[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
91_SB1603
LRB9112968SMdv
1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
-2- LRB9112968SMdv
1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act; and
21 (D-10) For taxable years ending after December
22 31, 1997, an amount equal to any eligible
23 remediation costs that the individual deducted in
24 computing adjusted gross income and for which the
25 individual claims a credit under subsection (l) of
26 Section 201;
27 and by deducting from the total so obtained the sum of
28 the following amounts:
29 (E) Any amount included in such total in
30 respect of any compensation (including but not
31 limited to any compensation paid or accrued to a
32 serviceman while a prisoner of war or missing in
33 action) paid to a resident by reason of being on
34 active duty in the Armed Forces of the United States
-3- LRB9112968SMdv
1 and in respect of any compensation paid or accrued
2 to a resident who as a governmental employee was a
3 prisoner of war or missing in action, and in respect
4 of any compensation paid to a resident in 1971 or
5 thereafter for annual training performed pursuant to
6 Sections 502 and 503, Title 32, United States Code
7 as a member of the Illinois National Guard;
8 (F) An amount equal to all amounts included in
9 such total pursuant to the provisions of Sections
10 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
11 408 of the Internal Revenue Code, or included in
12 such total as distributions under the provisions of
13 any retirement or disability plan for employees of
14 any governmental agency or unit, or retirement
15 payments to retired partners, which payments are
16 excluded in computing net earnings from self
17 employment by Section 1402 of the Internal Revenue
18 Code and regulations adopted pursuant thereto;
19 (G) The valuation limitation amount;
20 (H) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (I) An amount equal to all amounts included in
25 such total pursuant to the provisions of Section 111
26 of the Internal Revenue Code as a recovery of items
27 previously deducted from adjusted gross income in
28 the computation of taxable income;
29 (J) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
-4- LRB9112968SMdv
1 (K) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (J) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (K);
11 (L) For taxable years ending after December
12 31, 1983, an amount equal to all social security
13 benefits and railroad retirement benefits included
14 in such total pursuant to Sections 72(r) and 86 of
15 the Internal Revenue Code;
16 (M) With the exception of any amounts
17 subtracted under subparagraph (N), an amount equal
18 to the sum of all amounts disallowed as deductions
19 by (i) Sections 171(a) (2), and 265(2) of the
20 Internal Revenue Code of 1954, as now or hereafter
21 amended, and all amounts of expenses allocable to
22 interest and disallowed as deductions by Section
23 265(1) of the Internal Revenue Code of 1954, as now
24 or hereafter amended; and (ii) for taxable years
25 ending on or after August 13, 1999 the effective
26 date of this amendatory Act of the 91st General
27 Assembly, Sections 171(a)(2), 265, 280C, and
28 832(b)(5)(B)(i) of the Internal Revenue Code; the
29 provisions of this subparagraph are exempt from the
30 provisions of Section 250;
31 (N) An amount equal to all amounts included in
32 such total which are exempt from taxation by this
33 State either by reason of its statutes or
34 Constitution or by reason of the Constitution,
-5- LRB9112968SMdv
1 treaties or statutes of the United States; provided
2 that, in the case of any statute of this State that
3 exempts income derived from bonds or other
4 obligations from the tax imposed under this Act, the
5 amount exempted shall be the interest net of bond
6 premium amortization;
7 (O) An amount equal to any contribution made
8 to a job training project established pursuant to
9 the Tax Increment Allocation Redevelopment Act;
10 (P) An amount equal to the amount of the
11 deduction used to compute the federal income tax
12 credit for restoration of substantial amounts held
13 under claim of right for the taxable year pursuant
14 to Section 1341 of the Internal Revenue Code of
15 1986;
16 (Q) An amount equal to any amounts included in
17 such total, received by the taxpayer as an
18 acceleration in the payment of life, endowment or
19 annuity benefits in advance of the time they would
20 otherwise be payable as an indemnity for a terminal
21 illness;
22 (R) An amount equal to the amount of any
23 federal or State bonus paid to veterans of the
24 Persian Gulf War;
25 (S) An amount, to the extent included in
26 adjusted gross income, equal to the amount of a
27 contribution made in the taxable year on behalf of
28 the taxpayer to a medical care savings account
29 established under the Medical Care Savings Account
30 Act to the extent the contribution is accepted by
31 the account administrator as provided in that Act;
32 (T) An amount, to the extent included in
33 adjusted gross income, equal to the amount of
34 interest earned in the taxable year on a medical
-6- LRB9112968SMdv
1 care savings account established under the Medical
2 Care Savings Account Act on behalf of the taxpayer,
3 other than interest added pursuant to item (D-5) of
4 this paragraph (2);
5 (U) For one taxable year beginning on or after
6 January 1, 1994, an amount equal to the total amount
7 of tax imposed and paid under subsections (a) and
8 (b) of Section 201 of this Act on grant amounts
9 received by the taxpayer under the Nursing Home
10 Grant Assistance Act during the taxpayer's taxable
11 years 1992 and 1993;
12 (V) Beginning with tax years ending on or
13 after December 31, 1995 and ending with tax years
14 ending on or before December 31, 2004, an amount
15 equal to the amount paid by a taxpayer who is a
16 self-employed taxpayer, a partner of a partnership,
17 or a shareholder in a Subchapter S corporation for
18 health insurance or long-term care insurance for
19 that taxpayer or that taxpayer's spouse or
20 dependents, to the extent that the amount paid for
21 that health insurance or long-term care insurance
22 may be deducted under Section 213 of the Internal
23 Revenue Code of 1986, has not been deducted on the
24 federal income tax return of the taxpayer, and does
25 not exceed the taxable income attributable to that
26 taxpayer's income, self-employment income, or
27 Subchapter S corporation income; except that no
28 deduction shall be allowed under this item (V) if
29 the taxpayer is eligible to participate in any
30 health insurance or long-term care insurance plan of
31 an employer of the taxpayer or the taxpayer's
32 spouse. The amount of the health insurance and
33 long-term care insurance subtracted under this item
34 (V) shall be determined by multiplying total health
-7- LRB9112968SMdv
1 insurance and long-term care insurance premiums paid
2 by the taxpayer times a number that represents the
3 fractional percentage of eligible medical expenses
4 under Section 213 of the Internal Revenue Code of
5 1986 not actually deducted on the taxpayer's federal
6 income tax return;
7 (W) For taxable years beginning on or after
8 January 1, 1998, all amounts included in the
9 taxpayer's federal gross income in the taxable year
10 from amounts converted from a regular IRA to a Roth
11 IRA. This paragraph is exempt from the provisions of
12 Section 250; and
13 (X) For taxable year 1999 and thereafter, an
14 amount equal to the amount of any (i) distributions,
15 to the extent includible in gross income for federal
16 income tax purposes, made to the taxpayer because of
17 his or her status as a victim of persecution for
18 racial or religious reasons by Nazi Germany or any
19 other Axis regime or as an heir of the victim and
20 (ii) items of income, to the extent includible in
21 gross income for federal income tax purposes,
22 attributable to, derived from or in any way related
23 to assets stolen from, hidden from, or otherwise
24 lost to a victim of persecution for racial or
25 religious reasons by Nazi Germany or any other Axis
26 regime immediately prior to, during, and immediately
27 after World War II, including, but not limited to,
28 interest on the proceeds receivable as insurance
29 under policies issued to a victim of persecution for
30 racial or religious reasons by Nazi Germany or any
31 other Axis regime by European insurance companies
32 immediately prior to and during World War II;
33 provided, however, this subtraction from federal
34 adjusted gross income does not apply to assets
-8- LRB9112968SMdv
1 acquired with such assets or with the proceeds from
2 the sale of such assets; provided, further, this
3 paragraph shall only apply to a taxpayer who was the
4 first recipient of such assets after their recovery
5 and who is a victim of persecution for racial or
6 religious reasons by Nazi Germany or any other Axis
7 regime or as an heir of the victim. The amount of
8 and the eligibility for any public assistance,
9 benefit, or similar entitlement is not affected by
10 the inclusion of items (i) and (ii) of this
11 paragraph in gross income for federal income tax
12 purposes. This paragraph is exempt from the
13 provisions of Section 250. ; and
14 (Y) Beginning with taxable years ending on or
15 after December 31, 2000, an amount equal to the
16 amount allowed to be deducted for qualified
17 long-term care services under Section 213 of the
18 Internal Revenue Code. This paragraph (Y) is exempt
19 from the provisions of Section 250.
20 (b) Corporations.
21 (1) In general. In the case of a corporation, base
22 income means an amount equal to the taxpayer's taxable
23 income for the taxable year as modified by paragraph (2).
24 (2) Modifications. The taxable income referred to
25 in paragraph (1) shall be modified by adding thereto the
26 sum of the following amounts:
27 (A) An amount equal to all amounts paid or
28 accrued to the taxpayer as interest and all
29 distributions received from regulated investment
30 companies during the taxable year to the extent
31 excluded from gross income in the computation of
32 taxable income;
33 (B) An amount equal to the amount of tax
34 imposed by this Act to the extent deducted from
-9- LRB9112968SMdv
1 gross income in the computation of taxable income
2 for the taxable year;
3 (C) In the case of a regulated investment
4 company, an amount equal to the excess of (i) the
5 net long-term capital gain for the taxable year,
6 over (ii) the amount of the capital gain dividends
7 designated as such in accordance with Section
8 852(b)(3)(C) of the Internal Revenue Code and any
9 amount designated under Section 852(b)(3)(D) of the
10 Internal Revenue Code, attributable to the taxable
11 year (this amendatory Act of 1995 (Public Act 89-89)
12 is declarative of existing law and is not a new
13 enactment);
14 (D) The amount of any net operating loss
15 deduction taken in arriving at taxable income, other
16 than a net operating loss carried forward from a
17 taxable year ending prior to December 31, 1986;
18 (E) For taxable years in which a net operating
19 loss carryback or carryforward from a taxable year
20 ending prior to December 31, 1986 is an element of
21 taxable income under paragraph (1) of subsection (e)
22 or subparagraph (E) of paragraph (2) of subsection
23 (e), the amount by which addition modifications
24 other than those provided by this subparagraph (E)
25 exceeded subtraction modifications in such earlier
26 taxable year, with the following limitations applied
27 in the order that they are listed:
28 (i) the addition modification relating to
29 the net operating loss carried back or forward
30 to the taxable year from any taxable year
31 ending prior to December 31, 1986 shall be
32 reduced by the amount of addition modification
33 under this subparagraph (E) which related to
34 that net operating loss and which was taken
-10- LRB9112968SMdv
1 into account in calculating the base income of
2 an earlier taxable year, and
3 (ii) the addition modification relating
4 to the net operating loss carried back or
5 forward to the taxable year from any taxable
6 year ending prior to December 31, 1986 shall
7 not exceed the amount of such carryback or
8 carryforward;
9 For taxable years in which there is a net
10 operating loss carryback or carryforward from more
11 than one other taxable year ending prior to December
12 31, 1986, the addition modification provided in this
13 subparagraph (E) shall be the sum of the amounts
14 computed independently under the preceding
15 provisions of this subparagraph (E) for each such
16 taxable year; and
17 (E-5) For taxable years ending after December
18 31, 1997, an amount equal to any eligible
19 remediation costs that the corporation deducted in
20 computing adjusted gross income and for which the
21 corporation claims a credit under subsection (l) of
22 Section 201;
23 and by deducting from the total so obtained the sum of
24 the following amounts:
25 (F) An amount equal to the amount of any tax
26 imposed by this Act which was refunded to the
27 taxpayer and included in such total for the taxable
28 year;
29 (G) An amount equal to any amount included in
30 such total under Section 78 of the Internal Revenue
31 Code;
32 (H) In the case of a regulated investment
33 company, an amount equal to the amount of exempt
34 interest dividends as defined in subsection (b) (5)
-11- LRB9112968SMdv
1 of Section 852 of the Internal Revenue Code, paid to
2 shareholders for the taxable year;
3 (I) With the exception of any amounts
4 subtracted under subparagraph (J), an amount equal
5 to the sum of all amounts disallowed as deductions
6 by (i) Sections 171(a) (2), and 265(a)(2) and
7 amounts disallowed as interest expense by Section
8 291(a)(3) of the Internal Revenue Code, as now or
9 hereafter amended, and all amounts of expenses
10 allocable to interest and disallowed as deductions
11 by Section 265(a)(1) of the Internal Revenue Code,
12 as now or hereafter amended; and (ii) for taxable
13 years ending on or after August 13, 1999 the
14 effective date of this amendatory Act of the 91st
15 General Assembly, Sections 171(a)(2), 265, 280C, and
16 832(b)(5)(B)(i) of the Internal Revenue Code; the
17 provisions of this subparagraph are exempt from the
18 provisions of Section 250;
19 (J) An amount equal to all amounts included in
20 such total which are exempt from taxation by this
21 State either by reason of its statutes or
22 Constitution or by reason of the Constitution,
23 treaties or statutes of the United States; provided
24 that, in the case of any statute of this State that
25 exempts income derived from bonds or other
26 obligations from the tax imposed under this Act, the
27 amount exempted shall be the interest net of bond
28 premium amortization;
29 (K) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act and conducts substantially all
34 of its operations in an Enterprise Zone or zones;
-12- LRB9112968SMdv
1 (L) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (K) of paragraph 2 of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (L);
11 (M) For any taxpayer that is a financial
12 organization within the meaning of Section 304(c) of
13 this Act, an amount included in such total as
14 interest income from a loan or loans made by such
15 taxpayer to a borrower, to the extent that such a
16 loan is secured by property which is eligible for
17 the Enterprise Zone Investment Credit. To determine
18 the portion of a loan or loans that is secured by
19 property eligible for a Section 201(h) investment
20 credit to the borrower, the entire principal amount
21 of the loan or loans between the taxpayer and the
22 borrower should be divided into the basis of the
23 Section 201(h) investment credit property which
24 secures the loan or loans, using for this purpose
25 the original basis of such property on the date that
26 it was placed in service in the Enterprise Zone.
27 The subtraction modification available to taxpayer
28 in any year under this subsection shall be that
29 portion of the total interest paid by the borrower
30 with respect to such loan attributable to the
31 eligible property as calculated under the previous
32 sentence;
33 (M-1) For any taxpayer that is a financial
34 organization within the meaning of Section 304(c) of
-13- LRB9112968SMdv
1 this Act, an amount included in such total as
2 interest income from a loan or loans made by such
3 taxpayer to a borrower, to the extent that such a
4 loan is secured by property which is eligible for
5 the High Impact Business Investment Credit. To
6 determine the portion of a loan or loans that is
7 secured by property eligible for a Section 201(i)
8 investment credit to the borrower, the entire
9 principal amount of the loan or loans between the
10 taxpayer and the borrower should be divided into the
11 basis of the Section 201(i) investment credit
12 property which secures the loan or loans, using for
13 this purpose the original basis of such property on
14 the date that it was placed in service in a
15 federally designated Foreign Trade Zone or Sub-Zone
16 located in Illinois. No taxpayer that is eligible
17 for the deduction provided in subparagraph (M) of
18 paragraph (2) of this subsection shall be eligible
19 for the deduction provided under this subparagraph
20 (M-1). The subtraction modification available to
21 taxpayers in any year under this subsection shall be
22 that portion of the total interest paid by the
23 borrower with respect to such loan attributable to
24 the eligible property as calculated under the
25 previous sentence;
26 (N) Two times any contribution made during the
27 taxable year to a designated zone organization to
28 the extent that the contribution (i) qualifies as a
29 charitable contribution under subsection (c) of
30 Section 170 of the Internal Revenue Code and (ii)
31 must, by its terms, be used for a project approved
32 by the Department of Commerce and Community Affairs
33 under Section 11 of the Illinois Enterprise Zone
34 Act;
-14- LRB9112968SMdv
1 (O) An amount equal to: (i) 85% for taxable
2 years ending on or before December 31, 1992, or, a
3 percentage equal to the percentage allowable under
4 Section 243(a)(1) of the Internal Revenue Code of
5 1986 for taxable years ending after December 31,
6 1992, of the amount by which dividends included in
7 taxable income and received from a corporation that
8 is not created or organized under the laws of the
9 United States or any state or political subdivision
10 thereof, including, for taxable years ending on or
11 after December 31, 1988, dividends received or
12 deemed received or paid or deemed paid under
13 Sections 951 through 964 of the Internal Revenue
14 Code, exceed the amount of the modification provided
15 under subparagraph (G) of paragraph (2) of this
16 subsection (b) which is related to such dividends;
17 plus (ii) 100% of the amount by which dividends,
18 included in taxable income and received, including,
19 for taxable years ending on or after December 31,
20 1988, dividends received or deemed received or paid
21 or deemed paid under Sections 951 through 964 of the
22 Internal Revenue Code, from any such corporation
23 specified in clause (i) that would but for the
24 provisions of Section 1504 (b) (3) of the Internal
25 Revenue Code be treated as a member of the
26 affiliated group which includes the dividend
27 recipient, exceed the amount of the modification
28 provided under subparagraph (G) of paragraph (2) of
29 this subsection (b) which is related to such
30 dividends;
31 (P) An amount equal to any contribution made
32 to a job training project established pursuant to
33 the Tax Increment Allocation Redevelopment Act;
34 (Q) An amount equal to the amount of the
-15- LRB9112968SMdv
1 deduction used to compute the federal income tax
2 credit for restoration of substantial amounts held
3 under claim of right for the taxable year pursuant
4 to Section 1341 of the Internal Revenue Code of
5 1986; and
6 (R) In the case of an attorney-in-fact with
7 respect to whom an interinsurer or a reciprocal
8 insurer has made the election under Section 835 of
9 the Internal Revenue Code, 26 U.S.C. 835, an amount
10 equal to the excess, if any, of the amounts paid or
11 incurred by that interinsurer or reciprocal insurer
12 in the taxable year to the attorney-in-fact over the
13 deduction allowed to that interinsurer or reciprocal
14 insurer with respect to the attorney-in-fact under
15 Section 835(b) of the Internal Revenue Code for the
16 taxable year.
17 (3) Special rule. For purposes of paragraph (2)
18 (A), "gross income" in the case of a life insurance
19 company, for tax years ending on and after December 31,
20 1994, shall mean the gross investment income for the
21 taxable year.
22 (c) Trusts and estates.
23 (1) In general. In the case of a trust or estate,
24 base income means an amount equal to the taxpayer's
25 taxable income for the taxable year as modified by
26 paragraph (2).
27 (2) Modifications. Subject to the provisions of
28 paragraph (3), the taxable income referred to in
29 paragraph (1) shall be modified by adding thereto the sum
30 of the following amounts:
31 (A) An amount equal to all amounts paid or
32 accrued to the taxpayer as interest or dividends
33 during the taxable year to the extent excluded from
34 gross income in the computation of taxable income;
-16- LRB9112968SMdv
1 (B) In the case of (i) an estate, $600; (ii) a
2 trust which, under its governing instrument, is
3 required to distribute all of its income currently,
4 $300; and (iii) any other trust, $100, but in each
5 such case, only to the extent such amount was
6 deducted in the computation of taxable income;
7 (C) An amount equal to the amount of tax
8 imposed by this Act to the extent deducted from
9 gross income in the computation of taxable income
10 for the taxable year;
11 (D) The amount of any net operating loss
12 deduction taken in arriving at taxable income, other
13 than a net operating loss carried forward from a
14 taxable year ending prior to December 31, 1986;
15 (E) For taxable years in which a net operating
16 loss carryback or carryforward from a taxable year
17 ending prior to December 31, 1986 is an element of
18 taxable income under paragraph (1) of subsection (e)
19 or subparagraph (E) of paragraph (2) of subsection
20 (e), the amount by which addition modifications
21 other than those provided by this subparagraph (E)
22 exceeded subtraction modifications in such taxable
23 year, with the following limitations applied in the
24 order that they are listed:
25 (i) the addition modification relating to
26 the net operating loss carried back or forward
27 to the taxable year from any taxable year
28 ending prior to December 31, 1986 shall be
29 reduced by the amount of addition modification
30 under this subparagraph (E) which related to
31 that net operating loss and which was taken
32 into account in calculating the base income of
33 an earlier taxable year, and
34 (ii) the addition modification relating
-17- LRB9112968SMdv
1 to the net operating loss carried back or
2 forward to the taxable year from any taxable
3 year ending prior to December 31, 1986 shall
4 not exceed the amount of such carryback or
5 carryforward;
6 For taxable years in which there is a net
7 operating loss carryback or carryforward from more
8 than one other taxable year ending prior to December
9 31, 1986, the addition modification provided in this
10 subparagraph (E) shall be the sum of the amounts
11 computed independently under the preceding
12 provisions of this subparagraph (E) for each such
13 taxable year;
14 (F) For taxable years ending on or after
15 January 1, 1989, an amount equal to the tax deducted
16 pursuant to Section 164 of the Internal Revenue Code
17 if the trust or estate is claiming the same tax for
18 purposes of the Illinois foreign tax credit under
19 Section 601 of this Act;
20 (G) An amount equal to the amount of the
21 capital gain deduction allowable under the Internal
22 Revenue Code, to the extent deducted from gross
23 income in the computation of taxable income; and
24 (G-5) For taxable years ending after December
25 31, 1997, an amount equal to any eligible
26 remediation costs that the trust or estate deducted
27 in computing adjusted gross income and for which the
28 trust or estate claims a credit under subsection (l)
29 of Section 201;
30 and by deducting from the total so obtained the sum of
31 the following amounts:
32 (H) An amount equal to all amounts included in
33 such total pursuant to the provisions of Sections
34 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
-18- LRB9112968SMdv
1 408 of the Internal Revenue Code or included in such
2 total as distributions under the provisions of any
3 retirement or disability plan for employees of any
4 governmental agency or unit, or retirement payments
5 to retired partners, which payments are excluded in
6 computing net earnings from self employment by
7 Section 1402 of the Internal Revenue Code and
8 regulations adopted pursuant thereto;
9 (I) The valuation limitation amount;
10 (J) An amount equal to the amount of any tax
11 imposed by this Act which was refunded to the
12 taxpayer and included in such total for the taxable
13 year;
14 (K) An amount equal to all amounts included in
15 taxable income as modified by subparagraphs (A),
16 (B), (C), (D), (E), (F) and (G) which are exempt
17 from taxation by this State either by reason of its
18 statutes or Constitution or by reason of the
19 Constitution, treaties or statutes of the United
20 States; provided that, in the case of any statute of
21 this State that exempts income derived from bonds or
22 other obligations from the tax imposed under this
23 Act, the amount exempted shall be the interest net
24 of bond premium amortization;
25 (L) With the exception of any amounts
26 subtracted under subparagraph (K), an amount equal
27 to the sum of all amounts disallowed as deductions
28 by (i) Sections 171(a) (2) and 265(a)(2) of the
29 Internal Revenue Code, as now or hereafter amended,
30 and all amounts of expenses allocable to interest
31 and disallowed as deductions by Section 265(1) of
32 the Internal Revenue Code of 1954, as now or
33 hereafter amended; and (ii) for taxable years ending
34 on or after August 13, 1999 the effective date of
-19- LRB9112968SMdv
1 this amendatory Act of the 91st General Assembly,
2 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
3 of the Internal Revenue Code; the provisions of this
4 subparagraph are exempt from the provisions of
5 Section 250;
6 (M) An amount equal to those dividends
7 included in such total which were paid by a
8 corporation which conducts business operations in an
9 Enterprise Zone or zones created under the Illinois
10 Enterprise Zone Act and conducts substantially all
11 of its operations in an Enterprise Zone or Zones;
12 (N) An amount equal to any contribution made
13 to a job training project established pursuant to
14 the Tax Increment Allocation Redevelopment Act;
15 (O) An amount equal to those dividends
16 included in such total that were paid by a
17 corporation that conducts business operations in a
18 federally designated Foreign Trade Zone or Sub-Zone
19 and that is designated a High Impact Business
20 located in Illinois; provided that dividends
21 eligible for the deduction provided in subparagraph
22 (M) of paragraph (2) of this subsection shall not be
23 eligible for the deduction provided under this
24 subparagraph (O);
25 (P) An amount equal to the amount of the
26 deduction used to compute the federal income tax
27 credit for restoration of substantial amounts held
28 under claim of right for the taxable year pursuant
29 to Section 1341 of the Internal Revenue Code of
30 1986; and
31 (Q) For taxable year 1999 and thereafter, an
32 amount equal to the amount of any (i) distributions,
33 to the extent includible in gross income for federal
34 income tax purposes, made to the taxpayer because of
-20- LRB9112968SMdv
1 his or her status as a victim of persecution for
2 racial or religious reasons by Nazi Germany or any
3 other Axis regime or as an heir of the victim and
4 (ii) items of income, to the extent includible in
5 gross income for federal income tax purposes,
6 attributable to, derived from or in any way related
7 to assets stolen from, hidden from, or otherwise
8 lost to a victim of persecution for racial or
9 religious reasons by Nazi Germany or any other Axis
10 regime immediately prior to, during, and immediately
11 after World War II, including, but not limited to,
12 interest on the proceeds receivable as insurance
13 under policies issued to a victim of persecution for
14 racial or religious reasons by Nazi Germany or any
15 other Axis regime by European insurance companies
16 immediately prior to and during World War II;
17 provided, however, this subtraction from federal
18 adjusted gross income does not apply to assets
19 acquired with such assets or with the proceeds from
20 the sale of such assets; provided, further, this
21 paragraph shall only apply to a taxpayer who was the
22 first recipient of such assets after their recovery
23 and who is a victim of persecution for racial or
24 religious reasons by Nazi Germany or any other Axis
25 regime or as an heir of the victim. The amount of
26 and the eligibility for any public assistance,
27 benefit, or similar entitlement is not affected by
28 the inclusion of items (i) and (ii) of this
29 paragraph in gross income for federal income tax
30 purposes. This paragraph is exempt from the
31 provisions of Section 250.
32 (3) Limitation. The amount of any modification
33 otherwise required under this subsection shall, under
34 regulations prescribed by the Department, be adjusted by
-21- LRB9112968SMdv
1 any amounts included therein which were properly paid,
2 credited, or required to be distributed, or permanently
3 set aside for charitable purposes pursuant to Internal
4 Revenue Code Section 642(c) during the taxable year.
5 (d) Partnerships.
6 (1) In general. In the case of a partnership, base
7 income means an amount equal to the taxpayer's taxable
8 income for the taxable year as modified by paragraph (2).
9 (2) Modifications. The taxable income referred to
10 in paragraph (1) shall be modified by adding thereto the
11 sum of the following amounts:
12 (A) An amount equal to all amounts paid or
13 accrued to the taxpayer as interest or dividends
14 during the taxable year to the extent excluded from
15 gross income in the computation of taxable income;
16 (B) An amount equal to the amount of tax
17 imposed by this Act to the extent deducted from
18 gross income for the taxable year;
19 (C) The amount of deductions allowed to the
20 partnership pursuant to Section 707 (c) of the
21 Internal Revenue Code in calculating its taxable
22 income; and
23 (D) An amount equal to the amount of the
24 capital gain deduction allowable under the Internal
25 Revenue Code, to the extent deducted from gross
26 income in the computation of taxable income;
27 and by deducting from the total so obtained the following
28 amounts:
29 (E) The valuation limitation amount;
30 (F) An amount equal to the amount of any tax
31 imposed by this Act which was refunded to the
32 taxpayer and included in such total for the taxable
33 year;
34 (G) An amount equal to all amounts included in
-22- LRB9112968SMdv
1 taxable income as modified by subparagraphs (A),
2 (B), (C) and (D) which are exempt from taxation by
3 this State either by reason of its statutes or
4 Constitution or by reason of the Constitution,
5 treaties or statutes of the United States; provided
6 that, in the case of any statute of this State that
7 exempts income derived from bonds or other
8 obligations from the tax imposed under this Act, the
9 amount exempted shall be the interest net of bond
10 premium amortization;
11 (H) Any income of the partnership which
12 constitutes personal service income as defined in
13 Section 1348 (b) (1) of the Internal Revenue Code
14 (as in effect December 31, 1981) or a reasonable
15 allowance for compensation paid or accrued for
16 services rendered by partners to the partnership,
17 whichever is greater;
18 (I) An amount equal to all amounts of income
19 distributable to an entity subject to the Personal
20 Property Tax Replacement Income Tax imposed by
21 subsections (c) and (d) of Section 201 of this Act
22 including amounts distributable to organizations
23 exempt from federal income tax by reason of Section
24 501(a) of the Internal Revenue Code;
25 (J) With the exception of any amounts
26 subtracted under subparagraph (G), an amount equal
27 to the sum of all amounts disallowed as deductions
28 by (i) Sections 171(a) (2), and 265(2) of the
29 Internal Revenue Code of 1954, as now or hereafter
30 amended, and all amounts of expenses allocable to
31 interest and disallowed as deductions by Section
32 265(1) of the Internal Revenue Code, as now or
33 hereafter amended; and (ii) for taxable years ending
34 on or after August 13, 1999 the effective date of
-23- LRB9112968SMdv
1 this amendatory Act of the 91st General Assembly,
2 Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i)
3 of the Internal Revenue Code; the provisions of this
4 subparagraph are exempt from the provisions of
5 Section 250;
6 (K) An amount equal to those dividends
7 included in such total which were paid by a
8 corporation which conducts business operations in an
9 Enterprise Zone or zones created under the Illinois
10 Enterprise Zone Act, enacted by the 82nd General
11 Assembly, and which does not conduct such operations
12 other than in an Enterprise Zone or Zones;
13 (L) An amount equal to any contribution made
14 to a job training project established pursuant to
15 the Real Property Tax Increment Allocation
16 Redevelopment Act;
17 (M) An amount equal to those dividends
18 included in such total that were paid by a
19 corporation that conducts business operations in a
20 federally designated Foreign Trade Zone or Sub-Zone
21 and that is designated a High Impact Business
22 located in Illinois; provided that dividends
23 eligible for the deduction provided in subparagraph
24 (K) of paragraph (2) of this subsection shall not be
25 eligible for the deduction provided under this
26 subparagraph (M); and
27 (N) An amount equal to the amount of the
28 deduction used to compute the federal income tax
29 credit for restoration of substantial amounts held
30 under claim of right for the taxable year pursuant
31 to Section 1341 of the Internal Revenue Code of
32 1986.
33 (e) Gross income; adjusted gross income; taxable income.
34 (1) In general. Subject to the provisions of
-24- LRB9112968SMdv
1 paragraph (2) and subsection (b) (3), for purposes of
2 this Section and Section 803(e), a taxpayer's gross
3 income, adjusted gross income, or taxable income for the
4 taxable year shall mean the amount of gross income,
5 adjusted gross income or taxable income properly
6 reportable for federal income tax purposes for the
7 taxable year under the provisions of the Internal Revenue
8 Code. Taxable income may be less than zero. However, for
9 taxable years ending on or after December 31, 1986, net
10 operating loss carryforwards from taxable years ending
11 prior to December 31, 1986, may not exceed the sum of
12 federal taxable income for the taxable year before net
13 operating loss deduction, plus the excess of addition
14 modifications over subtraction modifications for the
15 taxable year. For taxable years ending prior to December
16 31, 1986, taxable income may never be an amount in excess
17 of the net operating loss for the taxable year as defined
18 in subsections (c) and (d) of Section 172 of the Internal
19 Revenue Code, provided that when taxable income of a
20 corporation (other than a Subchapter S corporation),
21 trust, or estate is less than zero and addition
22 modifications, other than those provided by subparagraph
23 (E) of paragraph (2) of subsection (b) for corporations
24 or subparagraph (E) of paragraph (2) of subsection (c)
25 for trusts and estates, exceed subtraction modifications,
26 an addition modification must be made under those
27 subparagraphs for any other taxable year to which the
28 taxable income less than zero (net operating loss) is
29 applied under Section 172 of the Internal Revenue Code or
30 under subparagraph (E) of paragraph (2) of this
31 subsection (e) applied in conjunction with Section 172 of
32 the Internal Revenue Code.
33 (2) Special rule. For purposes of paragraph (1) of
34 this subsection, the taxable income properly reportable
-25- LRB9112968SMdv
1 for federal income tax purposes shall mean:
2 (A) Certain life insurance companies. In the
3 case of a life insurance company subject to the tax
4 imposed by Section 801 of the Internal Revenue Code,
5 life insurance company taxable income, plus the
6 amount of distribution from pre-1984 policyholder
7 surplus accounts as calculated under Section 815a of
8 the Internal Revenue Code;
9 (B) Certain other insurance companies. In the
10 case of mutual insurance companies subject to the
11 tax imposed by Section 831 of the Internal Revenue
12 Code, insurance company taxable income;
13 (C) Regulated investment companies. In the
14 case of a regulated investment company subject to
15 the tax imposed by Section 852 of the Internal
16 Revenue Code, investment company taxable income;
17 (D) Real estate investment trusts. In the
18 case of a real estate investment trust subject to
19 the tax imposed by Section 857 of the Internal
20 Revenue Code, real estate investment trust taxable
21 income;
22 (E) Consolidated corporations. In the case of
23 a corporation which is a member of an affiliated
24 group of corporations filing a consolidated income
25 tax return for the taxable year for federal income
26 tax purposes, taxable income determined as if such
27 corporation had filed a separate return for federal
28 income tax purposes for the taxable year and each
29 preceding taxable year for which it was a member of
30 an affiliated group. For purposes of this
31 subparagraph, the taxpayer's separate taxable income
32 shall be determined as if the election provided by
33 Section 243(b) (2) of the Internal Revenue Code had
34 been in effect for all such years;
-26- LRB9112968SMdv
1 (F) Cooperatives. In the case of a
2 cooperative corporation or association, the taxable
3 income of such organization determined in accordance
4 with the provisions of Section 1381 through 1388 of
5 the Internal Revenue Code;
6 (G) Subchapter S corporations. In the case
7 of: (i) a Subchapter S corporation for which there
8 is in effect an election for the taxable year under
9 Section 1362 of the Internal Revenue Code, the
10 taxable income of such corporation determined in
11 accordance with Section 1363(b) of the Internal
12 Revenue Code, except that taxable income shall take
13 into account those items which are required by
14 Section 1363(b)(1) of the Internal Revenue Code to
15 be separately stated; and (ii) a Subchapter S
16 corporation for which there is in effect a federal
17 election to opt out of the provisions of the
18 Subchapter S Revision Act of 1982 and have applied
19 instead the prior federal Subchapter S rules as in
20 effect on July 1, 1982, the taxable income of such
21 corporation determined in accordance with the
22 federal Subchapter S rules as in effect on July 1,
23 1982; and
24 (H) Partnerships. In the case of a
25 partnership, taxable income determined in accordance
26 with Section 703 of the Internal Revenue Code,
27 except that taxable income shall take into account
28 those items which are required by Section 703(a)(1)
29 to be separately stated but which would be taken
30 into account by an individual in calculating his
31 taxable income.
32 (f) Valuation limitation amount.
33 (1) In general. The valuation limitation amount
34 referred to in subsections (a) (2) (G), (c) (2) (I) and
-27- LRB9112968SMdv
1 (d)(2) (E) is an amount equal to:
2 (A) The sum of the pre-August 1, 1969
3 appreciation amounts (to the extent consisting of
4 gain reportable under the provisions of Section 1245
5 or 1250 of the Internal Revenue Code) for all
6 property in respect of which such gain was reported
7 for the taxable year; plus
8 (B) The lesser of (i) the sum of the
9 pre-August 1, 1969 appreciation amounts (to the
10 extent consisting of capital gain) for all property
11 in respect of which such gain was reported for
12 federal income tax purposes for the taxable year, or
13 (ii) the net capital gain for the taxable year,
14 reduced in either case by any amount of such gain
15 included in the amount determined under subsection
16 (a) (2) (F) or (c) (2) (H).
17 (2) Pre-August 1, 1969 appreciation amount.
18 (A) If the fair market value of property
19 referred to in paragraph (1) was readily
20 ascertainable on August 1, 1969, the pre-August 1,
21 1969 appreciation amount for such property is the
22 lesser of (i) the excess of such fair market value
23 over the taxpayer's basis (for determining gain) for
24 such property on that date (determined under the
25 Internal Revenue Code as in effect on that date), or
26 (ii) the total gain realized and reportable for
27 federal income tax purposes in respect of the sale,
28 exchange or other disposition of such property.
29 (B) If the fair market value of property
30 referred to in paragraph (1) was not readily
31 ascertainable on August 1, 1969, the pre-August 1,
32 1969 appreciation amount for such property is that
33 amount which bears the same ratio to the total gain
34 reported in respect of the property for federal
-28- LRB9112968SMdv
1 income tax purposes for the taxable year, as the
2 number of full calendar months in that part of the
3 taxpayer's holding period for the property ending
4 July 31, 1969 bears to the number of full calendar
5 months in the taxpayer's entire holding period for
6 the property.
7 (C) The Department shall prescribe such
8 regulations as may be necessary to carry out the
9 purposes of this paragraph.
10 (g) Double deductions. Unless specifically provided
11 otherwise, nothing in this Section shall permit the same item
12 to be deducted more than once.
13 (h) Legislative intention. Except as expressly provided
14 by this Section there shall be no modifications or
15 limitations on the amounts of income, gain, loss or deduction
16 taken into account in determining gross income, adjusted
17 gross income or taxable income for federal income tax
18 purposes for the taxable year, or in the amount of such items
19 entering into the computation of base income and net income
20 under this Act for such taxable year, whether in respect of
21 property values as of August 1, 1969 or otherwise.
22 (Source: P.A. 90-491, eff. 1-1-98; 90-717, eff. 8-7-98;
23 90-770, eff. 8-14-98; 91-192, eff. 7-20-99; 91-205, eff.
24 7-20-99; 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676,
25 eff. 12-23-99; revised 1-5-00.)
26 Section 99. Effective date. This Act takes effect upon
27 becoming law.