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91_SB0665sam001
LRB9103055PTpkam
1 AMENDMENT TO SENATE BILL 665
2 AMENDMENT NO. . Amend Senate Bill 665 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 after 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 (D-5) An amount, to the extent not included in
28 adjusted gross income, equal to the amount of money
29 withdrawn by the taxpayer in the taxable year from a
30 medical care savings account and the interest earned
31 on the account in the taxable year of a withdrawal
32 pursuant to subsection (b) of Section 20 of the
33 Medical Care Savings Account Act; and
34 (D-10) For taxable years ending after December
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1 31, 1997, an amount equal to any eligible
2 remediation costs that the individual deducted in
3 computing adjusted gross income and for which the
4 individual claims a credit under subsection (l) of
5 Section 201;
6 and by deducting from the total so obtained the sum of
7 the following amounts:
8 (E) Any amount included in such total in
9 respect of any compensation (including but not
10 limited to any compensation paid or accrued to a
11 serviceman while a prisoner of war or missing in
12 action) paid to a resident by reason of being on
13 active duty in the Armed Forces of the United States
14 and in respect of any compensation paid or accrued
15 to a resident who as a governmental employee was a
16 prisoner of war or missing in action, and in respect
17 of any compensation paid to a resident in 1971 or
18 thereafter for annual training performed pursuant to
19 Sections 502 and 503, Title 32, United States Code
20 as a member of the Illinois National Guard;
21 (F) An amount equal to all amounts included in
22 such total pursuant to the provisions of Sections
23 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
24 408 of the Internal Revenue Code, or included in
25 such total as distributions under the provisions of
26 any retirement or disability plan for employees of
27 any governmental agency or unit, or retirement
28 payments to retired partners, which payments are
29 excluded in computing net earnings from self
30 employment by Section 1402 of the Internal Revenue
31 Code and regulations adopted pursuant thereto;
32 (G) The valuation limitation amount;
33 (H) An amount equal to the amount of any tax
34 imposed by this Act which was refunded to the
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1 taxpayer and included in such total for the taxable
2 year;
3 (I) An amount equal to all amounts included in
4 such total pursuant to the provisions of Section 111
5 of the Internal Revenue Code as a recovery of items
6 previously deducted from adjusted gross income in
7 the computation of taxable income;
8 (J) An amount equal to those dividends
9 included in such total which were paid by a
10 corporation which conducts business operations in an
11 Enterprise Zone or zones created under the Illinois
12 Enterprise Zone Act, and conducts substantially all
13 of its operations in an Enterprise Zone or zones;
14 (K) An amount equal to those dividends
15 included in such total that were paid by a
16 corporation that conducts business operations in a
17 federally designated Foreign Trade Zone or Sub-Zone
18 and that is designated a High Impact Business
19 located in Illinois; provided that dividends
20 eligible for the deduction provided in subparagraph
21 (J) of paragraph (2) of this subsection shall not be
22 eligible for the deduction provided under this
23 subparagraph (K);
24 (L) For taxable years ending after December
25 31, 1983, an amount equal to all social security
26 benefits and railroad retirement benefits included
27 in such total pursuant to Sections 72(r) and 86 of
28 the Internal Revenue Code;
29 (M) With the exception of any amounts
30 subtracted under subparagraph (N), an amount equal
31 to the sum of all amounts disallowed as deductions
32 by Sections 171(a) (2), and 265(2) of the Internal
33 Revenue Code of 1954, as now or hereafter amended,
34 and all amounts of expenses allocable to interest
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1 and disallowed as deductions by Section 265(1) of
2 the Internal Revenue Code of 1954, as now or
3 hereafter amended;
4 (N) 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 (O) An amount equal to any contribution made
15 to a job training project established pursuant to
16 the Tax Increment Allocation Redevelopment Act;
17 (P) An amount equal to the amount of the
18 deduction used to compute the federal income tax
19 credit for restoration of substantial amounts held
20 under claim of right for the taxable year pursuant
21 to Section 1341 of the Internal Revenue Code of
22 1986;
23 (Q) An amount equal to any amounts included in
24 such total, received by the taxpayer as an
25 acceleration in the payment of life, endowment or
26 annuity benefits in advance of the time they would
27 otherwise be payable as an indemnity for a terminal
28 illness;
29 (R) An amount equal to the amount of any
30 federal or State bonus paid to veterans of the
31 Persian Gulf War;
32 (S) An amount, to the extent included in
33 adjusted gross income, equal to the amount of a
34 contribution made in the taxable year on behalf of
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1 the taxpayer to a medical care savings account
2 established under the Medical Care Savings Account
3 Act to the extent the contribution is accepted by
4 the account administrator as provided in that Act;
5 (T) An amount, to the extent included in
6 adjusted gross income, equal to the amount of
7 interest earned in the taxable year on a medical
8 care savings account established under the Medical
9 Care Savings Account Act on behalf of the taxpayer,
10 other than interest added pursuant to item (D-5) of
11 this paragraph (2);
12 (U) For one taxable year beginning on or after
13 January 1, 1994, an amount equal to the total amount
14 of tax imposed and paid under subsections (a) and
15 (b) of Section 201 of this Act on grant amounts
16 received by the taxpayer under the Nursing Home
17 Grant Assistance Act during the taxpayer's taxable
18 years 1992 and 1993;
19 (V) Beginning with tax years ending on or
20 after December 31, 1995 and ending with tax years
21 ending on or before December 31, 1999, an amount
22 equal to the amount paid by a taxpayer who is a
23 self-employed taxpayer, a partner of a partnership,
24 or a shareholder in a Subchapter S corporation for
25 health insurance or long-term care insurance for
26 that taxpayer or that taxpayer's spouse or
27 dependents, to the extent that the amount paid for
28 that health insurance or long-term care insurance
29 may be deducted under Section 213 of the Internal
30 Revenue Code of 1986, has not been deducted on the
31 federal income tax return of the taxpayer, and does
32 not exceed the taxable income attributable to that
33 taxpayer's income, self-employment income, or
34 Subchapter S corporation income; except that no
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1 deduction shall be allowed under this item (V) if
2 the taxpayer is eligible to participate in any
3 health insurance or long-term care insurance plan of
4 an employer of the taxpayer or the taxpayer's
5 spouse. The amount of the health insurance and
6 long-term care insurance subtracted under this item
7 (V) shall be determined by multiplying total health
8 insurance and long-term care insurance premiums paid
9 by the taxpayer times a number that represents the
10 fractional percentage of eligible medical expenses
11 under Section 213 of the Internal Revenue Code of
12 1986 not actually deducted on the taxpayer's federal
13 income tax return; and
14 (W) For taxable years beginning on or after
15 January 1, 1998, all amounts included in the
16 taxpayer's federal gross income in the taxable year
17 from amounts converted from a regular IRA to a Roth
18 IRA. This paragraph is exempt from the provisions of
19 Section 250.
20 (b) Corporations.
21 (1) In general. In the case of a corporation, base
22 income means an amount equal to the taxpayer's taxable
23 income for the taxable year as modified by paragraph (2).
24 (2) Modifications. The taxable income referred to
25 in paragraph (1) shall be modified by adding thereto the
26 sum of the following amounts:
27 (A) An amount equal to all amounts paid or
28 accrued to the taxpayer as interest and all
29 distributions received from regulated investment
30 companies during the taxable year to the extent
31 excluded from gross income in the computation of
32 taxable income;
33 (B) An amount equal to the amount of tax
34 imposed by this Act to the extent deducted from
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1 gross income in the computation of taxable income
2 for the taxable year;
3 (C) In the case of a regulated investment
4 company, an amount equal to the excess of (i) the
5 net long-term capital gain for the taxable year,
6 over (ii) the amount of the capital gain dividends
7 designated as such in accordance with Section
8 852(b)(3)(C) of the Internal Revenue Code and any
9 amount designated under Section 852(b)(3)(D) of the
10 Internal Revenue Code, attributable to the taxable
11 year. (this amendatory Act of 1995 (Public Act
12 89-89) is declarative of existing law and is not a
13 new enactment);.
14 (D) The amount of any net operating loss
15 deduction taken in arriving at taxable income, other
16 than a net operating loss carried forward from a
17 taxable year ending prior to December 31, 1986; and
18 (E) For taxable years in which a net operating
19 loss carryback or carryforward from a taxable year
20 ending prior to December 31, 1986 is an element of
21 taxable income under paragraph (1) of subsection (e)
22 or subparagraph (E) of paragraph (2) of subsection
23 (e), the amount by which addition modifications
24 other than those provided by this subparagraph (E)
25 exceeded subtraction modifications in such earlier
26 taxable year, with the following limitations applied
27 in the order that they are listed:
28 (i) the addition modification relating to
29 the net operating loss carried back or forward
30 to the taxable year from any taxable year
31 ending prior to December 31, 1986 shall be
32 reduced by the amount of addition modification
33 under this subparagraph (E) which related to
34 that net operating loss and which was taken
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1 into account in calculating the base income of
2 an earlier taxable year, and
3 (ii) the addition modification relating
4 to the net operating loss carried back or
5 forward to the taxable year from any taxable
6 year ending prior to December 31, 1986 shall
7 not exceed the amount of such carryback or
8 carryforward;
9 For taxable years in which there is a net
10 operating loss carryback or carryforward from more
11 than one other taxable year ending prior to December
12 31, 1986, the addition modification provided in this
13 subparagraph (E) shall be the sum of the amounts
14 computed independently under the preceding
15 provisions of this subparagraph (E) for each such
16 taxable year;, and
17 (E-5) For taxable years ending after December
18 31, 1997, an amount equal to any eligible
19 remediation costs that the corporation deducted in
20 computing adjusted gross income and for which the
21 corporation claims a credit under subsection (l) of
22 Section 201;
23 and by deducting from the total so obtained the sum of
24 the following amounts:
25 (F) An amount equal to the amount of any tax
26 imposed by this Act which was refunded to the
27 taxpayer and included in such total for the taxable
28 year;
29 (G) An amount equal to any amount included in
30 such total under Section 78 of the Internal Revenue
31 Code;
32 (H) In the case of a regulated investment
33 company, an amount equal to the amount of exempt
34 interest dividends as defined in subsection (b) (5)
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1 of Section 852 of the Internal Revenue Code, paid to
2 shareholders for the taxable year;
3 (I) With the exception of any amounts
4 subtracted under subparagraph (J), an amount equal
5 to the sum of all amounts disallowed as deductions
6 by Sections 171(a) (2), and 265(a)(2) and amounts
7 disallowed as interest expense by Section 291(a)(3)
8 of the Internal Revenue Code, as now or hereafter
9 amended, and all amounts of expenses allocable to
10 interest and disallowed as deductions by Section
11 265(a)(1) of the Internal Revenue Code, as now or
12 hereafter amended;
13 (J) An amount equal to all amounts included in
14 such total which are exempt from taxation by this
15 State either by reason of its statutes or
16 Constitution or by reason of the Constitution,
17 treaties or statutes of the United States; provided
18 that, in the case of any statute of this State that
19 exempts income derived from bonds or other
20 obligations from the tax imposed under this Act, the
21 amount exempted shall be the interest net of bond
22 premium amortization;
23 (K) 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 (L) An amount equal to those dividends
30 included in such total that were paid by a
31 corporation that conducts business operations in a
32 federally designated Foreign Trade Zone or Sub-Zone
33 and that is designated a High Impact Business
34 located in Illinois; provided that dividends
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1 eligible for the deduction provided in subparagraph
2 (K) of paragraph 2 of this subsection shall not be
3 eligible for the deduction provided under this
4 subparagraph (L);
5 (M) For any taxpayer that is a financial
6 organization within the meaning of Section 304(c) of
7 this Act, an amount included in such total as
8 interest income from a loan or loans made by such
9 taxpayer to a borrower, to the extent that such a
10 loan is secured by property which is eligible for
11 the Enterprise Zone Investment Credit. To determine
12 the portion of a loan or loans that is secured by
13 property eligible for a Section 201(h) investment
14 credit to the borrower, the entire principal amount
15 of the loan or loans between the taxpayer and the
16 borrower should be divided into the basis of the
17 Section 201(h) investment credit property which
18 secures the loan or loans, using for this purpose
19 the original basis of such property on the date that
20 it was placed in service in the Enterprise Zone.
21 The subtraction modification available to taxpayer
22 in any year under this subsection shall be that
23 portion of the total interest paid by the borrower
24 with respect to such loan attributable to the
25 eligible property as calculated under the previous
26 sentence;
27 (M-1) For any taxpayer that is a financial
28 organization within the meaning of Section 304(c) of
29 this Act, an amount included in such total as
30 interest income from a loan or loans made by such
31 taxpayer to a borrower, to the extent that such a
32 loan is secured by property which is eligible for
33 the High Impact Business Investment Credit. To
34 determine the portion of a loan or loans that is
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1 secured by property eligible for a Section 201(i)
2 investment credit to the borrower, the entire
3 principal amount of the loan or loans between the
4 taxpayer and the borrower should be divided into the
5 basis of the Section 201(i) investment credit
6 property which secures the loan or loans, using for
7 this purpose the original basis of such property on
8 the date that it was placed in service in a
9 federally designated Foreign Trade Zone or Sub-Zone
10 located in Illinois. No taxpayer that is eligible
11 for the deduction provided in subparagraph (M) of
12 paragraph (2) of this subsection shall be eligible
13 for the deduction provided under this subparagraph
14 (M-1). The subtraction modification available to
15 taxpayers in any year under this subsection shall be
16 that portion of the total interest paid by the
17 borrower with respect to such loan attributable to
18 the eligible property as calculated under the
19 previous sentence;
20 (N) Two times any contribution made during the
21 taxable year to a designated zone organization to
22 the extent that the contribution (i) qualifies as a
23 charitable contribution under subsection (c) of
24 Section 170 of the Internal Revenue Code and (ii)
25 must, by its terms, be used for a project approved
26 by the Department of Commerce and Community Affairs
27 under Section 11 of the Illinois Enterprise Zone
28 Act;
29 (O) An amount equal to: (i) 85% for taxable
30 years ending on or before December 31, 1992, or, a
31 percentage equal to the percentage allowable under
32 Section 243(a)(1) of the Internal Revenue Code of
33 1986 for taxable years ending after December 31,
34 1992, of the amount by which dividends included in
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1 taxable income and received from a corporation that
2 is not created or organized under the laws of the
3 United States or any state or political subdivision
4 thereof, including, for taxable years ending on or
5 after December 31, 1988, dividends received or
6 deemed received or paid or deemed paid under
7 Sections 951 through 964 of the Internal Revenue
8 Code, exceed the amount of the modification provided
9 under subparagraph (G) of paragraph (2) of this
10 subsection (b) which is related to such dividends;
11 plus (ii) 100% of the amount by which dividends,
12 included in taxable income and received, including,
13 for taxable years ending on or after December 31,
14 1988, dividends received or deemed received or paid
15 or deemed paid under Sections 951 through 964 of the
16 Internal Revenue Code, from any such corporation
17 specified in clause (i) that would but for the
18 provisions of Section 1504 (b) (3) of the Internal
19 Revenue Code be treated as a member of the
20 affiliated group which includes the dividend
21 recipient, exceed the amount of the modification
22 provided under subparagraph (G) of paragraph (2) of
23 this subsection (b) which is related to such
24 dividends;
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; and
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 1986
33 ; and.
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.
11 (3) Special rule. For purposes of paragraph (2)
12 (A), "gross income" in the case of a life insurance
13 company, for tax years ending on and after December 31,
14 1994, shall mean the gross investment income for the
15 taxable year.
16 (c) Trusts and estates.
17 (1) In general. In the case of a trust or estate,
18 base income means an amount equal to the taxpayer's
19 taxable income for the taxable year as modified by
20 paragraph (2).
21 (2) Modifications. Subject to the provisions of
22 paragraph (3), the taxable income referred to in
23 paragraph (1) shall be modified by adding thereto the sum
24 of the following amounts:
25 (A) An amount equal to all amounts paid or
26 accrued to the taxpayer as interest or dividends
27 during the taxable year to the extent excluded from
28 gross income in the computation of taxable income;
29 (B) In the case of (i) an estate, $600; (ii) a
30 trust which, under its governing instrument, is
31 required to distribute all of its income currently,
32 $300; and (iii) any other trust, $100, but in each
33 such case, only to the extent such amount was
34 deducted in the computation of taxable income;
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1 (C) An amount equal to the amount of tax
2 imposed by this Act to the extent deducted from
3 gross income in the computation of taxable income
4 for the taxable year;
5 (D) The amount of any net operating loss
6 deduction taken in arriving at taxable income, other
7 than a net operating loss carried forward from a
8 taxable year ending prior to December 31, 1986;
9 (E) For taxable years in which a net operating
10 loss carryback or carryforward from a taxable year
11 ending prior to December 31, 1986 is an element of
12 taxable income under paragraph (1) of subsection (e)
13 or subparagraph (E) of paragraph (2) of subsection
14 (e), the amount by which addition modifications
15 other than those provided by this subparagraph (E)
16 exceeded subtraction modifications in such taxable
17 year, with the following limitations applied in the
18 order that they are listed:
19 (i) the addition modification relating to
20 the net operating loss carried back or forward
21 to the taxable year from any taxable year
22 ending prior to December 31, 1986 shall be
23 reduced by the amount of addition modification
24 under this subparagraph (E) which related to
25 that net operating loss and which was taken
26 into account in calculating the base income of
27 an earlier taxable year, and
28 (ii) the addition modification relating
29 to the net operating loss carried back or
30 forward to the taxable year from any taxable
31 year ending prior to December 31, 1986 shall
32 not exceed the amount of such carryback or
33 carryforward;
34 For taxable years in which there is a net
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1 operating loss carryback or carryforward from more
2 than one other taxable year ending prior to December
3 31, 1986, the addition modification provided in this
4 subparagraph (E) shall be the sum of the amounts
5 computed independently under the preceding
6 provisions of this subparagraph (E) for each such
7 taxable year;
8 (F) For taxable years ending on or after
9 January 1, 1989, an amount equal to the tax deducted
10 pursuant to Section 164 of the Internal Revenue Code
11 if the trust or estate is claiming the same tax for
12 purposes of the Illinois foreign tax credit under
13 Section 601 of this Act;
14 (G) 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 (G-5) For taxable years ending after December
19 31, 1997, an amount equal to any eligible
20 remediation costs that the trust or estate deducted
21 in computing adjusted gross income and for which the
22 trust or estate claims a credit under subsection (l)
23 of Section 201;
24 and by deducting from the total so obtained the sum of
25 the following amounts:
26 (H) An amount equal to all amounts included in
27 such total pursuant to the provisions of Sections
28 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
29 408 of the Internal Revenue Code or included in such
30 total as distributions under the provisions of any
31 retirement or disability plan for employees of any
32 governmental agency or unit, or retirement payments
33 to retired partners, which payments are excluded in
34 computing net earnings from self employment by
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1 Section 1402 of the Internal Revenue Code and
2 regulations adopted pursuant thereto;
3 (I) The valuation limitation amount;
4 (J) An amount equal to the amount of any tax
5 imposed by this Act which was refunded to the
6 taxpayer and included in such total for the taxable
7 year;
8 (K) An amount equal to all amounts included in
9 taxable income as modified by subparagraphs (A),
10 (B), (C), (D), (E), (F) and (G) which are exempt
11 from taxation by this State either by reason of its
12 statutes or Constitution or by reason of the
13 Constitution, treaties or statutes of the United
14 States; provided that, in the case of any statute of
15 this State that exempts income derived from bonds or
16 other obligations from the tax imposed under this
17 Act, the amount exempted shall be the interest net
18 of bond premium amortization;
19 (L) With the exception of any amounts
20 subtracted under subparagraph (K), an amount equal
21 to the sum of all amounts disallowed as deductions
22 by Sections 171(a) (2) and 265(a)(2) of the Internal
23 Revenue Code, as now or hereafter amended, and all
24 amounts of expenses allocable to interest and
25 disallowed as deductions by Section 265(1) of the
26 Internal Revenue Code of 1954, as now or hereafter
27 amended;
28 (M) An amount equal to those dividends
29 included in such total which were paid by a
30 corporation which conducts business operations in an
31 Enterprise Zone or zones created under the Illinois
32 Enterprise Zone Act and conducts substantially all
33 of its operations in an Enterprise Zone or Zones;
34 (N) An amount equal to any contribution made
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1 to a job training project established pursuant to
2 the Tax Increment Allocation Redevelopment Act;
3 (O) An amount equal to those dividends
4 included in such total that were paid by a
5 corporation that conducts business operations in a
6 federally designated Foreign Trade Zone or Sub-Zone
7 and that is designated a High Impact Business
8 located in Illinois; provided that dividends
9 eligible for the deduction provided in subparagraph
10 (M) of paragraph (2) of this subsection shall not be
11 eligible for the deduction provided under this
12 subparagraph (O); and
13 (P) An amount equal to the amount of the
14 deduction used to compute the federal income tax
15 credit for restoration of substantial amounts held
16 under claim of right for the taxable year pursuant
17 to Section 1341 of the Internal Revenue Code of
18 1986.
19 (3) Limitation. The amount of any modification
20 otherwise required under this subsection shall, under
21 regulations prescribed by the Department, be adjusted by
22 any amounts included therein which were properly paid,
23 credited, or required to be distributed, or permanently
24 set aside for charitable purposes pursuant to Internal
25 Revenue Code Section 642(c) during the taxable year.
26 (d) Partnerships.
27 (1) In general. In the case of a partnership, base
28 income means an amount equal to the taxpayer's taxable
29 income for the taxable year as modified by paragraph (2).
30 (2) Modifications. The taxable income referred to
31 in paragraph (1) shall be modified by adding thereto the
32 sum of the following amounts:
33 (A) An amount equal to all amounts paid or
34 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 taxable income;
3 (B) An amount equal to the amount of tax
4 imposed by this Act to the extent deducted from
5 gross income for the taxable year; and
6 (C) The amount of deductions allowed to the
7 partnership pursuant to Section 707 (c) of the
8 Internal Revenue Code in calculating its taxable
9 income; and
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of taxable income;
14 and by deducting from the total so obtained the following
15 amounts:
16 (E) The valuation limitation amount;
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 all amounts included in
22 taxable income as modified by subparagraphs (A),
23 (B), (C) and (D) which are exempt from taxation by
24 this State either by reason of its statutes or
25 Constitution or by reason of the Constitution,
26 treaties or statutes of the United States; provided
27 that, in the case of any statute of this State that
28 exempts income derived from bonds or other
29 obligations from the tax imposed under this Act, the
30 amount exempted shall be the interest net of bond
31 premium amortization;
32 (H) Any income of the partnership which
33 constitutes personal service income as defined in
34 Section 1348 (b) (1) of the Internal Revenue Code
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1 (as in effect December 31, 1981) or a reasonable
2 allowance for compensation paid or accrued for
3 services rendered by partners to the partnership,
4 whichever is greater;
5 (I) An amount equal to all amounts of income
6 distributable to an entity subject to the Personal
7 Property Tax Replacement Income Tax imposed by
8 subsections (c) and (d) of Section 201 of this Act
9 including amounts distributable to organizations
10 exempt from federal income tax by reason of Section
11 501(a) of the Internal Revenue Code;
12 (J) With the exception of any amounts
13 subtracted under subparagraph (G), an amount equal
14 to the sum of all amounts disallowed as deductions
15 by Sections 171(a) (2), and 265(2) of the Internal
16 Revenue Code of 1954, as now or hereafter amended,
17 and all amounts of expenses allocable to interest
18 and disallowed as deductions by Section 265(1) of
19 the Internal Revenue Code, as now or hereafter
20 amended;
21 (K) An amount equal to those dividends
22 included in such total which were paid by a
23 corporation which conducts business operations in an
24 Enterprise Zone or zones created under the Illinois
25 Enterprise Zone Act, enacted by the 82nd General
26 Assembly, and which does not conduct such operations
27 other than in an Enterprise Zone or Zones;
28 (L) An amount equal to any contribution made
29 to a job training project established pursuant to
30 the Real Property Tax Increment Allocation
31 Redevelopment Act;
32 (M) 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 (K) of paragraph (2) of this subsection shall not be
6 eligible for the deduction provided under this
7 subparagraph (M); and
8 (N) 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.
14 (e) Gross income; adjusted gross income; taxable income.
15 (1) In general. Subject to the provisions of
16 paragraph (2) and subsection (b) (3), for purposes of
17 this Section and Section 803(e), a taxpayer's gross
18 income, adjusted gross income, or taxable income for the
19 taxable year shall mean the amount of gross income,
20 adjusted gross income or taxable income properly
21 reportable for federal income tax purposes for the
22 taxable year under the provisions of the Internal Revenue
23 Code. Taxable income may be less than zero. However, for
24 taxable years ending on or after December 31, 1986, net
25 operating loss carryforwards from taxable years ending
26 prior to December 31, 1986, may not exceed the sum of
27 federal taxable income for the taxable year before net
28 operating loss deduction, plus the excess of addition
29 modifications over subtraction modifications for the
30 taxable year. For taxable years ending prior to December
31 31, 1986, taxable income may never be an amount in excess
32 of the net operating loss for the taxable year as defined
33 in subsections (c) and (d) of Section 172 of the Internal
34 Revenue Code, provided that when taxable income of a
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1 corporation (other than a Subchapter S corporation),
2 trust, or estate is less than zero and addition
3 modifications, other than those provided by subparagraph
4 (E) of paragraph (2) of subsection (b) for corporations
5 or subparagraph (E) of paragraph (2) of subsection (c)
6 for trusts and estates, exceed subtraction modifications,
7 an addition modification must be made under those
8 subparagraphs for any other taxable year to which the
9 taxable income less than zero (net operating loss) is
10 applied under Section 172 of the Internal Revenue Code or
11 under subparagraph (E) of paragraph (2) of this
12 subsection (e) applied in conjunction with Section 172 of
13 the Internal Revenue Code.
14 (2) Special rule. For purposes of paragraph (1) of
15 this subsection, the taxable income properly reportable
16 for federal income tax purposes shall mean:
17 (A) Certain life insurance companies. In the
18 case of a life insurance company subject to the tax
19 imposed by Section 801 of the Internal Revenue Code,
20 life insurance company taxable income, plus the
21 amount of distribution from pre-1984 policyholder
22 surplus accounts as calculated under Section 815a of
23 the Internal Revenue Code;
24 (B) Certain other insurance companies. In the
25 case of mutual insurance companies subject to the
26 tax imposed by Section 831 of the Internal Revenue
27 Code, insurance company taxable income;
28 (C) Regulated investment companies. In the
29 case of a regulated investment company subject to
30 the tax imposed by Section 852 of the Internal
31 Revenue Code, investment company taxable income;
32 (D) Real estate investment trusts. In the
33 case of a real estate investment trust subject to
34 the tax imposed by Section 857 of the Internal
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1 Revenue Code, real estate investment trust taxable
2 income;
3 (E) Consolidated corporations. In the case of
4 a corporation which is a member of an affiliated
5 group of corporations filing a consolidated income
6 tax return for the taxable year for federal income
7 tax purposes, taxable income determined as if such
8 corporation had filed a separate return for federal
9 income tax purposes for the taxable year and each
10 preceding taxable year for which it was a member of
11 an affiliated group. For purposes of this
12 subparagraph, the taxpayer's separate taxable income
13 shall be determined as if the election provided by
14 Section 243(b) (2) of the Internal Revenue Code had
15 been in effect for all such years;
16 (F) Cooperatives. In the case of a
17 cooperative corporation or association, the taxable
18 income of such organization determined in accordance
19 with the provisions of Section 1381 through 1388 of
20 the Internal Revenue Code;
21 (G) Subchapter S corporations. In the case
22 of: (i) a Subchapter S corporation for which there
23 is in effect an election for the taxable year under
24 Section 1362 of the Internal Revenue Code, the
25 taxable income of such corporation determined in
26 accordance with Section 1363(b) of the Internal
27 Revenue Code, except that taxable income shall take
28 into account those items which are required by
29 Section 1363(b)(1) of the Internal Revenue Code to
30 be separately stated; and (ii) a Subchapter S
31 corporation for which there is in effect a federal
32 election to opt out of the provisions of the
33 Subchapter S Revision Act of 1982 and have applied
34 instead the prior federal Subchapter S rules as in
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1 effect on July 1, 1982, the taxable income of such
2 corporation determined in accordance with the
3 federal Subchapter S rules as in effect on July 1,
4 1982; and
5 (H) Partnerships. In the case of a
6 partnership, taxable income determined in accordance
7 with Section 703 of the Internal Revenue Code,
8 except that taxable income shall take into account
9 those items which are required by Section 703(a)(1)
10 to be separately stated but which would be taken
11 into account by an individual in calculating his
12 taxable income.
13 (f) Valuation limitation amount.
14 (1) In general. The valuation limitation amount
15 referred to in subsections (a) (2) (G), (c) (2) (I) and
16 (d)(2) (E) is an amount equal to:
17 (A) The sum of the pre-August 1, 1969
18 appreciation amounts (to the extent consisting of
19 gain reportable under the provisions of Section 1245
20 or 1250 of the Internal Revenue Code) for all
21 property in respect of which such gain was reported
22 for the taxable year; plus
23 (B) The lesser of (i) the sum of the
24 pre-August 1, 1969 appreciation amounts (to the
25 extent consisting of capital gain) for all property
26 in respect of which such gain was reported for
27 federal income tax purposes for the taxable year, or
28 (ii) the net capital gain for the taxable year,
29 reduced in either case by any amount of such gain
30 included in the amount determined under subsection
31 (a) (2) (F) or (c) (2) (H).
32 (2) Pre-August 1, 1969 appreciation amount.
33 (A) If the fair market value of property
34 referred to in paragraph (1) was readily
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1 ascertainable on August 1, 1969, the pre-August 1,
2 1969 appreciation amount for such property is the
3 lesser of (i) the excess of such fair market value
4 over the taxpayer's basis (for determining gain) for
5 such property on that date (determined under the
6 Internal Revenue Code as in effect on that date), or
7 (ii) the total gain realized and reportable for
8 federal income tax purposes in respect of the sale,
9 exchange or other disposition of such property.
10 (B) If the fair market value of property
11 referred to in paragraph (1) was not readily
12 ascertainable on August 1, 1969, the pre-August 1,
13 1969 appreciation amount for such property is that
14 amount which bears the same ratio to the total gain
15 reported in respect of the property for federal
16 income tax purposes for the taxable year, as the
17 number of full calendar months in that part of the
18 taxpayer's holding period for the property ending
19 July 31, 1969 bears to the number of full calendar
20 months in the taxpayer's entire holding period for
21 the property.
22 (C) The Department shall prescribe such
23 regulations as may be necessary to carry out the
24 purposes of this paragraph.
25 (g) Double deductions. Unless specifically provided
26 otherwise, nothing in this Section shall permit the same item
27 to be deducted more than once.
28 (h) Legislative intention. Except as expressly provided
29 by this Section there shall be no modifications or
30 limitations on the amounts of income, gain, loss or deduction
31 taken into account in determining gross income, adjusted
32 gross income or taxable income for federal income tax
33 purposes for the taxable year, or in the amount of such items
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1 entering into the computation of base income and net income
2 under this Act for such taxable year, whether in respect of
3 property values as of August 1, 1969 or otherwise.
4 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
5 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
6 8-9-96; 90-491, eff. 1-1-98; 90-717, eff. 8-7-98; 90-770,
7 eff. 8-14-98; revised 9-21-98.)
8 Section 99. Effective date. This Act takes effect upon
9 becoming law.".