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90_SB0645eng
35 ILCS 5/211 new
Amends the Illinois Income Tax Act. Creates a tax credit
against the taxes imposed under this Act for employer
taxpayers in an amount equal to 100% of amounts contributed
by the employer to public or private elementary, secondary,
or post-secondary schools for educational purposes. Provides
that the credit may be carried forward for 2 years. Provides
that in no event shall the credit reduce the employer
taxpayer's liability under the Act below zero. Applies to
tax years beginning on or after January 1, 1997 and ending on
or before December 30, 2002.
LRB9002758KDpc
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1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 203.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 203 as follows:
7 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
8 Sec. 203. Base income defined.
9 (a) Individuals.
10 (1) In general. In the case of an individual, base
11 income means an amount equal to the taxpayer's adjusted
12 gross income for the taxable year as modified by
13 paragraph (2).
14 (2) Modifications. The adjusted gross income
15 referred to in paragraph (1) shall be modified by adding
16 thereto the sum of the following amounts:
17 (A) An amount equal to all amounts paid or
18 accrued to the taxpayer as interest or dividends
19 during the taxable year to the extent excluded from
20 gross income in the computation of adjusted gross
21 income, except stock dividends of qualified public
22 utilities described in Section 305(e) of the
23 Internal Revenue Code;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income in the computation of adjusted gross
27 income for the taxable year;
28 (C) An amount equal to the amount received
29 during the taxable year as a recovery or refund of
30 real property taxes paid with respect to the
31 taxpayer's principal residence under the Revenue Act
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1 of 1939 and for which a deduction was previously
2 taken under subparagraph (L) of this paragraph (2)
3 prior to July 1, 1991, the retrospective application
4 date of Article 4 of Public Act 87-17. In the case
5 of multi-unit or multi-use structures and farm
6 dwellings, the taxes on the taxpayer's principal
7 residence shall be that portion of the total taxes
8 for the entire property which is attributable to
9 such principal residence;
10 (D) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of adjusted gross income;
14 and
15 (D-5) An amount, to the extent not included in
16 adjusted gross income, equal to the amount of money
17 withdrawn by the taxpayer in the taxable year from a
18 medical care savings account and the interest earned
19 on the account in the taxable year of a withdrawal
20 pursuant to subsection (b) of Section 20 of the
21 Medical Care Savings Account Act;
22 and by deducting from the total so obtained the sum of
23 the following amounts:
24 (E) Any amount included in such total in
25 respect of any compensation (including but not
26 limited to any compensation paid or accrued to a
27 serviceman while a prisoner of war or missing in
28 action) paid to a resident by reason of being on
29 active duty in the Armed Forces of the United States
30 and in respect of any compensation paid or accrued
31 to a resident who as a governmental employee was a
32 prisoner of war or missing in action, and in respect
33 of any compensation paid to a resident in 1971 or
34 thereafter for annual training performed pursuant to
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1 Sections 502 and 503, Title 32, United States Code
2 as a member of the Illinois National Guard;
3 (F) An amount equal to all amounts included in
4 such total pursuant to the provisions of Sections
5 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
6 408 of the Internal Revenue Code, or included in
7 such total as distributions under the provisions of
8 any retirement or disability plan for employees of
9 any governmental agency or unit, or retirement
10 payments to retired partners, which payments are
11 excluded in computing net earnings from self
12 employment by Section 1402 of the Internal Revenue
13 Code and regulations adopted pursuant thereto;
14 (G) The valuation limitation amount;
15 (H) An amount equal to the amount of any tax
16 imposed by this Act which was refunded to the
17 taxpayer and included in such total for the taxable
18 year;
19 (I) An amount equal to all amounts included in
20 such total pursuant to the provisions of Section 111
21 of the Internal Revenue Code as a recovery of items
22 previously deducted from adjusted gross income in
23 the computation of taxable income;
24 (J) An amount equal to those dividends
25 included in such total which were paid by a
26 corporation which conducts business operations in an
27 Enterprise Zone or zones created under the Illinois
28 Enterprise Zone Act, and conducts substantially all
29 of its operations in an Enterprise Zone or zones;
30 (K) An amount equal to those dividends
31 included in such total that were paid by a
32 corporation that conducts business operations in a
33 federally designated Foreign Trade Zone or Sub-Zone
34 and that is designated a High Impact Business
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1 located in Illinois; provided that dividends
2 eligible for the deduction provided in subparagraph
3 (J) of paragraph (2) of this subsection shall not be
4 eligible for the deduction provided under this
5 subparagraph (K);
6 (L) For taxable years ending after December
7 31, 1983, an amount equal to all social security
8 benefits and railroad retirement benefits included
9 in such total pursuant to Sections 72(r) and 86 of
10 the Internal Revenue Code;
11 (M) With the exception of any amounts
12 subtracted under subparagraph (N), an amount equal
13 to the sum of all amounts disallowed as deductions
14 by Sections 171(a) (2), and 265(2) of the Internal
15 Revenue Code of 1954, as now or hereafter amended,
16 and all amounts of expenses allocable to interest
17 and disallowed as deductions by Section 265(1) of
18 the Internal Revenue Code of 1954, as now or
19 hereafter amended;
20 (N) An amount equal to all amounts included in
21 such total which are exempt from taxation by this
22 State either by reason of its statutes or
23 Constitution or by reason of the Constitution,
24 treaties or statutes of the United States; provided
25 that, in the case of any statute of this State that
26 exempts income derived from bonds or other
27 obligations from the tax imposed under this Act, the
28 amount exempted shall be the interest net of bond
29 premium amortization;
30 (O) An amount equal to any contribution made
31 to a job training project established pursuant to
32 the Tax Increment Allocation Redevelopment Act;
33 (P) An amount equal to the amount of the
34 deduction used to compute the federal income tax
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1 credit for restoration of substantial amounts held
2 under claim of right for the taxable year pursuant
3 to Section 1341 of the Internal Revenue Code of
4 1986;
5 (Q) An amount equal to any amounts included in
6 such total, received by the taxpayer as an
7 acceleration in the payment of life, endowment or
8 annuity benefits in advance of the time they would
9 otherwise be payable as an indemnity for a terminal
10 illness;
11 (R) An amount equal to the amount of any
12 federal or State bonus paid to veterans of the
13 Persian Gulf War;
14 (S) An amount, to the extent included in
15 adjusted gross income, equal to the amount of a
16 contribution made in the taxable year on behalf of
17 the taxpayer to a medical care savings account
18 established under the Medical Care Savings Account
19 Act to the extent the contribution is accepted by
20 the account administrator as provided in that Act;
21 (T) An amount, to the extent included in
22 adjusted gross income, equal to the amount of
23 interest earned in the taxable year on a medical
24 care savings account established under the Medical
25 Care Savings Account Act on behalf of the taxpayer,
26 other than interest added pursuant to item (D-5) of
27 this paragraph (2);
28 (U) For one taxable year beginning on or after
29 January 1, 1994, an amount equal to the total amount
30 of tax imposed and paid under subsections (a) and
31 (b) of Section 201 of this Act on grant amounts
32 received by the taxpayer under the Nursing Home
33 Grant Assistance Act during the taxpayer's taxable
34 years 1992 and 1993; and
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1 (V) Beginning with tax years ending on or
2 after December 31, 1995 and ending with tax years
3 ending on or before December 31, 1999, an amount
4 equal to the amount paid by a taxpayer who is a
5 self-employed taxpayer, a partner of a partnership,
6 or a shareholder in a Subchapter S corporation for
7 health insurance or long-term care insurance for
8 that taxpayer or that taxpayer's spouse or
9 dependents, to the extent that the amount paid for
10 that health insurance or long-term care insurance
11 may be deducted under Section 213 of the Internal
12 Revenue Code of 1986, has not been deducted on the
13 federal income tax return of the taxpayer, and does
14 not exceed the taxable income attributable to that
15 taxpayer's income, self-employment income, or
16 Subchapter S corporation income; except that no
17 deduction shall be allowed under this item (V) if
18 the taxpayer is eligible to participate in any
19 health insurance or long-term care insurance plan of
20 an employer of the taxpayer or the taxpayer's
21 spouse. The amount of the health insurance and
22 long-term care insurance subtracted under this item
23 (V) shall be determined by multiplying total health
24 insurance and long-term care insurance premiums paid
25 by the taxpayer times a number that represents the
26 fractional percentage of eligible medical expenses
27 under Section 213 of the Internal Revenue Code of
28 1986 not actually deducted on the taxpayer's federal
29 income tax return; and.
30 (W) Beginning with taxable years beginning on
31 or after January 1, 1997 and ending with taxable
32 years ending on or before December 30, 2002, an
33 amount, not to exceed $100,000, equal to the amount
34 contributed for educational purposes by the taxpayer
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1 to any public or private elementary or secondary
2 school in Illinois or to any foundation established
3 under Section 501(c)(3) of the Internal Revenue Code
4 to raise moneys for any public or private elementary
5 or secondary school in Illinois, as certified by
6 the recipient school.
7 (b) Corporations.
8 (1) In general. In the case of a corporation, base
9 income means an amount equal to the taxpayer's taxable
10 income for the taxable year as modified by paragraph (2).
11 (2) Modifications. The taxable income referred to
12 in paragraph (1) shall be modified by adding thereto the
13 sum of the following amounts:
14 (A) An amount equal to all amounts paid or
15 accrued to the taxpayer as interest and all
16 distributions received from regulated investment
17 companies during the taxable year to the extent
18 excluded from gross income in the computation of
19 taxable income;
20 (B) An amount equal to the amount of tax
21 imposed by this Act to the extent deducted from
22 gross income in the computation of taxable income
23 for the taxable year;
24 (C) In the case of a regulated investment
25 company or real estate investment trust, an amount
26 equal to the excess of (i) the net long-term capital
27 gain for the taxable year, over (ii) the amount of
28 the capital gain dividends designated as such in
29 accordance with Section 852(b)(3)(C) or Section
30 857(b)(3)(C) of the Internal Revenue Code and any
31 amount designated under Section 852(b)(3)(D) of the
32 Internal Revenue Code, attributable to the taxable
33 year.
34 This amendatory Act of 1995 is declarative of existing
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1 law and is not a new enactment.
2 (D) The amount of any net operating loss
3 deduction taken in arriving at taxable income, other
4 than a net operating loss carried forward from a
5 taxable year ending prior to December 31, 1986; and
6 (E) For taxable years in which a net operating
7 loss carryback or carryforward from a taxable year
8 ending prior to December 31, 1986 is an element of
9 taxable income under paragraph (1) of subsection (e)
10 or subparagraph (E) of paragraph (2) of subsection
11 (e), the amount by which addition modifications
12 other than those provided by this subparagraph (E)
13 exceeded subtraction modifications in such earlier
14 taxable year, with the following limitations applied
15 in the order that they are listed:
16 (i) the addition modification relating to
17 the net operating loss carried back or forward
18 to the taxable year from any taxable year
19 ending prior to December 31, 1986 shall be
20 reduced by the amount of addition modification
21 under this subparagraph (E) which related to
22 that net operating loss and which was taken
23 into account in calculating the base income of
24 an earlier taxable year, and
25 (ii) the addition modification relating
26 to the net operating loss carried back or
27 forward to the taxable year from any taxable
28 year ending prior to December 31, 1986 shall
29 not exceed the amount of such carryback or
30 carryforward;
31 For taxable years in which there is a net
32 operating loss carryback or carryforward from more
33 than one other taxable year ending prior to December
34 31, 1986, the addition modification provided in this
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1 subparagraph (E) shall be the sum of the amounts
2 computed independently under the preceding
3 provisions of this subparagraph (E) for each such
4 taxable year,
5 and by deducting from the total so obtained the sum of
6 the following amounts:
7 (F) An amount equal to the amount of any tax
8 imposed by this Act which was refunded to the
9 taxpayer and included in such total for the taxable
10 year;
11 (G) An amount equal to any amount included in
12 such total under Section 78 of the Internal Revenue
13 Code;
14 (H) In the case of a regulated investment
15 company, an amount equal to the amount of exempt
16 interest dividends as defined in subsection (b) (5)
17 of Section 852 of the Internal Revenue Code, paid to
18 shareholders for the taxable year;
19 (I) With the exception of any amounts
20 subtracted under subparagraph (J), an amount equal
21 to the sum of all amounts disallowed as deductions
22 by Sections 171(a) (2), and 265(a)(2) and amounts
23 disallowed as interest expense by Section 291(a)(3)
24 of the Internal Revenue Code, as now or hereafter
25 amended, and all amounts of expenses allocable to
26 interest and disallowed as deductions by Section
27 265(a)(1) of the Internal Revenue Code, as now or
28 hereafter amended;
29 (J) An amount equal to all amounts included in
30 such total which are exempt from taxation by this
31 State either by reason of its statutes or
32 Constitution or by reason of the Constitution,
33 treaties or statutes of the United States; provided
34 that, in the case of any statute of this State that
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1 exempts income derived from bonds or other
2 obligations from the tax imposed under this Act, the
3 amount exempted shall be the interest net of bond
4 premium amortization;
5 (K) An amount equal to those dividends
6 included in such total which were paid by a
7 corporation which conducts business operations in an
8 Enterprise Zone or zones created under the Illinois
9 Enterprise Zone Act and conducts substantially all
10 of its operations in an Enterprise Zone or zones;
11 (L) 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 (K) of paragraph 2 of this subsection shall not be
19 eligible for the deduction provided under this
20 subparagraph (L);
21 (M) For any taxpayer that is a financial
22 organization within the meaning of Section 304(c) of
23 this Act, an amount included in such total as
24 interest income from a loan or loans made by such
25 taxpayer to a borrower, to the extent that such a
26 loan is secured by property which is eligible for
27 the Enterprise Zone Investment Credit. To determine
28 the portion of a loan or loans that is secured by
29 property eligible for a Section 201(h) investment
30 credit to the borrower, the entire principal amount
31 of the loan or loans between the taxpayer and the
32 borrower should be divided into the basis of the
33 Section 201(h) investment credit property which
34 secures the loan or loans, using for this purpose
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1 the original basis of such property on the date that
2 it was placed in service in the Enterprise Zone.
3 The subtraction modification available to taxpayer
4 in any year under this subsection shall be that
5 portion of the total interest paid by the borrower
6 with respect to such loan attributable to the
7 eligible property as calculated under the previous
8 sentence;
9 (M-1) For any taxpayer that is a financial
10 organization within the meaning of Section 304(c) of
11 this Act, an amount included in such total as
12 interest income from a loan or loans made by such
13 taxpayer to a borrower, to the extent that such a
14 loan is secured by property which is eligible for
15 the High Impact Business Investment Credit. To
16 determine the portion of a loan or loans that is
17 secured by property eligible for a Section 201(i)
18 investment credit to the borrower, the entire
19 principal amount of the loan or loans between the
20 taxpayer and the borrower should be divided into the
21 basis of the Section 201(i) investment credit
22 property which secures the loan or loans, using for
23 this purpose the original basis of such property on
24 the date that it was placed in service in a
25 federally designated Foreign Trade Zone or Sub-Zone
26 located in Illinois. No taxpayer that is eligible
27 for the deduction provided in subparagraph (M) of
28 paragraph (2) of this subsection shall be eligible
29 for the deduction provided under this subparagraph
30 (M-1). The subtraction modification available to
31 taxpayers in any year under this subsection shall be
32 that portion of the total interest paid by the
33 borrower with respect to such loan attributable to
34 the eligible property as calculated under the
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1 previous sentence;
2 (N) Two times any contribution made during the
3 taxable year to a designated zone organization to
4 the extent that the contribution (i) qualifies as a
5 charitable contribution under subsection (c) of
6 Section 170 of the Internal Revenue Code and (ii)
7 must, by its terms, be used for a project approved
8 by the Department of Commerce and Community Affairs
9 under Section 11 of the Illinois Enterprise Zone
10 Act;
11 (O) An amount equal to: (i) 85% for taxable
12 years ending on or before December 31, 1992, or, a
13 percentage equal to the percentage allowable under
14 Section 243(a)(1) of the Internal Revenue Code of
15 1986 for taxable years ending after December 31,
16 1992, of the amount by which dividends included in
17 taxable income and received from a corporation that
18 is not created or organized under the laws of the
19 United States or any state or political subdivision
20 thereof, including, for taxable years ending on or
21 after December 31, 1988, dividends received or
22 deemed received or paid or deemed paid under
23 Sections 951 through 964 of the Internal Revenue
24 Code, exceed the amount of the modification provided
25 under subparagraph (G) of paragraph (2) of this
26 subsection (b) which is related to such dividends;
27 plus (ii) 100% of the amount by which dividends,
28 included in taxable income and received, including,
29 for taxable years ending on or after December 31,
30 1988, dividends received or deemed received or paid
31 or deemed paid under Sections 951 through 964 of the
32 Internal Revenue Code, from any such corporation
33 specified in clause (i) that would but for the
34 provisions of Section 1504 (b) (3) of the Internal
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1 Revenue Code be treated as a member of the
2 affiliated group which includes the dividend
3 recipient, exceed the amount of the modification
4 provided under subparagraph (G) of paragraph (2) of
5 this subsection (b) which is related to such
6 dividends;
7 (P) An amount equal to any contribution made
8 to a job training project established pursuant to
9 the Tax Increment Allocation Redevelopment Act; and
10 (Q) An amount equal to the amount of the
11 deduction used to compute the federal income tax
12 credit for restoration of substantial amounts held
13 under claim of right for the taxable year pursuant
14 to Section 1341 of the Internal Revenue Code of
15 1986; and.
16 (R) Beginning with taxable years beginning on
17 or after January 1, 1997 and ending with taxable
18 years ending on or before December 30, 2002, an
19 amount, not to exceed $100,000, equal to the amount
20 contributed for educational purposes by the taxpayer
21 to any public or private elementary or secondary
22 school in Illinois or to any foundation established
23 under Section 501(c)(3) of the Internal Revenue Code
24 to raise moneys for any public or private elementary
25 or secondary school in Illinois, as certified by
26 the recipient school.
27 (3) Special rule. For purposes of paragraph (2)
28 (A), "gross income" in the case of a life insurance
29 company, for tax years ending on and after December 31,
30 1994, shall mean the gross investment income for the
31 taxable year.
32 (c) Trusts and estates.
33 (1) In general. In the case of a trust or estate,
34 base income means an amount equal to the taxpayer's
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1 taxable income for the taxable year as modified by
2 paragraph (2).
3 (2) Modifications. Subject to the provisions of
4 paragraph (3), the taxable income referred to in
5 paragraph (1) shall be modified by adding thereto the sum
6 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) In the case of (i) an estate, $600; (ii) a
12 trust which, under its governing instrument, is
13 required to distribute all of its income currently,
14 $300; and (iii) any other trust, $100, but in each
15 such case, only to the extent such amount was
16 deducted in the computation of taxable income;
17 (C) An amount equal to the amount of tax
18 imposed by this Act to the extent deducted from
19 gross income in the computation of taxable income
20 for the taxable year;
21 (D) The amount of any net operating loss
22 deduction taken in arriving at taxable income, other
23 than a net operating loss carried forward from a
24 taxable year ending prior to December 31, 1986;
25 (E) For taxable years in which a net operating
26 loss carryback or carryforward from a taxable year
27 ending prior to December 31, 1986 is an element of
28 taxable income under paragraph (1) of subsection (e)
29 or subparagraph (E) of paragraph (2) of subsection
30 (e), the amount by which addition modifications
31 other than those provided by this subparagraph (E)
32 exceeded subtraction modifications in such taxable
33 year, with the following limitations applied in the
34 order that they are listed:
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1 (i) the addition modification relating to
2 the net operating loss carried back or forward
3 to the taxable year from any taxable year
4 ending prior to December 31, 1986 shall be
5 reduced by the amount of addition modification
6 under this subparagraph (E) which related to
7 that net operating loss and which was taken
8 into account in calculating the base income of
9 an earlier taxable year, and
10 (ii) the addition modification relating
11 to the net operating loss carried back or
12 forward to the taxable year from any taxable
13 year ending prior to December 31, 1986 shall
14 not exceed the amount of such carryback or
15 carryforward;
16 For taxable years in which there is a net
17 operating loss carryback or carryforward from more
18 than one other taxable year ending prior to December
19 31, 1986, the addition modification provided in this
20 subparagraph (E) shall be the sum of the amounts
21 computed independently under the preceding
22 provisions of this subparagraph (E) for each such
23 taxable year;
24 (F) For taxable years ending on or after
25 January 1, 1989, an amount equal to the tax deducted
26 pursuant to Section 164 of the Internal Revenue Code
27 if the trust or estate is claiming the same tax for
28 purposes of the Illinois foreign tax credit under
29 Section 601 of this Act; and
30 (G) An amount equal to the amount of the
31 capital gain deduction allowable under the Internal
32 Revenue Code, to the extent deducted from gross
33 income in the computation of taxable income;
34 and by deducting from the total so obtained the sum of
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1 the following amounts:
2 (H) An amount equal to all amounts included in
3 such total pursuant to the provisions of Sections
4 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
5 408 of the Internal Revenue Code or included in such
6 total as distributions under the provisions of any
7 retirement or disability plan for employees of any
8 governmental agency or unit, or retirement payments
9 to retired partners, which payments are excluded in
10 computing net earnings from self employment by
11 Section 1402 of the Internal Revenue Code and
12 regulations adopted pursuant thereto;
13 (I) The valuation limitation amount;
14 (J) An amount equal to the amount of any tax
15 imposed by this Act which was refunded to the
16 taxpayer and included in such total for the taxable
17 year;
18 (K) An amount equal to all amounts included in
19 taxable income as modified by subparagraphs (A),
20 (B), (C), (D), (E), (F) and (G) which are exempt
21 from taxation by this State either by reason of its
22 statutes or Constitution or by reason of the
23 Constitution, treaties or statutes of the United
24 States; provided that, in the case of any statute of
25 this State that exempts income derived from bonds or
26 other obligations from the tax imposed under this
27 Act, the amount exempted shall be the interest net
28 of bond premium amortization;
29 (L) With the exception of any amounts
30 subtracted under subparagraph (K), an amount equal
31 to the sum of all amounts disallowed as deductions
32 by Sections 171(a) (2) and 265(a)(2) of the Internal
33 Revenue Code, as now or hereafter amended, and all
34 amounts of expenses allocable to interest and
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1 disallowed as deductions by Section 265(1) of the
2 Internal Revenue Code of 1954, as now or hereafter
3 amended;
4 (M) An amount equal to those dividends
5 included in such total which were paid by a
6 corporation which conducts business operations in an
7 Enterprise Zone or zones created under the Illinois
8 Enterprise Zone Act and conducts substantially all
9 of its operations in an Enterprise Zone or Zones;
10 (N) An amount equal to any contribution made
11 to a job training project established pursuant to
12 the Tax Increment Allocation Redevelopment Act;
13 (O) An amount equal to those dividends
14 included in such total that were paid by a
15 corporation that conducts business operations in a
16 federally designated Foreign Trade Zone or Sub-Zone
17 and that is designated a High Impact Business
18 located in Illinois; provided that dividends
19 eligible for the deduction provided in subparagraph
20 (M) of paragraph (2) of this subsection shall not be
21 eligible for the deduction provided under this
22 subparagraph (O); and
23 (P) An amount equal to the amount of the
24 deduction used to compute the federal income tax
25 credit for restoration of substantial amounts held
26 under claim of right for the taxable year pursuant
27 to Section 1341 of the Internal Revenue Code of
28 1986; and.
29 (Q) Beginning with taxable years beginning on
30 or after January 1, 1997 and ending with taxable
31 years ending on or before December 30, 2002, an
32 amount, not to exceed $100,000, equal to the amount
33 contributed for educational purposes by the taxpayer
34 to any public or private elementary or secondary
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1 school in Illinois or to any foundation established
2 under Section 501(c)(3) of the Internal Revenue Code
3 to raise moneys for any public or private elementary
4 or secondary school in Illinois, as certified by the
5 recipient school.
6 (3) Limitation. The amount of any modification
7 otherwise required under this subsection shall, under
8 regulations prescribed by the Department, be adjusted by
9 any amounts included therein which were properly paid,
10 credited, or required to be distributed, or permanently
11 set aside for charitable purposes pursuant to Internal
12 Revenue Code Section 642(c) during the taxable year.
13 (d) Partnerships.
14 (1) In general. In the case of a partnership, base
15 income means an amount equal to the taxpayer's taxable
16 income for the taxable year as modified by paragraph (2).
17 (2) Modifications. The taxable income referred to
18 in paragraph (1) shall be modified by adding thereto the
19 sum of the following amounts:
20 (A) An amount equal to all amounts paid or
21 accrued to the taxpayer as interest or dividends
22 during the taxable year to the extent excluded from
23 gross income in the computation of taxable income;
24 (B) An amount equal to the amount of tax
25 imposed by this Act to the extent deducted from
26 gross income for the taxable year; and
27 (C) The amount of deductions allowed to the
28 partnership pursuant to Section 707 (c) of the
29 Internal Revenue Code in calculating its taxable
30 income;
31 (D) An amount equal to the amount of the
32 capital gain deduction allowable under the Internal
33 Revenue Code, to the extent deducted from gross
34 income in the computation of taxable income;
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1 and by deducting from the total so obtained the following
2 amounts:
3 (E) The valuation limitation amount;
4 (F) 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 (G) An amount equal to all amounts included in
9 taxable income as modified by subparagraphs (A),
10 (B), (C) and (D) which are exempt from taxation by
11 this State either by reason of its statutes or
12 Constitution or by reason of the Constitution,
13 treaties or statutes of the United States; provided
14 that, in the case of any statute of this State that
15 exempts income derived from bonds or other
16 obligations from the tax imposed under this Act, the
17 amount exempted shall be the interest net of bond
18 premium amortization;
19 (H) Any income of the partnership which
20 constitutes personal service income as defined in
21 Section 1348 (b) (1) of the Internal Revenue Code
22 (as in effect December 31, 1981) or a reasonable
23 allowance for compensation paid or accrued for
24 services rendered by partners to the partnership,
25 whichever is greater;
26 (I) An amount equal to all amounts of income
27 distributable to an entity subject to the Personal
28 Property Tax Replacement Income Tax imposed by
29 subsections (c) and (d) of Section 201 of this Act
30 including amounts distributable to organizations
31 exempt from federal income tax by reason of Section
32 501(a) of the Internal Revenue Code;
33 (J) With the exception of any amounts
34 subtracted under subparagraph (G), an amount equal
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1 to the sum of all amounts disallowed as deductions
2 by Sections 171(a) (2), and 265(2) of the Internal
3 Revenue Code of 1954, as now or hereafter amended,
4 and all amounts of expenses allocable to interest
5 and disallowed as deductions by Section 265(1) of
6 the Internal Revenue Code, as now or hereafter
7 amended;
8 (K) 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, enacted by the 82nd General
13 Assembly, and which does not conduct such operations
14 other than in an Enterprise Zone or Zones;
15 (L) An amount equal to any contribution made
16 to a job training project established pursuant to
17 the Real Property Tax Increment Allocation
18 Redevelopment Act;
19 (M) An amount equal to those dividends
20 included in such total that were paid by a
21 corporation that conducts business operations in a
22 federally designated Foreign Trade Zone or Sub-Zone
23 and that is designated a High Impact Business
24 located in Illinois; provided that dividends
25 eligible for the deduction provided in subparagraph
26 (K) of paragraph (2) of this subsection shall not be
27 eligible for the deduction provided under this
28 subparagraph (M); and
29 (N) An amount equal to the amount of the
30 deduction used to compute the federal income tax
31 credit for restoration of substantial amounts held
32 under claim of right for the taxable year pursuant
33 to Section 1341 of the Internal Revenue Code of
34 1986.
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1 (e) Gross income; adjusted gross income; taxable income.
2 (1) In general. Subject to the provisions of
3 paragraph (2) and subsection (b) (3), for purposes of
4 this Section and Section 803(e), a taxpayer's gross
5 income, adjusted gross income, or taxable income for the
6 taxable year shall mean the amount of gross income,
7 adjusted gross income or taxable income properly
8 reportable for federal income tax purposes for the
9 taxable year under the provisions of the Internal Revenue
10 Code. Taxable income may be less than zero. However, for
11 taxable years ending on or after December 31, 1986, net
12 operating loss carryforwards from taxable years ending
13 prior to December 31, 1986, may not exceed the sum of
14 federal taxable income for the taxable year before net
15 operating loss deduction, plus the excess of addition
16 modifications over subtraction modifications for the
17 taxable year. For taxable years ending prior to December
18 31, 1986, taxable income may never be an amount in excess
19 of the net operating loss for the taxable year as defined
20 in subsections (c) and (d) of Section 172 of the Internal
21 Revenue Code, provided that when taxable income of a
22 corporation (other than a Subchapter S corporation),
23 trust, or estate is less than zero and addition
24 modifications, other than those provided by subparagraph
25 (E) of paragraph (2) of subsection (b) for corporations
26 or subparagraph (E) of paragraph (2) of subsection (c)
27 for trusts and estates, exceed subtraction modifications,
28 an addition modification must be made under those
29 subparagraphs for any other taxable year to which the
30 taxable income less than zero (net operating loss) is
31 applied under Section 172 of the Internal Revenue Code or
32 under subparagraph (E) of paragraph (2) of this
33 subsection (e) applied in conjunction with Section 172 of
34 the Internal Revenue Code.
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1 (2) Special rule. For purposes of paragraph (1) of
2 this subsection, the taxable income properly reportable
3 for federal income tax purposes shall mean:
4 (A) Certain life insurance companies. In the
5 case of a life insurance company subject to the tax
6 imposed by Section 801 of the Internal Revenue Code,
7 life insurance company taxable income, plus the
8 amount of distribution from pre-1984 policyholder
9 surplus accounts as calculated under Section 815a of
10 the Internal Revenue Code;
11 (B) Certain other insurance companies. In the
12 case of mutual insurance companies subject to the
13 tax imposed by Section 831 of the Internal Revenue
14 Code, insurance company taxable income;
15 (C) Regulated investment companies. In the
16 case of a regulated investment company subject to
17 the tax imposed by Section 852 of the Internal
18 Revenue Code, investment company taxable income;
19 (D) Real estate investment trusts. In the
20 case of a real estate investment trust subject to
21 the tax imposed by Section 857 of the Internal
22 Revenue Code, real estate investment trust taxable
23 income;
24 (E) Consolidated corporations. In the case of
25 a corporation which is a member of an affiliated
26 group of corporations filing a consolidated income
27 tax return for the taxable year for federal income
28 tax purposes, taxable income determined as if such
29 corporation had filed a separate return for federal
30 income tax purposes for the taxable year and each
31 preceding taxable year for which it was a member of
32 an affiliated group. For purposes of this
33 subparagraph, the taxpayer's separate taxable income
34 shall be determined as if the election provided by
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1 Section 243(b) (2) of the Internal Revenue Code had
2 been in effect for all such years;
3 (F) Cooperatives. In the case of a
4 cooperative corporation or association, the taxable
5 income of such organization determined in accordance
6 with the provisions of Section 1381 through 1388 of
7 the Internal Revenue Code;
8 (G) Subchapter S corporations. In the case
9 of: (i) a Subchapter S corporation for which there
10 is in effect an election for the taxable year under
11 Section 1362 of the Internal Revenue Code, the
12 taxable income of such corporation determined in
13 accordance with Section 1363(b) of the Internal
14 Revenue Code, except that taxable income shall take
15 into account those items which are required by
16 Section 1363(b)(1) of the Internal Revenue Code to
17 be separately stated; and (ii) a Subchapter S
18 corporation for which there is in effect a federal
19 election to opt out of the provisions of the
20 Subchapter S Revision Act of 1982 and have applied
21 instead the prior federal Subchapter S rules as in
22 effect on July 1, 1982, the taxable income of such
23 corporation determined in accordance with the
24 federal Subchapter S rules as in effect on July 1,
25 1982; and
26 (H) Partnerships. In the case of a
27 partnership, taxable income determined in accordance
28 with Section 703 of the Internal Revenue Code,
29 except that taxable income shall take into account
30 those items which are required by Section 703(a)(1)
31 to be separately stated but which would be taken
32 into account by an individual in calculating his
33 taxable income.
34 (f) Valuation limitation amount.
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1 (1) In general. The valuation limitation amount
2 referred to in subsections (a) (2) (G), (c) (2) (I) and
3 (d)(2) (E) is an amount equal to:
4 (A) The sum of the pre-August 1, 1969
5 appreciation amounts (to the extent consisting of
6 gain reportable under the provisions of Section 1245
7 or 1250 of the Internal Revenue Code) for all
8 property in respect of which such gain was reported
9 for the taxable year; plus
10 (B) The lesser of (i) the sum of the
11 pre-August 1, 1969 appreciation amounts (to the
12 extent consisting of capital gain) for all property
13 in respect of which such gain was reported for
14 federal income tax purposes for the taxable year, or
15 (ii) the net capital gain for the taxable year,
16 reduced in either case by any amount of such gain
17 included in the amount determined under subsection
18 (a) (2) (F) or (c) (2) (H).
19 (2) Pre-August 1, 1969 appreciation amount.
20 (A) If the fair market value of property
21 referred to in paragraph (1) was readily
22 ascertainable on August 1, 1969, the pre-August 1,
23 1969 appreciation amount for such property is the
24 lesser of (i) the excess of such fair market value
25 over the taxpayer's basis (for determining gain) for
26 such property on that date (determined under the
27 Internal Revenue Code as in effect on that date), or
28 (ii) the total gain realized and reportable for
29 federal income tax purposes in respect of the sale,
30 exchange or other disposition of such property.
31 (B) If the fair market value of property
32 referred to in paragraph (1) was not readily
33 ascertainable on August 1, 1969, the pre-August 1,
34 1969 appreciation amount for such property is that
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1 amount which bears the same ratio to the total gain
2 reported in respect of the property for federal
3 income tax purposes for the taxable year, as the
4 number of full calendar months in that part of the
5 taxpayer's holding period for the property ending
6 July 31, 1969 bears to the number of full calendar
7 months in the taxpayer's entire holding period for
8 the property.
9 (C) The Department shall prescribe such
10 regulations as may be necessary to carry out the
11 purposes of this paragraph.
12 (g) Double deductions. Unless specifically provided
13 otherwise, nothing in this Section shall permit the same item
14 to be deducted more than once.
15 (h) Legislative intention. Except as expressly provided
16 by this Section there shall be no modifications or
17 limitations on the amounts of income, gain, loss or deduction
18 taken into account in determining gross income, adjusted
19 gross income or taxable income for federal income tax
20 purposes for the taxable year, or in the amount of such items
21 entering into the computation of base income and net income
22 under this Act for such taxable year, whether in respect of
23 property values as of August 1, 1969 or otherwise.
24 (Source: P.A. 88-195; 88-648, eff. 9-16-94; 88-669, eff.
25 11-29-94; 88-670, eff. 12-2-94; 89-89, eff. 6-30-95; 89-235,
26 eff. 8-4-95; 89-418, eff. 11-15-95; 89-460, eff. 5-24-96;
27 89-626, eff. 8-9-96.)