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90_HB3811ham005
LRB9010584PTbdam04
1 AMENDMENT TO HOUSE BILL 3811
2 AMENDMENT NO. . Amend House Bill 3811, AS AMENDED,
3 by replacing the title with the following:
4 "AN ACT concerning taxation."; and
5 by inserting above Section 5 the following:
6 "Section 3. The Illinois Income Tax Act is amended by
7 changing Section 203 as follows:
8 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
9 Sec. 203. Base income defined.
10 (a) Individuals.
11 (1) In general. In the case of an individual, base
12 income means an amount equal to the taxpayer's adjusted
13 gross income for the taxable year as modified by
14 paragraph (2).
15 (2) Modifications. The adjusted gross income
16 referred to in paragraph (1) shall be modified by adding
17 thereto the sum of the following amounts:
18 (A) An amount equal to all amounts paid or
19 accrued to the taxpayer as interest or dividends
20 during the taxable year to the extent excluded from
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1 gross income in the computation of adjusted gross
2 income, except stock dividends of qualified public
3 utilities described in Section 305(e) of the
4 Internal Revenue Code;
5 (B) An amount equal to the amount of tax
6 imposed by this Act to the extent deducted from
7 gross income in the computation of adjusted gross
8 income for the taxable year;
9 (C) An amount equal to the amount received
10 during the taxable year as a recovery or refund of
11 real property taxes paid with respect to the
12 taxpayer's principal residence under the Revenue Act
13 of 1939 and for which a deduction was previously
14 taken under subparagraph (L) of this paragraph (2)
15 prior to July 1, 1991, the retrospective application
16 date of Article 4 of Public Act 87-17. In the case
17 of multi-unit or multi-use structures and farm
18 dwellings, the taxes on the taxpayer's principal
19 residence shall be that portion of the total taxes
20 for the entire property which is attributable to
21 such principal residence;
22 (D) An amount equal to the amount of the
23 capital gain deduction allowable under the Internal
24 Revenue Code, to the extent deducted from gross
25 income in the computation of adjusted gross income;
26 and
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29 withdrawn by the taxpayer in the taxable year from a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;
34 and by deducting from the total so obtained the sum of
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1 the following amounts:
2 (E) Any amount included in such total in
3 respect of any compensation (including but not
4 limited to any compensation paid or accrued to a
5 serviceman while a prisoner of war or missing in
6 action) paid to a resident by reason of being on
7 active duty in the Armed Forces of the United States
8 and in respect of any compensation paid or accrued
9 to a resident who as a governmental employee was a
10 prisoner of war or missing in action, and in respect
11 of any compensation paid to a resident in 1971 or
12 thereafter for annual training performed pursuant to
13 Sections 502 and 503, Title 32, United States Code
14 as a member of the Illinois National Guard;
15 (F) An amount equal to all amounts included in
16 such total pursuant to the provisions of Sections
17 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
18 408 of the Internal Revenue Code, or included in
19 such total as distributions under the provisions of
20 any retirement or disability plan for employees of
21 any governmental agency or unit, or retirement
22 payments to retired partners, which payments are
23 excluded in computing net earnings from self
24 employment by Section 1402 of the Internal Revenue
25 Code and regulations adopted pursuant thereto;
26 (G) The valuation limitation amount;
27 (H) An amount equal to the amount of any tax
28 imposed by this Act which was refunded to the
29 taxpayer and included in such total for the taxable
30 year;
31 (I) An amount equal to all amounts included in
32 such total pursuant to the provisions of Section 111
33 of the Internal Revenue Code as a recovery of items
34 previously deducted from adjusted gross income in
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1 the computation of taxable income;
2 (J) 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 (K) An amount equal to those dividends
9 included in such total that were paid by a
10 corporation that conducts business operations in a
11 federally designated Foreign Trade Zone or Sub-Zone
12 and that is designated a High Impact Business
13 located in Illinois; provided that dividends
14 eligible for the deduction provided in subparagraph
15 (J) of paragraph (2) of this subsection shall not be
16 eligible for the deduction provided under this
17 subparagraph (K);
18 (L) For taxable years ending after December
19 31, 1983, an amount equal to all social security
20 benefits and railroad retirement benefits included
21 in such total pursuant to Sections 72(r) and 86 of
22 the Internal Revenue Code;
23 (M) With the exception of any amounts
24 subtracted under subparagraph (N), an amount equal
25 to the sum of all amounts disallowed as deductions
26 by Sections 171(a) (2), and 265(2) of the Internal
27 Revenue Code of 1954, as now or hereafter amended,
28 and all amounts of expenses allocable to interest
29 and disallowed as deductions by Section 265(1) of
30 the Internal Revenue Code of 1954, as now or
31 hereafter amended;
32 (N) An amount equal to all amounts included in
33 such total which are exempt from taxation by this
34 State either by reason of its statutes or
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1 Constitution or by reason of the Constitution,
2 treaties or statutes of the United States; provided
3 that, in the case of any statute of this State that
4 exempts income derived from bonds or other
5 obligations from the tax imposed under this Act, the
6 amount exempted shall be the interest net of bond
7 premium amortization;
8 (O) An amount equal to any contribution made
9 to a job training project established pursuant to
10 the Tax Increment Allocation Redevelopment Act;
11 (P) An amount equal to the amount of the
12 deduction used to compute the federal income tax
13 credit for restoration of substantial amounts held
14 under claim of right for the taxable year pursuant
15 to Section 1341 of the Internal Revenue Code of
16 1986;
17 (Q) An amount equal to any amounts included in
18 such total, received by the taxpayer as an
19 acceleration in the payment of life, endowment or
20 annuity benefits in advance of the time they would
21 otherwise be payable as an indemnity for a terminal
22 illness;
23 (R) An amount equal to the amount of any
24 federal or State bonus paid to veterans of the
25 Persian Gulf War;
26 (S) An amount, to the extent included in
27 adjusted gross income, equal to the amount of a
28 contribution made in the taxable year on behalf of
29 the taxpayer to a medical care savings account
30 established under the Medical Care Savings Account
31 Act to the extent the contribution is accepted by
32 the account administrator as provided in that Act;
33 (T) An amount, to the extent included in
34 adjusted gross income, equal to the amount of
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1 interest earned in the taxable year on a medical
2 care savings account established under the Medical
3 Care Savings Account Act on behalf of the taxpayer,
4 other than interest added pursuant to item (D-5) of
5 this paragraph (2);
6 (U) For one taxable year beginning on or after
7 January 1, 1994, an amount equal to the total amount
8 of tax imposed and paid under subsections (a) and
9 (b) of Section 201 of this Act on grant amounts
10 received by the taxpayer under the Nursing Home
11 Grant Assistance Act during the taxpayer's taxable
12 years 1992 and 1993; and
13 (V) Beginning with tax years ending on or
14 after December 31, 1995 and ending with tax years
15 ending on or before December 31, 1999, an amount
16 equal to the amount paid by a taxpayer who is a
17 self-employed taxpayer, a partner of a partnership,
18 or a shareholder in a Subchapter S corporation for
19 health insurance or long-term care insurance for
20 that taxpayer or that taxpayer's spouse or
21 dependents, to the extent that the amount paid for
22 that health insurance or long-term care insurance
23 may be deducted under Section 213 of the Internal
24 Revenue Code of 1986, has not been deducted on the
25 federal income tax return of the taxpayer, and does
26 not exceed the taxable income attributable to that
27 taxpayer's income, self-employment income, or
28 Subchapter S corporation income; except that no
29 deduction shall be allowed under this item (V) if
30 the taxpayer is eligible to participate in any
31 health insurance or long-term care insurance plan of
32 an employer of the taxpayer or the taxpayer's
33 spouse. The amount of the health insurance and
34 long-term care insurance subtracted under this item
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1 (V) shall be determined by multiplying total health
2 insurance and long-term care insurance premiums paid
3 by the taxpayer times a number that represents the
4 fractional percentage of eligible medical expenses
5 under Section 213 of the Internal Revenue Code of
6 1986 not actually deducted on the taxpayer's federal
7 income tax return; and .
8 (W) For taxable years beginning on or after
9 January 1, 1998, all amounts included in the
10 taxpayer's federal gross income in the taxable year
11 from amounts converted from a regular IRA to a Roth
12 IRA. This paragraph is exempt from the provisions of
13 Section 250.
14 (b) Corporations.
15 (1) In general. In the case of a corporation, base
16 income means an amount equal to the taxpayer's taxable
17 income for the taxable year as modified by paragraph (2).
18 (2) Modifications. The taxable income referred to
19 in paragraph (1) shall be modified by adding thereto the
20 sum of the following amounts:
21 (A) An amount equal to all amounts paid or
22 accrued to the taxpayer as interest and all
23 distributions received from regulated investment
24 companies during the taxable year to the extent
25 excluded from gross income in the computation of
26 taxable income;
27 (B) An amount equal to the amount of tax
28 imposed by this Act to the extent deducted from
29 gross income in the computation of taxable income
30 for the taxable year;
31 (C) In the case of a regulated investment
32 company, an amount equal to the excess of (i) the
33 net long-term capital gain for the taxable year,
34 over (ii) the amount of the capital gain dividends
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1 designated as such in accordance with Section
2 852(b)(3)(C) of the Internal Revenue Code and any
3 amount designated under Section 852(b)(3)(D) of the
4 Internal Revenue Code, attributable to the taxable
5 year.
6 This amendatory Act of 1995 is declarative of existing
7 law and is not a new enactment.
8 (D) The amount of any net operating loss
9 deduction taken in arriving at taxable income, other
10 than a net operating loss carried forward from a
11 taxable year ending prior to December 31, 1986; and
12 (E) For taxable years in which a net operating
13 loss carryback or carryforward from a taxable year
14 ending prior to December 31, 1986 is an element of
15 taxable income under paragraph (1) of subsection (e)
16 or subparagraph (E) of paragraph (2) of subsection
17 (e), the amount by which addition modifications
18 other than those provided by this subparagraph (E)
19 exceeded subtraction modifications in such earlier
20 taxable year, with the following limitations applied
21 in the order that they are listed:
22 (i) the addition modification relating to
23 the net operating loss carried back or forward
24 to the taxable year from any taxable year
25 ending prior to December 31, 1986 shall be
26 reduced by the amount of addition modification
27 under this subparagraph (E) which related to
28 that net operating loss and which was taken
29 into account in calculating the base income of
30 an earlier taxable year, and
31 (ii) the addition modification relating
32 to the net operating loss carried back or
33 forward to the taxable year from any taxable
34 year ending prior to December 31, 1986 shall
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1 not exceed the amount of such carryback or
2 carryforward;
3 For taxable years in which there is a net
4 operating loss carryback or carryforward from more
5 than one other taxable year ending prior to December
6 31, 1986, the addition modification provided in this
7 subparagraph (E) shall be the sum of the amounts
8 computed independently under the preceding
9 provisions of this subparagraph (E) for each such
10 taxable year,
11 and by deducting from the total so obtained the sum of
12 the following amounts:
13 (F) An amount equal to the amount of any tax
14 imposed by this Act which was refunded to the
15 taxpayer and included in such total for the taxable
16 year;
17 (G) An amount equal to any amount included in
18 such total under Section 78 of the Internal Revenue
19 Code;
20 (H) In the case of a regulated investment
21 company, an amount equal to the amount of exempt
22 interest dividends as defined in subsection (b) (5)
23 of Section 852 of the Internal Revenue Code, paid to
24 shareholders for the taxable year;
25 (I) With the exception of any amounts
26 subtracted under subparagraph (J), an amount equal
27 to the sum of all amounts disallowed as deductions
28 by Sections 171(a) (2), and 265(a)(2) and amounts
29 disallowed as interest expense by Section 291(a)(3)
30 of the Internal Revenue Code, as now or hereafter
31 amended, and all amounts of expenses allocable to
32 interest and disallowed as deductions by Section
33 265(a)(1) of the Internal Revenue Code, as now or
34 hereafter amended;
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1 (J) An amount equal to all amounts included in
2 such total which are exempt from taxation by this
3 State either by reason of its statutes or
4 Constitution or by reason of the Constitution,
5 treaties or statutes of the United States; provided
6 that, in the case of any statute of this State that
7 exempts income derived from bonds or other
8 obligations from the tax imposed under this Act, the
9 amount exempted shall be the interest net of bond
10 premium amortization;
11 (K) An amount equal to those dividends
12 included in such total which were paid by a
13 corporation which conducts business operations in an
14 Enterprise Zone or zones created under the Illinois
15 Enterprise Zone Act and conducts substantially all
16 of its operations in an Enterprise Zone or zones;
17 (L) An amount equal to those dividends
18 included in such total that were paid by a
19 corporation that conducts business operations in a
20 federally designated Foreign Trade Zone or Sub-Zone
21 and that is designated a High Impact Business
22 located in Illinois; provided that dividends
23 eligible for the deduction provided in subparagraph
24 (K) of paragraph 2 of this subsection shall not be
25 eligible for the deduction provided under this
26 subparagraph (L);
27 (M) 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 Enterprise Zone Investment Credit. To determine
34 the portion of a loan or loans that is secured by
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1 property eligible for a Section 201(h) investment
2 credit to the borrower, the entire principal amount
3 of the loan or loans between the taxpayer and the
4 borrower should be divided into the basis of the
5 Section 201(h) investment credit property which
6 secures the loan or loans, using for this purpose
7 the original basis of such property on the date that
8 it was placed in service in the Enterprise Zone.
9 The subtraction modification available to taxpayer
10 in any year under this subsection shall be that
11 portion of the total interest paid by the borrower
12 with respect to such loan attributable to the
13 eligible property as calculated under the previous
14 sentence;
15 (M-1) For any taxpayer that is a financial
16 organization within the meaning of Section 304(c) of
17 this Act, an amount included in such total as
18 interest income from a loan or loans made by such
19 taxpayer to a borrower, to the extent that such a
20 loan is secured by property which is eligible for
21 the High Impact Business Investment Credit. To
22 determine the portion of a loan or loans that is
23 secured by property eligible for a Section 201(i)
24 investment credit to the borrower, the entire
25 principal amount of the loan or loans between the
26 taxpayer and the borrower should be divided into the
27 basis of the Section 201(i) investment credit
28 property which secures the loan or loans, using for
29 this purpose the original basis of such property on
30 the date that it was placed in service in a
31 federally designated Foreign Trade Zone or Sub-Zone
32 located in Illinois. No taxpayer that is eligible
33 for the deduction provided in subparagraph (M) of
34 paragraph (2) of this subsection shall be eligible
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1 for the deduction provided under this subparagraph
2 (M-1). The subtraction modification available to
3 taxpayers in any year under this subsection shall be
4 that portion of the total interest paid by the
5 borrower with respect to such loan attributable to
6 the eligible property as calculated under the
7 previous sentence;
8 (N) Two times any contribution made during the
9 taxable year to a designated zone organization to
10 the extent that the contribution (i) qualifies as a
11 charitable contribution under subsection (c) of
12 Section 170 of the Internal Revenue Code and (ii)
13 must, by its terms, be used for a project approved
14 by the Department of Commerce and Community Affairs
15 under Section 11 of the Illinois Enterprise Zone
16 Act;
17 (O) An amount equal to: (i) 85% for taxable
18 years ending on or before December 31, 1992, or, a
19 percentage equal to the percentage allowable under
20 Section 243(a)(1) of the Internal Revenue Code of
21 1986 for taxable years ending after December 31,
22 1992, of the amount by which dividends included in
23 taxable income and received from a corporation that
24 is not created or organized under the laws of the
25 United States or any state or political subdivision
26 thereof, including, for taxable years ending on or
27 after December 31, 1988, dividends received or
28 deemed received or paid or deemed paid under
29 Sections 951 through 964 of the Internal Revenue
30 Code, exceed the amount of the modification provided
31 under subparagraph (G) of paragraph (2) of this
32 subsection (b) which is related to such dividends;
33 plus (ii) 100% of the amount by which dividends,
34 included in taxable income and received, including,
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1 for taxable years ending on or after December 31,
2 1988, dividends received or deemed received or paid
3 or deemed paid under Sections 951 through 964 of the
4 Internal Revenue Code, from any such corporation
5 specified in clause (i) that would but for the
6 provisions of Section 1504 (b) (3) of the Internal
7 Revenue Code be treated as a member of the
8 affiliated group which includes the dividend
9 recipient, exceed the amount of the modification
10 provided under subparagraph (G) of paragraph (2) of
11 this subsection (b) which is related to such
12 dividends;
13 (P) An amount equal to any contribution made
14 to a job training project established pursuant to
15 the Tax Increment Allocation Redevelopment Act; and
16 (Q) 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 (3) Special rule. For purposes of paragraph (2)
23 (A), "gross income" in the case of a life insurance
24 company, for tax years ending on and after December 31,
25 1994, shall mean the gross investment income for the
26 taxable year.
27 (c) Trusts and estates.
28 (1) In general. In the case of a trust or estate,
29 base income means an amount equal to the taxpayer's
30 taxable income for the taxable year as modified by
31 paragraph (2).
32 (2) Modifications. Subject to the provisions of
33 paragraph (3), the taxable income referred to in
34 paragraph (1) shall be modified by adding thereto the sum
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1 of the following amounts:
2 (A) An amount equal to all amounts paid or
3 accrued to the taxpayer as interest or dividends
4 during the taxable year to the extent excluded from
5 gross income in the computation of taxable income;
6 (B) In the case of (i) an estate, $600; (ii) a
7 trust which, under its governing instrument, is
8 required to distribute all of its income currently,
9 $300; and (iii) any other trust, $100, but in each
10 such case, only to the extent such amount was
11 deducted in the computation of taxable income;
12 (C) An amount equal to the amount of tax
13 imposed by this Act to the extent deducted from
14 gross income in the computation of taxable income
15 for the taxable year;
16 (D) The amount of any net operating loss
17 deduction taken in arriving at taxable income, other
18 than a net operating loss carried forward from a
19 taxable year ending prior to December 31, 1986;
20 (E) For taxable years in which a net operating
21 loss carryback or carryforward from a taxable year
22 ending prior to December 31, 1986 is an element of
23 taxable income under paragraph (1) of subsection (e)
24 or subparagraph (E) of paragraph (2) of subsection
25 (e), the amount by which addition modifications
26 other than those provided by this subparagraph (E)
27 exceeded subtraction modifications in such taxable
28 year, with the following limitations applied in the
29 order that they are listed:
30 (i) the addition modification relating to
31 the net operating loss carried back or forward
32 to the taxable year from any taxable year
33 ending prior to December 31, 1986 shall be
34 reduced by the amount of addition modification
-15- LRB9010584PTbdam04
1 under this subparagraph (E) which related to
2 that net operating loss and which was taken
3 into account in calculating the base income of
4 an earlier taxable year, and
5 (ii) the addition modification relating
6 to the net operating loss carried back or
7 forward to the taxable year from any taxable
8 year ending prior to December 31, 1986 shall
9 not exceed the amount of such carryback or
10 carryforward;
11 For taxable years in which there is a net
12 operating loss carryback or carryforward from more
13 than one other taxable year ending prior to December
14 31, 1986, the addition modification provided in this
15 subparagraph (E) shall be the sum of the amounts
16 computed independently under the preceding
17 provisions of this subparagraph (E) for each such
18 taxable year;
19 (F) For taxable years ending on or after
20 January 1, 1989, an amount equal to the tax deducted
21 pursuant to Section 164 of the Internal Revenue Code
22 if the trust or estate is claiming the same tax for
23 purposes of the Illinois foreign tax credit under
24 Section 601 of this Act; and
25 (G) An amount equal to the amount of the
26 capital gain deduction allowable under the Internal
27 Revenue Code, to the extent deducted from gross
28 income in the computation of taxable income;
29 and by deducting from the total so obtained the sum of
30 the following amounts:
31 (H) An amount equal to all amounts included in
32 such total pursuant to the provisions of Sections
33 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
34 408 of the Internal Revenue Code or included in such
-16- LRB9010584PTbdam04
1 total as distributions under the provisions of any
2 retirement or disability plan for employees of any
3 governmental agency or unit, or retirement payments
4 to retired partners, which payments are excluded in
5 computing net earnings from self employment by
6 Section 1402 of the Internal Revenue Code and
7 regulations adopted pursuant thereto;
8 (I) The valuation limitation amount;
9 (J) An amount equal to the amount of any tax
10 imposed by this Act which was refunded to the
11 taxpayer and included in such total for the taxable
12 year;
13 (K) An amount equal to all amounts included in
14 taxable income as modified by subparagraphs (A),
15 (B), (C), (D), (E), (F) and (G) which are exempt
16 from taxation by this State either by reason of its
17 statutes or Constitution or by reason of the
18 Constitution, treaties or statutes of the United
19 States; provided that, in the case of any statute of
20 this State that exempts income derived from bonds or
21 other obligations from the tax imposed under this
22 Act, the amount exempted shall be the interest net
23 of bond premium amortization;
24 (L) With the exception of any amounts
25 subtracted under subparagraph (K), an amount equal
26 to the sum of all amounts disallowed as deductions
27 by Sections 171(a) (2) and 265(a)(2) of the Internal
28 Revenue Code, as now or hereafter amended, and all
29 amounts of expenses allocable to interest and
30 disallowed as deductions by Section 265(1) of the
31 Internal Revenue Code of 1954, as now or hereafter
32 amended;
33 (M) An amount equal to those dividends
34 included in such total which were paid by a
-17- LRB9010584PTbdam04
1 corporation which conducts business operations in an
2 Enterprise Zone or zones created under the Illinois
3 Enterprise Zone Act and conducts substantially all
4 of its operations in an Enterprise Zone or Zones;
5 (N) An amount equal to any contribution made
6 to a job training project established pursuant to
7 the Tax Increment Allocation Redevelopment Act;
8 (O) An amount equal to those dividends
9 included in such total that were paid by a
10 corporation that conducts business operations in a
11 federally designated Foreign Trade Zone or Sub-Zone
12 and that is designated a High Impact Business
13 located in Illinois; provided that dividends
14 eligible for the deduction provided in subparagraph
15 (M) of paragraph (2) of this subsection shall not be
16 eligible for the deduction provided under this
17 subparagraph (O); and
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 (3) Limitation. The amount of any modification
25 otherwise required under this subsection shall, under
26 regulations prescribed by the Department, be adjusted by
27 any amounts included therein which were properly paid,
28 credited, or required to be distributed, or permanently
29 set aside for charitable purposes pursuant to Internal
30 Revenue Code Section 642(c) during the taxable year.
31 (d) Partnerships.
32 (1) In general. In the case of a partnership, base
33 income means an amount equal to the taxpayer's taxable
34 income for the taxable year as modified by paragraph (2).
-18- LRB9010584PTbdam04
1 (2) Modifications. The taxable income referred to
2 in paragraph (1) shall be modified by adding thereto the
3 sum of the following amounts:
4 (A) An amount equal to all amounts paid or
5 accrued to the taxpayer as interest or dividends
6 during the taxable year to the extent excluded from
7 gross income in the computation of taxable income;
8 (B) An amount equal to the amount of tax
9 imposed by this Act to the extent deducted from
10 gross income for the taxable year; and
11 (C) The amount of deductions allowed to the
12 partnership pursuant to Section 707 (c) of the
13 Internal Revenue Code in calculating its taxable
14 income;
15 (D) An amount equal to the amount of the
16 capital gain deduction allowable under the Internal
17 Revenue Code, to the extent deducted from gross
18 income in the computation of taxable income;
19 and by deducting from the total so obtained the following
20 amounts:
21 (E) The valuation limitation amount;
22 (F) An amount equal to the amount of any tax
23 imposed by this Act which was refunded to the
24 taxpayer and included in such total for the taxable
25 year;
26 (G) An amount equal to all amounts included in
27 taxable income as modified by subparagraphs (A),
28 (B), (C) and (D) which are exempt from taxation by
29 this State either by reason of its statutes or
30 Constitution or by reason of the Constitution,
31 treaties or statutes of the United States; provided
32 that, in the case of any statute of this State that
33 exempts income derived from bonds or other
34 obligations from the tax imposed under this Act, the
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1 amount exempted shall be the interest net of bond
2 premium amortization;
3 (H) Any income of the partnership which
4 constitutes personal service income as defined in
5 Section 1348 (b) (1) of the Internal Revenue Code
6 (as in effect December 31, 1981) or a reasonable
7 allowance for compensation paid or accrued for
8 services rendered by partners to the partnership,
9 whichever is greater;
10 (I) An amount equal to all amounts of income
11 distributable to an entity subject to the Personal
12 Property Tax Replacement Income Tax imposed by
13 subsections (c) and (d) of Section 201 of this Act
14 including amounts distributable to organizations
15 exempt from federal income tax by reason of Section
16 501(a) of the Internal Revenue Code;
17 (J) With the exception of any amounts
18 subtracted under subparagraph (G), an amount equal
19 to the sum of all amounts disallowed as deductions
20 by Sections 171(a) (2), and 265(2) of the Internal
21 Revenue Code of 1954, as now or hereafter amended,
22 and all amounts of expenses allocable to interest
23 and disallowed as deductions by Section 265(1) of
24 the Internal Revenue Code, as now or hereafter
25 amended;
26 (K) An amount equal to those dividends
27 included in such total which were paid by a
28 corporation which conducts business operations in an
29 Enterprise Zone or zones created under the Illinois
30 Enterprise Zone Act, enacted by the 82nd General
31 Assembly, and which does not conduct such operations
32 other than in an Enterprise Zone or Zones;
33 (L) An amount equal to any contribution made
34 to a job training project established pursuant to
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1 the Real Property Tax Increment Allocation
2 Redevelopment Act;
3 (M) 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 (K) of paragraph (2) of this subsection shall not be
11 eligible for the deduction provided under this
12 subparagraph (M); and
13 (N) 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 (e) Gross income; adjusted gross income; taxable income.
20 (1) In general. Subject to the provisions of
21 paragraph (2) and subsection (b) (3), for purposes of
22 this Section and Section 803(e), a taxpayer's gross
23 income, adjusted gross income, or taxable income for the
24 taxable year shall mean the amount of gross income,
25 adjusted gross income or taxable income properly
26 reportable for federal income tax purposes for the
27 taxable year under the provisions of the Internal Revenue
28 Code. Taxable income may be less than zero. However, for
29 taxable years ending on or after December 31, 1986, net
30 operating loss carryforwards from taxable years ending
31 prior to December 31, 1986, may not exceed the sum of
32 federal taxable income for the taxable year before net
33 operating loss deduction, plus the excess of addition
34 modifications over subtraction modifications for the
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1 taxable year. For taxable years ending prior to December
2 31, 1986, taxable income may never be an amount in excess
3 of the net operating loss for the taxable year as defined
4 in subsections (c) and (d) of Section 172 of the Internal
5 Revenue Code, provided that when taxable income of a
6 corporation (other than a Subchapter S corporation),
7 trust, or estate is less than zero and addition
8 modifications, other than those provided by subparagraph
9 (E) of paragraph (2) of subsection (b) for corporations
10 or subparagraph (E) of paragraph (2) of subsection (c)
11 for trusts and estates, exceed subtraction modifications,
12 an addition modification must be made under those
13 subparagraphs for any other taxable year to which the
14 taxable income less than zero (net operating loss) is
15 applied under Section 172 of the Internal Revenue Code or
16 under subparagraph (E) of paragraph (2) of this
17 subsection (e) applied in conjunction with Section 172 of
18 the Internal Revenue Code.
19 (2) Special rule. For purposes of paragraph (1) of
20 this subsection, the taxable income properly reportable
21 for federal income tax purposes shall mean:
22 (A) Certain life insurance companies. In the
23 case of a life insurance company subject to the tax
24 imposed by Section 801 of the Internal Revenue Code,
25 life insurance company taxable income, plus the
26 amount of distribution from pre-1984 policyholder
27 surplus accounts as calculated under Section 815a of
28 the Internal Revenue Code;
29 (B) Certain other insurance companies. In the
30 case of mutual insurance companies subject to the
31 tax imposed by Section 831 of the Internal Revenue
32 Code, insurance company taxable income;
33 (C) Regulated investment companies. In the
34 case of a regulated investment company subject to
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1 the tax imposed by Section 852 of the Internal
2 Revenue Code, investment company taxable income;
3 (D) Real estate investment trusts. In the
4 case of a real estate investment trust subject to
5 the tax imposed by Section 857 of the Internal
6 Revenue Code, real estate investment trust taxable
7 income;
8 (E) Consolidated corporations. In the case of
9 a corporation which is a member of an affiliated
10 group of corporations filing a consolidated income
11 tax return for the taxable year for federal income
12 tax purposes, taxable income determined as if such
13 corporation had filed a separate return for federal
14 income tax purposes for the taxable year and each
15 preceding taxable year for which it was a member of
16 an affiliated group. For purposes of this
17 subparagraph, the taxpayer's separate taxable income
18 shall be determined as if the election provided by
19 Section 243(b) (2) of the Internal Revenue Code had
20 been in effect for all such years;
21 (F) Cooperatives. In the case of a
22 cooperative corporation or association, the taxable
23 income of such organization determined in accordance
24 with the provisions of Section 1381 through 1388 of
25 the Internal Revenue Code;
26 (G) Subchapter S corporations. In the case
27 of: (i) a Subchapter S corporation for which there
28 is in effect an election for the taxable year under
29 Section 1362 of the Internal Revenue Code, the
30 taxable income of such corporation determined in
31 accordance with Section 1363(b) of the Internal
32 Revenue Code, except that taxable income shall take
33 into account those items which are required by
34 Section 1363(b)(1) of the Internal Revenue Code to
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1 be separately stated; and (ii) a Subchapter S
2 corporation for which there is in effect a federal
3 election to opt out of the provisions of the
4 Subchapter S Revision Act of 1982 and have applied
5 instead the prior federal Subchapter S rules as in
6 effect on July 1, 1982, the taxable income of such
7 corporation determined in accordance with the
8 federal Subchapter S rules as in effect on July 1,
9 1982; and
10 (H) Partnerships. In the case of a
11 partnership, taxable income determined in accordance
12 with Section 703 of the Internal Revenue Code,
13 except that taxable income shall take into account
14 those items which are required by Section 703(a)(1)
15 to be separately stated but which would be taken
16 into account by an individual in calculating his
17 taxable income.
18 (f) Valuation limitation amount.
19 (1) In general. The valuation limitation amount
20 referred to in subsections (a) (2) (G), (c) (2) (I) and
21 (d)(2) (E) is an amount equal to:
22 (A) The sum of the pre-August 1, 1969
23 appreciation amounts (to the extent consisting of
24 gain reportable under the provisions of Section 1245
25 or 1250 of the Internal Revenue Code) for all
26 property in respect of which such gain was reported
27 for the taxable year; plus
28 (B) The lesser of (i) the sum of the
29 pre-August 1, 1969 appreciation amounts (to the
30 extent consisting of capital gain) for all property
31 in respect of which such gain was reported for
32 federal income tax purposes for the taxable year, or
33 (ii) the net capital gain for the taxable year,
34 reduced in either case by any amount of such gain
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1 included in the amount determined under subsection
2 (a) (2) (F) or (c) (2) (H).
3 (2) Pre-August 1, 1969 appreciation amount.
4 (A) If the fair market value of property
5 referred to in paragraph (1) was readily
6 ascertainable on August 1, 1969, the pre-August 1,
7 1969 appreciation amount for such property is the
8 lesser of (i) the excess of such fair market value
9 over the taxpayer's basis (for determining gain) for
10 such property on that date (determined under the
11 Internal Revenue Code as in effect on that date), or
12 (ii) the total gain realized and reportable for
13 federal income tax purposes in respect of the sale,
14 exchange or other disposition of such property.
15 (B) If the fair market value of property
16 referred to in paragraph (1) was not readily
17 ascertainable on August 1, 1969, the pre-August 1,
18 1969 appreciation amount for such property is that
19 amount which bears the same ratio to the total gain
20 reported in respect of the property for federal
21 income tax purposes for the taxable year, as the
22 number of full calendar months in that part of the
23 taxpayer's holding period for the property ending
24 July 31, 1969 bears to the number of full calendar
25 months in the taxpayer's entire holding period for
26 the property.
27 (C) The Department shall prescribe such
28 regulations as may be necessary to carry out the
29 purposes of this paragraph.
30 (g) Double deductions. Unless specifically provided
31 otherwise, nothing in this Section shall permit the same item
32 to be deducted more than once.
33 (h) Legislative intention. Except as expressly provided
34 by this Section there shall be no modifications or
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1 limitations on the amounts of income, gain, loss or deduction
2 taken into account in determining gross income, adjusted
3 gross income or taxable income for federal income tax
4 purposes for the taxable year, or in the amount of such items
5 entering into the computation of base income and net income
6 under this Act for such taxable year, whether in respect of
7 property values as of August 1, 1969 or otherwise.
8 (Source: P.A. 89-89, eff. 6-30-95; 89-235, eff. 8-4-95;
9 89-418, eff. 11-15-95; 89-460, eff. 5-24-96; 89-626, eff.
10 8-9-96; 90-491, eff. 1-1-98.)".