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92_SB1536
LRB9211060SMdv
1 AN ACT concerning taxes.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Income Tax Act is amended by
5 changing Sections 201, 202, 203, 205, 211, 304, 305, 308,
6 502, 803 and 1501 as follows:
7 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
8 Sec. 201. Tax Imposed.
9 (a) In general. A tax measured by net income is hereby
10 imposed on every individual, corporation, trust and estate
11 for each taxable year ending after July 31, 1969 on the
12 privilege of earning or receiving income in or as a resident
13 of this State. Such tax shall be in addition to all other
14 occupation or privilege taxes imposed by this State or by any
15 municipal corporation or political subdivision thereof.
16 (b) Rates. The tax imposed by subsection (a) of this
17 Section shall be determined as follows, except as adjusted by
18 subsection (d-1):
19 (1) In the case of an individual, trust or estate,
20 for taxable years ending prior to July 1, 1989, an amount
21 equal to 2 1/2% of the taxpayer's net income for the
22 taxable year.
23 (2) In the case of an individual, trust or estate,
24 for taxable years beginning prior to July 1, 1989 and
25 ending after June 30, 1989, an amount equal to the sum of
26 (i) 2 1/2% of the taxpayer's net income for the period
27 prior to July 1, 1989, as calculated under Section 202.3,
28 and (ii) 3% of the taxpayer's net income for the period
29 after June 30, 1989, as calculated under Section 202.3.
30 (3) In the case of an individual, trust or estate,
31 for taxable years beginning after June 30, 1989, an
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1 amount equal to 3% of the taxpayer's net income for the
2 taxable year.
3 (4) (Blank).
4 (5) (Blank).
5 (6) In the case of a corporation, for taxable years
6 ending prior to July 1, 1989, an amount equal to 4% of
7 the taxpayer's net income for the taxable year.
8 (7) In the case of a corporation, for taxable years
9 beginning prior to July 1, 1989 and ending after June 30,
10 1989, an amount equal to the sum of (i) 4% of the
11 taxpayer's net income for the period prior to July 1,
12 1989, as calculated under Section 202.3, and (ii) 4.8% of
13 the taxpayer's net income for the period after June 30,
14 1989, as calculated under Section 202.3.
15 (8) In the case of a corporation other than a
16 Subchapter S corporation, for taxable years beginning
17 after June 30, 1989, an amount equal to 4.8% of the
18 taxpayer's net income for the taxable year.
19 (9) In the case of a partnership or Subchapter S
20 corporation, for taxable years ending after December 31,
21 2001, an amount equal to the taxpayer's net income for
22 the taxable year multiplied by the average tax rate under
23 this subsection (b) of this Section applicable to the
24 partners or shareholders of the taxpayer who have not
25 made a pass-through election with respect to the
26 taxpayer. The average rate shall be computed by
27 weighting the rate applicable to each such partner or
28 shareholder by a fraction equal to that partner's or
29 shareholder's share of the base income of the taxpayer,
30 divided by the sum of the shares of income of all such
31 partners or shareholders. If the partner or shareholder
32 is itself a partnership or a Subchapter S corporation,
33 the tax rate applicable to that partner or shareholder
34 shall be the weighted average tax rate applicable to all
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1 partners or shareholders of that partner or shareholder.
2 For purposes of this paragraph (9), in the case of any
3 partner or shareholder who is not identified in the books
4 and records of the taxpayer as a person subject to a
5 lower rate, the rate applicable to that person shall be
6 the rate imposed on corporations under this subsection
7 (b).
8 (c) Beginning on July 1, 1979 and thereafter, in
9 addition to such income tax, there is also hereby imposed the
10 Personal Property Tax Replacement Income Tax measured by net
11 income on every corporation (including Subchapter S
12 corporations), partnership and trust, for each taxable year
13 ending after June 30, 1979. Such taxes are imposed on the
14 privilege of earning or receiving income in or as a resident
15 of this State. The Personal Property Tax Replacement Income
16 Tax shall be in addition to the income tax imposed by
17 subsections (a) and (b) of this Section and in addition to
18 all other occupation or privilege taxes imposed by this State
19 or by any municipal corporation or political subdivision
20 thereof.
21 (d) Additional Personal Property Tax Replacement Income
22 Tax Rates. The personal property tax replacement income tax
23 imposed by this subsection and subsection (c) of this Section
24 in the case of a corporation, other than a Subchapter S
25 corporation and except as adjusted by subsection (d-1), shall
26 be an additional amount equal to 2.85% of such taxpayer's net
27 income for the taxable year, except that beginning on January
28 1, 1981, and through the taxable year ending on or before
29 December 31, 2001 thereafter, the rate of 2.85% specified in
30 this subsection shall be reduced to 2.5%, and in the case of
31 a partnership, trust or a Subchapter S corporation shall be
32 an additional amount equal to 1.5% of such taxpayer's net
33 income for the taxable year. For taxable years ending after
34 December 31, 2001, the rate of tax imposed in this
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1 subsection on a trust shall be 1.5% and, in the case of a
2 partnership or Subchapter S corporation, the rate of tax
3 under this subsection shall be the average tax rate under
4 this subsection (d) of this Section applicable to the
5 partners or shareholders of the taxpayer who do not qualify
6 the taxpayer for the subtraction modification allowed in
7 subparagraph (I) of paragraph (2) of subsection (d) of
8 Section 203 of this Act, in the case of a partnership, or in
9 subparagraph (T) of paragraph (2) of subsection (b) of
10 Section 203 of this Act, in the case of a Subchapter S
11 corporation. The average rate shall be computed by weighting
12 the rate applicable to each such partner or shareholder by a
13 fraction equal to that partner's or shareholder's share of
14 the base income of the taxpayer, divided by the sum of the
15 shares of income of all such partners or shareholders. If
16 the partner or shareholder is itself a partnership or a
17 Subchapter S corporation, the tax rate applicable to that
18 partner or shareholder shall be the weighted average tax rate
19 applicable to all partners or shareholders of that partner or
20 shareholder. For purposes of this subsection (d), the rate
21 applicable to a partner or shareholder who is neither subject
22 to Personal Property Tax Replacement Income Tax nor an
23 organization exempt from federal income tax by reason of
24 Section 501(a) of the Internal Revenue Code shall be 1.5% and
25 the tax rate applicable to any partner or shareholder who is
26 not identified in the books and records of the taxpayer as
27 being subject to a lower rate shall be 2.5%.
28 (d-1) Rate reduction for certain foreign insurers. In
29 the case of a foreign insurer, as defined by Section 35A-5 of
30 the Illinois Insurance Code, whose state or country of
31 domicile imposes on insurers domiciled in Illinois a
32 retaliatory tax (excluding any insurer whose premiums from
33 reinsurance assumed are 50% or more of its total insurance
34 premiums as determined under paragraph (2) of subsection (b)
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1 of Section 304, except that for purposes of this
2 determination premiums from reinsurance do not include
3 premiums from inter-affiliate reinsurance arrangements),
4 beginning with taxable years ending on or after December 31,
5 1999, the sum of the rates of tax imposed by subsections (b)
6 and (d) shall be reduced (but not increased) to the rate at
7 which the total amount of tax imposed under this Act, net of
8 all credits allowed under this Act, shall equal (i) the total
9 amount of tax that would be imposed on the foreign insurer's
10 net income allocable to Illinois for the taxable year by such
11 foreign insurer's state or country of domicile if that net
12 income were subject to all income taxes and taxes measured by
13 net income imposed by such foreign insurer's state or country
14 of domicile, net of all credits allowed or (ii) a rate of
15 zero if no such tax is imposed on such income by the foreign
16 insurer's state of domicile. For the purposes of this
17 subsection (d-1), an inter-affiliate includes a mutual
18 insurer under common management.
19 (1) For the purposes of subsection (d-1), in no
20 event shall the sum of the rates of tax imposed by
21 subsections (b) and (d) be reduced below the rate at
22 which the sum of:
23 (A) the total amount of tax imposed on such
24 foreign insurer under this Act for a taxable year,
25 net of all credits allowed under this Act, plus
26 (B) the privilege tax imposed by Section 409
27 of the Illinois Insurance Code, the fire insurance
28 company tax imposed by Section 12 of the Fire
29 Investigation Act, and the fire department taxes
30 imposed under Section 11-10-1 of the Illinois
31 Municipal Code,
32 equals 1.25% of the net taxable premiums written for the
33 taxable year, as described by subsection (1) of Section
34 409 of the Illinois Insurance Code. This paragraph will
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1 in no event increase the rates imposed under subsections
2 (b) and (d).
3 (2) Any reduction in the rates of tax imposed by
4 this subsection shall be applied first against the rates
5 imposed by subsection (b) and only after the tax imposed
6 by subsection (a) net of all credits allowed under this
7 Section other than the credit allowed under subsection
8 (i) has been reduced to zero, against the rates imposed
9 by subsection (d).
10 This subsection (d-1) is exempt from the provisions of
11 Section 250.
12 (e) Investment credit. A taxpayer shall be allowed a
13 credit against the Personal Property Tax Replacement Income
14 Tax for investment in qualified property.
15 (1) A taxpayer shall be allowed a credit equal to
16 .5% of the basis of qualified property placed in service
17 during the taxable year, provided such property is placed
18 in service on or after July 1, 1984. There shall be
19 allowed an additional credit equal to .5% of the basis of
20 qualified property placed in service during the taxable
21 year, provided such property is placed in service on or
22 after July 1, 1986, and the taxpayer's base employment
23 within Illinois has increased by 1% or more over the
24 preceding year as determined by the taxpayer's employment
25 records filed with the Illinois Department of Employment
26 Security. Taxpayers who are new to Illinois shall be
27 deemed to have met the 1% growth in base employment for
28 the first year in which they file employment records with
29 the Illinois Department of Employment Security. The
30 provisions added to this Section by Public Act 85-1200
31 (and restored by Public Act 87-895) shall be construed as
32 declaratory of existing law and not as a new enactment.
33 If, in any year, the increase in base employment within
34 Illinois over the preceding year is less than 1%, the
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1 additional credit shall be limited to that percentage
2 times a fraction, the numerator of which is .5% and the
3 denominator of which is 1%, but shall not exceed .5%.
4 The investment credit shall not be allowed to the extent
5 that it would reduce a taxpayer's liability in any tax
6 year below zero, nor may any credit for qualified
7 property be allowed for any year other than the year in
8 which the property was placed in service in Illinois. For
9 tax years ending on or after December 31, 1987, and on or
10 before December 31, 1988, the credit shall be allowed for
11 the tax year in which the property is placed in service,
12 or, if the amount of the credit exceeds the tax liability
13 for that year, whether it exceeds the original liability
14 or the liability as later amended, such excess may be
15 carried forward and applied to the tax liability of the 5
16 taxable years following the excess credit years if the
17 taxpayer (i) makes investments which cause the creation
18 of a minimum of 2,000 full-time equivalent jobs in
19 Illinois, (ii) is located in an enterprise zone
20 established pursuant to the Illinois Enterprise Zone Act
21 and (iii) is certified by the Department of Commerce and
22 Community Affairs as complying with the requirements
23 specified in clause (i) and (ii) by July 1, 1986. The
24 Department of Commerce and Community Affairs shall notify
25 the Department of Revenue of all such certifications
26 immediately. For tax years ending after December 31,
27 1988, the credit shall be allowed for the tax year in
28 which the property is placed in service, or, if the
29 amount of the credit exceeds the tax liability for that
30 year, whether it exceeds the original liability or the
31 liability as later amended, such excess may be carried
32 forward and applied to the tax liability of the 5 taxable
33 years following the excess credit years. The credit shall
34 be applied to the earliest year for which there is a
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1 liability. If there is credit from more than one tax year
2 that is available to offset a liability, earlier credit
3 shall be applied first.
4 (2) The term "qualified property" means property
5 which:
6 (A) is tangible, whether new or used,
7 including buildings and structural components of
8 buildings and signs that are real property, but not
9 including land or improvements to real property that
10 are not a structural component of a building such as
11 landscaping, sewer lines, local access roads,
12 fencing, parking lots, and other appurtenances;
13 (B) is depreciable pursuant to Section 167 of
14 the Internal Revenue Code, except that "3-year
15 property" as defined in Section 168(c)(2)(A) of that
16 Code is not eligible for the credit provided by this
17 subsection (e);
18 (C) is acquired by purchase as defined in
19 Section 179(d) of the Internal Revenue Code;
20 (D) is used in Illinois by a taxpayer who is
21 primarily engaged in manufacturing, or in mining
22 coal or fluorite, or in retailing; and
23 (E) has not previously been used in Illinois
24 in such a manner and by such a person as would
25 qualify for the credit provided by this subsection
26 (e) or subsection (f).
27 (3) For purposes of this subsection (e),
28 "manufacturing" means the material staging and production
29 of tangible personal property by procedures commonly
30 regarded as manufacturing, processing, fabrication, or
31 assembling which changes some existing material into new
32 shapes, new qualities, or new combinations. For purposes
33 of this subsection (e) the term "mining" shall have the
34 same meaning as the term "mining" in Section 613(c) of
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1 the Internal Revenue Code. For purposes of this
2 subsection (e), the term "retailing" means the sale of
3 tangible personal property or services rendered in
4 conjunction with the sale of tangible consumer goods or
5 commodities.
6 (4) The basis of qualified property shall be the
7 basis used to compute the depreciation deduction for
8 federal income tax purposes.
9 (5) If the basis of the property for federal income
10 tax depreciation purposes is increased after it has been
11 placed in service in Illinois by the taxpayer, the amount
12 of such increase shall be deemed property placed in
13 service on the date of such increase in basis.
14 (6) The term "placed in service" shall have the
15 same meaning as under Section 46 of the Internal Revenue
16 Code.
17 (7) If during any taxable year, any property ceases
18 to be qualified property in the hands of the taxpayer
19 within 48 months after being placed in service, or the
20 situs of any qualified property is moved outside Illinois
21 within 48 months after being placed in service, the
22 Personal Property Tax Replacement Income Tax for such
23 taxable year shall be increased. Such increase shall be
24 determined by (i) recomputing the investment credit which
25 would have been allowed for the year in which credit for
26 such property was originally allowed by eliminating such
27 property from such computation and, (ii) subtracting such
28 recomputed credit from the amount of credit previously
29 allowed. For the purposes of this paragraph (7), a
30 reduction of the basis of qualified property resulting
31 from a redetermination of the purchase price shall be
32 deemed a disposition of qualified property to the extent
33 of such reduction.
34 (8) Unless the investment credit is extended by
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1 law, the basis of qualified property shall not include
2 costs incurred after December 31, 2003, except for costs
3 incurred pursuant to a binding contract entered into on
4 or before December 31, 2003.
5 (9) Each taxable year ending before December 31,
6 2000, a partnership may elect to pass through to its
7 partners the credits to which the partnership is entitled
8 under this subsection (e) for the taxable year. A
9 partner may use the credit allocated to him or her under
10 this paragraph only against the tax imposed in
11 subsections (c) and (d) of this Section. If the
12 partnership makes that election, those credits shall be
13 allocated among the partners in the partnership in
14 accordance with the rules set forth in Section 704(b) of
15 the Internal Revenue Code, and the rules promulgated
16 under that Section, and the allocated amount of the
17 credits shall be allowed to the partners for that taxable
18 year. The partnership shall make this election on its
19 Personal Property Tax Replacement Income Tax return for
20 that taxable year. The election to pass through the
21 credits shall be irrevocable.
22 For taxable years ending on or after December 31,
23 2000 and on or before December 31, 2001, a partner that
24 qualifies its partnership for a subtraction under
25 subparagraph (I) of paragraph (2) of subsection (d) of
26 Section 203 or a shareholder that qualifies a Subchapter
27 S corporation for a subtraction under subparagraph (S) of
28 paragraph (2) of subsection (b) of Section 203 shall be
29 allowed a credit under this subsection (e) equal to its
30 share of the credit earned under this subsection (e)
31 during the taxable year by the partnership or Subchapter
32 S corporation, determined in accordance with the
33 determination of income and distributive share of income
34 under Sections 702 and 704 and Subchapter S of the
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1 Internal Revenue Code. This paragraph is exempt from the
2 provisions of Section 250.
3 (10) For taxable years ending after December 31,
4 2001, for taxpayers who are subject to the Personal
5 Property Tax Replacement Income Tax imposed by
6 subsections (c) and (d) of this Section and who have made
7 a pass-through election with respect to a partnership or
8 Subchapter S corporation whose activities fulfill the
9 requirements of this subsection (e), there shall be
10 allowed a credit under this subsection (e) to be
11 determined in accordance with the determination of income
12 and distributive share of income under Sections 702 and
13 704 and Subchapter S of the Internal Revenue Code. This
14 paragraph is exempt from the provisions of Section 250.
15 (f) Investment credit; Enterprise Zone.
16 (1) A taxpayer shall be allowed a credit against
17 the tax imposed by subsections (a) and (b) of this
18 Section for investment in qualified property which is
19 placed in service in an Enterprise Zone created pursuant
20 to the Illinois Enterprise Zone Act. For taxable years
21 ending on or before December 31, 2001, for partners and,
22 shareholders of Subchapter S corporations, and, for
23 taxable years ending after December 31, 2001, for
24 taxpayers who have made a pass-through election with
25 respect to a partnership or Subchapter S corporation
26 whose activities fulfill the requirements of this
27 subsection (f) and owners of limited liability companies,
28 if the liability company is treated as a partnership for
29 purposes of federal and State income taxation, there
30 shall be allowed a credit under this subsection (f) to be
31 determined in accordance with the determination of income
32 and distributive share of income under Sections 702 and
33 704 and Subchapter S of the Internal Revenue Code. The
34 credit shall be .5% of the basis for such property. The
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1 credit shall be available only in the taxable year in
2 which the property is placed in service in the Enterprise
3 Zone and shall not be allowed to the extent that it would
4 reduce a taxpayer's liability for the tax imposed by
5 subsections (a) and (b) of this Section to below zero.
6 For tax years ending on or after December 31, 1985, the
7 credit shall be allowed for the tax year in which the
8 property is placed in service, or, if the amount of the
9 credit exceeds the tax liability for that year, whether
10 it exceeds the original liability or the liability as
11 later amended, such excess may be carried forward and
12 applied to the tax liability of the 5 taxable years
13 following the excess credit year. The credit shall be
14 applied to the earliest year for which there is a
15 liability. If there is credit from more than one tax year
16 that is available to offset a liability, the credit
17 accruing first in time shall be applied first. The
18 changes to this subsection made by this amendatory Act of
19 the 92nd General Assembly are exempt from the provisions
20 of Section 250.
21 (2) The term qualified property means property
22 which:
23 (A) is tangible, whether new or used,
24 including buildings and structural components of
25 buildings;
26 (B) is depreciable pursuant to Section 167 of
27 the Internal Revenue Code, except that "3-year
28 property" as defined in Section 168(c)(2)(A) of that
29 Code is not eligible for the credit provided by this
30 subsection (f);
31 (C) is acquired by purchase as defined in
32 Section 179(d) of the Internal Revenue Code;
33 (D) is used in the Enterprise Zone by the
34 taxpayer; and
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1 (E) has not been previously used in Illinois
2 in such a manner and by such a person as would
3 qualify for the credit provided by this subsection
4 (f) or subsection (e).
5 (3) The basis of qualified property shall be the
6 basis used to compute the depreciation deduction for
7 federal income tax purposes.
8 (4) If the basis of the property for federal income
9 tax depreciation purposes is increased after it has been
10 placed in service in the Enterprise Zone by the taxpayer,
11 the amount of such increase shall be deemed property
12 placed in service on the date of such increase in basis.
13 (5) The term "placed in service" shall have the
14 same meaning as under Section 46 of the Internal Revenue
15 Code.
16 (6) If during any taxable year, any property ceases
17 to be qualified property in the hands of the taxpayer
18 within 48 months after being placed in service, or the
19 situs of any qualified property is moved outside the
20 Enterprise Zone within 48 months after being placed in
21 service, the tax imposed under subsections (a) and (b) of
22 this Section for such taxable year shall be increased.
23 Such increase shall be determined by (i) recomputing the
24 investment credit which would have been allowed for the
25 year in which credit for such property was originally
26 allowed by eliminating such property from such
27 computation, and (ii) subtracting such recomputed credit
28 from the amount of credit previously allowed. For the
29 purposes of this paragraph (6), a reduction of the basis
30 of qualified property resulting from a redetermination of
31 the purchase price shall be deemed a disposition of
32 qualified property to the extent of such reduction.
33 (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
34 Zone or Sub-Zone.
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1 (1) A taxpayer conducting a trade or business in an
2 enterprise zone or a High Impact Business designated by
3 the Department of Commerce and Community Affairs
4 conducting a trade or business in a federally designated
5 Foreign Trade Zone or Sub-Zone shall be allowed a credit
6 against the tax imposed by subsections (a) and (b) of
7 this Section in the amount of $500 per eligible employee
8 hired to work in the zone during the taxable year.
9 (2) To qualify for the credit:
10 (A) the taxpayer must hire 5 or more eligible
11 employees to work in an enterprise zone or federally
12 designated Foreign Trade Zone or Sub-Zone during the
13 taxable year;
14 (B) the taxpayer's total employment within the
15 enterprise zone or federally designated Foreign
16 Trade Zone or Sub-Zone must increase by 5 or more
17 full-time employees beyond the total employed in
18 that zone at the end of the previous tax year for
19 which a jobs tax credit under this Section was
20 taken, or beyond the total employed by the taxpayer
21 as of December 31, 1985, whichever is later; and
22 (C) the eligible employees must be employed
23 180 consecutive days in order to be deemed hired for
24 purposes of this subsection.
25 (3) An "eligible employee" means an employee who
26 is:
27 (A) Certified by the Department of Commerce
28 and Community Affairs as "eligible for services"
29 pursuant to regulations promulgated in accordance
30 with Title II of the Job Training Partnership Act,
31 Training Services for the Disadvantaged or Title III
32 of the Job Training Partnership Act, Employment and
33 Training Assistance for Dislocated Workers Program.
34 (B) Hired after the enterprise zone or
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1 federally designated Foreign Trade Zone or Sub-Zone
2 was designated or the trade or business was located
3 in that zone, whichever is later.
4 (C) Employed in the enterprise zone or Foreign
5 Trade Zone or Sub-Zone. An employee is employed in
6 an enterprise zone or federally designated Foreign
7 Trade Zone or Sub-Zone if his services are rendered
8 there or it is the base of operations for the
9 services performed.
10 (D) A full-time employee working 30 or more
11 hours per week.
12 (4) For tax years ending on or after December 31,
13 1985 and prior to December 31, 1988, the credit shall be
14 allowed for the tax year in which the eligible employees
15 are hired. For tax years ending on or after December 31,
16 1988, the credit shall be allowed for the tax year
17 immediately following the tax year in which the eligible
18 employees are hired. If the amount of the credit exceeds
19 the tax liability for that year, whether it exceeds the
20 original liability or the liability as later amended,
21 such excess may be carried forward and applied to the tax
22 liability of the 5 taxable years following the excess
23 credit year. The credit shall be applied to the earliest
24 year for which there is a liability. If there is credit
25 from more than one tax year that is available to offset a
26 liability, earlier credit shall be applied first.
27 (5) The Department of Revenue shall promulgate such
28 rules and regulations as may be deemed necessary to carry
29 out the purposes of this subsection (g).
30 (6) The credit shall be available for eligible
31 employees hired on or after January 1, 1986.
32 (7) For taxable years ending after December 31,
33 2001, for taxpayers who have made a pass-through election
34 with respect to a partnership or Subchapter S corporation
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1 whose activities fulfill the requirements of this
2 subsection (g), there shall be allowed a credit under
3 this subsection (g) to be determined in accordance with
4 the determination of income and distributive share of
5 income under Sections 702 and 704 and Subchapter S of the
6 Internal Revenue Code. This paragraph is exempt from the
7 provisions of Section 250.
8 (h) Investment credit; High Impact Business.
9 (1) Subject to subsections (b) and (b-5) of Section
10 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
11 be allowed a credit against the tax imposed by
12 subsections (a) and (b) of this Section for investment in
13 qualified property which is placed in service by a
14 Department of Commerce and Community Affairs designated
15 High Impact Business. The credit shall be .5% of the
16 basis for such property. The credit shall not be
17 available (i) until the minimum investments in qualified
18 property set forth in subdivision (a)(3)(A) of Section
19 5.5 of the Illinois Enterprise Zone Act have been
20 satisfied or (ii) until the time authorized in subsection
21 (b-5) of the Illinois Enterprise Zone Act for entities
22 designated as High Impact Businesses under subdivisions
23 (a)(3)(B), (a)(3)(C), and (a)(3)(D) of Section 5.5 of the
24 Illinois Enterprise Zone Act, and shall not be allowed to
25 the extent that it would reduce a taxpayer's liability
26 for the tax imposed by subsections (a) and (b) of this
27 Section to below zero. The credit applicable to such
28 investments shall be taken in the taxable year in which
29 such investments have been completed. The credit for
30 additional investments beyond the minimum investment by a
31 designated high impact business authorized under
32 subdivision (a)(3)(A) of Section 5.5 of the Illinois
33 Enterprise Zone Act shall be available only in the
34 taxable year in which the property is placed in service
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1 and shall not be allowed to the extent that it would
2 reduce a taxpayer's liability for the tax imposed by
3 subsections (a) and (b) of this Section to below zero.
4 For tax years ending on or after December 31, 1987, the
5 credit shall be allowed for the tax year in which the
6 property is placed in service, or, if the amount of the
7 credit exceeds the tax liability for that year, whether
8 it exceeds the original liability or the liability as
9 later amended, such excess may be carried forward and
10 applied to the tax liability of the 5 taxable years
11 following the excess credit year. The credit shall be
12 applied to the earliest year for which there is a
13 liability. If there is credit from more than one tax
14 year that is available to offset a liability, the credit
15 accruing first in time shall be applied first.
16 Changes made in this subdivision (h)(1) by Public
17 Act 88-670 restore changes made by Public Act 85-1182 and
18 reflect existing law.
19 (2) The term qualified property means property
20 which:
21 (A) is tangible, whether new or used,
22 including buildings and structural components of
23 buildings;
24 (B) is depreciable pursuant to Section 167 of
25 the Internal Revenue Code, except that "3-year
26 property" as defined in Section 168(c)(2)(A) of that
27 Code is not eligible for the credit provided by this
28 subsection (h);
29 (C) is acquired by purchase as defined in
30 Section 179(d) of the Internal Revenue Code; and
31 (D) is not eligible for the Enterprise Zone
32 Investment Credit provided by subsection (f) of this
33 Section.
34 (3) The basis of qualified property shall be the
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1 basis used to compute the depreciation deduction for
2 federal income tax purposes.
3 (4) If the basis of the property for federal income
4 tax depreciation purposes is increased after it has been
5 placed in service in a federally designated Foreign Trade
6 Zone or Sub-Zone located in Illinois by the taxpayer, the
7 amount of such increase shall be deemed property placed
8 in service on the date of such increase in basis.
9 (5) The term "placed in service" shall have the
10 same meaning as under Section 46 of the Internal Revenue
11 Code.
12 (6) If during any taxable year ending on or before
13 December 31, 1996, any property ceases to be qualified
14 property in the hands of the taxpayer within 48 months
15 after being placed in service, or the situs of any
16 qualified property is moved outside Illinois within 48
17 months after being placed in service, the tax imposed
18 under subsections (a) and (b) of this Section for such
19 taxable year shall be increased. Such increase shall be
20 determined by (i) recomputing the investment credit which
21 would have been allowed for the year in which credit for
22 such property was originally allowed by eliminating such
23 property from such computation, and (ii) subtracting such
24 recomputed credit from the amount of credit previously
25 allowed. For the purposes of this paragraph (6), a
26 reduction of the basis of qualified property resulting
27 from a redetermination of the purchase price shall be
28 deemed a disposition of qualified property to the extent
29 of such reduction.
30 (7) Beginning with tax years ending after December
31 31, 1996, if a taxpayer qualifies for the credit under
32 this subsection (h) and thereby is granted a tax
33 abatement and the taxpayer relocates its entire facility
34 in violation of the explicit terms and length of the
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1 contract under Section 18-183 of the Property Tax Code,
2 the tax imposed under subsections (a) and (b) of this
3 Section shall be increased for the taxable year in which
4 the taxpayer relocated its facility by an amount equal to
5 the amount of credit received by the taxpayer under this
6 subsection (h).
7 (8) For taxable years ending after December 31,
8 2001, for taxpayers who have made a pass-through election
9 with respect to a partnership or Subchapter S corporation
10 whose activities fulfill the requirements of this
11 subsection (h), there shall be allowed a credit under
12 this subsection (h) to be determined in accordance with
13 the determination of income and distributive share of
14 income under Sections 702 and 704 and Subchapter S of the
15 Internal Revenue Code. This paragraph is exempt from the
16 provisions of Section 250.
17 (i) Personal Property Tax Replacement Income Tax Credit.
18 A credit shall be allowed against the tax imposed by
19 subsections (a) and (b) of this Section for the tax imposed
20 by subsections (c) and (d) of this Section. This credit
21 shall be computed by multiplying the tax imposed by
22 subsections (c) and (d) of this Section by a fraction, the
23 numerator of which is base income allocable to Illinois and
24 the denominator of which is Illinois base income, and further
25 multiplying the product by the tax rate imposed by
26 subsections (a) and (b) of this Section.
27 Any credit earned on or after December 31, 1986 under
28 this subsection which is unused in the year the credit is
29 computed because it exceeds the tax liability imposed by
30 subsections (a) and (b) for that year (whether it exceeds the
31 original liability or the liability as later amended) may be
32 carried forward and applied to the tax liability imposed by
33 subsections (a) and (b) of the 5 taxable years following the
34 excess credit year. This credit shall be applied first to
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1 the earliest year for which there is a liability. If there
2 is a credit under this subsection from more than one tax year
3 that is available to offset a liability the earliest credit
4 arising under this subsection shall be applied first.
5 If, during any taxable year ending on or after December
6 31, 1986, the tax imposed by subsections (c) and (d) of this
7 Section for which a taxpayer has claimed a credit under this
8 subsection (i) is reduced, the amount of credit for such tax
9 shall also be reduced. Such reduction shall be determined by
10 recomputing the credit to take into account the reduced tax
11 imposed by subsection (c) and (d). If any portion of the
12 reduced amount of credit has been carried to a different
13 taxable year, an amended return shall be filed for such
14 taxable year to reduce the amount of credit claimed.
15 (j) Training expense credit. Beginning with tax years
16 ending on or after December 31, 1986, a taxpayer shall be
17 allowed a credit against the tax imposed by subsection (a)
18 and (b) under this Section for all amounts paid or accrued,
19 on behalf of all persons employed by the taxpayer in Illinois
20 or Illinois residents employed outside of Illinois by a
21 taxpayer, for educational or vocational training in
22 semi-technical or technical fields or semi-skilled or skilled
23 fields, which were deducted from gross income in the
24 computation of taxable income. The credit against the tax
25 imposed by subsections (a) and (b) shall be 1.6% of such
26 training expenses. For taxable years ending on or before
27 December 31, 2001, for partners and, shareholders of
28 subchapter S corporations, and, for taxable years ending
29 after December 31, 2001, for partners and shareholders who
30 have made a pass-through election with respect to a
31 partnership or Subchapter S corporation whose activities
32 fulfill the requirements of this subsection (j) and owners of
33 limited liability companies, if the liability company is
34 treated as a partnership for purposes of federal and State
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1 income taxation, there shall be allowed a credit under this
2 subsection (j) to be determined in accordance with the
3 determination of income and distributive share of income
4 under Sections 702 and 704 and subchapter S of the Internal
5 Revenue Code. The changes to this subsection made by this
6 amendatory Act of the 92nd General Assembly are exempt from
7 the provisions of Section 250.
8 Any credit allowed under this subsection which is unused
9 in the year the credit is earned may be carried forward to
10 each of the 5 taxable years following the year for which the
11 credit is first computed until it is used. This credit shall
12 be applied first to the earliest year for which there is a
13 liability. If there is a credit under this subsection from
14 more than one tax year that is available to offset a
15 liability the earliest credit arising under this subsection
16 shall be applied first.
17 (k) Research and development credit.
18 Beginning with tax years ending after July 1, 1990, a
19 taxpayer shall be allowed a credit against the tax imposed by
20 subsections (a) and (b) of this Section for increasing
21 research activities in this State. The credit allowed
22 against the tax imposed by subsections (a) and (b) shall be
23 equal to 6 1/2% of the qualifying expenditures for increasing
24 research activities in this State. For taxable years ending
25 on or before December 31, 2001, for partners and,
26 shareholders of subchapter S corporations, and, for taxable
27 years ending after December 31, 2001, for partners and
28 shareholders who have made a pass-through election with
29 respect to a partnership or Subchapter S corporation whose
30 activities fulfill the requirements of this subsection (k)
31 and owners of limited liability companies, if the liability
32 company is treated as a partnership for purposes of federal
33 and State income taxation, there shall be allowed a credit
34 under this subsection (k) to be determined in accordance with
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1 the determination of income and distributive share of income
2 under Sections 702 and 704 and subchapter S of the Internal
3 Revenue Code. The changes to this subsection made by this
4 amendatory Act of the 92nd General Assembly are exempt from
5 the provisions of Section 250.
6 For purposes of this subsection, "qualifying
7 expenditures" means the qualifying expenditures as defined
8 for the federal credit for increasing research activities
9 which would be allowable under Section 41 of the Internal
10 Revenue Code and which are conducted in this State,
11 "qualifying expenditures for increasing research activities
12 in this State" means the excess of qualifying expenditures
13 for the taxable year in which incurred over qualifying
14 expenditures for the base period, "qualifying expenditures
15 for the base period" means the average of the qualifying
16 expenditures for each year in the base period, and "base
17 period" means the 3 taxable years immediately preceding the
18 taxable year for which the determination is being made.
19 Any credit in excess of the tax liability for the taxable
20 year may be carried forward. A taxpayer may elect to have the
21 unused credit shown on its final completed return carried
22 over as a credit against the tax liability for the following
23 5 taxable years or until it has been fully used, whichever
24 occurs first.
25 If an unused credit is carried forward to a given year
26 from 2 or more earlier years, that credit arising in the
27 earliest year will be applied first against the tax liability
28 for the given year. If a tax liability for the given year
29 still remains, the credit from the next earliest year will
30 then be applied, and so on, until all credits have been used
31 or no tax liability for the given year remains. Any
32 remaining unused credit or credits then will be carried
33 forward to the next following year in which a tax liability
34 is incurred, except that no credit can be carried forward to
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1 a year which is more than 5 years after the year in which the
2 expense for which the credit is given was incurred.
3 Unless extended by law, the credit shall not include
4 costs incurred after December 31, 2004, except for costs
5 incurred pursuant to a binding contract entered into on or
6 before December 31, 2004.
7 No inference shall be drawn from this amendatory Act of
8 the 91st General Assembly in construing this Section for
9 taxable years beginning before January 1, 1999.
10 (l) Environmental Remediation Tax Credit.
11 (i) For tax years ending after December 31, 1997
12 and on or before December 31, 2001, a taxpayer shall be
13 allowed a credit against the tax imposed by subsections
14 (a) and (b) of this Section for certain amounts paid for
15 unreimbursed eligible remediation costs, as specified in
16 this subsection. For purposes of this Section,
17 "unreimbursed eligible remediation costs" means costs
18 approved by the Illinois Environmental Protection Agency
19 ("Agency") under Section 58.14 of the Environmental
20 Protection Act that were paid in performing environmental
21 remediation at a site for which a No Further Remediation
22 Letter was issued by the Agency and recorded under
23 Section 58.10 of the Environmental Protection Act. The
24 credit must be claimed for the taxable year in which
25 Agency approval of the eligible remediation costs is
26 granted. The credit is not available to any taxpayer if
27 the taxpayer or any related party caused or contributed
28 to, in any material respect, a release of regulated
29 substances on, in, or under the site that was identified
30 and addressed by the remedial action pursuant to the Site
31 Remediation Program of the Environmental Protection Act.
32 After the Pollution Control Board rules are adopted
33 pursuant to the Illinois Administrative Procedure Act for
34 the administration and enforcement of Section 58.9 of the
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1 Environmental Protection Act, determinations as to credit
2 availability for purposes of this Section shall be made
3 consistent with those rules. For purposes of this
4 Section, "taxpayer" includes a person whose tax
5 attributes the taxpayer has succeeded to under Section
6 381 of the Internal Revenue Code and "related party"
7 includes the persons disallowed a deduction for losses by
8 paragraphs (b), (c), and (f)(1) of Section 267 of the
9 Internal Revenue Code by virtue of being a related
10 taxpayer, as well as any of its partners. The credit
11 allowed against the tax imposed by subsections (a) and
12 (b) shall be equal to 25% of the unreimbursed eligible
13 remediation costs in excess of $100,000 per site, except
14 that the $100,000 threshold shall not apply to any site
15 contained in an enterprise zone as determined by the
16 Department of Commerce and Community Affairs. The total
17 credit allowed shall not exceed $40,000 per year with a
18 maximum total of $150,000 per site. For taxable years
19 ending on or before December 31, 2001, for partners and
20 shareholders of subchapter S corporations, and, for
21 taxable years ending after December 31, 2001, for
22 partners and shareholders who have made a pass-through
23 election with respect to a partnership or Subchapter S
24 corporation whose activities fulfill the requirements of
25 this subsection (l), there shall be allowed a credit
26 under this subsection to be determined in accordance with
27 the determination of income and distributive share of
28 income under Sections 702 and 704 and subchapter S of the
29 Internal Revenue Code. The changes to this subsection
30 made by this amendatory Act of the 92nd General Assembly
31 are exempt from the provisions of Section 250.
32 (ii) A credit allowed under this subsection that is
33 unused in the year the credit is earned may be carried
34 forward to each of the 5 taxable years following the year
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1 for which the credit is first earned until it is used.
2 The term "unused credit" does not include any amounts of
3 unreimbursed eligible remediation costs in excess of the
4 maximum credit per site authorized under paragraph (i).
5 This credit shall be applied first to the earliest year
6 for which there is a liability. If there is a credit
7 under this subsection from more than one tax year that is
8 available to offset a liability, the earliest credit
9 arising under this subsection shall be applied first. A
10 credit allowed under this subsection may be sold to a
11 buyer as part of a sale of all or part of the remediation
12 site for which the credit was granted. The purchaser of
13 a remediation site and the tax credit shall succeed to
14 the unused credit and remaining carry-forward period of
15 the seller. To perfect the transfer, the assignor shall
16 record the transfer in the chain of title for the site
17 and provide written notice to the Director of the
18 Illinois Department of Revenue of the assignor's intent
19 to sell the remediation site and the amount of the tax
20 credit to be transferred as a portion of the sale. In no
21 event may a credit be transferred to any taxpayer if the
22 taxpayer or a related party would not be eligible under
23 the provisions of subsection (i).
24 (iii) For purposes of this Section, the term "site"
25 shall have the same meaning as under Section 58.2 of the
26 Environmental Protection Act.
27 (m) Education expense credit.
28 Beginning with tax years ending after December 31, 1999,
29 a taxpayer who is the custodian of one or more qualifying
30 pupils shall be allowed a credit against the tax imposed by
31 subsections (a) and (b) of this Section for qualified
32 education expenses incurred on behalf of the qualifying
33 pupils. The credit shall be equal to 25% of qualified
34 education expenses, but in no event may the total credit
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1 under this Section claimed by a family that is the custodian
2 of qualifying pupils exceed $500. In no event shall a credit
3 under this subsection reduce the taxpayer's liability under
4 this Act to less than zero. This subsection is exempt from
5 the provisions of Section 250 of this Act.
6 For purposes of this subsection;
7 "Qualifying pupils" means individuals who (i) are
8 residents of the State of Illinois, (ii) are under the age of
9 21 at the close of the school year for which a credit is
10 sought, and (iii) during the school year for which a credit
11 is sought were full-time pupils enrolled in a kindergarten
12 through twelfth grade education program at any school, as
13 defined in this subsection.
14 "Qualified education expense" means the amount incurred
15 on behalf of a qualifying pupil in excess of $250 for
16 tuition, book fees, and lab fees at the school in which the
17 pupil is enrolled during the regular school year.
18 "School" means any public or nonpublic elementary or
19 secondary school in Illinois that is in compliance with Title
20 VI of the Civil Rights Act of 1964 and attendance at which
21 satisfies the requirements of Section 26-1 of the School
22 Code, except that nothing shall be construed to require a
23 child to attend any particular public or nonpublic school to
24 qualify for the credit under this Section.
25 "Custodian" means, with respect to qualifying pupils, an
26 Illinois resident who is a parent, the parents, a legal
27 guardian, or the legal guardians of the qualifying pupils.
28 (Source: P.A. 91-9, eff. 1-1-00; 91-357, eff. 7-29-99;
29 91-643, eff. 8-20-99; 91-644, eff. 8-20-99; 91-860, eff.
30 6-22-00; 91-913, eff. 1-1-01; 92-12, eff. 7-1-01; 92-16, eff.
31 6-28-01.)
32 (35 ILCS 5/202) (from Ch. 120, par. 2-202)
33 Sec. 202. Net Income Defined. In general. For purposes of
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1 this Act, a taxpayer's net income for a taxable year shall be
2 that portion of his or her base income for such year except
3 money and other benefits, other than salary, received by a
4 driver in a ridesharing arrangement using a motor vehicle,
5 which is allocable to this State under the provisions of
6 Article 3 plus, in the case of a partner or a shareholder of
7 a Subchapter S corporation, any amounts allocated to the
8 taxpayer under subsections (e) or (f) of Section 305 or
9 subsection (e) of Section 308 of this Act, minus, in the case
10 of a partnership or Subchapter S corporation:
11 (1) for purposes of determining the taxpayer's
12 liability under subsections (a) and (b) of Section 201 of
13 this Act, any amounts allocated to a partner or
14 shareholder under subsection (e) of Section 305 or
15 subsection (e) of Section 308 of this Act, or
16 (2) for purposes of determining the taxpayer's
17 liability under subsections (c) and (d) of Section 201 of
18 this Act, any amounts allocated under subsection (e) or
19 (f) of Section 305 or subsection (e) of Section 308 of
20 this Act to a partner or shareholder who is subject to
21 the Personal Property Tax Replacement Income Tax under
22 subsections (c) and (d) of Section 201 of this Act and
23 any amount distributable to a partner or shareholder who
24 is exempt from federal income tax by reason of Section
25 501(a) of the Internal Revenue Code, and less the
26 standard exemption allowed by Section 204 and the
27 deduction allowed by Section 207.
28 (Source: P.A. 85-731.)
29 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
30 Sec. 203. Base income defined.
31 (a) Individuals.
32 (1) In general. In the case of an individual, base
33 income means an amount equal to the taxpayer's adjusted
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1 gross income for the taxable year as modified by
2 paragraph (2).
3 (2) Modifications. The adjusted gross income
4 referred to in paragraph (1) shall be modified by adding
5 thereto the sum of the following amounts:
6 (A) An amount equal to all amounts paid or
7 accrued to the taxpayer as interest or dividends
8 during the taxable year to the extent excluded from
9 gross income in the computation of adjusted gross
10 income, except stock dividends of qualified public
11 utilities described in Section 305(e) of the
12 Internal Revenue Code;
13 (B) An amount equal to the amount of tax
14 imposed by this Act to the extent deducted from
15 gross income in the computation of adjusted gross
16 income for the taxable year;
17 (C) An amount equal to the amount received
18 during the taxable year as a recovery or refund of
19 real property taxes paid with respect to the
20 taxpayer's principal residence under the Revenue Act
21 of 1939 and for which a deduction was previously
22 taken under subparagraph (L) of this paragraph (2)
23 prior to July 1, 1991, the retrospective application
24 date of Article 4 of Public Act 87-17. In the case
25 of multi-unit or multi-use structures and farm
26 dwellings, the taxes on the taxpayer's principal
27 residence shall be that portion of the total taxes
28 for the entire property which is attributable to
29 such principal residence;
30 (D) An amount equal to the amount of the
31 capital gain deduction allowable under the Internal
32 Revenue Code, to the extent deducted from gross
33 income in the computation of adjusted gross income;
34 (D-1) For taxable years ending after December
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1 31, 2001, the taxpayer's share in any loss incurred
2 by a partnership or Subchapter S corporation, to the
3 extent the loss reduced the adjusted gross income of
4 the taxpayer;
5 (D-5) An amount, to the extent not included in
6 adjusted gross income, equal to the amount of money
7 withdrawn by the taxpayer in the taxable year from a
8 medical care savings account and the interest earned
9 on the account in the taxable year of a withdrawal
10 pursuant to subsection (b) of Section 20 of the
11 Medical Care Savings Account Act or subsection (b)
12 of Section 20 of the Medical Care Savings Account
13 Act of 2000; and
14 (D-10) For taxable years ending after December
15 31, 1997, an amount equal to any eligible
16 remediation costs that the individual deducted in
17 computing adjusted gross income and for which the
18 individual claims a credit under subsection (l) of
19 Section 201;
20 and by deducting from the total so obtained the sum of
21 the following amounts:
22 (E) For taxable years ending before December
23 31, 2001, any amount included in such total in
24 respect of any compensation (including but not
25 limited to any compensation paid or accrued to a
26 serviceman while a prisoner of war or missing in
27 action) paid to a resident by reason of being on
28 active duty in the Armed Forces of the United States
29 and in respect of any compensation paid or accrued
30 to a resident who as a governmental employee was a
31 prisoner of war or missing in action, and in respect
32 of any compensation paid to a resident in 1971 or
33 thereafter for annual training performed pursuant to
34 Sections 502 and 503, Title 32, United States Code
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1 as a member of the Illinois National Guard. For
2 taxable years ending on or after December 31, 2001,
3 any amount included in such total in respect of any
4 compensation (including but not limited to any
5 compensation paid or accrued to a serviceman while a
6 prisoner of war or missing in action) paid to a
7 resident by reason of being a member of any
8 component of the Armed Forces of the United States
9 and in respect of any compensation paid or accrued
10 to a resident who as a governmental employee was a
11 prisoner of war or missing in action, and in respect
12 of any compensation paid to a resident in 2001 or
13 thereafter by reason of being a member of the
14 Illinois National Guard. The provisions of this
15 amendatory Act of the 92nd General Assembly are
16 exempt from the provisions of Section 250;
17 (F) An amount equal to all amounts included in
18 such total pursuant to the provisions of Sections
19 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
20 408 of the Internal Revenue Code, or included in
21 such total as distributions under the provisions of
22 any retirement or disability plan for employees of
23 any governmental agency or unit, or retirement
24 payments to retired partners, which payments are
25 excluded in computing net earnings from self
26 employment by Section 1402 of the Internal Revenue
27 Code and regulations adopted pursuant thereto;
28 (G) The valuation limitation amount;
29 (H) An amount equal to the amount of any tax
30 imposed by this Act which was refunded to the
31 taxpayer and included in such total for the taxable
32 year;
33 (I) An amount equal to all amounts included in
34 such total pursuant to the provisions of Section 111
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1 of the Internal Revenue Code as a recovery of items
2 previously deducted from adjusted gross income in
3 the computation of taxable income;
4 (J) An amount equal to those dividends
5 included in such total which were paid by a
6 corporation which conducts business operations in an
7 Enterprise Zone or zones created under the Illinois
8 Enterprise Zone Act, and conducts substantially all
9 of its operations in an Enterprise Zone or zones;
10 (K) An amount equal to those dividends
11 included in such total that were paid by a
12 corporation that conducts business operations in a
13 federally designated Foreign Trade Zone or Sub-Zone
14 and that is designated a High Impact Business
15 located in Illinois; provided that dividends
16 eligible for the deduction provided in subparagraph
17 (J) of paragraph (2) of this subsection shall not be
18 eligible for the deduction provided under this
19 subparagraph (K);
20 (L) For taxable years ending after December
21 31, 1983, an amount equal to all social security
22 benefits and railroad retirement benefits included
23 in such total pursuant to Sections 72(r) and 86 of
24 the Internal Revenue Code;
25 (M) With the exception of any amounts
26 subtracted under subparagraph (N), 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 of 1954, as now
33 or hereafter amended; and (ii) for taxable years
34 ending on or after August 13, 1999, Sections
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1 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
2 Internal Revenue Code; the provisions of this
3 subparagraph are exempt from the provisions of
4 Section 250;
5 (N) An amount equal to all amounts included in
6 such total which are exempt from taxation by this
7 State either by reason of its statutes or
8 Constitution or by reason of the Constitution,
9 treaties or statutes of the United States; provided
10 that, in the case of any statute of this State that
11 exempts income derived from bonds or other
12 obligations from the tax imposed under this Act, the
13 amount exempted shall be the interest net of bond
14 premium amortization;
15 (O) An amount equal to any contribution made
16 to a job training project established pursuant to
17 the Tax Increment Allocation Redevelopment Act;
18 (P) An amount equal to the amount of the
19 deduction used to compute the federal income tax
20 credit for restoration of substantial amounts held
21 under claim of right for the taxable year pursuant
22 to Section 1341 of the Internal Revenue Code of
23 1986;
24 (Q) An amount equal to any amounts included in
25 such total, received by the taxpayer as an
26 acceleration in the payment of life, endowment or
27 annuity benefits in advance of the time they would
28 otherwise be payable as an indemnity for a terminal
29 illness;
30 (R) An amount equal to the amount of any
31 federal or State bonus paid to veterans of the
32 Persian Gulf War;
33 (S) An amount, to the extent included in
34 adjusted gross income, equal to the amount of a
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1 contribution made in the taxable year on behalf of
2 the taxpayer to a medical care savings account
3 established under the Medical Care Savings Account
4 Act or the Medical Care Savings Account Act of 2000
5 to the extent the contribution is accepted by the
6 account administrator as provided in that Act;
7 (T) An amount, to the extent included in
8 adjusted gross income, equal to the amount of
9 interest earned in the taxable year on a medical
10 care savings account established under the Medical
11 Care Savings Account Act or the Medical Care Savings
12 Account Act of 2000 on behalf of the taxpayer, other
13 than interest added pursuant to item (D-5) of this
14 paragraph (2);
15 (U) For one taxable year beginning on or after
16 January 1, 1994, an amount equal to the total amount
17 of tax imposed and paid under subsections (a) and
18 (b) of Section 201 of this Act on grant amounts
19 received by the taxpayer under the Nursing Home
20 Grant Assistance Act during the taxpayer's taxable
21 years 1992 and 1993;
22 (V) Beginning with tax years ending on or
23 after December 31, 1995 and ending with tax years
24 ending on or before December 31, 2004, an amount
25 equal to the amount paid by a taxpayer who is a
26 self-employed taxpayer, a partner of a partnership,
27 or a shareholder in a Subchapter S corporation for
28 health insurance or long-term care insurance for
29 that taxpayer or that taxpayer's spouse or
30 dependents, to the extent that the amount paid for
31 that health insurance or long-term care insurance
32 may be deducted under Section 213 of the Internal
33 Revenue Code of 1986, has not been deducted on the
34 federal income tax return of the taxpayer, and does
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1 not exceed the taxable income attributable to that
2 taxpayer's income, self-employment income, or
3 Subchapter S corporation income; except that no
4 deduction shall be allowed under this item (V) if
5 the taxpayer is eligible to participate in any
6 health insurance or long-term care insurance plan of
7 an employer of the taxpayer or the taxpayer's
8 spouse. The amount of the health insurance and
9 long-term care insurance subtracted under this item
10 (V) shall be determined by multiplying total health
11 insurance and long-term care insurance premiums paid
12 by the taxpayer times a number that represents the
13 fractional percentage of eligible medical expenses
14 under Section 213 of the Internal Revenue Code of
15 1986 not actually deducted on the taxpayer's federal
16 income tax return;
17 (W) For taxable years beginning on or after
18 January 1, 1998, all amounts included in the
19 taxpayer's federal gross income in the taxable year
20 from amounts converted from a regular IRA to a Roth
21 IRA. This paragraph is exempt from the provisions of
22 Section 250;
23 (X) For taxable year 1999 and thereafter, an
24 amount equal to the amount of any (i) distributions,
25 to the extent includible in gross income for federal
26 income tax purposes, made to the taxpayer because of
27 his or her status as a victim of persecution for
28 racial or religious reasons by Nazi Germany or any
29 other Axis regime or as an heir of the victim and
30 (ii) items of income, to the extent includible in
31 gross income for federal income tax purposes,
32 attributable to, derived from or in any way related
33 to assets stolen from, hidden from, or otherwise
34 lost to a victim of persecution for racial or
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1 religious reasons by Nazi Germany or any other Axis
2 regime immediately prior to, during, and immediately
3 after World War II, including, but not limited to,
4 interest on the proceeds receivable as insurance
5 under policies issued to a victim of persecution for
6 racial or religious reasons by Nazi Germany or any
7 other Axis regime by European insurance companies
8 immediately prior to and during World War II;
9 provided, however, this subtraction from federal
10 adjusted gross income does not apply to assets
11 acquired with such assets or with the proceeds from
12 the sale of such assets; provided, further, this
13 paragraph shall only apply to a taxpayer who was the
14 first recipient of such assets after their recovery
15 and who is a victim of persecution for racial or
16 religious reasons by Nazi Germany or any other Axis
17 regime or as an heir of the victim. The amount of
18 and the eligibility for any public assistance,
19 benefit, or similar entitlement is not affected by
20 the inclusion of items (i) and (ii) of this
21 paragraph in gross income for federal income tax
22 purposes. This paragraph is exempt from the
23 provisions of Section 250; and
24 (Y) For taxable years beginning on or after
25 January 1, 2002, moneys contributed in the taxable
26 year to a College Savings Pool account under Section
27 16.5 of the State Treasurer Act. This subparagraph
28 (Y) is exempt from the provisions of Section 250;
29 (Z) Any money or benefits, other than salary,
30 received by a driver in a ridesharing arrangement
31 using a motor vehicle; and
32 (AA) For taxable years ending after December
33 31, 2001, any amount of income from a partnership or
34 Subchapter S corporation included in the adjusted
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1 gross income of the taxpayer, except to the extent
2 the taxpayer has claimed another subtraction
3 modification under this paragraph (2) with respect
4 to that income; this subparagraph is exempt from the
5 provisions of Section 250.
6 (b) Corporations.
7 (1) In general. In the case of a corporation, base
8 income means an amount equal to the taxpayer's taxable
9 income for the taxable year as modified by paragraph (2).
10 (2) Modifications. The taxable income referred to
11 in paragraph (1) shall be modified by adding thereto the
12 sum of the following amounts:
13 (A) An amount equal to all amounts paid or
14 accrued to the taxpayer as interest and all
15 distributions received from regulated investment
16 companies during the taxable year to the extent
17 excluded from gross income in the computation of
18 taxable income;
19 (B) An amount equal to the amount of tax
20 imposed by this Act to the extent deducted from
21 gross income in the computation of taxable income
22 for the taxable year;
23 (C) In the case of a regulated investment
24 company, an amount equal to the excess of (i) the
25 net long-term capital gain for the taxable year,
26 over (ii) the amount of the capital gain dividends
27 designated as such in accordance with Section
28 852(b)(3)(C) of the Internal Revenue Code and any
29 amount designated under Section 852(b)(3)(D) of the
30 Internal Revenue Code, attributable to the taxable
31 year (this amendatory Act of 1995 (Public Act 89-89)
32 is declarative of existing law and is not a new
33 enactment);
34 (D) The amount of any net operating loss
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1 deduction taken in arriving at taxable income, other
2 than a net operating loss carried forward from a
3 taxable year ending prior to December 31, 1986;
4 (E) For taxable years in which a net operating
5 loss carryback or carryforward from a taxable year
6 ending prior to December 31, 1986 is an element of
7 taxable income under paragraph (1) of subsection (e)
8 or subparagraph (E) of paragraph (2) of subsection
9 (e), the amount by which addition modifications
10 other than those provided by this subparagraph (E)
11 exceeded subtraction modifications in such earlier
12 taxable year, with the following limitations applied
13 in the order that they are listed:
14 (i) the addition modification relating to
15 the net operating loss carried back or forward
16 to the taxable year from any taxable year
17 ending prior to December 31, 1986 shall be
18 reduced by the amount of addition modification
19 under this subparagraph (E) which related to
20 that net operating loss and which was taken
21 into account in calculating the base income of
22 an earlier taxable year, and
23 (ii) the addition modification relating
24 to the net operating loss carried back or
25 forward to the taxable year from any taxable
26 year ending prior to December 31, 1986 shall
27 not exceed the amount of such carryback or
28 carryforward;
29 For taxable years in which there is a net
30 operating loss carryback or carryforward from more
31 than one other taxable year ending prior to December
32 31, 1986, the addition modification provided in this
33 subparagraph (E) shall be the sum of the amounts
34 computed independently under the preceding
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1 provisions of this subparagraph (E) for each such
2 taxable year;
3 (E-1) For taxable years ending after December
4 31, 2001, the taxpayer's share in any loss incurred
5 by a partnership or Subchapter S corporation, to the
6 extent the loss reduced the taxable income of the
7 taxpayer and has not been added back under
8 subparagraph (D) of this paragraph (2); and
9 (E-5) For taxable years ending after December
10 31, 1997, an amount equal to any eligible
11 remediation costs that the corporation deducted in
12 computing adjusted gross income and for which the
13 corporation claims a credit under subsection (l) of
14 Section 201;
15 and by deducting from the total so obtained the sum of
16 the following amounts:
17 (F) An amount equal to the amount of any tax
18 imposed by this Act which was refunded to the
19 taxpayer and included in such total for the taxable
20 year;
21 (G) An amount equal to any amount included in
22 such total under Section 78 of the Internal Revenue
23 Code;
24 (H) In the case of a regulated investment
25 company, an amount equal to the amount of exempt
26 interest dividends as defined in subsection (b) (5)
27 of Section 852 of the Internal Revenue Code, paid to
28 shareholders for the taxable year;
29 (I) With the exception of any amounts
30 subtracted under subparagraph (J), an amount equal
31 to the sum of all amounts disallowed as deductions
32 by (i) Sections 171(a) (2), and 265(a)(2) and
33 amounts disallowed as interest expense by Section
34 291(a)(3) of the Internal Revenue Code, as now or
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1 hereafter amended, and all amounts of expenses
2 allocable to interest and disallowed as deductions
3 by Section 265(a)(1) of the Internal Revenue Code,
4 as now or hereafter amended; and (ii) for taxable
5 years ending on or after August 13, 1999, Sections
6 171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
7 of the Internal Revenue Code; the provisions of this
8 subparagraph are exempt from the provisions of
9 Section 250;
10 (J) An amount equal to all amounts included in
11 such total which are exempt from taxation by this
12 State either by reason of its statutes or
13 Constitution or by reason of the Constitution,
14 treaties or statutes of the United States; provided
15 that, in the case of any statute of this State that
16 exempts income derived from bonds or other
17 obligations from the tax imposed under this Act, the
18 amount exempted shall be the interest net of bond
19 premium amortization;
20 (K) An amount equal to those dividends
21 included in such total which were paid by a
22 corporation which conducts business operations in an
23 Enterprise Zone or zones created under the Illinois
24 Enterprise Zone Act and conducts substantially all
25 of its operations in an Enterprise Zone or zones;
26 (L) An amount equal to those dividends
27 included in such total that were paid by a
28 corporation that conducts business operations in a
29 federally designated Foreign Trade Zone or Sub-Zone
30 and that is designated a High Impact Business
31 located in Illinois; provided that dividends
32 eligible for the deduction provided in subparagraph
33 (K) of paragraph 2 of this subsection shall not be
34 eligible for the deduction provided under this
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1 subparagraph (L);
2 (M) For any taxpayer that is a financial
3 organization within the meaning of Section 304(c) of
4 this Act, an amount included in such total as
5 interest income from a loan or loans made by such
6 taxpayer to a borrower, to the extent that such a
7 loan is secured by property which is eligible for
8 the Enterprise Zone Investment Credit. To determine
9 the portion of a loan or loans that is secured by
10 property eligible for a Section 201(f) investment
11 credit to the borrower, the entire principal amount
12 of the loan or loans between the taxpayer and the
13 borrower should be divided into the basis of the
14 Section 201(f) investment credit property which
15 secures the loan or loans, using for this purpose
16 the original basis of such property on the date that
17 it was placed in service in the Enterprise Zone.
18 The subtraction modification available to taxpayer
19 in any year under this subsection shall be that
20 portion of the total interest paid by the borrower
21 with respect to such loan attributable to the
22 eligible property as calculated under the previous
23 sentence;
24 (M-1) For any taxpayer that is a financial
25 organization within the meaning of Section 304(c) of
26 this Act, an amount included in such total as
27 interest income from a loan or loans made by such
28 taxpayer to a borrower, to the extent that such a
29 loan is secured by property which is eligible for
30 the High Impact Business Investment Credit. To
31 determine the portion of a loan or loans that is
32 secured by property eligible for a Section 201(h)
33 investment credit to the borrower, the entire
34 principal amount of the loan or loans between the
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1 taxpayer and the borrower should be divided into the
2 basis of the Section 201(h) investment credit
3 property which secures the loan or loans, using for
4 this purpose the original basis of such property on
5 the date that it was placed in service in a
6 federally designated Foreign Trade Zone or Sub-Zone
7 located in Illinois. No taxpayer that is eligible
8 for the deduction provided in subparagraph (M) of
9 paragraph (2) of this subsection shall be eligible
10 for the deduction provided under this subparagraph
11 (M-1). The subtraction modification available to
12 taxpayers in any year under this subsection shall be
13 that portion of the total interest paid by the
14 borrower with respect to such loan attributable to
15 the eligible property as calculated under the
16 previous sentence;
17 (N) Two times any contribution made during the
18 taxable year to a designated zone organization to
19 the extent that the contribution (i) qualifies as a
20 charitable contribution under subsection (c) of
21 Section 170 of the Internal Revenue Code and (ii)
22 must, by its terms, be used for a project approved
23 by the Department of Commerce and Community Affairs
24 under Section 11 of the Illinois Enterprise Zone
25 Act;
26 (O) An amount equal to: (i) 85% for taxable
27 years ending on or before December 31, 1992, or, a
28 percentage equal to the percentage allowable under
29 Section 243(a)(1) of the Internal Revenue Code of
30 1986 for taxable years ending after December 31,
31 1992, of the amount by which dividends included in
32 taxable income and received from a corporation that
33 is not created or organized under the laws of the
34 United States or any state or political subdivision
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1 thereof, including, for taxable years ending on or
2 after December 31, 1988, dividends received or
3 deemed received or paid or deemed paid under
4 Sections 951 through 964 of the Internal Revenue
5 Code, exceed the amount of the modification provided
6 under subparagraph (G) of paragraph (2) of this
7 subsection (b) which is related to such dividends;
8 plus (ii) 100% of the amount by which dividends,
9 included in taxable income and received, including,
10 for taxable years ending on or after December 31,
11 1988, dividends received or deemed received or paid
12 or deemed paid under Sections 951 through 964 of the
13 Internal Revenue Code, from any such corporation
14 specified in clause (i) that would but for the
15 provisions of Section 1504 (b) (3) of the Internal
16 Revenue Code be treated as a member of the
17 affiliated group which includes the dividend
18 recipient, exceed the amount of the modification
19 provided under subparagraph (G) of paragraph (2) of
20 this subsection (b) which is related to such
21 dividends; provided that, for taxable years ending
22 after December 31, 2001, no subtraction shall be
23 allowed under this subparagraph for dividends
24 received by a Subchapter S corporation;
25 (P) An amount equal to any contribution made
26 to a job training project established pursuant to
27 the Tax Increment Allocation Redevelopment Act;
28 (Q) An amount equal to the amount of the
29 deduction used to compute the federal income tax
30 credit for restoration of substantial amounts held
31 under claim of right for the taxable year pursuant
32 to Section 1341 of the Internal Revenue Code of
33 1986;
34 (R) In the case of an attorney-in-fact with
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1 respect to whom an interinsurer or a reciprocal
2 insurer has made the election under Section 835 of
3 the Internal Revenue Code, 26 U.S.C. 835, an amount
4 equal to the excess, if any, of the amounts paid or
5 incurred by that interinsurer or reciprocal insurer
6 in the taxable year to the attorney-in-fact over the
7 deduction allowed to that interinsurer or reciprocal
8 insurer with respect to the attorney-in-fact under
9 Section 835(b) of the Internal Revenue Code for the
10 taxable year; and
11 (S) For taxable years ending on or after
12 December 31, 1997, in the case of a Subchapter S
13 corporation, an amount equal to all amounts of
14 income allocable to a shareholder subject to the
15 Personal Property Tax Replacement Income Tax imposed
16 by subsections (c) and (d) of Section 201 of this
17 Act, including amounts allocable to organizations
18 exempt from federal income tax by reason of Section
19 501(a) of the Internal Revenue Code. This
20 subparagraph (S) is exempt from the provisions of
21 Section 250; and
22 (T) For taxable years ending after December
23 31, 2001, any amount of income from a partnership or
24 Subchapter S corporation included in the taxable
25 income of the taxpayer, except to the extent the
26 taxpayer has claimed another subtraction
27 modification under this paragraph (2) with respect
28 to that income; this subparagraph is exempt from the
29 provisions of Section 250.
30 (3) Special rule. For purposes of paragraph (2)
31 (A), "gross income" in the case of a life insurance
32 company, for tax years ending on and after December 31,
33 1994, shall mean the gross investment income for the
34 taxable year.
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1 (c) Trusts and estates.
2 (1) In general. In the case of a trust or estate,
3 base income means an amount equal to the taxpayer's
4 taxable income for the taxable year as modified by
5 paragraph (2).
6 (2) Modifications. Subject to the provisions of
7 paragraph (3), the taxable income referred to in
8 paragraph (1) shall be modified by adding thereto the sum
9 of the following amounts:
10 (A) An amount equal to all amounts paid or
11 accrued to the taxpayer as interest or dividends
12 during the taxable year to the extent excluded from
13 gross income in the computation of taxable income;
14 (B) In the case of (i) an estate, $600; (ii) a
15 trust which, under its governing instrument, is
16 required to distribute all of its income currently,
17 $300; and (iii) any other trust, $100, but in each
18 such case, only to the extent such amount was
19 deducted in the computation of taxable income;
20 (C) An amount equal to the amount of tax
21 imposed by this Act to the extent deducted from
22 gross income in the computation of taxable income
23 for the taxable year;
24 (D) The amount of any net operating loss
25 deduction taken in arriving at taxable income, other
26 than a net operating loss carried forward from a
27 taxable year ending prior to December 31, 1986;
28 (E) For taxable years in which a net operating
29 loss carryback or carryforward from a taxable year
30 ending prior to December 31, 1986 is an element of
31 taxable income under paragraph (1) of subsection (e)
32 or subparagraph (E) of paragraph (2) of subsection
33 (e), the amount by which addition modifications
34 other than those provided by this subparagraph (E)
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1 exceeded subtraction modifications in such taxable
2 year, with the following limitations applied in the
3 order that they are listed:
4 (i) the addition modification relating to
5 the net operating loss carried back or forward
6 to the taxable year from any taxable year
7 ending prior to December 31, 1986 shall be
8 reduced by the amount of addition modification
9 under this subparagraph (E) which related to
10 that net operating loss and which was taken
11 into account in calculating the base income of
12 an earlier taxable year, and
13 (ii) the addition modification relating
14 to the net operating loss carried back or
15 forward to the taxable year from any taxable
16 year ending prior to December 31, 1986 shall
17 not exceed the amount of such carryback or
18 carryforward;
19 For taxable years in which there is a net
20 operating loss carryback or carryforward from more
21 than one other taxable year ending prior to December
22 31, 1986, the addition modification provided in this
23 subparagraph (E) shall be the sum of the amounts
24 computed independently under the preceding
25 provisions of this subparagraph (E) for each such
26 taxable year;
27 (F) For taxable years ending on or after
28 January 1, 1989, an amount equal to the tax deducted
29 pursuant to Section 164 of the Internal Revenue Code
30 if the trust or estate is claiming the same tax for
31 purposes of the Illinois foreign tax credit under
32 Section 601 of this Act;
33 (G) An amount equal to the amount of the
34 capital gain deduction allowable under the Internal
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1 Revenue Code, to the extent deducted from gross
2 income in the computation of taxable income;
3 (G-1) For taxable years ending after December
4 31, 2001, the taxpayer's share in any loss incurred
5 by a partnership or Subchapter S corporation, to the
6 extent the loss reduced the taxable income of the
7 taxpayer and has not been added back under
8 subparagraph (D) of this paragraph (2); and
9 (G-5) For taxable years ending after December
10 31, 1997, an amount equal to any eligible
11 remediation costs that the trust or estate deducted
12 in computing adjusted gross income and for which the
13 trust or estate claims a credit under subsection (l)
14 of Section 201;
15 and by deducting from the total so obtained the sum of
16 the following amounts:
17 (H) An amount equal to all amounts included in
18 such total pursuant to the provisions of Sections
19 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
20 408 of the Internal Revenue Code or included in such
21 total as distributions under the provisions of any
22 retirement or disability plan for employees of any
23 governmental agency or unit, or retirement payments
24 to retired partners, which payments are excluded in
25 computing net earnings from self employment by
26 Section 1402 of the Internal Revenue Code and
27 regulations adopted pursuant thereto;
28 (I) The valuation limitation amount;
29 (J) An amount equal to the amount of any tax
30 imposed by this Act which was refunded to the
31 taxpayer and included in such total for the taxable
32 year;
33 (K) An amount equal to all amounts included in
34 taxable income as modified by subparagraphs (A),
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1 (B), (C), (D), (E), (F) and (G) which are exempt
2 from taxation by this State either by reason of its
3 statutes or Constitution or by reason of the
4 Constitution, treaties or statutes of the United
5 States; provided that, in the case of any statute of
6 this State that exempts income derived from bonds or
7 other obligations from the tax imposed under this
8 Act, the amount exempted shall be the interest net
9 of bond premium amortization;
10 (L) With the exception of any amounts
11 subtracted under subparagraph (K), an amount equal
12 to the sum of all amounts disallowed as deductions
13 by (i) Sections 171(a) (2) and 265(a)(2) of the
14 Internal Revenue Code, as now or hereafter amended,
15 and all amounts of expenses allocable to interest
16 and disallowed as deductions by Section 265(1) of
17 the Internal Revenue Code of 1954, as now or
18 hereafter amended; and (ii) for taxable years ending
19 on or after August 13, 1999, Sections 171(a)(2),
20 265, 280C, and 832(b)(5)(B)(i) of the Internal
21 Revenue Code; the provisions of this subparagraph
22 are exempt from the provisions of Section 250;
23 (M) An amount equal to those dividends
24 included in such total which were paid by a
25 corporation which conducts business operations in an
26 Enterprise Zone or zones created under the Illinois
27 Enterprise Zone Act and conducts substantially all
28 of its operations in an Enterprise Zone or Zones;
29 (N) An amount equal to any contribution made
30 to a job training project established pursuant to
31 the Tax Increment Allocation Redevelopment Act;
32 (O) An amount equal to those dividends
33 included in such total that were paid by a
34 corporation that conducts business operations in a
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1 federally designated Foreign Trade Zone or Sub-Zone
2 and that is designated a High Impact Business
3 located in Illinois; provided that dividends
4 eligible for the deduction provided in subparagraph
5 (M) of paragraph (2) of this subsection shall not be
6 eligible for the deduction provided under this
7 subparagraph (O);
8 (P) An amount equal to the amount of the
9 deduction used to compute the federal income tax
10 credit for restoration of substantial amounts held
11 under claim of right for the taxable year pursuant
12 to Section 1341 of the Internal Revenue Code of
13 1986; and
14 (Q) For taxable year 1999 and thereafter, an
15 amount equal to the amount of any (i) distributions,
16 to the extent includible in gross income for federal
17 income tax purposes, made to the taxpayer because of
18 his or her status as a victim of persecution for
19 racial or religious reasons by Nazi Germany or any
20 other Axis regime or as an heir of the victim and
21 (ii) items of income, to the extent includible in
22 gross income for federal income tax purposes,
23 attributable to, derived from or in any way related
24 to assets stolen from, hidden from, or otherwise
25 lost to a victim of persecution for racial or
26 religious reasons by Nazi Germany or any other Axis
27 regime immediately prior to, during, and immediately
28 after World War II, including, but not limited to,
29 interest on the proceeds receivable as insurance
30 under policies issued to a victim of persecution for
31 racial or religious reasons by Nazi Germany or any
32 other Axis regime by European insurance companies
33 immediately prior to and during World War II;
34 provided, however, this subtraction from federal
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1 adjusted gross income does not apply to assets
2 acquired with such assets or with the proceeds from
3 the sale of such assets; provided, further, this
4 paragraph shall only apply to a taxpayer who was the
5 first recipient of such assets after their recovery
6 and who is a victim of persecution for racial or
7 religious reasons by Nazi Germany or any other Axis
8 regime or as an heir of the victim. The amount of
9 and the eligibility for any public assistance,
10 benefit, or similar entitlement is not affected by
11 the inclusion of items (i) and (ii) of this
12 paragraph in gross income for federal income tax
13 purposes. This paragraph is exempt from the
14 provisions of Section 250; and
15 (R) For taxable years ending after December
16 31, 2001, any amount of income from a partnership or
17 Subchapter S corporation included in the taxable
18 income of the taxpayer, except to the extent the
19 taxpayer has claimed another subtraction
20 modification under this paragraph (2) with respect
21 to that income. This subparagraph is exempt from
22 the provisions of Section 250.
23 (3) Limitation. The amount of any modification
24 otherwise required under this subsection shall, under
25 regulations prescribed by the Department, be adjusted by
26 any amounts included therein which were properly paid,
27 credited, or required to be distributed, or permanently
28 set aside for charitable purposes pursuant to Internal
29 Revenue Code Section 642(c) during the taxable year.
30 (d) Partnerships.
31 (1) In general. In the case of a partnership, base
32 income means an amount equal to the taxpayer's taxable
33 income for the taxable year as modified by paragraph (2).
34 (2) Modifications. The taxable income referred to
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1 in paragraph (1) shall be modified by adding thereto the
2 sum of the following amounts:
3 (A) An amount equal to all amounts paid or
4 accrued to the taxpayer as interest or dividends
5 during the taxable year to the extent excluded from
6 gross income in the computation of taxable income;
7 (B) An amount equal to the amount of tax
8 imposed by this Act to the extent deducted from
9 gross income for the taxable year;
10 (C) The amount of deductions allowed to the
11 partnership pursuant to Section 707 (c) of the
12 Internal Revenue Code in calculating its taxable
13 income; and
14 (D) An amount equal to the amount of the
15 capital gain deduction allowable under the Internal
16 Revenue Code, to the extent deducted from gross
17 income in the computation of taxable income; and
18 (D-1) For taxable years ending after December
19 31, 2001, the taxpayer's share in any loss incurred
20 by a partnership or Subchapter S corporation, to the
21 extent the loss reduced the taxable income of the
22 taxpayer;
23 and by deducting from the total so obtained the following
24 amounts:
25 (E) The valuation limitation amount;
26 (F) An amount equal to the amount of any tax
27 imposed by this Act which was refunded to the
28 taxpayer and included in such total for the taxable
29 year;
30 (G) An amount equal to all amounts included in
31 taxable income as modified by subparagraphs (A),
32 (B), (C) and (D) which are exempt from taxation by
33 this State either by reason of its statutes or
34 Constitution or by reason of the Constitution,
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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 (H) Any income of the partnership which
8 constitutes personal service income as defined in
9 Section 1348 (b) (1) of the Internal Revenue Code
10 (as in effect December 31, 1981) or a reasonable
11 allowance for compensation paid or accrued for
12 services rendered by partners to the partnership,
13 whichever is greater;
14 (I) For taxable years ending on or before
15 December 31, 2001, an amount equal to all amounts of
16 income distributable to an entity subject to the
17 Personal Property Tax Replacement Income Tax imposed
18 by subsections (c) and (d) of Section 201 of this
19 Act including amounts distributable to organizations
20 exempt from federal income tax by reason of Section
21 501(a) of the Internal Revenue Code;
22 (J) With the exception of any amounts
23 subtracted under subparagraph (G), an amount equal
24 to the sum of all amounts disallowed as deductions
25 by (i) Sections 171(a) (2), and 265(2) of the
26 Internal Revenue Code of 1954, as now or hereafter
27 amended, and all amounts of expenses allocable to
28 interest and disallowed as deductions by Section
29 265(1) of the Internal Revenue Code, as now or
30 hereafter amended; and (ii) for taxable years ending
31 on or after August 13, 1999, Sections 171(a)(2),
32 265, 280C, and 832(b)(5)(B)(i) of the Internal
33 Revenue Code; the provisions of this subparagraph
34 are exempt from the provisions of Section 250;
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1 (K) An amount equal to those dividends
2 included in such total which were paid by a
3 corporation which conducts business operations in an
4 Enterprise Zone or zones created under the Illinois
5 Enterprise Zone Act, enacted by the 82nd General
6 Assembly, and which does not conduct such operations
7 other than in an Enterprise Zone or Zones;
8 (L) An amount equal to any contribution made
9 to a job training project established pursuant to
10 the Real Property Tax Increment Allocation
11 Redevelopment Act;
12 (M) An amount equal to those dividends
13 included in such total that were paid by a
14 corporation that conducts business operations in a
15 federally designated Foreign Trade Zone or Sub-Zone
16 and that is designated a High Impact Business
17 located in Illinois; provided that dividends
18 eligible for the deduction provided in subparagraph
19 (K) of paragraph (2) of this subsection shall not be
20 eligible for the deduction provided under this
21 subparagraph (M); and
22 (N) An amount equal to the amount of the
23 deduction used to compute the federal income tax
24 credit for restoration of substantial amounts held
25 under claim of right for the taxable year pursuant
26 to Section 1341 of the Internal Revenue Code of
27 1986; and
28 (O) For taxable years ending after December
29 31, 2001, any amount of income from a partnership or
30 Subchapter S corporation included in the taxable
31 income of the taxpayer, except to the extent the
32 taxpayer has claimed another subtraction
33 modification under this paragraph (2) with respect
34 to that income; this subparagraph is exempt from the
-53- LRB9211060SMdv
1 provisions of Section 250.
2 (e) Gross income; adjusted gross income; taxable income.
3 (1) In general. Subject to the provisions of
4 paragraph (2) and subsection (b) (3), for purposes of
5 this Section and Section 803(e), a taxpayer's gross
6 income, adjusted gross income, or taxable income for the
7 taxable year shall mean the amount of gross income,
8 adjusted gross income or taxable income properly
9 reportable for federal income tax purposes for the
10 taxable year under the provisions of the Internal Revenue
11 Code. Taxable income may be less than zero. However, for
12 taxable years ending on or after December 31, 1986, net
13 operating loss carryforwards from taxable years ending
14 prior to December 31, 1986, may not exceed the sum of
15 federal taxable income for the taxable year before net
16 operating loss deduction, plus the excess of addition
17 modifications over subtraction modifications for the
18 taxable year. For taxable years ending prior to December
19 31, 1986, taxable income may never be an amount in excess
20 of the net operating loss for the taxable year as defined
21 in subsections (c) and (d) of Section 172 of the Internal
22 Revenue Code, provided that when taxable income of a
23 corporation (other than a Subchapter S corporation),
24 trust, or estate is less than zero and addition
25 modifications, other than those provided by subparagraph
26 (E) of paragraph (2) of subsection (b) for corporations
27 or subparagraph (E) of paragraph (2) of subsection (c)
28 for trusts and estates, exceed subtraction modifications,
29 an addition modification must be made under those
30 subparagraphs for any other taxable year to which the
31 taxable income less than zero (net operating loss) is
32 applied under Section 172 of the Internal Revenue Code or
33 under subparagraph (E) of paragraph (2) of this
34 subsection (e) applied in conjunction with Section 172 of
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1 the Internal Revenue Code.
2 (2) Special rule. For purposes of paragraph (1) of
3 this subsection, the taxable income properly reportable
4 for federal income tax purposes shall mean:
5 (A) Certain life insurance companies. In the
6 case of a life insurance company subject to the tax
7 imposed by Section 801 of the Internal Revenue Code,
8 life insurance company taxable income, plus the
9 amount of distribution from pre-1984 policyholder
10 surplus accounts as calculated under Section 815a of
11 the Internal Revenue Code;
12 (B) Certain other insurance companies. In the
13 case of mutual insurance companies subject to the
14 tax imposed by Section 831 of the Internal Revenue
15 Code, insurance company taxable income;
16 (C) Regulated investment companies. In the
17 case of a regulated investment company subject to
18 the tax imposed by Section 852 of the Internal
19 Revenue Code, investment company taxable income;
20 (D) Real estate investment trusts. In the
21 case of a real estate investment trust subject to
22 the tax imposed by Section 857 of the Internal
23 Revenue Code, real estate investment trust taxable
24 income;
25 (E) Consolidated corporations. In the case of
26 a corporation which is a member of an affiliated
27 group of corporations filing a consolidated income
28 tax return for the taxable year for federal income
29 tax purposes, taxable income determined as if such
30 corporation had filed a separate return for federal
31 income tax purposes for the taxable year and each
32 preceding taxable year for which it was a member of
33 an affiliated group. For purposes of this
34 subparagraph, the taxpayer's separate taxable income
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1 shall be determined as if the election provided by
2 Section 243(b) (2) of the Internal Revenue Code had
3 been in effect for all such years;
4 (F) Cooperatives. In the case of a
5 cooperative corporation or association, the taxable
6 income of such organization determined in accordance
7 with the provisions of Section 1381 through 1388 of
8 the Internal Revenue Code;
9 (G) Subchapter S corporations. In the case
10 of: (i) a Subchapter S corporation for which there
11 is in effect an election for the taxable year under
12 Section 1362 of the Internal Revenue Code, the
13 taxable income of such corporation determined in
14 accordance with Section 1363(b) of the Internal
15 Revenue Code, except that taxable income shall take
16 into account those items which are required by
17 Section 1363(b)(1) of the Internal Revenue Code to
18 be separately stated; and (ii) a Subchapter S
19 corporation for which there is in effect a federal
20 election to opt out of the provisions of the
21 Subchapter S Revision Act of 1982 and have applied
22 instead the prior federal Subchapter S rules as in
23 effect on July 1, 1982, the taxable income of such
24 corporation determined in accordance with the
25 federal Subchapter S rules as in effect on July 1,
26 1982; and
27 (H) Partnerships. In the case of a
28 partnership, taxable income determined in accordance
29 with Section 703 of the Internal Revenue Code,
30 except that taxable income shall take into account
31 those items which are required by Section 703(a)(1)
32 to be separately stated but which would be taken
33 into account by an individual in calculating his
34 taxable income.
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1 (f) Valuation limitation amount.
2 (1) In general. The valuation limitation amount
3 referred to in subsections (a) (2) (G), (c) (2) (I) and
4 (d)(2) (E) is an amount equal to:
5 (A) The sum of the pre-August 1, 1969
6 appreciation amounts (to the extent consisting of
7 gain reportable under the provisions of Section 1245
8 or 1250 of the Internal Revenue Code) for all
9 property in respect of which such gain was reported
10 for the taxable year; plus
11 (B) The lesser of (i) the sum of the
12 pre-August 1, 1969 appreciation amounts (to the
13 extent consisting of capital gain) for all property
14 in respect of which such gain was reported for
15 federal income tax purposes for the taxable year, or
16 (ii) the net capital gain for the taxable year,
17 reduced in either case by any amount of such gain
18 included in the amount determined under subsection
19 (a) (2) (F) or (c) (2) (H).
20 (2) Pre-August 1, 1969 appreciation amount.
21 (A) If the fair market value of property
22 referred to in paragraph (1) was readily
23 ascertainable on August 1, 1969, the pre-August 1,
24 1969 appreciation amount for such property is the
25 lesser of (i) the excess of such fair market value
26 over the taxpayer's basis (for determining gain) for
27 such property on that date (determined under the
28 Internal Revenue Code as in effect on that date), or
29 (ii) the total gain realized and reportable for
30 federal income tax purposes in respect of the sale,
31 exchange or other disposition of such property.
32 (B) If the fair market value of property
33 referred to in paragraph (1) was not readily
34 ascertainable on August 1, 1969, the pre-August 1,
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1 1969 appreciation amount for such property is that
2 amount which bears the same ratio to the total gain
3 reported in respect of the property for federal
4 income tax purposes for the taxable year, as the
5 number of full calendar months in that part of the
6 taxpayer's holding period for the property ending
7 July 31, 1969 bears to the number of full calendar
8 months in the taxpayer's entire holding period for
9 the property.
10 (C) The Department shall prescribe such
11 regulations as may be necessary to carry out the
12 purposes of this paragraph.
13 (g) Double deductions. Unless specifically provided
14 otherwise, nothing in this Section shall permit the same item
15 to be deducted more than once.
16 (h) Legislative intention. Except as expressly provided
17 by this Section there shall be no modifications or
18 limitations on the amounts of income, gain, loss or deduction
19 taken into account in determining gross income, adjusted
20 gross income or taxable income for federal income tax
21 purposes for the taxable year, or in the amount of such items
22 entering into the computation of base income and net income
23 under this Act for such taxable year, whether in respect of
24 property values as of August 1, 1969 or otherwise.
25 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
26 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
27 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
28 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
29 revised 9-21-01.)
30 (35 ILCS 5/205) (from Ch. 120, par. 2-205)
31 Sec. 205. Exempt organizations.
32 (a) Charitable, etc. organizations. The base income of
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1 an organization which is exempt from the federal income tax
2 by reason of Section 501(a) of the Internal Revenue Code
3 shall not be determined under section 203 of this Act, but
4 shall be its unrelated business taxable income as determined
5 under section 512 of the Internal Revenue Code, after
6 eliminating any item of income, deduction, or loss derived
7 from a partnership or Subchapter S corporation, without any
8 deduction for the tax imposed by this Act. The standard
9 exemption provided by section 204 of this Act shall not be
10 allowed in determining the net income of an organization to
11 which this subsection applies.
12 (b) Partnerships. For taxable years ending on or before
13 December 31, 2001, a partnership as such shall not be subject
14 to the tax imposed by subsection 201 (a) and (b) of this Act.
15 For taxable years ending after December 31, 2001, a
16 partnership shall be subject to the tax imposed by subsection
17 (a) and (b) of Section 201 of this Act on the share of the
18 partnership's base income distributable to any partner who
19 has not elected in writing to pay the taxes imposed by
20 Section 201 of this Act on that share. Such pass-through
21 election shall be in the form required by the Department and
22 must be filed with the Department no later than the date on
23 which the partnership files its return for the first taxable
24 year to which the election applies. Once made, the
25 pass-through election shall remain in effect until revoked by
26 the partner in writing in the form required by the
27 Department, which must be filed on or prior to the date on
28 which the partnership return is due (including extensions)
29 for the first taxable year to which the revocation shall
30 apply. A partnership shall be liable for the tax imposed by
31 Section 201 of this Act, including penalties and interest, on
32 any partner who has made the pass-through election with
33 respect to such partnership to the extent such partner fails
34 to pay his or her tax liability with respect to his or her
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1 share of the base income of the partnership for any taxable
2 year. All partnerships, but shall be subject to the
3 replacement tax imposed by subsection 201 (c) and (d) of this
4 Act and shall compute its base income as described in
5 subsection (d) of Section 203 of this Act. A partnership
6 shall file such returns and other information at such time
7 and in such manner as may be required under Article 5 of this
8 Act. The partners in a partnership shall be liable for the
9 replacement tax imposed by Section subsection 201 (c) and (d)
10 of this Act on such partnership, to the extent such tax is
11 not paid by the partnership, as provided under the laws of
12 Illinois governing the liability of partners for the
13 obligations of a partnership. For taxable years ending on or
14 before December 31, 2001, persons carrying on business as
15 partners shall be liable for the tax imposed by subsection
16 201 (a) and (b) of this Act only in their separate or
17 individual capacities.
18 (c) Subchapter S corporations. For taxable years ending
19 on or before December 31, 2001, a Subchapter S corporation
20 shall not be subject to the tax imposed by subsection 201 (a)
21 and (b) of this Act. For taxable years ending after December
22 31, 2001, a Subchapter S corporation shall be subject to the
23 tax imposed by subsections (a) and (b) of Section 201 of this
24 Act on the share of the corporation's base income allocable
25 to any shareholder who has not elected in writing to pay the
26 taxes imposed by Section 201 of this Act on that share. Such
27 pass-through election shall be in the form required by the
28 Department and must be filed with the Department no later
29 than the date on which the corporation files its return for
30 the first taxable year to which the election applies. Once
31 made, the pass-through election shall remain in effect until
32 revoked by the shareholder in writing in the form required by
33 the Department, which must be filed on or prior to the date
34 on which the corporation return is due (including extensions)
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1 for the first taxable year to which the revocation shall
2 apply. A Subchapter S corporation shall be liable for the
3 taxes imposed by Section 201 of this Act, including penalties
4 and interest, on any shareholder who has made a pass-through
5 election with respect to such Subchapter S corporation to the
6 extent that shareholder fails to pay his or her tax
7 liability with respect to his or her share of the base income
8 of the Subchapter S corporation. All Subchapter S
9 corporations but shall be subject to the replacement tax
10 imposed by subsection 201 (c) and (d) of this Act and shall
11 file such returns and other information at such time and in
12 such manner as may be required under Article 5 of this Act.
13 (d) Combat zone death. An individual relieved from the
14 federal income tax for any taxable year by reason of section
15 692 of the Internal Revenue Code shall not be subject to the
16 tax imposed by this Act for such taxable year.
17 (e) Certain trusts. A common trust fund described in
18 Section 584 of the Internal Revenue Code, and any other trust
19 to the extent that the grantor is treated as the owner
20 thereof under sections 671 through 678 of the Internal
21 Revenue Code shall not be subject to the tax imposed by this
22 Act.
23 (f) Certain business activities. A person not otherwise
24 subject to the tax imposed by this Act shall not become
25 subject to the tax imposed by this Act by reason of:
26 (1) that person's ownership of tangible personal
27 property located at the premises of a printer in this
28 State with which the person has contracted for printing,
29 or
30 (2) activities of the person's employees or agents
31 located solely at the premises of a printer and related
32 to quality control, distribution, or printing services
33 performed by a printer in the State with which the person
34 has contracted for printing.
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1 (Source: P.A. 88-361.)
2 (35 ILCS 5/211)
3 Sec. 211. Economic Development for a Growing Economy Tax
4 Credit. For tax years beginning on or after January 1, 1999,
5 a Taxpayer who has entered into an Agreement under the
6 Economic Development for a Growing Economy Tax Credit Act is
7 entitled to a credit against the taxes imposed under
8 subsections (a) and (b) of Section 201 of this Act in an
9 amount to be determined in the Agreement. For taxable years
10 ending on or before December 31, 2001, if the Taxpayer is a
11 partnership or Subchapter S corporation, the credit shall be
12 allowed to the partners or shareholders in accordance with
13 the determination of income and distributive share of income
14 under Sections 702 and 704 and subchapter S of the Internal
15 Revenue Code. For taxable years ending after December 31,
16 2001, if the taxpayer is a partnership or Subchapter S
17 corporation, the credit shall be allowed to the partners and
18 shareholders who have made a pass-through election with
19 respect to the taxpayer in accordance with the determination
20 of income and distributive share of income under Sections 702
21 and 704 and Subchapter S of the Internal Revenue Code. The
22 Department, in cooperation with the Department of Commerce
23 and Community Affairs, shall prescribe rules to enforce and
24 administer the provisions of this Section. This Section is
25 exempt from the provisions of Section 250 of this Act.
26 The credit shall be subject to the conditions set forth
27 in the Agreement and the following limitations:
28 (1) The tax credit shall not exceed the Incremental
29 Income Tax (as defined in Section 5-5 of the Economic
30 Development for a Growing Economy Tax Credit Act) with
31 respect to the project.
32 (2) The amount of the credit allowed during the tax
33 year plus the sum of all amounts allowed in prior years
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1 shall not exceed 100% of the aggregate amount expended by
2 the Taxpayer during all prior tax years on approved costs
3 defined by Agreement.
4 (3) The amount of the credit shall be determined on
5 an annual basis. Except as applied in a carryover year
6 pursuant to Section 211(4) of this Act, the credit may
7 not be applied against any State income tax liability in
8 more than 10 taxable years; provided, however, that (i)
9 an eligible business certified by the Department of
10 Commerce and Community Affairs under the Corporate
11 Headquarters Relocation Act may not apply the credit
12 against any of its State income tax liability in more
13 than 15 taxable years and (ii) credits allowed to that
14 eligible business are subject to the conditions and
15 requirements set forth in Sections 5-35 and 5-45 of the
16 Economic Development for a Growing Economy Tax Credit
17 Act.
18 (4) The credit may not exceed the amount of taxes
19 imposed pursuant to subsections (a) and (b) of Section
20 201 of this Act. Any credit that is unused in the year
21 the credit is computed may be carried forward and applied
22 to the tax liability of the 5 taxable years following the
23 excess credit year. The credit shall be applied to the
24 earliest year for which there is a tax liability. If
25 there are credits from more than one tax year that are
26 available to offset a liability, the earlier credit shall
27 be applied first.
28 (5) No credit shall be allowed with respect to any
29 Agreement for any taxable year ending after the
30 Noncompliance Date. Upon receiving notification by the
31 Department of Commerce and Community Affairs of the
32 noncompliance of a Taxpayer with an Agreement, the
33 Department shall notify the Taxpayer that no credit is
34 allowed with respect to that Agreement for any taxable
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1 year ending after the Noncompliance Date, as stated in
2 such notification. If any credit has been allowed with
3 respect to an Agreement for a taxable year ending after
4 the Noncompliance Date for that Agreement, any refund
5 paid to the Taxpayer for that taxable year shall, to the
6 extent of that credit allowed, be an erroneous refund
7 within the meaning of Section 912 of this Act.
8 (6) For purposes of this Section, the terms
9 "Agreement", "Incremental Income Tax", and
10 "Noncompliance Date" have the same meaning as when used
11 in the Economic Development for a Growing Economy Tax
12 Credit Act.
13 (Source: P.A. 91-476, eff. 8-11-99; 92-207, eff. 8-1-01.)
14 (35 ILCS 5/304) (from Ch. 120, par. 3-304)
15 Sec. 304. Business income of persons other than
16 residents.
17 (a) In general. The business income of a person other
18 than a resident shall be allocated to this State if such
19 person's business income is derived solely from this State.
20 If a person other than a resident derives business income
21 from this State and one or more other states, then, for tax
22 years ending on or before December 30, 1998, and except as
23 otherwise provided by this Section, such person's business
24 income shall be apportioned to this State by multiplying the
25 income by a fraction, the numerator of which is the sum of
26 the property factor (if any), the payroll factor (if any) and
27 200% of the sales factor (if any), and the denominator of
28 which is 4 reduced by the number of factors other than the
29 sales factor which have a denominator of zero and by an
30 additional 2 if the sales factor has a denominator of zero.
31 For tax years ending on or after December 31, 1998, and
32 except as otherwise provided by this Section, persons other
33 than residents who derive business income from this State and
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1 one or more other states shall compute their apportionment
2 factor by weighting their property, payroll, and sales
3 factors as provided in subsection (h) of this Section.
4 (1) Property factor.
5 (A) The property factor is a fraction, the
6 numerator of which is the average value of the person's
7 real and tangible personal property owned or rented and
8 used in the trade or business in this State during the
9 taxable year and the denominator of which is the average
10 value of all the person's real and tangible personal
11 property owned or rented and used in the trade or
12 business during the taxable year.
13 (B) Property owned by the person is valued at its
14 original cost. Property rented by the person is valued at
15 8 times the net annual rental rate. Net annual rental
16 rate is the annual rental rate paid by the person less
17 any annual rental rate received by the person from
18 sub-rentals.
19 (C) The average value of property shall be
20 determined by averaging the values at the beginning and
21 ending of the taxable year but the Director may require
22 the averaging of monthly values during the taxable year
23 if reasonably required to reflect properly the average
24 value of the person's property.
25 (2) Payroll factor.
26 (A) The payroll factor is a fraction, the numerator
27 of which is the total amount paid in this State during
28 the taxable year by the person for compensation, and the
29 denominator of which is the total compensation paid
30 everywhere during the taxable year.
31 (B) Compensation is paid in this State if:
32 (i) The individual's service is performed
33 entirely within this State;
34 (ii) The individual's service is performed
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1 both within and without this State, but the service
2 performed without this State is incidental to the
3 individual's service performed within this State; or
4 (iii) Some of the service is performed within
5 this State and either the base of operations, or if
6 there is no base of operations, the place from which
7 the service is directed or controlled is within this
8 State, or the base of operations or the place from
9 which the service is directed or controlled is not
10 in any state in which some part of the service is
11 performed, but the individual's residence is in this
12 State.
13 Beginning with taxable years ending on or after
14 December 31, 1992, for residents of states that impose a
15 comparable tax liability on residents of this State, for
16 purposes of item (i) of this paragraph (B), in the case
17 of persons who perform personal services under personal
18 service contracts for sports performances, services by
19 that person at a sporting event taking place in Illinois
20 shall be deemed to be a performance entirely within this
21 State.
22 (3) Sales factor.
23 (A) The sales factor is a fraction, the numerator
24 of which is the total sales of the person in this State
25 during the taxable year, and the denominator of which is
26 the total sales of the person everywhere during the
27 taxable year.
28 (B) Sales of tangible personal property are in this
29 State if:
30 (i) The property is delivered or shipped to a
31 purchaser, other than the United States government,
32 within this State regardless of the f. o. b. point
33 or other conditions of the sale; or
34 (ii) The property is shipped from an office,
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1 store, warehouse, factory or other place of storage
2 in this State and either the purchaser is the United
3 States government or the person is not taxable in
4 the state of the purchaser; provided, however, that
5 premises owned or leased by a person who has
6 independently contracted with the seller for the
7 printing of newspapers, periodicals or books shall
8 not be deemed to be an office, store, warehouse,
9 factory or other place of storage for purposes of
10 this Section. Sales of tangible personal property
11 are not in this State if the seller and purchaser
12 would be members of the same unitary business group
13 but for the fact that either the seller or purchaser
14 is a person with 80% or more of total business
15 activity outside of the United States and the
16 property is purchased for resale.
17 (B-1) Patents, copyrights, trademarks, and similar
18 items of intangible personal property.
19 (i) Gross receipts from the licensing, sale,
20 or other disposition of a patent, copyright,
21 trademark, or similar item of intangible personal
22 property are in this State to the extent the item is
23 utilized in this State during the year the gross
24 receipts are included in gross income.
25 (ii) Place of utilization.
26 (I) A patent is utilized in a state to
27 the extent that it is employed in production,
28 fabrication, manufacturing, or other processing
29 in the state or to the extent that a patented
30 product is produced in the state. If a patent
31 is utilized in more than one state, the extent
32 to which it is utilized in any one state shall
33 be a fraction equal to the gross receipts of
34 the licensee or purchaser from sales or leases
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1 of items produced, fabricated, manufactured, or
2 processed within that state using the patent
3 and of patented items produced within that
4 state, divided by the total of such gross
5 receipts for all states in which the patent is
6 utilized.
7 (II) A copyright is utilized in a state
8 to the extent that printing or other
9 publication originates in the state. If a
10 copyright is utilized in more than one state,
11 the extent to which it is utilized in any one
12 state shall be a fraction equal to the gross
13 receipts from sales or licenses of materials
14 printed or published in that state divided by
15 the total of such gross receipts for all states
16 in which the copyright is utilized.
17 (III) Trademarks and other items of
18 intangible personal property governed by this
19 paragraph (B-1) are utilized in the state in
20 which the commercial domicile of the licensee
21 or purchaser is located.
22 (iii) If the state of utilization of an item
23 of property governed by this paragraph (B-1) cannot
24 be determined from the taxpayer's books and records
25 or from the books and records of any person related
26 to the taxpayer within the meaning of Section 267(b)
27 of the Internal Revenue Code, 26 U.S.C. 267, the
28 gross receipts attributable to that item shall be
29 excluded from both the numerator and the denominator
30 of the sales factor.
31 (B-2) Gross receipts from the license, sale, or
32 other disposition of patents, copyrights, trademarks, and
33 similar items of intangible personal property may be
34 included in the numerator or denominator of the sales
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1 factor only if gross receipts from licenses, sales, or
2 other disposition of such items comprise more than 50% of
3 the taxpayer's total gross receipts included in gross
4 income during the tax year and during each of the 2
5 immediately preceding tax years; provided that, when a
6 taxpayer is a member of a unitary business group, such
7 determination shall be made on the basis of the gross
8 receipts of the entire unitary business group.
9 (C) Sales, other than sales governed by paragraphs
10 (B) and (B-1), are in this State if:
11 (i) The income-producing activity is performed
12 in this State; or
13 (ii) The income-producing activity is
14 performed both within and without this State and a
15 greater proportion of the income-producing activity
16 is performed within this State than without this
17 State, based on performance costs.
18 (D) For taxable years ending on or after December
19 31, 1995, the following items of income shall not be
20 included in the numerator or denominator of the sales
21 factor: dividends; amounts included under Section 78 of
22 the Internal Revenue Code; and Subpart F income as
23 defined in Section 952 of the Internal Revenue Code. No
24 inference shall be drawn from the enactment of this
25 paragraph (D) in construing this Section for taxable
26 years ending before December 31, 1995.
27 (E) Paragraphs (B-1) and (B-2) shall apply to tax
28 years ending on or after December 31, 1999, provided that
29 a taxpayer may elect to apply the provisions of these
30 paragraphs to prior tax years. Such election shall be
31 made in the form and manner prescribed by the Department,
32 shall be irrevocable, and shall apply to all tax years;
33 provided that, if a taxpayer's Illinois income tax
34 liability for any tax year, as assessed under Section 903
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1 prior to January 1, 1999, was computed in a manner
2 contrary to the provisions of paragraphs (B-1) or (B-2),
3 no refund shall be payable to the taxpayer for that tax
4 year to the extent such refund is the result of applying
5 the provisions of paragraph (B-1) or (B-2) retroactively.
6 In the case of a unitary business group, such election
7 shall apply to all members of such group for every tax
8 year such group is in existence, but shall not apply to
9 any taxpayer for any period during which that taxpayer is
10 not a member of such group.
11 (b) Insurance companies.
12 (1) In general. Except as otherwise provided by
13 paragraph (2), business income of an insurance company
14 for a taxable year shall be apportioned to this State by
15 multiplying such income by a fraction, the numerator of
16 which is the direct premiums written for insurance upon
17 property or risk in this State, and the denominator of
18 which is the direct premiums written for insurance upon
19 property or risk everywhere. For purposes of this
20 subsection, the term "direct premiums written" means the
21 total amount of direct premiums written, assessments and
22 annuity considerations as reported for the taxable year
23 on the annual statement filed by the company with the
24 Illinois Director of Insurance in the form approved by
25 the National Convention of Insurance Commissioners or
26 such other form as may be prescribed in lieu thereof.
27 (2) Reinsurance. If the principal source of
28 premiums written by an insurance company consists of
29 premiums for reinsurance accepted by it, the business
30 income of such company shall be apportioned to this State
31 by multiplying such income by a fraction, the numerator
32 of which is the sum of (i) direct premiums written for
33 insurance upon property or risk in this State, plus (ii)
34 premiums written for reinsurance accepted in respect of
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1 property or risk in this State, and the denominator of
2 which is the sum of (iii) direct premiums written for
3 insurance upon property or risk everywhere, plus (iv)
4 premiums written for reinsurance accepted in respect of
5 property or risk everywhere. For purposes of this
6 paragraph, premiums written for reinsurance accepted in
7 respect of property or risk in this State, whether or not
8 otherwise determinable, may, at the election of the
9 company, be determined on the basis of the proportion
10 which premiums written for reinsurance accepted from
11 companies commercially domiciled in Illinois bears to
12 premiums written for reinsurance accepted from all
13 sources, or, alternatively, in the proportion which the
14 sum of the direct premiums written for insurance upon
15 property or risk in this State by each ceding company
16 from which reinsurance is accepted bears to the sum of
17 the total direct premiums written by each such ceding
18 company for the taxable year.
19 (c) Financial organizations.
20 (1) In general. Business income of a financial
21 organization shall be apportioned to this State by
22 multiplying such income by a fraction, the numerator of
23 which is its business income from sources within this
24 State, and the denominator of which is its business
25 income from all sources. For the purposes of this
26 subsection, the business income of a financial
27 organization from sources within this State is the sum of
28 the amounts referred to in subparagraphs (A) through (E)
29 following, but excluding the adjusted income of an
30 international banking facility as determined in paragraph
31 (2):
32 (A) Fees, commissions or other compensation
33 for financial services rendered within this State;
34 (B) Gross profits from trading in stocks,
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1 bonds or other securities managed within this State;
2 (C) Dividends, and interest from Illinois
3 customers, which are received within this State;
4 (D) Interest charged to customers at places of
5 business maintained within this State for carrying
6 debit balances of margin accounts, without deduction
7 of any costs incurred in carrying such accounts; and
8 (E) Any other gross income resulting from the
9 operation as a financial organization within this
10 State. In computing the amounts referred to in
11 paragraphs (A) through (E) of this subsection, any
12 amount received by a member of an affiliated group
13 (determined under Section 1504(a) of the Internal
14 Revenue Code but without reference to whether any
15 such corporation is an "includible corporation"
16 under Section 1504(b) of the Internal Revenue Code)
17 from another member of such group shall be included
18 only to the extent such amount exceeds expenses of
19 the recipient directly related thereto.
20 (2) International Banking Facility.
21 (A) Adjusted Income. The adjusted income of
22 an international banking facility is its income
23 reduced by the amount of the floor amount.
24 (B) Floor Amount. The floor amount shall be
25 the amount, if any, determined by multiplying the
26 income of the international banking facility by a
27 fraction, not greater than one, which is determined
28 as follows:
29 (i) The numerator shall be:
30 The average aggregate, determined on a
31 quarterly basis, of the financial
32 organization's loans to banks in foreign
33 countries, to foreign domiciled borrowers
34 (except where secured primarily by real estate)
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1 and to foreign governments and other foreign
2 official institutions, as reported for its
3 branches, agencies and offices within the state
4 on its "Consolidated Report of Condition",
5 Schedule A, Lines 2.c., 5.b., and 7.a., which
6 was filed with the Federal Deposit Insurance
7 Corporation and other regulatory authorities,
8 for the year 1980, minus
9 The average aggregate, determined on a
10 quarterly basis, of such loans (other than
11 loans of an international banking facility), as
12 reported by the financial institution for its
13 branches, agencies and offices within the
14 state, on the corresponding Schedule and lines
15 of the Consolidated Report of Condition for the
16 current taxable year, provided, however, that
17 in no case shall the amount determined in this
18 clause (the subtrahend) exceed the amount
19 determined in the preceding clause (the
20 minuend); and
21 (ii) the denominator shall be the average
22 aggregate, determined on a quarterly basis, of
23 the international banking facility's loans to
24 banks in foreign countries, to foreign
25 domiciled borrowers (except where secured
26 primarily by real estate) and to foreign
27 governments and other foreign official
28 institutions, which were recorded in its
29 financial accounts for the current taxable
30 year.
31 (C) Change to Consolidated Report of Condition
32 and in Qualification. In the event the Consolidated
33 Report of Condition which is filed with the Federal
34 Deposit Insurance Corporation and other regulatory
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1 authorities is altered so that the information
2 required for determining the floor amount is not
3 found on Schedule A, lines 2.c., 5.b. and 7.a., the
4 financial institution shall notify the Department
5 and the Department may, by regulations or otherwise,
6 prescribe or authorize the use of an alternative
7 source for such information. The financial
8 institution shall also notify the Department should
9 its international banking facility fail to qualify
10 as such, in whole or in part, or should there be any
11 amendment or change to the Consolidated Report of
12 Condition, as originally filed, to the extent such
13 amendment or change alters the information used in
14 determining the floor amount.
15 (d) Transportation services. Business income derived
16 from furnishing transportation services shall be apportioned
17 to this State in accordance with paragraphs (1) and (2):
18 (1) Such business income (other than that derived
19 from transportation by pipeline) shall be apportioned to
20 this State by multiplying such income by a fraction, the
21 numerator of which is the revenue miles of the person in
22 this State, and the denominator of which is the revenue
23 miles of the person everywhere. For purposes of this
24 paragraph, a revenue mile is the transportation of 1
25 passenger or 1 net ton of freight the distance of 1 mile
26 for a consideration. Where a person is engaged in the
27 transportation of both passengers and freight, the
28 fraction above referred to shall be determined by means
29 of an average of the passenger revenue mile fraction and
30 the freight revenue mile fraction, weighted to reflect
31 the person's
32 (A) relative railway operating income from
33 total passenger and total freight service, as
34 reported to the Interstate Commerce Commission, in
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1 the case of transportation by railroad, and
2 (B) relative gross receipts from passenger and
3 freight transportation, in case of transportation
4 other than by railroad.
5 (2) Such business income derived from
6 transportation by pipeline shall be apportioned to this
7 State by multiplying such income by a fraction, the
8 numerator of which is the revenue miles of the person in
9 this State, and the denominator of which is the revenue
10 miles of the person everywhere. For the purposes of this
11 paragraph, a revenue mile is the transportation by
12 pipeline of 1 barrel of oil, 1,000 cubic feet of gas, or
13 of any specified quantity of any other substance, the
14 distance of 1 mile for a consideration.
15 (e) Combined apportionment. Where 2 or more persons are
16 engaged in a unitary business as described in subsection
17 (a)(27) of Section 1501, a part of which is conducted in this
18 State by one or more members of the group, the business
19 income attributable to this State by any such member or
20 members shall be apportioned by means of the combined
21 apportionment method. For taxable years ending after December
22 31, 2001, in any case in which a partner is a member of a
23 unitary business group of which the partnership is also a
24 member and that partner has not made a pass-through election
25 with respect to such partnership, the portion of such
26 partnership's business income attributable to this State
27 shall be the sum of (i) each such unitary partner's share of
28 the portion of its business income attributable to this
29 State, computed by combining that partner's unitary business
30 income with that partner's share of the partnership's
31 business income, by using that partner's share of the
32 Illinois numerators of the partnership's apportionment
33 factors and by combining the denominators of that partner's
34 apportionment factors with the denominators of the
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1 partnership's apportionment factors, plus (ii) the share of
2 all other partners of the partnership attributable to this
3 State, computed by excluding the unitary partners' shares of
4 business income and the unitary partners' shares of the
5 Illinois numerators of the partnership's apportionment
6 factors from the apportionment computation. For partners who
7 have made a pass-through election, subsection (e) of Section
8 305 of this Act applies.
9 (f) Alternative allocation. If the allocation and
10 apportionment provisions of subsections (a) through (e) and
11 of subsection (h) do not fairly represent the extent of a
12 person's business activity in this State, the person may
13 petition for, or the Director may require, in respect of all
14 or any part of the person's business activity, if reasonable:
15 (1) Separate accounting;
16 (2) The exclusion of any one or more factors;
17 (3) The inclusion of one or more additional factors
18 which will fairly represent the person's business
19 activities in this State; or
20 (4) The employment of any other method to
21 effectuate an equitable allocation and apportionment of
22 the person's business income.
23 (g) Cross reference. For allocation of business income
24 by residents, see Section 301(a).
25 (h) For tax years ending on or after December 31, 1998,
26 the apportionment factor of persons who apportion their
27 business income to this State under subsection (a) shall be
28 equal to:
29 (1) for tax years ending on or after December 31,
30 1998 and before December 31, 1999, 16 2/3% of the
31 property factor plus 16 2/3% of the payroll factor plus
32 66 2/3% of the sales factor;
33 (2) for tax years ending on or after December 31,
34 1999 and before December 31, 2000, 8 1/3% of the property
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1 factor plus 8 1/3% of the payroll factor plus 83 1/3% of
2 the sales factor;
3 (3) for tax years ending on or after December 31,
4 2000, the sales factor.
5 If, in any tax year ending on or after December 31, 1998 and
6 before December 31, 2000, the denominator of the payroll,
7 property, or sales factor is zero, the apportionment factor
8 computed in paragraph (1) or (2) of this subsection for that
9 year shall be divided by an amount equal to 100% minus the
10 percentage weight given to each factor whose denominator is
11 equal to zero.
12 (Source: P.A. 90-562, eff. 12-16-97; 90-613, eff. 7-9-98;
13 91-541, eff. 8-13-99.)
14 (35 ILCS 5/305) (from Ch. 120, par. 3-305)
15 Sec. 305. Allocation of Partnership Income by
16 partnerships and partners other than residents.
17 (a) Allocation of partnership business income by
18 partners other than residents. For taxable years ending on or
19 before December 31, 2001, the respective shares of partners
20 other than residents in so much of the business income of the
21 partnership as is allocated or apportioned to this State in
22 the possession of the partnership shall be taken into account
23 by such partners pro rata in accordance with their respective
24 distributive shares of such partnership income for the
25 partnership's taxable year and allocated to this State.
26 (b) Allocation of partnership nonbusiness income by
27 partners other than residents. For taxable years ending on or
28 before December 31, 2001, the respective shares of partners
29 other than residents in the items of partnership income and
30 deduction not taken into account in computing the business
31 income of a partnership shall be taken into account by such
32 partners pro rata in accordance with their respective
33 distributive shares of such partnership income for the
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1 partnership's taxable year, and allocated as if such items
2 had been paid, incurred or accrued directly to such partners
3 in their separate capacities.
4 (c) Allocation or apportionment of base income by
5 partnership. Base income of a partnership shall be allocated
6 or apportioned to this State pursuant to Article 3, in the
7 same manner as it is allocated or apportioned for any other
8 nonresident.
9 (d) Cross reference. For allocation of partnership
10 income or deductions by residents for taxable years ending on
11 or before December 31, 2001, see Section 301 (a).
12 (e) For taxable years ending after December 31, 2001, a
13 partner who has made a pass-through election with respect to
14 a partnership shall include in net income:
15 (1) In the case of a resident partner:
16 (A) the partner's distributable share of the
17 net income or net loss of the partnership;
18 (B) the amount of the subtraction modification
19 allowed to the partnership under subparagraph (H) of
20 paragraph (2) of subsection (d) of Section 203 of
21 this Act that is allocable to the partner or
22 attributable to personal services rendered by the
23 partner; plus
24 (C) for purposes of determining the Personal
25 Property Tax Replacement Income Tax imposed under
26 Subsections (c) and (d) of this Act, a resident
27 trust shall include its share of the subtraction
28 modification allowed to the partnership under
29 subparagraph (I) of paragraph (2) of subsection (d)
30 of Section 203 of this Act.
31 (2) In the case of a partner other than a resident:
32 (A) the amount of the subtraction modification
33 allowed to the partnership under subparagraph (H) of
34 paragraph (2) of subsection (d) of Section 203 of
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1 this Act that is attributable to personal services
2 rendered by the partner that, if rendered by an
3 employee, would cause the employee's compensation to
4 be paid in this State under subparagraph (B) of
5 paragraph (2) of subsection (a) of Section 304 of
6 this Act; plus
7 (B) the partner's distributable share of the
8 net income or net loss of the partnership (plus, for
9 purposes of any Personal Property Tax Replacement
10 Income Tax imposed on the partner in subsections (c)
11 and (d) of this Act, the portion attributable to the
12 partner of the subtraction modification allowed to
13 the partnership under subparagraph (I) of paragraph
14 (2) of subsection (d) of Section 203 of this Act),
15 allocated or apportioned to this State as follows:
16 (i) Nonbusiness Income. The partner's
17 share of any item of the partnership's
18 nonbusiness income shall be allocated as if
19 such item had been paid, incurred or accrued
20 directly to such partner in his or her separate
21 capacity.
22 (ii) Business Income.
23 (aa) In a case in which the partner
24 and the partnership are members of a
25 unitary business group, the partner's
26 share of the partnership's business income
27 and apportionment factors shall be
28 combined with the business income and
29 factors of the partner.
30 (bb) In all other cases, the
31 partner's share of the business income of
32 the partnership which shall be allocated
33 to this State shall be the partner's share
34 of the business income apportioned to this
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1 State by the partnership under subsection
2 (c) of this Section.
3 (f) For taxable years ending after December 31, 2001, a
4 partner who has not made a pass-through election with respect
5 to a partnership shall include in net income:
6 (1) In the case of a resident partner, the amount
7 of the subtraction modification allowed to the
8 partnership under subparagraph (H) of paragraph (2) of
9 subsection (d) of Section 203 of this Act that is
10 allocable to the partner or attributable to personal
11 services rendered by the partner.
12 (2) In the case of a partner other than a resident,
13 the amount of the subtraction modification allowed to the
14 partnership under subparagraph (H) of paragraph (2) of
15 subsection (d) of Section 203 of this Act that is
16 attributable to personal services rendered by the partner
17 that, if rendered by an employee, would cause the
18 employee's compensation to be paid in this State under
19 subparagraph (B) of paragraph (2) of subsection (a) of
20 Section 304 of this Act.
21 (Source: P.A. 84-550.)
22 (35 ILCS 5/308) (from Ch. 120, par. 3-308)
23 Sec. 308. Allocation of Subchapter S Corporation Income
24 by Subchapter S Corporations and Shareholders Other Than
25 Residents.
26 (a) Allocation of Subchapter S corporation business
27 income by shareholders other than residents. For taxable
28 years ending on or before December 31, 2001, the respective
29 shares of shareholders other than residents in so much of the
30 business income of the Subchapter S corporation as is
31 allocated or apportioned to this State in the hands of the
32 Subchapter S corporation shall be taken into account by such
33 shareholder pro rata in accordance with the requirements of
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1 Section 1366 of the Internal Revenue Code for the Subchapter
2 S corporation's taxable year and allocated to this State.
3 (b) Allocation of Subchapter S corporation nonbusiness
4 income by shareholders other than residents. For taxable
5 years ending on or before December 31, 2001, the respective
6 share of shareholders other than residents in the items of
7 Subchapter S corporation income and deduction not taken into
8 account in computing the business income of the Subchapter S
9 corporation shall be taken into account by such shareholders
10 pro rata in accordance with the requirements of Section 1366
11 of the Internal Revenue Code for the corporation's taxable
12 year, and allocated as if such items had been paid, incurred
13 or accrued directly to such shareholders in their separate
14 capacities.
15 (c) Allocation or apportionment of base income by the
16 Subchapter S corporation. Base income of a Subchapter S
17 corporation shall be allocated or apportioned to this State
18 pursuant to this Article 3 in the same manner as it is
19 allocated or apportioned for any other nonresident.
20 (d) For taxable years ending on or before December 31,
21 2001, this Section shall not apply to any corporation for
22 which there is in effect a federal election to opt out of the
23 provisions of the Subchapter S Revision Act of 1982 and have
24 applied instead the prior federal Subchapter S rules as in
25 effect on July 1, 1982.
26 (e) Allocation of base income of Subchapter S
27 corporation to shareholders. For taxable years ending after
28 December 31, 2001, a shareholder who has made a pass-through
29 election with respect to a Subchapter S corporation shall
30 include in net income:
31 (1) In the case of a resident shareholder:
32 (A) the shareholder's distributable share of
33 the base income or loss of the Subchapter S
34 corporation, as determined in subsection (b) of
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1 Section 203 of this Act; plus
2 (B) for purposes of determining the Personal
3 Property Tax Replacement Income Tax imposed under
4 Subsections (c) and (d) of Section 201 of this Act
5 of a resident trust, the trust shall include its
6 share of the subtraction modification allowed to the
7 Subchapter S corporation under subparagraph (T) of
8 paragraph (2) of subsection (b) of Section 203 of
9 this Act.
10 (2) in the case of a shareholder other than a
11 resident:
12 (A) The shareholder's share of the net income
13 or loss of the corporation (plus, for purposes of
14 any Personal Property Tax Replacement Income Tax
15 imposed on the shareholder in subsections (c) and
16 (d) of Section 201 of this Act, the portion
17 attributable to the partner of the subtraction
18 modification allowed to the partnership under
19 subparagraph (I) of paragraph (2) of subsection (d)
20 of Section 203 of this Act), allocated or
21 apportioned to this State as follows:
22 (i) Nonbusiness Income. The
23 shareholder's share of any item of the
24 Subchapter S corporation's nonbusiness income
25 shall be as if such item had been paid,
26 incurred or accrued directly to such
27 shareholder in his or her separate capacity.
28 (ii) Business Income. The shareholder's
29 share of the business income of the Subchapter
30 S corporation allocated to this State under
31 subsection (c) of this Section.
32 (Source: P.A. 83-1352.)
33 (35 ILCS 5/502) (from Ch. 120, par. 5-502)
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1 Sec. 502. Returns and notices.
2 (a) In general. A return with respect to the taxes
3 imposed by this Act shall be made by every person for any
4 taxable year:
5 (1) For which such person is liable for a tax
6 imposed by this Act, or
7 (2) In the case of a resident or in the case of a
8 corporation which is qualified to do business in this
9 State, for which such person is required to make a
10 federal income tax return, regardless of whether such
11 person is liable for a tax imposed by this Act. However,
12 this paragraph shall not require a resident to make a
13 return if such person has an Illinois base income of the
14 basic amount in Section 204(b) or less and is either
15 claimed as a dependent on another person's tax return
16 under the Internal Revenue Code of 1986, or is claimed as
17 a dependent on another person's tax return under this
18 Act.
19 (b) Fiduciaries and receivers.
20 (1) Decedents. If an individual is deceased, any
21 return or notice required of such individual under this
22 Act shall be made by his executor, administrator, or
23 other person charged with the property of such decedent.
24 (2) Individuals under a disability. If an
25 individual is unable to make a return or notice required
26 under this Act, the return or notice required of such
27 individual shall be made by his duly authorized agent,
28 guardian, fiduciary or other person charged with the care
29 of the person or property of such individual.
30 (3) Estates and trusts. Returns or notices required
31 of an estate or a trust shall be made by the fiduciary
32 thereof.
33 (4) Receivers, trustees and assignees for
34 corporations. In a case where a receiver, trustee in
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1 bankruptcy, or assignee, by order of a court of competent
2 jurisdiction, by operation of law, or otherwise, has
3 possession of or holds title to all or substantially all
4 the property or business of a corporation, whether or not
5 such property or business is being operated, such
6 receiver, trustee, or assignee shall make the returns and
7 notices required of such corporation in the same manner
8 and form as corporations are required to make such
9 returns and notices.
10 (c) Joint returns by husband and wife.
11 (1) Except as provided in paragraph (3), if a
12 husband and wife file a joint federal income tax return
13 for a taxable year they shall file a joint return under
14 this Act for such taxable year and their liabilities
15 shall be joint and several, but if the federal income tax
16 liability of either spouse is determined on a separate
17 federal income tax return, they shall file separate
18 returns under this Act.
19 (2) If neither spouse is required to file a federal
20 income tax return and either or both are required to file
21 a return under this Act, they may elect to file separate
22 or joint returns and pursuant to such election their
23 liabilities shall be separate or joint and several.
24 (3) If either husband or wife is a resident and the
25 other is a nonresident, they shall file separate returns
26 in this State on such forms as may be required by the
27 Department in which event their tax liabilities shall be
28 separate; but they may elect to determine their joint net
29 income and file a joint return as if both were residents
30 and in such case, their liabilities shall be joint and
31 several.
32 (4) Innocent spouses.
33 (A) However, for tax liabilities arising and
34 paid prior to the effective date of this amendatory
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1 Act of the 91st General Assembly, an innocent spouse
2 shall be relieved of liability for tax (including
3 interest and penalties) for any taxable year for
4 which a joint return has been made, upon submission
5 of proof that the Internal Revenue Service has made
6 a determination under Section 6013(e) of the
7 Internal Revenue Code, for the same taxable year,
8 which determination relieved the spouse from
9 liability for federal income taxes. If there is no
10 federal income tax liability at issue for the same
11 taxable year, the Department shall rely on the
12 provisions of Section 6013(e) to determine whether
13 the person requesting innocent spouse abatement of
14 tax, penalty, and interest is entitled to that
15 relief.
16 (B) For tax liabilities arising after the
17 effective date of this amendatory Act of the 91st
18 General Assembly or which arose prior to that
19 effective date, but remain unpaid as of the
20 effective date, if an individual who filed a joint
21 return for any taxable year has made an election
22 under this paragraph, the individual's liability for
23 any tax shown on the joint return shall not exceed
24 the individual's separate return amount and the
25 individual's liability for any deficiency assessed
26 for that taxable year shall not exceed the portion
27 of the deficiency properly allocable to the
28 individual. For purposes of this paragraph:
29 (i) An election properly made pursuant to
30 Section 6015 of the Internal Revenue Code shall
31 constitute an election under this paragraph,
32 provided that the election shall not be
33 effective until the individual has notified the
34 Department of the election in the form and
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1 manner prescribed by the Department.
2 (ii) If no election has been made under
3 Section 6015, the individual may make an
4 election under this paragraph in the form and
5 manner prescribed by the Department, provided
6 that no election may be made if the Department
7 finds that assets were transferred between
8 individuals filing a joint return as part of a
9 scheme by such individuals to avoid payment of
10 Illinois income tax and the election shall not
11 eliminate the individual's liability for any
12 portion of a deficiency attributable to an
13 error on the return of which the individual had
14 actual knowledge as of the date of filing.
15 (iii) In determining the separate return
16 amount or portion of any deficiency
17 attributable to an individual, the Department
18 shall follow the provisions in Section 6015(b)
19 and (c) of the Internal Revenue Code.
20 (iv) In determining the validity of an
21 individual's election under subparagraph (ii)
22 and in determining an electing individual's
23 separate return amount or portion of any
24 deficiency under subparagraph (iii), any
25 determination made by the Secretary of the
26 Treasury under Section 6015(a) of the Internal
27 Revenue Code regarding criteria for eligibility
28 or under Section 6015(b) or (c) of the Internal
29 Revenue Code regarding the allocation of any
30 item of income, deduction, payment, or credit
31 between an individual making the federal
32 election and that individual's spouse shall be
33 conclusively presumed to be correct. With
34 respect to any item that is not the subject of
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1 a determination by the Secretary of the
2 Treasury, in any proceeding involving this
3 subsection, the individual making the election
4 shall have the burden of proof with respect to
5 any item except that the Department shall have
6 the burden of proof with respect to items in
7 subdivision (ii).
8 (v) Any election made by an individual
9 under this subsection shall apply to all years
10 for which that individual and the spouse named
11 in the election have filed a joint return.
12 (vi) After receiving a notice that the
13 federal election has been made or after
14 receiving an election under subdivision (ii),
15 the Department shall take no collection action
16 against the electing individual for any
17 liability arising from a joint return covered
18 by the election until the Department has
19 notified the electing individual in writing
20 that the election is invalid or of the portion
21 of the liability the Department has allocated
22 to the electing individual. Within 60 days
23 (150 days if the individual is outside the
24 United States) after the issuance of such
25 notification, the individual may file a written
26 protest of the denial of the election or of the
27 Department's determination of the liability
28 allocated to him or her and shall be granted a
29 hearing within the Department under the
30 provisions of Section 908. If a protest is
31 filed, the Department shall take no collection
32 action against the electing individual until
33 the decision regarding the protest has become
34 final under subsection (d) of Section 908 or,
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1 if administrative review of the Department's
2 decision is requested under Section 1201, until
3 the decision of the court becomes final.
4 (d) Partnerships. Every partnership having any base
5 income allocable to this State in accordance with section
6 305(c) shall retain information concerning all items of
7 income, gain, loss and deduction; the names and addresses of
8 all of the partners, or names and addresses of members of a
9 limited liability company, or other persons who would be
10 entitled to share in the base income of the partnership if
11 distributed; the amount of the distributive share of each;
12 and such other pertinent information as the Department may by
13 forms or regulations prescribe. The partnership shall make
14 that information available to the Department when requested
15 by the Department.
16 (e) For taxable years ending on or after December 31,
17 1985, and before December 31, 1993, taxpayers that are
18 corporations (other than Subchapter S corporations) having
19 the same taxable year and that are members of the same
20 unitary business group may elect to be treated as one
21 taxpayer for purposes of any original return, amended return
22 which includes the same taxpayers of the unitary group which
23 joined in the election to file the original return,
24 extension, claim for refund, assessment, collection and
25 payment and determination of the group's tax liability under
26 this Act. This subsection (e) does not permit the election to
27 be made for some, but not all, of the purposes enumerated
28 above. For taxable years ending on or after December 31,
29 1987, corporate members (other than Subchapter S
30 corporations) of the same unitary business group making this
31 subsection (e) election are not required to have the same
32 taxable year.
33 For taxable years ending on or after December 31, 1993,
34 taxpayers that are corporations (other than Subchapter S
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1 corporations) and that are members of the same unitary
2 business group shall be treated as one taxpayer for purposes
3 of any original return, amended return which includes the
4 same taxpayers of the unitary group which joined in filing
5 the original return, extension, claim for refund, assessment,
6 collection and payment and determination of the group's tax
7 liability under this Act.
8 (f) For taxable years ending on or before December 31,
9 2001, the Department may promulgate regulations to permit
10 nonresident individual partners of the same partnership,
11 nonresident Subchapter S corporation shareholders of the same
12 Subchapter S corporation, and nonresident individuals
13 transacting an insurance business in Illinois under a Lloyds
14 plan of operation, and nonresident individual members of the
15 same limited liability company that is treated as a
16 partnership under Section 1501 (a)(16) of this Act, to file
17 composite individual income tax returns reflecting the
18 composite income of such individuals allocable to Illinois
19 and to make composite individual income tax payments. The
20 Department may by regulation also permit such composite
21 returns to include the income tax owed by Illinois residents
22 attributable to their income from partnerships, Subchapter S
23 corporations, insurance businesses organized under a Lloyds
24 plan of operation, or limited liability companies that are
25 treated as partnership under Section 1501 (a)(16) of this
26 Act, in which case such Illinois residents will be permitted
27 to claim credits on their individual returns for their shares
28 of the composite tax payments. This paragraph of subsection
29 (f) applies to taxable years ending on or after December 31,
30 1987.
31 For taxable years ending on or after December 31, 1999,
32 the Department may, by regulation, also permit any persons
33 transacting an insurance business organized under a Lloyds
34 plan of operation to file composite returns reflecting the
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1 income of such persons allocable to Illinois and the tax
2 rates applicable to such persons under Section 201 and to
3 make composite tax payments and shall, by regulation, also
4 provide that the income and apportionment factors
5 attributable to the transaction of an insurance business
6 organized under a Lloyds plan of operation by any person
7 joining in the filing of a composite return shall, for
8 purposes of allocating and apportioning income under Article
9 3 of this Act and computing net income under Section 202 of
10 this Act, be excluded from any other income and apportionment
11 factors of that person or of any unitary business group, as
12 defined in subdivision (a)(27) of Section 1501, to which that
13 person may belong.
14 (g) The Department may adopt rules to authorize the
15 electronic filing of any return required to be filed under
16 this Section.
17 (Source: P.A. 90-613, eff. 7-9-98; 91-541, eff. 8-13-99;
18 91-913, eff. 1-1-01.)
19 (35 ILCS 5/803) (from Ch. 120, par. 8-803)
20 Sec. 803. Payment of Estimated Tax.
21 (a) Every taxpayer other than an estate, trust,
22 partnership, Subchapter S corporation or farmer is required
23 to pay estimated tax for the taxable year, in such amount and
24 with such forms as the Department shall prescribe, if the
25 amount payable as estimated tax can reasonably be expected to
26 be more than (i) $250 for taxable years ending before
27 December 31, 2001 and $500 for taxable years ending on or
28 after December 31, 2001 or (ii) $400 for partnerships and
29 corporations.
30 (b) Estimated tax defined. The term "estimated tax"
31 means the excess of:
32 (1) The amount which the taxpayer estimates to be
33 his tax under this Act for the taxable year, over
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1 (2) The amount which he estimates to be the sum of
2 any amounts to be withheld on account of or credited
3 against such tax.
4 (c) Joint payment. If they are eligible to do so for
5 federal tax purposes, a husband and wife may pay estimated
6 tax as if they were one taxpayer, in which case the liability
7 with respect to the estimated tax shall be joint and several.
8 If a joint payment is made but the husband and wife elect to
9 determine their taxes under this Act separately, the
10 estimated tax for such year may be treated as the estimated
11 tax of either husband or wife, or may be divided between
12 them, as they may elect.
13 (d) There shall be paid 4 equal installments of
14 estimated tax for each taxable year, payable as follows:
15 Required Installment: Due Date:
16 1st April 15
17 2nd June 15
18 3rd September 15
19 4th Individuals: January 15 of the
20 following taxable year
21 Corporations and partnerships:
22 December 15
23 (e) Farmers. An individual, having gross income from
24 farming for the taxable year which is at least 2/3 of his
25 total estimated gross income for such year.
26 (f) Application to short taxable years. The application
27 of this section to taxable years of less than 12 months shall
28 be in accordance with regulations prescribed by the
29 Department.
30 (g) Fiscal years. In the application of this section to
31 the case of a taxable year beginning on any date other than
32 January 1, there shall be substituted, for the months
33 specified in subsections (d) and (e), the months which
34 correspond thereto.
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1 (h) Installments paid in advance. Any installment of
2 estimated tax may be paid before the date prescribed for its
3 payment.
4 The changes in this Section made by this amendatory Act
5 of 1985 shall apply to taxable years ending on or after
6 January 1, 1986.
7 (Source: P.A. 91-913, eff. 1-1-01.)
8 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
9 Sec. 1501. Definitions.
10 (a) In general. When used in this Act, where not
11 otherwise distinctly expressed or manifestly incompatible
12 with the intent thereof:
13 (1) Business income. The term "business income"
14 means income arising from transactions and activity in
15 the regular course of the taxpayer's trade or business,
16 net of the deductions allocable thereto, and includes
17 income from tangible and intangible property if the
18 acquisition, management, and disposition of the property
19 constitute integral parts of the taxpayer's regular trade
20 or business operations. Such term does not include
21 compensation or the deductions allocable thereto. Any
22 subtraction modification allowed to the partnership under
23 subparagraph (H) of paragraph (2) of subsection (d) of
24 Section 203 of this Act shall be allocable to the
25 business income of the partnership.
26 (2) Commercial domicile. The term "commercial
27 domicile" means the principal place from which the trade
28 or business of the taxpayer is directed or managed.
29 (3) Compensation. The term "compensation" means
30 wages, salaries, commissions and any other form of
31 remuneration paid to employees for personal services.
32 (4) Corporation. The term "corporation" includes
33 associations, joint-stock companies, insurance companies
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1 and cooperatives. Any entity, including a limited
2 liability company formed under the Illinois Limited
3 Liability Company Act, shall be treated as a corporation
4 if it is so classified for federal income tax purposes.
5 (5) Department. The term "Department" means the
6 Department of Revenue of this State.
7 (6) Director. The term "Director" means the
8 Director of Revenue of this State.
9 (7) Fiduciary. The term "fiduciary" means a
10 guardian, trustee, executor, administrator, receiver, or
11 any person acting in any fiduciary capacity for any
12 person.
13 (8) Financial organization.
14 (A) The term "financial organization" means
15 any bank, bank holding company, trust company,
16 savings bank, industrial bank, land bank, safe
17 deposit company, private banker, savings and loan
18 association, building and loan association, credit
19 union, currency exchange, cooperative bank, small
20 loan company, sales finance company, investment
21 company, or any person which is owned by a bank or
22 bank holding company. For the purpose of this
23 Section a "person" will include only those persons
24 which a bank holding company may acquire and hold an
25 interest in, directly or indirectly, under the
26 provisions of the Bank Holding Company Act of 1956
27 (12 U.S.C. 1841, et seq.), except where interests in
28 any person must be disposed of within certain
29 required time limits under the Bank Holding Company
30 Act of 1956.
31 (B) For purposes of subparagraph (A) of this
32 paragraph, the term "bank" includes (i) any entity
33 that is regulated by the Comptroller of the Currency
34 under the National Bank Act, or by the Federal
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1 Reserve Board, or by the Federal Deposit Insurance
2 Corporation and (ii) any federally or State
3 chartered bank operating as a credit card bank.
4 (C) For purposes of subparagraph (A) of this
5 paragraph, the term "sales finance company" has the
6 meaning provided in the following item (i) or (ii):
7 (i) A person primarily engaged in one or
8 more of the following businesses: the business
9 of purchasing customer receivables, the
10 business of making loans upon the security of
11 customer receivables, the business of making
12 loans for the express purpose of funding
13 purchases of tangible personal property or
14 services by the borrower, or the business of
15 finance leasing. For purposes of this item
16 (i), "customer receivable" means:
17 (a) a retail installment contract or
18 retail charge agreement within the meaning of
19 the Sales Finance Agency Act, the Retail
20 Installment Sales Act, or the Motor Vehicle
21 Retail Installment Sales Act;
22 (b) an installment, charge, credit, or
23 similar contract or agreement arising from the
24 sale of tangible personal property or services
25 in a transaction involving a deferred payment
26 price payable in one or more installments
27 subsequent to the sale; or
28 (c) the outstanding balance of a contract
29 or agreement described in provisions (a) or (b)
30 of this item (i).
31 A customer receivable need not provide for
32 payment of interest on deferred payments. A sales
33 finance company may purchase a customer receivable
34 from, or make a loan secured by a customer
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1 receivable to, the seller in the original
2 transaction or to a person who purchased the
3 customer receivable directly or indirectly from that
4 seller.
5 (ii) A corporation meeting each of the
6 following criteria:
7 (a) the corporation must be a member of
8 an "affiliated group" within the meaning of
9 Section 1504(a) of the Internal Revenue Code,
10 determined without regard to Section 1504(b) of
11 the Internal Revenue Code;
12 (b) more than 50% of the gross income of
13 the corporation for the taxable year must be
14 interest income derived from qualifying loans.
15 A "qualifying loan" is a loan made to a member
16 of the corporation's affiliated group that
17 originates customer receivables (within the
18 meaning of item (i)) or to whom customer
19 receivables originated by a member of the
20 affiliated group have been transferred, to the
21 extent the average outstanding balance of loans
22 from that corporation to members of its
23 affiliated group during the taxable year do not
24 exceed the limitation amount for that
25 corporation. The "limitation amount" for a
26 corporation is the average outstanding balances
27 during the taxable year of customer receivables
28 (within the meaning of item (i)) originated by
29 all members of the affiliated group. If the
30 average outstanding balances of the loans made
31 by a corporation to members of its affiliated
32 group exceed the limitation amount, the
33 interest income of that corporation from
34 qualifying loans shall be equal to its interest
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1 income from loans to members of its affiliated
2 groups times a fraction equal to the limitation
3 amount divided by the average outstanding
4 balances of the loans made by that corporation
5 to members of its affiliated group;
6 (c) the total of all shareholder's equity
7 (including, without limitation, paid-in capital
8 on common and preferred stock and retained
9 earnings) of the corporation plus the total of
10 all of its loans, advances, and other
11 obligations payable or owed to members of its
12 affiliated group may not exceed 20% of the
13 total assets of the corporation at any time
14 during the tax year; and
15 (d) more than 50% of all interest-bearing
16 obligations of the affiliated group payable to
17 persons outside the group determined in
18 accordance with generally accepted accounting
19 principles must be obligations of the
20 corporation.
21 This amendatory Act of the 91st General Assembly is
22 declaratory of existing law.
23 (D) Subparagraphs (B) and (C) of this
24 paragraph are declaratory of existing law and apply
25 retroactively, for all tax years beginning on or
26 before December 31, 1996, to all original returns,
27 to all amended returns filed no later than 30 days
28 after the effective date of this amendatory Act of
29 1996, and to all notices issued on or before the
30 effective date of this amendatory Act of 1996 under
31 subsection (a) of Section 903, subsection (a) of
32 Section 904, subsection (e) of Section 909, or
33 Section 912. A taxpayer that is a "financial
34 organization" that engages in any transaction with
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1 an affiliate shall be a "financial organization" for
2 all purposes of this Act.
3 (E) For all tax years beginning on or before
4 December 31, 1996, a taxpayer that falls within the
5 definition of a "financial organization" under
6 subparagraphs (B) or (C) of this paragraph, but who
7 does not fall within the definition of a "financial
8 organization" under the Proposed Regulations issued
9 by the Department of Revenue on July 19, 1996, may
10 irrevocably elect to apply the Proposed Regulations
11 for all of those years as though the Proposed
12 Regulations had been lawfully promulgated, adopted,
13 and in effect for all of those years. For purposes
14 of applying subparagraphs (B) or (C) of this
15 paragraph to all of those years, the election
16 allowed by this subparagraph applies only to the
17 taxpayer making the election and to those members of
18 the taxpayer's unitary business group who are
19 ordinarily required to apportion business income
20 under the same subsection of Section 304 of this Act
21 as the taxpayer making the election. No election
22 allowed by this subparagraph shall be made under a
23 claim filed under subsection (d) of Section 909 more
24 than 30 days after the effective date of this
25 amendatory Act of 1996.
26 (F) Finance Leases. For purposes of this
27 subsection, a finance lease shall be treated as a
28 loan or other extension of credit, rather than as a
29 lease, regardless of how the transaction is
30 characterized for any other purpose, including the
31 purposes of any regulatory agency to which the
32 lessor is subject. A finance lease is any
33 transaction in the form of a lease in which the
34 lessee is treated as the owner of the leased asset
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1 entitled to any deduction for depreciation allowed
2 under Section 167 of the Internal Revenue Code.
3 (9) Fiscal year. The term "fiscal year" means an
4 accounting period of 12 months ending on the last day of
5 any month other than December.
6 (10) Includes and including. The terms "includes"
7 and "including" when used in a definition contained in
8 this Act shall not be deemed to exclude other things
9 otherwise within the meaning of the term defined.
10 (11) Internal Revenue Code. The term "Internal
11 Revenue Code" means the United States Internal Revenue
12 Code of 1954 or any successor law or laws relating to
13 federal income taxes in effect for the taxable year.
14 (12) Mathematical error. The term "mathematical
15 error" includes the following types of errors, omissions,
16 or defects in a return filed by a taxpayer which prevents
17 acceptance of the return as filed for processing:
18 (A) arithmetic errors or incorrect
19 computations on the return or supporting schedules;
20 (B) entries on the wrong lines;
21 (C) omission of required supporting forms or
22 schedules or the omission of the information in
23 whole or in part called for thereon; and
24 (D) an attempt to claim, exclude, deduct, or
25 improperly report, in a manner directly contrary to
26 the provisions of the Act and regulations thereunder
27 any item of income, exemption, deduction, or credit.
28 (13) Nonbusiness income. The term "nonbusiness
29 income" means all income other than business income or
30 compensation.
31 (14) Nonresident. The term "nonresident" means a
32 person who is not a resident.
33 (15) Paid, incurred and accrued. The terms "paid",
34 "incurred" and "accrued" shall be construed according to
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1 the method of accounting upon the basis of which the
2 person's base income is computed under this Act.
3 (16) Partnership and partner. The term
4 "partnership" includes a syndicate, group, pool, joint
5 venture or other unincorporated organization, through or
6 by means of which any business, financial operation, or
7 venture is carried on, and which is not, within the
8 meaning of this Act, a trust or estate or a corporation;
9 and the term "partner" includes a member in such
10 syndicate, group, pool, joint venture or organization
11 and. The term "partnership" includes any entity,
12 including a limited liability company formed under the
13 Illinois Limited Liability Company Act, classified as a
14 partnership for federal income tax purposes. However, the
15 term "partnership" does not include a syndicate, group,
16 pool, joint venture, or other unincorporated organization
17 established for the sole purpose of playing the Illinois
18 State Lottery or any entity that is excluded from the
19 application of Subchapter K of the Internal Revenue Code
20 pursuant to an election under Section 761(a) of the
21 Internal Revenue Code.
22 For taxable years ending after December 31, 2001,
23 the following entities shall be classified as
24 partnerships for all purposes of this Act, and the owner
25 or parent of each such entity shall be classified as a
26 partner for all purposes of this Act, and such entities,
27 owners and parents shall compute their net incomes as if
28 such entities were subject to Subchapter K of the
29 Internal Revenue Code:
30 (A) any entity that has elected to be
31 disregarded as an entity separate from its owner
32 pursuant to Treasury Regulation Section
33 301.7701-3(a); or
34 (B) a qualified REIT subsidiary, within the
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1 meaning of Section 856(i) of the Internal Revenue
2 Code.
3 (17) Part-year resident. The term "part-year
4 resident" means an individual who became a resident
5 during the taxable year or ceased to be a resident during
6 the taxable year. Under Section 1501 (a) (20) (A) (i)
7 residence commences with presence in this State for other
8 than a temporary or transitory purpose and ceases with
9 absence from this State for other than a temporary or
10 transitory purpose. Under Section 1501 (a) (20) (A) (ii)
11 residence commences with the establishment of domicile in
12 this State and ceases with the establishment of domicile
13 in another State.
14 (18) Person. The term "person" shall be construed
15 to mean and include an individual, a trust, estate,
16 partnership, association, firm, company, corporation,
17 limited liability company, or fiduciary. For purposes of
18 Section 1301 and 1302 of this Act, a "person" means (i)
19 an individual, (ii) a corporation, (iii) an officer,
20 agent, or employee of a corporation, (iv) a member, agent
21 or employee of a partnership, or (v) a member, manager,
22 employee, officer, director, or agent of a limited
23 liability company who in such capacity commits an offense
24 specified in Section 1301 and 1302.
25 (18A) Records. The term "records" includes all
26 data maintained by the taxpayer, whether on paper,
27 microfilm, microfiche, or any type of machine-sensible
28 data compilation.
29 (19) Regulations. The term "regulations" includes
30 rules promulgated and forms prescribed by the Department.
31 (20) Resident. The term "resident" means:
32 (A) an individual (i) who is in this State for
33 other than a temporary or transitory purpose during
34 the taxable year; or (ii) who is domiciled in this
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1 State but is absent from the State for a temporary
2 or transitory purpose during the taxable year;
3 (B) The estate of a decedent who at his or her
4 death was domiciled in this State;
5 (C) A trust created by a will of a decedent
6 who at his death was domiciled in this State; and
7 (D) An irrevocable trust, the grantor of which
8 was domiciled in this State at the time such trust
9 became irrevocable. For purpose of this
10 subparagraph, a trust shall be considered
11 irrevocable to the extent that the grantor is not
12 treated as the owner thereof under Sections 671
13 through 678 of the Internal Revenue Code.
14 (21) Sales. The term "sales" means all gross
15 receipts of the taxpayer not allocated under Sections
16 301, 302 and 303.
17 (22) State. The term "state" when applied to a
18 jurisdiction other than this State means any state of the
19 United States, the District of Columbia, the Commonwealth
20 of Puerto Rico, any Territory or Possession of the United
21 States, and any foreign country, or any political
22 subdivision of any of the foregoing. For purposes of the
23 foreign tax credit under Section 601, the term "state"
24 means any state of the United States, the District of
25 Columbia, the Commonwealth of Puerto Rico, and any
26 territory or possession of the United States, or any
27 political subdivision of any of the foregoing, effective
28 for tax years ending on or after December 31, 1989.
29 (23) Taxable year. The term "taxable year" means
30 the calendar year, or the fiscal year ending during such
31 calendar year, upon the basis of which the base income is
32 computed under this Act. "Taxable year" means, in the
33 case of a return made for a fractional part of a year
34 under the provisions of this Act, the period for which
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1 such return is made.
2 (24) Taxpayer. The term "taxpayer" means any person
3 subject to the tax imposed by this Act.
4 (25) International banking facility. The term
5 international banking facility shall have the same
6 meaning as is set forth in the Illinois Banking Act or as
7 is set forth in the laws of the United States or
8 regulations of the Board of Governors of the Federal
9 Reserve System.
10 (26) Income Tax Return Preparer.
11 (A) The term "income tax return preparer"
12 means any person who prepares for compensation, or
13 who employs one or more persons to prepare for
14 compensation, any return of tax imposed by this Act
15 or any claim for refund of tax imposed by this Act.
16 The preparation of a substantial portion of a return
17 or claim for refund shall be treated as the
18 preparation of that return or claim for refund.
19 (B) A person is not an income tax return
20 preparer if all he or she does is
21 (i) furnish typing, reproducing, or other
22 mechanical assistance;
23 (ii) prepare returns or claims for
24 refunds for the employer by whom he or she is
25 regularly and continuously employed;
26 (iii) prepare as a fiduciary returns or
27 claims for refunds for any person; or
28 (iv) prepare claims for refunds for a
29 taxpayer in response to any notice of
30 deficiency issued to that taxpayer or in
31 response to any waiver of restriction after the
32 commencement of an audit of that taxpayer or of
33 another taxpayer if a determination in the
34 audit of the other taxpayer directly or
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1 indirectly affects the tax liability of the
2 taxpayer whose claims he or she is preparing.
3 (27) Unitary business group. The term "unitary
4 business group" means a group of persons related through
5 common ownership whose business activities are integrated
6 with, dependent upon and contribute to each other. The
7 group will not include those members whose business
8 activity outside the United States is 80% or more of any
9 such member's total business activity; for purposes of
10 this paragraph and clause (a) (3) (B) (ii) of Section
11 304, business activity within the United States shall be
12 measured by means of the factors ordinarily applicable
13 under subsections (a), (b), (c), (d), or (h) of Section
14 304 except that, in the case of members ordinarily
15 required to apportion business income by means of the 3
16 factor formula of property, payroll and sales specified
17 in subsection (a) of Section 304, including the formula
18 as weighted in subsection (h) of Section 304, such
19 members shall not use the sales factor in the computation
20 and the results of the property and payroll factor
21 computations of subsection (a) of Section 304 shall be
22 divided by 2 (by one if either the property or payroll
23 factor has a denominator of zero) and provided that, in
24 the case of a partnership, the payroll factor shall
25 include any amount described in subparagraph (H) of
26 paragraph (2) of subsection (d) of Section 203 of this
27 Act (whether or not allocable to a partner who has
28 elected to pay tax on his or her distributable share of
29 the base income of the partnership) and the numerator
30 shall include any amount attributable to a partner for
31 personal services rendered that would, if rendered by an
32 employee, cause the employee's compensation to be
33 included in the numerator of the payroll factor. The
34 computation required by the preceding sentence shall, in
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1 each case, involve the division of the member's property,
2 payroll, or revenue miles in the United States, insurance
3 premiums on property or risk in the United States, or
4 financial organization business income from sources
5 within the United States, as the case may be, by the
6 respective worldwide figures for such items. Common
7 ownership in the case of corporations is the direct or
8 indirect control or ownership of more than 50% of the
9 outstanding voting stock of the persons carrying on
10 unitary business activity. Unitary business activity can
11 ordinarily be illustrated where the activities of the
12 members are: (1) in the same general line (such as
13 manufacturing, wholesaling, retailing of tangible
14 personal property, insurance, transportation or finance);
15 or (2) are steps in a vertically structured enterprise or
16 process (such as the steps involved in the production of
17 natural resources, which might include exploration,
18 mining, refining, and marketing); and, in either
19 instance, the members are functionally integrated through
20 the exercise of strong centralized management (where, for
21 example, authority over such matters as purchasing,
22 financing, tax compliance, product line, personnel,
23 marketing and capital investment is not left to each
24 member). In no event, however, will any unitary business
25 group include members which are ordinarily required to
26 apportion business income under different subsections of
27 Section 304 except that for tax years ending on or after
28 December 31, 1987 this prohibition shall not apply to a
29 unitary business group composed of one or more taxpayers
30 all of which apportion business income pursuant to
31 subsection (b) of Section 304, or all of which apportion
32 business income pursuant to subsection (d) of Section
33 304, and a holding company of such single-factor
34 taxpayers (see definition of "financial organization" for
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1 rule regarding holding companies of financial
2 organizations). If a unitary business group would, but
3 for the preceding sentence, include members that are
4 ordinarily required to apportion business income under
5 different subsections of Section 304, then for each
6 subsection of Section 304 for which there are two or more
7 members, there shall be a separate unitary business group
8 composed of such members. For purposes of the preceding
9 two sentences, a member is "ordinarily required to
10 apportion business income" under a particular subsection
11 of Section 304 if it would be required to use the
12 apportionment method prescribed by such subsection except
13 for the fact that it derives business income solely from
14 Illinois. If the unitary business group members'
15 accounting periods differ, the common parent's accounting
16 period or, if there is no common parent, the accounting
17 period of the member that is expected to have, on a
18 recurring basis, the greatest Illinois income tax
19 liability must be used to determine whether to use the
20 apportionment method provided in subsection (a) or
21 subsection (h) of Section 304. The prohibition against
22 membership in a unitary business group for taxpayers
23 ordinarily required to apportion income under different
24 subsections of Section 304 does not apply to taxpayers
25 required to apportion income under subsection (a) and
26 subsection (h) of Section 304. The provisions of this
27 amendatory Act of 1998 apply to tax years ending on or
28 after December 31, 1998.
29 (28) Subchapter S corporation. The term
30 "Subchapter S corporation" means a corporation for which
31 there is in effect an election under Section 1362 of the
32 Internal Revenue Code, or for which there is a federal
33 election to opt out of the provisions of the Subchapter S
34 Revision Act of 1982 and have applied instead the prior
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1 federal Subchapter S rules as in effect on July 1, 1982.
2 For taxable years ending after December 31, 2001, a
3 qualified Subchapter S corporation subsidiary, within the
4 meaning of Section 1361(b)(3)(B) of the Internal Revenue
5 Code, shall be classified as a Subchapter S corporation,
6 separate and apart from its parent, for all purposes of
7 this Act.
8 (29) Pass-through election. The term "pass-through
9 election" means an election made by a partner under
10 subsection (b) of Section 205 of this Act to be subject
11 to the taxes imposed under Section 201 of this Act on his
12 or her share of the net income of the partnership or by a
13 shareholder of a Subchapter S corporation under
14 subsection (c) of Section 205 of this Act to be subject
15 to the taxes imposed under Section 201 of this Act on his
16 or her share of the net income of the corporation.
17 (b) Other definitions.
18 (1) Words denoting number, gender, and so forth,
19 when used in this Act, where not otherwise distinctly
20 expressed or manifestly incompatible with the intent
21 thereof:
22 (A) Words importing the singular include and
23 apply to several persons, parties or things;
24 (B) Words importing the plural include the
25 singular; and
26 (C) Words importing the masculine gender
27 include the feminine as well.
28 (2) "Company" or "association" as including
29 successors and assigns. The word "company" or
30 "association", when used in reference to a corporation,
31 shall be deemed to embrace the words "successors and
32 assigns of such company or association", and in like
33 manner as if these last-named words, or words of similar
34 import, were expressed.
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1 (3) Other terms. Any term used in any Section of
2 this Act with respect to the application of, or in
3 connection with, the provisions of any other Section of
4 this Act shall have the same meaning as in such other
5 Section.
6 (Source: P.A. 90-613, eff. 7-9-98; 91-535, eff. 1-1-00;
7 91-913, eff. 1-1-01.)