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90_SB1592ham001
LRB9011434PTbdam
1 AMENDMENT TO SENATE BILL 1592
2 AMENDMENT NO. . Amend Senate Bill 1592 by replacing
3 the title with the following:
4 "AN ACT to amend the Illinois Income Tax Act by changing
5 Section 203."; and
6 by replacing everything below the enacting clause with the
7 following:
8 "Section 5. The Illinois Income Tax Act is amended by
9 changing Section 203 as follows:
10 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
11 Sec. 203. Base income defined.
12 (a) Individuals.
13 (1) In general. In the case of an individual, base
14 income means an amount equal to the taxpayer's adjusted
15 gross income for the taxable year as modified by
16 paragraph (2).
17 (2) Modifications. The adjusted gross income
18 referred to in paragraph (1) shall be modified by adding
19 thereto the sum of the following amounts:
20 (A) An amount equal to all amounts paid or
21 accrued to the taxpayer as interest or dividends
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1 during the taxable year to the extent excluded from
2 gross income in the computation of adjusted gross
3 income, except stock dividends of qualified public
4 utilities described in Section 305(e) of the
5 Internal Revenue Code;
6 (B) An amount equal to the amount of tax
7 imposed by this Act to the extent deducted from
8 gross income in the computation of adjusted gross
9 income for the taxable year;
10 (C) An amount equal to the amount received
11 during the taxable year as a recovery or refund of
12 real property taxes paid with respect to the
13 taxpayer's principal residence under the Revenue Act
14 of 1939 and for which a deduction was previously
15 taken under subparagraph (L) of this paragraph (2)
16 prior to July 1, 1991, the retrospective application
17 date of Article 4 of Public Act 87-17. In the case
18 of multi-unit or multi-use structures and farm
19 dwellings, the taxes on the taxpayer's principal
20 residence shall be that portion of the total taxes
21 for the entire property which is attributable to
22 such principal residence;
23 (D) An amount equal to the amount of the
24 capital gain deduction allowable under the Internal
25 Revenue Code, to the extent deducted from gross
26 income in the computation of adjusted gross income;
27 and
28 (D-5) An amount, to the extent not included in
29 adjusted gross income, equal to the amount of money
30 withdrawn by the taxpayer in the taxable year from a
31 medical care savings account and the interest earned
32 on the account in the taxable year of a withdrawal
33 pursuant to subsection (b) of Section 20 of the
34 Medical Care Savings Account Act;
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1 and by deducting from the total so obtained the sum of
2 the following amounts:
3 (E) Any amount included in such total in
4 respect of any compensation (including but not
5 limited to any compensation paid or accrued to a
6 serviceman while a prisoner of war or missing in
7 action) paid to a resident by reason of being on
8 active duty in 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 1971 or
13 thereafter for annual training performed pursuant to
14 Sections 502 and 503, Title 32, United States Code
15 as a member of the Illinois National Guard;
16 (F) An amount equal to all amounts included in
17 such total pursuant to the provisions of Sections
18 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
19 408 of the Internal Revenue Code, or included in
20 such total as distributions under the provisions of
21 any retirement or disability plan for employees of
22 any governmental agency or unit, or retirement
23 payments to retired partners, which payments are
24 excluded in computing net earnings from self
25 employment by Section 1402 of the Internal Revenue
26 Code and regulations adopted pursuant thereto;
27 (G) The valuation limitation amount;
28 (H) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (I) An amount equal to all amounts included in
33 such total pursuant to the provisions of Section 111
34 of the Internal Revenue Code as a recovery of items
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1 previously deducted from adjusted gross income in
2 the computation of taxable income;
3 (J) An amount equal to those dividends
4 included in such total which were paid by a
5 corporation which conducts business operations in an
6 Enterprise Zone or zones created under the Illinois
7 Enterprise Zone Act, and conducts substantially all
8 of its operations in an Enterprise Zone or zones;
9 (K) An amount equal to those dividends
10 included in such total that were paid by a
11 corporation that conducts business operations in a
12 federally designated Foreign Trade Zone or Sub-Zone
13 and that is designated a High Impact Business
14 located in Illinois; provided that dividends
15 eligible for the deduction provided in subparagraph
16 (J) of paragraph (2) of this subsection shall not be
17 eligible for the deduction provided under this
18 subparagraph (K);
19 (L) For taxable years ending after December
20 31, 1983, an amount equal to all social security
21 benefits and railroad retirement benefits included
22 in such total pursuant to Sections 72(r) and 86 of
23 the Internal Revenue Code;
24 (M) With the exception of any amounts
25 subtracted under subparagraph (N), an amount equal
26 to the sum of all amounts disallowed as deductions
27 by Sections 171(a) (2), and 265(2) of the Internal
28 Revenue Code of 1954, as now or hereafter amended,
29 and all amounts of expenses allocable to interest
30 and disallowed as deductions by Section 265(1) of
31 the Internal Revenue Code of 1954, as now or
32 hereafter amended;
33 (N) An amount equal to all amounts included in
34 such total which are exempt from taxation by this
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1 State either by reason of its statutes or
2 Constitution or by reason of the Constitution,
3 treaties or statutes of the United States; provided
4 that, in the case of any statute of this State that
5 exempts income derived from bonds or other
6 obligations from the tax imposed under this Act, the
7 amount exempted shall be the interest net of bond
8 premium amortization;
9 (O) An amount equal to any contribution made
10 to a job training project established pursuant to
11 the Tax Increment Allocation Redevelopment Act;
12 (P) An amount equal to the amount of the
13 deduction used to compute the federal income tax
14 credit for restoration of substantial amounts held
15 under claim of right for the taxable year pursuant
16 to Section 1341 of the Internal Revenue Code of
17 1986;
18 (Q) An amount equal to any amounts included in
19 such total, received by the taxpayer as an
20 acceleration in the payment of life, endowment or
21 annuity benefits in advance of the time they would
22 otherwise be payable as an indemnity for a terminal
23 illness;
24 (R) An amount equal to the amount of any
25 federal or State bonus paid to veterans of the
26 Persian Gulf War;
27 (S) An amount, to the extent included in
28 adjusted gross income, equal to the amount of a
29 contribution made in the taxable year on behalf of
30 the taxpayer to a medical care savings account
31 established under the Medical Care Savings Account
32 Act to the extent the contribution is accepted by
33 the account administrator as provided in that Act;
34 (T) An amount, to the extent included in
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1 adjusted gross income, equal to the amount of
2 interest earned in the taxable year on a medical
3 care savings account established under the Medical
4 Care Savings Account Act on behalf of the taxpayer,
5 other than interest added pursuant to item (D-5) of
6 this paragraph (2);
7 (U) For one taxable year beginning on or after
8 January 1, 1994, an amount equal to the total amount
9 of tax imposed and paid under subsections (a) and
10 (b) of Section 201 of this Act on grant amounts
11 received by the taxpayer under the Nursing Home
12 Grant Assistance Act during the taxpayer's taxable
13 years 1992 and 1993; and
14 (V) Beginning with tax years ending on or
15 after December 31, 1995 and ending with tax years
16 ending on or before December 31, 1999, an amount
17 equal to the amount paid by a taxpayer who is a
18 self-employed taxpayer, a partner of a partnership,
19 or a shareholder in a Subchapter S corporation for
20 health insurance or long-term care insurance for
21 that taxpayer or that taxpayer's spouse or
22 dependents, to the extent that the amount paid for
23 that health insurance or long-term care insurance
24 may be deducted under Section 213 of the Internal
25 Revenue Code of 1986, has not been deducted on the
26 federal income tax return of the taxpayer, and does
27 not exceed the taxable income attributable to that
28 taxpayer's income, self-employment income, or
29 Subchapter S corporation income; except that no
30 deduction shall be allowed under this item (V) if
31 the taxpayer is eligible to participate in any
32 health insurance or long-term care insurance plan of
33 an employer of the taxpayer or the taxpayer's
34 spouse. The amount of the health insurance and
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1 long-term care insurance subtracted under this item
2 (V) shall be determined by multiplying total health
3 insurance and long-term care insurance premiums paid
4 by the taxpayer times a number that represents the
5 fractional percentage of eligible medical expenses
6 under Section 213 of the Internal Revenue Code of
7 1986 not actually deducted on the taxpayer's federal
8 income tax return.
9 (W) Beginning with tax years ending on or
10 after December 31, 1998, an amount equal to the
11 amount paid during the tax year by a taxpayer, up to
12 $10,000, for the cost of anti-rejection drugs
13 prescribed by a licensed physician to prevent the
14 taxpayer's body from rejecting a surgically
15 transplanted organ. This subparagraph is exempt
16 from the provisions of Section 250.
17 (b) Corporations.
18 (1) In general. In the case of a corporation, base
19 income means an amount equal to the taxpayer's taxable
20 income for the taxable year as modified by paragraph (2).
21 (2) Modifications. The taxable income referred to
22 in paragraph (1) shall be modified by adding thereto the
23 sum of the following amounts:
24 (A) An amount equal to all amounts paid or
25 accrued to the taxpayer as interest and all
26 distributions received from regulated investment
27 companies during the taxable year to the extent
28 excluded from gross income in the computation of
29 taxable income;
30 (B) An amount equal to the amount of tax
31 imposed by this Act to the extent deducted from
32 gross income in the computation of taxable income
33 for the taxable year;
34 (C) In the case of a regulated investment
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1 company, an amount equal to the excess of (i) the
2 net long-term capital gain for the taxable year,
3 over (ii) the amount of the capital gain dividends
4 designated as such in accordance with Section
5 852(b)(3)(C) of the Internal Revenue Code and any
6 amount designated under Section 852(b)(3)(D) of the
7 Internal Revenue Code, attributable to the taxable
8 year.
9 This amendatory Act of 1995 is declarative of existing
10 law and is not a new enactment.
11 (D) The amount of any net operating loss
12 deduction taken in arriving at taxable income, other
13 than a net operating loss carried forward from a
14 taxable year ending prior to December 31, 1986; and
15 (E) For taxable years in which a net operating
16 loss carryback or carryforward from a taxable year
17 ending prior to December 31, 1986 is an element of
18 taxable income under paragraph (1) of subsection (e)
19 or subparagraph (E) of paragraph (2) of subsection
20 (e), the amount by which addition modifications
21 other than those provided by this subparagraph (E)
22 exceeded subtraction modifications in such earlier
23 taxable year, with the following limitations applied
24 in the order that they are listed:
25 (i) the addition modification relating to
26 the net operating loss carried back or forward
27 to the taxable year from any taxable year
28 ending prior to December 31, 1986 shall be
29 reduced by the amount of addition modification
30 under this subparagraph (E) which related to
31 that net operating loss and which was taken
32 into account in calculating the base income of
33 an earlier taxable year, and
34 (ii) the addition modification relating
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1 to the net operating loss carried back or
2 forward to the taxable year from any taxable
3 year ending prior to December 31, 1986 shall
4 not exceed the amount of such carryback or
5 carryforward;
6 For taxable years in which there is a net
7 operating loss carryback or carryforward from more
8 than one other taxable year ending prior to December
9 31, 1986, the addition modification provided in this
10 subparagraph (E) shall be the sum of the amounts
11 computed independently under the preceding
12 provisions of this subparagraph (E) for each such
13 taxable year,
14 and by deducting from the total so obtained the sum of
15 the following amounts:
16 (F) An amount equal to the amount of any tax
17 imposed by this Act which was refunded to the
18 taxpayer and included in such total for the taxable
19 year;
20 (G) An amount equal to any amount included in
21 such total under Section 78 of the Internal Revenue
22 Code;
23 (H) In the case of a regulated investment
24 company, an amount equal to the amount of exempt
25 interest dividends as defined in subsection (b) (5)
26 of Section 852 of the Internal Revenue Code, paid to
27 shareholders for the taxable year;
28 (I) With the exception of any amounts
29 subtracted under subparagraph (J), an amount equal
30 to the sum of all amounts disallowed as deductions
31 by Sections 171(a) (2), and 265(a)(2) and amounts
32 disallowed as interest expense by Section 291(a)(3)
33 of the Internal Revenue Code, as now or hereafter
34 amended, and all amounts of expenses allocable to
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1 interest and disallowed as deductions by Section
2 265(a)(1) of the Internal Revenue Code, as now or
3 hereafter amended;
4 (J) An amount equal to all amounts included in
5 such total which are exempt from taxation by this
6 State either by reason of its statutes or
7 Constitution or by reason of the Constitution,
8 treaties or statutes of the United States; provided
9 that, in the case of any statute of this State that
10 exempts income derived from bonds or other
11 obligations from the tax imposed under this Act, the
12 amount exempted shall be the interest net of bond
13 premium amortization;
14 (K) An amount equal to those dividends
15 included in such total which were paid by a
16 corporation which conducts business operations in an
17 Enterprise Zone or zones created under the Illinois
18 Enterprise Zone Act and conducts substantially all
19 of its operations in an Enterprise Zone or zones;
20 (L) An amount equal to those dividends
21 included in such total that were paid by a
22 corporation that conducts business operations in a
23 federally designated Foreign Trade Zone or Sub-Zone
24 and that is designated a High Impact Business
25 located in Illinois; provided that dividends
26 eligible for the deduction provided in subparagraph
27 (K) of paragraph 2 of this subsection shall not be
28 eligible for the deduction provided under this
29 subparagraph (L);
30 (M) For any taxpayer that is a financial
31 organization within the meaning of Section 304(c) of
32 this Act, an amount included in such total as
33 interest income from a loan or loans made by such
34 taxpayer to a borrower, to the extent that such a
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1 loan is secured by property which is eligible for
2 the Enterprise Zone Investment Credit. To determine
3 the portion of a loan or loans that is secured by
4 property eligible for a Section 201(h) investment
5 credit to the borrower, the entire principal amount
6 of the loan or loans between the taxpayer and the
7 borrower should be divided into the basis of the
8 Section 201(h) investment credit property which
9 secures the loan or loans, using for this purpose
10 the original basis of such property on the date that
11 it was placed in service in the Enterprise Zone.
12 The subtraction modification available to taxpayer
13 in any year under this subsection shall be that
14 portion of the total interest paid by the borrower
15 with respect to such loan attributable to the
16 eligible property as calculated under the previous
17 sentence;
18 (M-1) For any taxpayer that is a financial
19 organization within the meaning of Section 304(c) of
20 this Act, an amount included in such total as
21 interest income from a loan or loans made by such
22 taxpayer to a borrower, to the extent that such a
23 loan is secured by property which is eligible for
24 the High Impact Business Investment Credit. To
25 determine the portion of a loan or loans that is
26 secured by property eligible for a Section 201(i)
27 investment credit to the borrower, the entire
28 principal amount of the loan or loans between the
29 taxpayer and the borrower should be divided into the
30 basis of the Section 201(i) investment credit
31 property which secures the loan or loans, using for
32 this purpose the original basis of such property on
33 the date that it was placed in service in a
34 federally designated Foreign Trade Zone or Sub-Zone
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1 located in Illinois. No taxpayer that is eligible
2 for the deduction provided in subparagraph (M) of
3 paragraph (2) of this subsection shall be eligible
4 for the deduction provided under this subparagraph
5 (M-1). The subtraction modification available to
6 taxpayers in any year under this subsection shall be
7 that portion of the total interest paid by the
8 borrower with respect to such loan attributable to
9 the eligible property as calculated under the
10 previous sentence;
11 (N) Two times any contribution made during the
12 taxable year to a designated zone organization to
13 the extent that the contribution (i) qualifies as a
14 charitable contribution under subsection (c) of
15 Section 170 of the Internal Revenue Code and (ii)
16 must, by its terms, be used for a project approved
17 by the Department of Commerce and Community Affairs
18 under Section 11 of the Illinois Enterprise Zone
19 Act;
20 (O) An amount equal to: (i) 85% for taxable
21 years ending on or before December 31, 1992, or, a
22 percentage equal to the percentage allowable under
23 Section 243(a)(1) of the Internal Revenue Code of
24 1986 for taxable years ending after December 31,
25 1992, of the amount by which dividends included in
26 taxable income and received from a corporation that
27 is not created or organized under the laws of the
28 United States or any state or political subdivision
29 thereof, including, for taxable years ending on or
30 after December 31, 1988, dividends received or
31 deemed received or paid or deemed paid under
32 Sections 951 through 964 of the Internal Revenue
33 Code, exceed the amount of the modification provided
34 under subparagraph (G) of paragraph (2) of this
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1 subsection (b) which is related to such dividends;
2 plus (ii) 100% of the amount by which dividends,
3 included in taxable income and received, including,
4 for taxable years ending on or after December 31,
5 1988, dividends received or deemed received or paid
6 or deemed paid under Sections 951 through 964 of the
7 Internal Revenue Code, from any such corporation
8 specified in clause (i) that would but for the
9 provisions of Section 1504 (b) (3) of the Internal
10 Revenue Code be treated as a member of the
11 affiliated group which includes the dividend
12 recipient, exceed the amount of the modification
13 provided under subparagraph (G) of paragraph (2) of
14 this subsection (b) which is related to such
15 dividends;
16 (P) An amount equal to any contribution made
17 to a job training project established pursuant to
18 the Tax Increment Allocation Redevelopment Act; and
19 (Q) An amount equal to the amount of the
20 deduction used to compute the federal income tax
21 credit for restoration of substantial amounts held
22 under claim of right for the taxable year pursuant
23 to Section 1341 of the Internal Revenue Code of
24 1986.
25 (3) Special rule. For purposes of paragraph (2)
26 (A), "gross income" in the case of a life insurance
27 company, for tax years ending on and after December 31,
28 1994, shall mean the gross investment income for the
29 taxable year.
30 (c) Trusts and estates.
31 (1) In general. In the case of a trust or estate,
32 base income means an amount equal to the taxpayer's
33 taxable income for the taxable year as modified by
34 paragraph (2).
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1 (2) Modifications. Subject to the provisions of
2 paragraph (3), the taxable income referred to in
3 paragraph (1) shall be modified by adding thereto the sum
4 of the following amounts:
5 (A) An amount equal to all amounts paid or
6 accrued to the taxpayer as interest or dividends
7 during the taxable year to the extent excluded from
8 gross income in the computation of taxable income;
9 (B) In the case of (i) an estate, $600; (ii) a
10 trust which, under its governing instrument, is
11 required to distribute all of its income currently,
12 $300; and (iii) any other trust, $100, but in each
13 such case, only to the extent such amount was
14 deducted in the computation of taxable income;
15 (C) An amount equal to the amount of tax
16 imposed by this Act to the extent deducted from
17 gross income in the computation of taxable income
18 for the taxable year;
19 (D) The amount of any net operating loss
20 deduction taken in arriving at taxable income, other
21 than a net operating loss carried forward from a
22 taxable year ending prior to December 31, 1986;
23 (E) For taxable years in which a net operating
24 loss carryback or carryforward from a taxable year
25 ending prior to December 31, 1986 is an element of
26 taxable income under paragraph (1) of subsection (e)
27 or subparagraph (E) of paragraph (2) of subsection
28 (e), the amount by which addition modifications
29 other than those provided by this subparagraph (E)
30 exceeded subtraction modifications in such taxable
31 year, with the following limitations applied in the
32 order that they are listed:
33 (i) the addition modification relating to
34 the net operating loss carried back or forward
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1 to the taxable year from any taxable year
2 ending prior to December 31, 1986 shall be
3 reduced by the amount of addition modification
4 under this subparagraph (E) which related to
5 that net operating loss and which was taken
6 into account in calculating the base income of
7 an earlier taxable year, and
8 (ii) the addition modification relating
9 to the net operating loss carried back or
10 forward to the taxable year from any taxable
11 year ending prior to December 31, 1986 shall
12 not exceed the amount of such carryback or
13 carryforward;
14 For taxable years in which there is a net
15 operating loss carryback or carryforward from more
16 than one other taxable year ending prior to December
17 31, 1986, the addition modification provided in this
18 subparagraph (E) shall be the sum of the amounts
19 computed independently under the preceding
20 provisions of this subparagraph (E) for each such
21 taxable year;
22 (F) For taxable years ending on or after
23 January 1, 1989, an amount equal to the tax deducted
24 pursuant to Section 164 of the Internal Revenue Code
25 if the trust or estate is claiming the same tax for
26 purposes of the Illinois foreign tax credit under
27 Section 601 of this Act; and
28 (G) An amount equal to the amount of the
29 capital gain deduction allowable under the Internal
30 Revenue Code, to the extent deducted from gross
31 income in the computation of taxable income;
32 and by deducting from the total so obtained the sum of
33 the following amounts:
34 (H) An amount equal to all amounts included in
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1 such total pursuant to the provisions of Sections
2 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
3 408 of the Internal Revenue Code or included in such
4 total as distributions under the provisions of any
5 retirement or disability plan for employees of any
6 governmental agency or unit, or retirement payments
7 to retired partners, which payments are excluded in
8 computing net earnings from self employment by
9 Section 1402 of the Internal Revenue Code and
10 regulations adopted pursuant thereto;
11 (I) The valuation limitation amount;
12 (J) An amount equal to the amount of any tax
13 imposed by this Act which was refunded to the
14 taxpayer and included in such total for the taxable
15 year;
16 (K) An amount equal to all amounts included in
17 taxable income as modified by subparagraphs (A),
18 (B), (C), (D), (E), (F) and (G) which are exempt
19 from taxation by this State either by reason of its
20 statutes or Constitution or by reason of the
21 Constitution, treaties or statutes of the United
22 States; provided that, in the case of any statute of
23 this State that exempts income derived from bonds or
24 other obligations from the tax imposed under this
25 Act, the amount exempted shall be the interest net
26 of bond premium amortization;
27 (L) With the exception of any amounts
28 subtracted under subparagraph (K), an amount equal
29 to the sum of all amounts disallowed as deductions
30 by Sections 171(a) (2) and 265(a)(2) of the Internal
31 Revenue Code, as now or hereafter amended, and all
32 amounts of expenses allocable to interest and
33 disallowed as deductions by Section 265(1) of the
34 Internal Revenue Code of 1954, as now or hereafter
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1 amended;
2 (M) An amount equal to those dividends
3 included in such total which were paid by a
4 corporation which conducts business operations in an
5 Enterprise Zone or zones created under the Illinois
6 Enterprise Zone Act and conducts substantially all
7 of its operations in an Enterprise Zone or Zones;
8 (N) An amount equal to any contribution made
9 to a job training project established pursuant to
10 the Tax Increment Allocation Redevelopment Act;
11 (O) An amount equal to those dividends
12 included in such total that were paid by a
13 corporation that conducts business operations in a
14 federally designated Foreign Trade Zone or Sub-Zone
15 and that is designated a High Impact Business
16 located in Illinois; provided that dividends
17 eligible for the deduction provided in subparagraph
18 (M) of paragraph (2) of this subsection shall not be
19 eligible for the deduction provided under this
20 subparagraph (O); and
21 (P) An amount equal to the amount of the
22 deduction used to compute the federal income tax
23 credit for restoration of substantial amounts held
24 under claim of right for the taxable year pursuant
25 to Section 1341 of the Internal Revenue Code of
26 1986.
27 (3) Limitation. The amount of any modification
28 otherwise required under this subsection shall, under
29 regulations prescribed by the Department, be adjusted by
30 any amounts included therein which were properly paid,
31 credited, or required to be distributed, or permanently
32 set aside for charitable purposes pursuant to Internal
33 Revenue Code Section 642(c) during the taxable year.
34 (d) Partnerships.
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1 (1) In general. In the case of a partnership, base
2 income means an amount equal to the taxpayer's taxable
3 income for the taxable year as modified by paragraph (2).
4 (2) Modifications. The taxable income referred to
5 in paragraph (1) shall be modified by adding thereto the
6 sum of the following amounts:
7 (A) An amount equal to all amounts paid or
8 accrued to the taxpayer as interest or dividends
9 during the taxable year to the extent excluded from
10 gross income in the computation of taxable income;
11 (B) An amount equal to the amount of tax
12 imposed by this Act to the extent deducted from
13 gross income for the taxable year; and
14 (C) The amount of deductions allowed to the
15 partnership pursuant to Section 707 (c) of the
16 Internal Revenue Code in calculating its taxable
17 income;
18 (D) An amount equal to the amount of the
19 capital gain deduction allowable under the Internal
20 Revenue Code, to the extent deducted from gross
21 income in the computation of taxable income;
22 and by deducting from the total so obtained the following
23 amounts:
24 (E) The valuation limitation amount;
25 (F) An amount equal to the amount of any tax
26 imposed by this Act which was refunded to the
27 taxpayer and included in such total for the taxable
28 year;
29 (G) An amount equal to all amounts included in
30 taxable income as modified by subparagraphs (A),
31 (B), (C) and (D) which are exempt from taxation by
32 this State either by reason of its statutes or
33 Constitution or by reason of the Constitution,
34 treaties or statutes of the United States; provided
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1 that, in the case of any statute of this State that
2 exempts income derived from bonds or other
3 obligations from the tax imposed under this Act, the
4 amount exempted shall be the interest net of bond
5 premium amortization;
6 (H) Any income of the partnership which
7 constitutes personal service income as defined in
8 Section 1348 (b) (1) of the Internal Revenue Code
9 (as in effect December 31, 1981) or a reasonable
10 allowance for compensation paid or accrued for
11 services rendered by partners to the partnership,
12 whichever is greater;
13 (I) An amount equal to all amounts of income
14 distributable to an entity subject to the Personal
15 Property Tax Replacement Income Tax imposed by
16 subsections (c) and (d) of Section 201 of this Act
17 including amounts distributable to organizations
18 exempt from federal income tax by reason of Section
19 501(a) of the Internal Revenue Code;
20 (J) With the exception of any amounts
21 subtracted under subparagraph (G), an amount equal
22 to the sum of all amounts disallowed as deductions
23 by Sections 171(a) (2), and 265(2) of the Internal
24 Revenue Code of 1954, as now or hereafter amended,
25 and all amounts of expenses allocable to interest
26 and disallowed as deductions by Section 265(1) of
27 the Internal Revenue Code, as now or hereafter
28 amended;
29 (K) An amount equal to those dividends
30 included in such total which were paid by a
31 corporation which conducts business operations in an
32 Enterprise Zone or zones created under the Illinois
33 Enterprise Zone Act, enacted by the 82nd General
34 Assembly, and which does not conduct such operations
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1 other than in an Enterprise Zone or Zones;
2 (L) An amount equal to any contribution made
3 to a job training project established pursuant to
4 the Real Property Tax Increment Allocation
5 Redevelopment Act;
6 (M) An amount equal to those dividends
7 included in such total that were paid by a
8 corporation that conducts business operations in a
9 federally designated Foreign Trade Zone or Sub-Zone
10 and that is designated a High Impact Business
11 located in Illinois; provided that dividends
12 eligible for the deduction provided in subparagraph
13 (K) of paragraph (2) of this subsection shall not be
14 eligible for the deduction provided under this
15 subparagraph (M); and
16 (N) An amount equal to the amount of the
17 deduction used to compute the federal income tax
18 credit for restoration of substantial amounts held
19 under claim of right for the taxable year pursuant
20 to Section 1341 of the Internal Revenue Code of
21 1986.
22 (e) Gross income; adjusted gross income; taxable income.
23 (1) In general. Subject to the provisions of
24 paragraph (2) and subsection (b) (3), for purposes of
25 this Section and Section 803(e), a taxpayer's gross
26 income, adjusted gross income, or taxable income for the
27 taxable year shall mean the amount of gross income,
28 adjusted gross income or taxable income properly
29 reportable for federal income tax purposes for the
30 taxable year under the provisions of the Internal Revenue
31 Code. Taxable income may be less than zero. However, for
32 taxable years ending on or after December 31, 1986, net
33 operating loss carryforwards from taxable years ending
34 prior to December 31, 1986, may not exceed the sum of
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1 federal taxable income for the taxable year before net
2 operating loss deduction, plus the excess of addition
3 modifications over subtraction modifications for the
4 taxable year. For taxable years ending prior to December
5 31, 1986, taxable income may never be an amount in excess
6 of the net operating loss for the taxable year as defined
7 in subsections (c) and (d) of Section 172 of the Internal
8 Revenue Code, provided that when taxable income of a
9 corporation (other than a Subchapter S corporation),
10 trust, or estate is less than zero and addition
11 modifications, other than those provided by subparagraph
12 (E) of paragraph (2) of subsection (b) for corporations
13 or subparagraph (E) of paragraph (2) of subsection (c)
14 for trusts and estates, exceed subtraction modifications,
15 an addition modification must be made under those
16 subparagraphs for any other taxable year to which the
17 taxable income less than zero (net operating loss) is
18 applied under Section 172 of the Internal Revenue Code or
19 under subparagraph (E) of paragraph (2) of this
20 subsection (e) applied in conjunction with Section 172 of
21 the Internal Revenue Code.
22 (2) Special rule. For purposes of paragraph (1) of
23 this subsection, the taxable income properly reportable
24 for federal income tax purposes shall mean:
25 (A) Certain life insurance companies. In the
26 case of a life insurance company subject to the tax
27 imposed by Section 801 of the Internal Revenue Code,
28 life insurance company taxable income, plus the
29 amount of distribution from pre-1984 policyholder
30 surplus accounts as calculated under Section 815a of
31 the Internal Revenue Code;
32 (B) Certain other insurance companies. In the
33 case of mutual insurance companies subject to the
34 tax imposed by Section 831 of the Internal Revenue
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1 Code, insurance company taxable income;
2 (C) Regulated investment companies. In the
3 case of a regulated investment company subject to
4 the tax imposed by Section 852 of the Internal
5 Revenue Code, investment company taxable income;
6 (D) Real estate investment trusts. In the
7 case of a real estate investment trust subject to
8 the tax imposed by Section 857 of the Internal
9 Revenue Code, real estate investment trust taxable
10 income;
11 (E) Consolidated corporations. In the case of
12 a corporation which is a member of an affiliated
13 group of corporations filing a consolidated income
14 tax return for the taxable year for federal income
15 tax purposes, taxable income determined as if such
16 corporation had filed a separate return for federal
17 income tax purposes for the taxable year and each
18 preceding taxable year for which it was a member of
19 an affiliated group. For purposes of this
20 subparagraph, the taxpayer's separate taxable income
21 shall be determined as if the election provided by
22 Section 243(b) (2) of the Internal Revenue Code had
23 been in effect for all such years;
24 (F) Cooperatives. In the case of a
25 cooperative corporation or association, the taxable
26 income of such organization determined in accordance
27 with the provisions of Section 1381 through 1388 of
28 the Internal Revenue Code;
29 (G) Subchapter S corporations. In the case
30 of: (i) a Subchapter S corporation for which there
31 is in effect an election for the taxable year under
32 Section 1362 of the Internal Revenue Code, the
33 taxable income of such corporation determined in
34 accordance with Section 1363(b) of the Internal
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1 Revenue Code, except that taxable income shall take
2 into account those items which are required by
3 Section 1363(b)(1) of the Internal Revenue Code to
4 be separately stated; and (ii) a Subchapter S
5 corporation for which there is in effect a federal
6 election to opt out of the provisions of the
7 Subchapter S Revision Act of 1982 and have applied
8 instead the prior federal Subchapter S rules as in
9 effect on July 1, 1982, the taxable income of such
10 corporation determined in accordance with the
11 federal Subchapter S rules as in effect on July 1,
12 1982; and
13 (H) Partnerships. In the case of a
14 partnership, taxable income determined in accordance
15 with Section 703 of the Internal Revenue Code,
16 except that taxable income shall take into account
17 those items which are required by Section 703(a)(1)
18 to be separately stated but which would be taken
19 into account by an individual in calculating his
20 taxable income.
21 (f) Valuation limitation amount.
22 (1) In general. The valuation limitation amount
23 referred to in subsections (a) (2) (G), (c) (2) (I) and
24 (d)(2) (E) is an amount equal to:
25 (A) The sum of the pre-August 1, 1969
26 appreciation amounts (to the extent consisting of
27 gain reportable under the provisions of Section 1245
28 or 1250 of the Internal Revenue Code) for all
29 property in respect of which such gain was reported
30 for the taxable year; plus
31 (B) The lesser of (i) the sum of the
32 pre-August 1, 1969 appreciation amounts (to the
33 extent consisting of capital gain) for all property
34 in respect of which such gain was reported for
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1 federal income tax purposes for the taxable year, or
2 (ii) the net capital gain for the taxable year,
3 reduced in either case by any amount of such gain
4 included in the amount determined under subsection
5 (a) (2) (F) or (c) (2) (H).
6 (2) Pre-August 1, 1969 appreciation amount.
7 (A) If the fair market value of property
8 referred to in paragraph (1) was readily
9 ascertainable on August 1, 1969, the pre-August 1,
10 1969 appreciation amount for such property is the
11 lesser of (i) the excess of such fair market value
12 over the taxpayer's basis (for determining gain) for
13 such property on that date (determined under the
14 Internal Revenue Code as in effect on that date), or
15 (ii) the total gain realized and reportable for
16 federal income tax purposes in respect of the sale,
17 exchange or other disposition of such property.
18 (B) If the fair market value of property
19 referred to in paragraph (1) was not readily
20 ascertainable on August 1, 1969, the pre-August 1,
21 1969 appreciation amount for such property is that
22 amount which bears the same ratio to the total gain
23 reported in respect of the property for federal
24 income tax purposes for the taxable year, as the
25 number of full calendar months in that part of the
26 taxpayer's holding period for the property ending
27 July 31, 1969 bears to the number of full calendar
28 months in the taxpayer's entire holding period for
29 the property.
30 (C) The Department shall prescribe such
31 regulations as may be necessary to carry out the
32 purposes of this paragraph.
33 (g) Double deductions. Unless specifically provided
34 otherwise, nothing in this Section shall permit the same item
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1 to be deducted more than once.
2 (h) Legislative intention. Except as expressly provided
3 by this Section there shall be no modifications or
4 limitations on the amounts of income, gain, loss or deduction
5 taken into account in determining gross income, adjusted
6 gross income or taxable income for federal income tax
7 purposes for the taxable year, or in the amount of such items
8 entering into the computation of base income and net income
9 under this Act for such taxable year, whether in respect of
10 property values as of August 1, 1969 or otherwise.
11 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
12 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
13 8-9-96; 90-491, eff. 1-1-98.)
14 Section 99. Effective date. This Act takes effect upon
15 becoming law.".