State of Illinois
90th General Assembly
Legislation

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[ Introduced ][ Engrossed ][ House Amendment 001 ]
[ House Amendment 002 ][ Senate Amendment 002 ]

90_SB0645sam001

                                         SDS/90SB0645pam1/dgd
 1                    AMENDMENT TO SENATE BILL 645
 2        AMENDMENT NO.     .  Amend Senate Bill 645  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
                            -2-          SDS/90SB0645pam1/dgd
 1             during the taxable year to the extent excluded  from
 2             gross  income  in  the computation of adjusted gross
 3             income, except stock dividends of  qualified  public
 4             utilities   described   in  Section  305(e)  of  the
 5             Internal Revenue Code;
 6                  (B)  An amount  equal  to  the  amount  of  tax
 7             imposed  by  this  Act  to  the extent deducted from
 8             gross income in the computation  of  adjusted  gross
 9             income for the taxable year;
10                  (C)  An  amount  equal  to  the amount received
11             during the taxable year as a recovery or  refund  of
12             real   property  taxes  paid  with  respect  to  the
13             taxpayer's principal residence under the Revenue Act
14             of 1939 and for which  a  deduction  was  previously
15             taken  under  subparagraph (L) of this paragraph (2)
16             prior to July 1, 1991, the retrospective application
17             date of Article 4 of Public Act 87-17.  In the  case
18             of  multi-unit  or  multi-use  structures  and  farm
19             dwellings,  the  taxes  on  the taxpayer's principal
20             residence shall be that portion of the  total  taxes
21             for  the  entire  property  which is attributable to
22             such principal residence;
23                  (D)  An amount  equal  to  the  amount  of  the
24             capital  gain deduction allowable under the Internal
25             Revenue Code, to  the  extent  deducted  from  gross
26             income  in the computation of adjusted gross income;
27             and
28                  (D-5)  An amount, to the extent not included in
29             adjusted gross income, equal to the amount of  money
30             withdrawn by the taxpayer in the taxable year from a
31             medical care savings account and the interest earned
32             on  the  account in the taxable year of a withdrawal
33             pursuant to subsection (b)  of  Section  20  of  the
34             Medical Care Savings Account Act;
                            -3-          SDS/90SB0645pam1/dgd
 1        and  by  deducting  from the total so obtained the sum of
 2        the following amounts:
 3                  (E)  Any  amount  included  in  such  total  in
 4             respect  of  any  compensation  (including  but  not
 5             limited to any compensation paid  or  accrued  to  a
 6             serviceman  while  a  prisoner  of war or missing in
 7             action) paid to a resident by  reason  of  being  on
 8             active duty in the Armed Forces of the United States
 9             and  in  respect of any compensation paid or accrued
10             to a resident who as a governmental employee  was  a
11             prisoner of war or missing in action, and in respect
12             of  any  compensation  paid to a resident in 1971 or
13             thereafter for annual training performed pursuant to
14             Sections 502 and 503, Title 32, United  States  Code
15             as a member of the Illinois National Guard;
16                  (F)  An amount equal to all amounts included in
17             such  total  pursuant  to the provisions of Sections
18             402(a), 402(c), 403(a), 403(b), 406(a), 407(a),  and
19             408  of  the  Internal  Revenue Code, or included in
20             such total as distributions under the provisions  of
21             any  retirement  or disability plan for employees of
22             any  governmental  agency  or  unit,  or  retirement
23             payments to retired  partners,  which  payments  are
24             excluded   in   computing  net  earnings  from  self
25             employment by Section 1402 of the  Internal  Revenue
26             Code and regulations adopted pursuant thereto;
27                  (G)  The valuation limitation amount;
28                  (H)  An  amount  equal to the amount of any tax
29             imposed by  this  Act  which  was  refunded  to  the
30             taxpayer  and included in such total for the taxable
31             year;
32                  (I)  An amount equal to all amounts included in
33             such total pursuant to the provisions of Section 111
34             of the Internal Revenue Code as a recovery of  items
                            -4-          SDS/90SB0645pam1/dgd
 1             previously  deducted  from  adjusted gross income in
 2             the computation of taxable income;
 3                  (J)  An  amount  equal   to   those   dividends
 4             included   in  such  total  which  were  paid  by  a
 5             corporation which conducts business operations in an
 6             Enterprise Zone or zones created under the  Illinois
 7             Enterprise  Zone Act, and conducts substantially all
 8             of its operations in an Enterprise Zone or zones;
 9                  (K)  An  amount  equal   to   those   dividends
10             included   in   such  total  that  were  paid  by  a
11             corporation that conducts business operations  in  a
12             federally  designated Foreign Trade Zone or Sub-Zone
13             and  that  is  designated  a  High  Impact  Business
14             located  in  Illinois;   provided   that   dividends
15             eligible  for the deduction provided in subparagraph
16             (J) of paragraph (2) of this subsection shall not be
17             eligible  for  the  deduction  provided  under  this
18             subparagraph (K);
19                  (L)  For taxable years  ending  after  December
20             31,  1983,  an  amount  equal to all social security
21             benefits and railroad retirement  benefits  included
22             in  such  total pursuant to Sections 72(r) and 86 of
23             the Internal Revenue Code;
24                  (M)  With  the   exception   of   any   amounts
25             subtracted  under  subparagraph (N), an amount equal
26             to the sum of all amounts disallowed  as  deductions
27             by  Sections  171(a) (2), and 265(2) of the Internal
28             Revenue Code of 1954, as now or  hereafter  amended,
29             and  all  amounts  of expenses allocable to interest
30             and  disallowed as deductions by Section  265(1)  of
31             the  Internal  Revenue  Code  of  1954,  as  now  or
32             hereafter amended;
33                  (N)  An amount equal to all amounts included in
34             such  total  which  are exempt from taxation by this
                            -5-          SDS/90SB0645pam1/dgd
 1             State  either  by  reason   of   its   statutes   or
 2             Constitution  or  by  reason  of  the  Constitution,
 3             treaties  or statutes of the United States; provided
 4             that, in the case of any statute of this State  that
 5             exempts   income   derived   from   bonds  or  other
 6             obligations from the tax imposed under this Act, the
 7             amount exempted shall be the interest  net  of  bond
 8             premium amortization;
 9                  (O)  An  amount  equal to any contribution made
10             to a job training project  established  pursuant  to
11             the Tax Increment Allocation Redevelopment Act;
12                  (P)  An  amount  equal  to  the  amount  of the
13             deduction used to compute  the  federal  income  tax
14             credit  for  restoration of substantial amounts held
15             under claim of right for the taxable  year  pursuant
16             to  Section  1341  of  the  Internal Revenue Code of
17             1986;
18                  (Q)  An amount equal to any amounts included in
19             such  total,  received  by  the   taxpayer   as   an
20             acceleration  in  the  payment of life, endowment or
21             annuity benefits in advance of the time  they  would
22             otherwise  be payable as an indemnity for a terminal
23             illness;
24                  (R)  An amount  equal  to  the  amount  of  any
25             federal  or  State  bonus  paid  to  veterans of the
26             Persian Gulf War;
27                  (S)  An  amount,  to  the  extent  included  in
28             adjusted gross income, equal  to  the  amount  of  a
29             contribution  made  in the taxable year on behalf of
30             the taxpayer  to  a  medical  care  savings  account
31             established  under  the Medical Care Savings Account
32             Act to the extent the contribution  is  accepted  by
33             the account administrator as provided in that Act;
34                  (T)  An  amount,  to  the  extent  included  in
                            -6-          SDS/90SB0645pam1/dgd
 1             adjusted  gross  income,  equal  to  the  amount  of
 2             interest  earned  in  the  taxable year on a medical
 3             care savings account established under  the  Medical
 4             Care  Savings Account Act on behalf of the taxpayer,
 5             other than interest added pursuant to item (D-5)  of
 6             this paragraph (2);
 7                  (U)  For one taxable year beginning on or after
 8             January 1, 1994, an amount equal to the total amount
 9             of  tax  imposed  and paid under subsections (a) and
10             (b) of Section 201 of  this  Act  on  grant  amounts
11             received  by  the  taxpayer  under  the Nursing Home
12             Grant Assistance Act during the  taxpayer's  taxable
13             years 1992 and 1993; and
14                  (V)  Beginning  with  tax  years  ending  on or
15             after December 31, 1995 and ending  with  tax  years
16             ending  on  or  before  December 31, 1999, an amount
17             equal to the amount paid by  a  taxpayer  who  is  a
18             self-employed  taxpayer, a partner of a partnership,
19             or a shareholder in a Subchapter S  corporation  for
20             health  insurance  or  long-term  care insurance for
21             that  taxpayer  or   that   taxpayer's   spouse   or
22             dependents,  to  the extent that the amount paid for
23             that health insurance or  long-term  care  insurance
24             may  be  deducted  under Section 213 of the Internal
25             Revenue Code of 1986, has not been deducted  on  the
26             federal  income tax return of the taxpayer, and does
27             not exceed the taxable income attributable  to  that
28             taxpayer's   income,   self-employment   income,  or
29             Subchapter S  corporation  income;  except  that  no
30             deduction  shall  be  allowed under this item (V) if
31             the taxpayer  is  eligible  to  participate  in  any
32             health insurance or long-term care insurance plan of
33             an  employer  of  the  taxpayer  or  the  taxpayer's
34             spouse.   The  amount  of  the  health insurance and
                            -7-          SDS/90SB0645pam1/dgd
 1             long-term care insurance subtracted under this  item
 2             (V)  shall be determined by multiplying total health
 3             insurance and long-term care insurance premiums paid
 4             by the taxpayer times a number that  represents  the
 5             fractional  percentage  of eligible medical expenses
 6             under Section 213 of the Internal  Revenue  Code  of
 7             1986 not actually deducted on the taxpayer's federal
 8             income tax return; and.
 9                  (W)  Beginning  with taxable years beginning on
10             or after January 1, 1997  and  ending  with  taxable
11             years  ending  on  or  before  December 30, 2002, an
12             amount, not to exceed $100,000, equal to the  amount
13             contributed for educational purposes by the taxpayer
14             to  any  public or private elementary, secondary, or
15             post-secondary school in Illinois, as  certified  by
16             the recipient school.
17        (b)  Corporations.
18             (1)  In general.  In the case of a corporation, base
19        income  means  an  amount equal to the taxpayer's taxable
20        income for the taxable year as modified by paragraph (2).
21             (2)  Modifications.  The taxable income referred  to
22        in  paragraph (1) shall be modified by adding thereto the
23        sum of the following amounts:
24                  (A)  An amount equal to  all  amounts  paid  or
25             accrued   to   the  taxpayer  as  interest  and  all
26             distributions  received  from  regulated  investment
27             companies during the  taxable  year  to  the  extent
28             excluded  from  gross  income  in the computation of
29             taxable income;
30                  (B)  An amount  equal  to  the  amount  of  tax
31             imposed  by  this  Act  to  the extent deducted from
32             gross income in the computation  of  taxable  income
33             for the taxable year;
34                  (C)  In  the  case  of  a  regulated investment
                            -8-          SDS/90SB0645pam1/dgd
 1             company or real estate investment trust,  an  amount
 2             equal to the excess of (i) the net long-term capital
 3             gain  for  the taxable year, over (ii) the amount of
 4             the capital gain dividends  designated  as  such  in
 5             accordance  with  Section  852(b)(3)(C)  or  Section
 6             857(b)(3)(C)  of  the  Internal Revenue Code and any
 7             amount designated under Section 852(b)(3)(D) of  the
 8             Internal  Revenue  Code, attributable to the taxable
 9             year.
10        This amendatory Act of 1995 is  declarative  of  existing
11    law and is not a new enactment.
12                  (D)  The  amount  of  any  net  operating  loss
13             deduction taken in arriving at taxable income, other
14             than  a  net  operating  loss carried forward from a
15             taxable year ending prior to December 31, 1986; and
16                  (E)  For taxable years in which a net operating
17             loss carryback or carryforward from a  taxable  year
18             ending  prior  to December 31, 1986 is an element of
19             taxable income under paragraph (1) of subsection (e)
20             or subparagraph (E) of paragraph (2)  of  subsection
21             (e),  the  amount  by  which  addition modifications
22             other than those provided by this  subparagraph  (E)
23             exceeded  subtraction  modifications in such earlier
24             taxable year, with the following limitations applied
25             in the order that they are listed:
26                       (i)  the addition modification relating to
27                  the net operating loss carried back or  forward
28                  to  the  taxable  year  from  any  taxable year
29                  ending prior to  December  31,  1986  shall  be
30                  reduced  by the amount of addition modification
31                  under this subparagraph (E)  which  related  to
32                  that  net  operating  loss  and which was taken
33                  into account in calculating the base income  of
34                  an earlier taxable year, and
                            -9-          SDS/90SB0645pam1/dgd
 1                       (ii)  the  addition  modification relating
 2                  to the  net  operating  loss  carried  back  or
 3                  forward  to  the  taxable year from any taxable
 4                  year ending prior to December  31,  1986  shall
 5                  not  exceed  the  amount  of  such carryback or
 6                  carryforward;
 7                  For taxable years  in  which  there  is  a  net
 8             operating  loss  carryback or carryforward from more
 9             than one other taxable year ending prior to December
10             31, 1986, the addition modification provided in this
11             subparagraph (E) shall be the  sum  of  the  amounts
12             computed    independently    under   the   preceding
13             provisions of this subparagraph (E)  for  each  such
14             taxable year,
15        and  by  deducting  from the total so obtained the sum of
16        the following amounts:
17                  (F)  An amount equal to the amount of  any  tax
18             imposed  by  this  Act  which  was  refunded  to the
19             taxpayer and included in such total for the  taxable
20             year;
21                  (G)  An  amount equal to any amount included in
22             such total under Section 78 of the Internal  Revenue
23             Code;
24                  (H)  In  the  case  of  a  regulated investment
25             company, an amount equal to  the  amount  of  exempt
26             interest  dividends as defined in subsection (b) (5)
27             of Section 852 of the Internal Revenue Code, paid to
28             shareholders for the taxable year;
29                  (I)  With  the   exception   of   any   amounts
30             subtracted  under  subparagraph (J), an amount equal
31             to the sum of all amounts disallowed  as  deductions
32             by  Sections  171(a)  (2), and 265(a)(2) and amounts
33             disallowed as interest expense by Section  291(a)(3)
34             of  the  Internal  Revenue Code, as now or hereafter
                            -10-         SDS/90SB0645pam1/dgd
 1             amended, and all amounts of  expenses  allocable  to
 2             interest  and  disallowed  as  deductions by Section
 3             265(a)(1) of the Internal Revenue Code,  as  now  or
 4             hereafter amended;
 5                  (J)  An amount equal to all amounts included in
 6             such  total  which  are exempt from taxation by this
 7             State  either  by  reason   of   its   statutes   or
 8             Constitution  or  by  reason  of  the  Constitution,
 9             treaties  or statutes of the United States; provided
10             that, in the case of any statute of this State  that
11             exempts   income   derived   from   bonds  or  other
12             obligations from the tax imposed under this Act, the
13             amount exempted shall be the interest  net  of  bond
14             premium amortization;
15                  (K)  An   amount   equal   to  those  dividends
16             included  in  such  total  which  were  paid  by   a
17             corporation which conducts business operations in an
18             Enterprise  Zone or zones created under the Illinois
19             Enterprise Zone Act and conducts  substantially  all
20             of its operations in an Enterprise Zone or zones;
21                  (L)  An   amount   equal   to  those  dividends
22             included  in  such  total  that  were  paid   by   a
23             corporation  that  conducts business operations in a
24             federally designated Foreign Trade Zone or  Sub-Zone
25             and  that  is  designated  a  High  Impact  Business
26             located   in   Illinois;   provided  that  dividends
27             eligible for the deduction provided in  subparagraph
28             (K)  of  paragraph 2 of this subsection shall not be
29             eligible  for  the  deduction  provided  under  this
30             subparagraph (L);
31                  (M)  For  any  taxpayer  that  is  a  financial
32             organization within the meaning of Section 304(c) of
33             this Act,  an  amount  included  in  such  total  as
34             interest  income  from  a loan or loans made by such
                            -11-         SDS/90SB0645pam1/dgd
 1             taxpayer to a borrower, to the extent  that  such  a
 2             loan  is  secured  by property which is eligible for
 3             the Enterprise Zone Investment Credit. To  determine
 4             the  portion  of  a loan or loans that is secured by
 5             property eligible for a  Section  201(h)  investment
 6             credit  to the borrower, the entire principal amount
 7             of the loan or loans between the  taxpayer  and  the
 8             borrower  should  be  divided  into the basis of the
 9             Section  201(h)  investment  credit  property  which
10             secures the loan or loans, using  for  this  purpose
11             the original basis of such property on the date that
12             it  was  placed  in  service in the Enterprise Zone.
13             The subtraction modification available  to  taxpayer
14             in  any  year  under  this  subsection shall be that
15             portion of the total interest paid by  the  borrower
16             with  respect  to  such  loan  attributable  to  the
17             eligible  property  as calculated under the previous
18             sentence;
19                  (M-1)  For any taxpayer  that  is  a  financial
20             organization within the meaning of Section 304(c) of
21             this  Act,  an  amount  included  in  such  total as
22             interest income from a loan or loans  made  by  such
23             taxpayer  to  a  borrower, to the extent that such a
24             loan is secured by property which  is  eligible  for
25             the  High  Impact  Business  Investment  Credit.  To
26             determine the portion of a loan  or  loans  that  is
27             secured  by  property  eligible for a Section 201(i)
28             investment  credit  to  the  borrower,  the   entire
29             principal  amount  of  the loan or loans between the
30             taxpayer and the borrower should be divided into the
31             basis  of  the  Section  201(i)  investment   credit
32             property  which secures the loan or loans, using for
33             this purpose the original basis of such property  on
34             the  date  that  it  was  placed  in  service  in  a
                            -12-         SDS/90SB0645pam1/dgd
 1             federally  designated Foreign Trade Zone or Sub-Zone
 2             located in Illinois.  No taxpayer that  is  eligible
 3             for  the  deduction  provided in subparagraph (M) of
 4             paragraph (2) of this subsection shall  be  eligible
 5             for  the  deduction provided under this subparagraph
 6             (M-1).  The subtraction  modification  available  to
 7             taxpayers in any year under this subsection shall be
 8             that  portion  of  the  total  interest  paid by the
 9             borrower with respect to such loan  attributable  to
10             the   eligible  property  as  calculated  under  the
11             previous sentence;
12                  (N)  Two times any contribution made during the
13             taxable year to a designated  zone  organization  to
14             the  extent that the contribution (i) qualifies as a
15             charitable  contribution  under  subsection  (c)  of
16             Section 170 of the Internal Revenue  Code  and  (ii)
17             must,  by  its terms, be used for a project approved
18             by the Department of Commerce and Community  Affairs
19             under  Section  11  of  the Illinois Enterprise Zone
20             Act;
21                  (O)  An amount equal to: (i)  85%  for  taxable
22             years  ending  on or before December 31, 1992, or, a
23             percentage equal to the percentage  allowable  under
24             Section  243(a)(1)  of  the Internal Revenue Code of
25             1986 for taxable years  ending  after  December  31,
26             1992,  of  the amount by which dividends included in
27             taxable income and received from a corporation  that
28             is  not  created  or organized under the laws of the
29             United States or any state or political  subdivision
30             thereof,  including,  for taxable years ending on or
31             after  December  31,  1988,  dividends  received  or
32             deemed  received  or  paid  or  deemed  paid   under
33             Sections  951  through  964  of the Internal Revenue
34             Code, exceed the amount of the modification provided
                            -13-         SDS/90SB0645pam1/dgd
 1             under subparagraph (G)  of  paragraph  (2)  of  this
 2             subsection  (b)  which is related to such dividends;
 3             plus (ii) 100% of the  amount  by  which  dividends,
 4             included  in taxable income and received, including,
 5             for taxable years ending on or  after  December  31,
 6             1988,  dividends received or deemed received or paid
 7             or deemed paid under Sections 951 through 964 of the
 8             Internal Revenue Code,  from  any  such  corporation
 9             specified  in  clause  (i)  that  would  but for the
10             provisions of Section 1504 (b) (3) of  the  Internal
11             Revenue   Code   be  treated  as  a  member  of  the
12             affiliated  group  which   includes   the   dividend
13             recipient,  exceed  the  amount  of the modification
14             provided under subparagraph (G) of paragraph (2)  of
15             this   subsection  (b)  which  is  related  to  such
16             dividends;
17                  (P)  An amount equal to any  contribution  made
18             to  a  job  training project established pursuant to
19             the Tax Increment Allocation Redevelopment Act; and
20                  (Q)  An amount  equal  to  the  amount  of  the
21             deduction  used  to  compute  the federal income tax
22             credit for restoration of substantial  amounts  held
23             under  claim  of right for the taxable year pursuant
24             to Section 1341 of  the  Internal  Revenue  Code  of
25             1986; and.
26                  (R)  Beginning  with taxable years beginning on
27             or after January 1, 1997  and  ending  with  taxable
28             years  ending  on  or  before  December 30, 2002, an
29             amount, not to exceed $100,000, equal to the  amount
30             contributed for educational purposes by the taxpayer
31             to  any  public or private elementary, secondary, or
32             post-secondary school in Illinois, as  certified  by
33             the recipient school.
34             (3)  Special  rule.   For  purposes of paragraph (2)
                            -14-         SDS/90SB0645pam1/dgd
 1        (A), "gross income" in  the  case  of  a  life  insurance
 2        company,  for  tax years ending on and after December 31,
 3        1994, shall mean the  gross  investment  income  for  the
 4        taxable year.
 5        (c)  Trusts and estates.
 6             (1)  In  general.  In the case of a trust or estate,
 7        base income means  an  amount  equal  to  the  taxpayer's
 8        taxable  income  for  the  taxable  year  as  modified by
 9        paragraph (2).
10             (2)  Modifications.  Subject to  the  provisions  of
11        paragraph   (3),   the  taxable  income  referred  to  in
12        paragraph (1) shall be modified by adding thereto the sum
13        of the following amounts:
14                  (A)  An amount equal to  all  amounts  paid  or
15             accrued  to  the  taxpayer  as interest or dividends
16             during the taxable year to the extent excluded  from
17             gross income in the computation of taxable income;
18                  (B)  In the case of (i) an estate, $600; (ii) a
19             trust  which,  under  its  governing  instrument, is
20             required to distribute all of its income  currently,
21             $300;  and  (iii) any other trust, $100, but in each
22             such case,  only  to  the  extent  such  amount  was
23             deducted in the computation of taxable income;
24                  (C)  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 taxable income
27             for the taxable year;
28                  (D)  The  amount  of  any  net  operating  loss
29             deduction taken in arriving at taxable income, other
30             than a net operating loss  carried  forward  from  a
31             taxable year ending prior to December 31, 1986;
32                  (E)  For taxable years in which a net operating
33             loss  carryback  or carryforward from a taxable year
34             ending prior to December 31, 1986 is an  element  of
                            -15-         SDS/90SB0645pam1/dgd
 1             taxable income under paragraph (1) of subsection (e)
 2             or  subparagraph  (E) of paragraph (2) of subsection
 3             (e), the  amount  by  which  addition  modifications
 4             other  than  those provided by this subparagraph (E)
 5             exceeded subtraction modifications in  such  taxable
 6             year,  with the following limitations applied in the
 7             order that they are listed:
 8                       (i)  the addition modification relating to
 9                  the net operating loss carried back or  forward
10                  to  the  taxable  year  from  any  taxable year
11                  ending prior to  December  31,  1986  shall  be
12                  reduced  by the amount of addition modification
13                  under this subparagraph (E)  which  related  to
14                  that  net  operating  loss  and which was taken
15                  into account in calculating the base income  of
16                  an earlier taxable year, and
17                       (ii)  the  addition  modification relating
18                  to the  net  operating  loss  carried  back  or
19                  forward  to  the  taxable year from any taxable
20                  year ending prior to December  31,  1986  shall
21                  not  exceed  the  amount  of  such carryback or
22                  carryforward;
23                  For taxable years  in  which  there  is  a  net
24             operating  loss  carryback or carryforward from more
25             than one other taxable year ending prior to December
26             31, 1986, the addition modification provided in this
27             subparagraph (E) shall be the  sum  of  the  amounts
28             computed    independently    under   the   preceding
29             provisions of this subparagraph (E)  for  each  such
30             taxable year;
31                  (F)  For  taxable  years  ending  on  or  after
32             January 1, 1989, an amount equal to the tax deducted
33             pursuant to Section 164 of the Internal Revenue Code
34             if  the trust or estate is claiming the same tax for
                            -16-         SDS/90SB0645pam1/dgd
 1             purposes of the Illinois foreign  tax  credit  under
 2             Section 601 of this Act; and
 3                  (G)  An  amount  equal  to  the  amount  of the
 4             capital gain deduction allowable under the  Internal
 5             Revenue  Code,  to  the  extent  deducted from gross
 6             income in the computation of taxable income;
 7        and by deducting from the total so obtained  the  sum  of
 8        the following amounts:
 9                  (H)  An amount equal to all amounts included in
10             such  total  pursuant  to the provisions of Sections
11             402(a), 402(c), 403(a), 403(b), 406(a),  407(a)  and
12             408 of the Internal Revenue Code or included in such
13             total  as  distributions under the provisions of any
14             retirement or disability plan for employees  of  any
15             governmental  agency or unit, or retirement payments
16             to retired partners, which payments are excluded  in
17             computing  net  earnings  from  self  employment  by
18             Section  1402  of  the  Internal  Revenue  Code  and
19             regulations adopted pursuant thereto;
20                  (I)  The valuation limitation amount;
21                  (J)  An  amount  equal to the amount of any tax
22             imposed by  this  Act  which  was  refunded  to  the
23             taxpayer  and included in such total for the taxable
24             year;
25                  (K)  An amount equal to all amounts included in
26             taxable income as  modified  by  subparagraphs  (A),
27             (B),  (C),  (D),  (E),  (F) and (G) which are exempt
28             from taxation by this State either by reason of  its
29             statutes   or  Constitution  or  by  reason  of  the
30             Constitution, treaties or  statutes  of  the  United
31             States; provided that, in the case of any statute of
32             this State that exempts income derived from bonds or
33             other  obligations  from  the tax imposed under this
34             Act, the amount exempted shall be the  interest  net
                            -17-         SDS/90SB0645pam1/dgd
 1             of bond premium amortization;
 2                  (L)  With   the   exception   of   any  amounts
 3             subtracted under subparagraph (K), an  amount  equal
 4             to  the  sum of all amounts disallowed as deductions
 5             by Sections 171(a) (2) and 265(a)(2) of the Internal
 6             Revenue Code, as now or hereafter amended,  and  all
 7             amounts   of  expenses  allocable  to  interest  and
 8             disallowed as deductions by Section  265(1)  of  the
 9             Internal  Revenue  Code of 1954, as now or hereafter
10             amended;
11                  (M)  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                  (N)  An amount equal to any  contribution  made
18             to  a  job  training project established pursuant to
19             the Tax Increment Allocation Redevelopment Act;
20                  (O)  An  amount  equal   to   those   dividends
21             included   in   such  total  that  were  paid  by  a
22             corporation that conducts business operations  in  a
23             federally  designated Foreign Trade Zone or Sub-Zone
24             and  that  is  designated  a  High  Impact  Business
25             located  in  Illinois;   provided   that   dividends
26             eligible  for the deduction provided in subparagraph
27             (M) of paragraph (2) of this subsection shall not be
28             eligible  for  the  deduction  provided  under  this
29             subparagraph (O); and
30                  (P)  An amount  equal  to  the  amount  of  the
31             deduction  used  to  compute  the federal income tax
32             credit for restoration of substantial  amounts  held
33             under  claim  of right for the taxable year pursuant
34             to Section 1341 of  the  Internal  Revenue  Code  of
                            -18-         SDS/90SB0645pam1/dgd
 1             1986; and.
 2                  (Q)  Beginning  with taxable years beginning on
 3             or after January 1, 1997  and  ending  with  taxable
 4             years  ending  on  or  before  December 30, 2002, an
 5             amount, not to exceed $100,000, equal to the  amount
 6             contributed for educational purposes by the taxpayer
 7             to  any  public or private elementary, secondary, or
 8             post-secondary school in Illinois, as  certified  by
 9             the recipient school.
10             (3)  Limitation.   The  amount  of  any modification
11        otherwise required under  this  subsection  shall,  under
12        regulations  prescribed by the Department, be adjusted by
13        any amounts included therein which  were  properly  paid,
14        credited,  or  required to be distributed, or permanently
15        set aside for charitable purposes pursuant   to  Internal
16        Revenue Code Section 642(c) during the taxable year.
17        (d)  Partnerships.
18             (1)  In  general. In the case of a partnership, base
19        income means an amount equal to  the  taxpayer's  taxable
20        income for the taxable year as modified by paragraph (2).
21             (2)  Modifications.  The  taxable income referred to
22        in paragraph (1) shall be modified by adding thereto  the
23        sum of the following amounts:
24                  (A)  An  amount  equal  to  all amounts paid or
25             accrued to the taxpayer  as  interest  or  dividends
26             during  the taxable year to the extent excluded from
27             gross income in the computation of taxable income;
28                  (B)  An amount  equal  to  the  amount  of  tax
29             imposed  by  this  Act  to  the extent deducted from
30             gross income for the taxable year; and
31                  (C)  The amount of deductions  allowed  to  the
32             partnership  pursuant  to  Section  707  (c)  of the
33             Internal Revenue Code  in  calculating  its  taxable
34             income;
                            -19-         SDS/90SB0645pam1/dgd
 1                  (D)  An  amount  equal  to  the  amount  of the
 2             capital gain deduction allowable under the  Internal
 3             Revenue  Code,  to  the  extent  deducted from gross
 4             income in the computation of taxable income;
 5        and by deducting from the total so obtained the following
 6        amounts:
 7                  (E)  The valuation limitation amount;
 8                  (F)  An amount equal to the amount of  any  tax
 9             imposed  by  this  Act  which  was  refunded  to the
10             taxpayer and included in such total for the  taxable
11             year;
12                  (G)  An amount equal to all amounts included in
13             taxable  income  as  modified  by subparagraphs (A),
14             (B), (C) and (D) which are exempt from  taxation  by
15             this  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                  (H)  Any  income  of  the   partnership   which
24             constitutes  personal  service  income as defined in
25             Section 1348 (b) (1) of the  Internal  Revenue  Code
26             (as  in  effect  December  31, 1981) or a reasonable
27             allowance  for  compensation  paid  or  accrued  for
28             services rendered by partners  to  the  partnership,
29             whichever is greater;
30                  (I)  An  amount  equal to all amounts of income
31             distributable to an entity subject to  the  Personal
32             Property  Tax  Replacement  Income  Tax  imposed  by
33             subsections  (c)  and (d) of Section 201 of this Act
34             including  amounts  distributable  to  organizations
                            -20-         SDS/90SB0645pam1/dgd
 1             exempt from federal income tax by reason of  Section
 2             501(a) of the Internal Revenue Code;
 3                  (J)  With   the   exception   of   any  amounts
 4             subtracted under subparagraph (G), an  amount  equal
 5             to  the  sum of all amounts disallowed as deductions
 6             by Sections 171(a) (2), and 265(2) of  the  Internal
 7             Revenue  Code  of 1954, as now or hereafter amended,
 8             and all amounts of expenses  allocable  to  interest
 9             and  disallowed  as  deductions by Section 265(1) of
10             the Internal  Revenue  Code,  as  now  or  hereafter
11             amended;
12                  (K)  An   amount   equal   to  those  dividends
13             included  in  such  total  which  were  paid  by   a
14             corporation which conducts business operations in an
15             Enterprise  Zone or zones created under the Illinois
16             Enterprise Zone Act, enacted  by  the  82nd  General
17             Assembly, and which does not conduct such operations
18             other than in an Enterprise Zone or Zones;
19                  (L)  An  amount  equal to any contribution made
20             to a job training project  established  pursuant  to
21             the   Real   Property   Tax   Increment   Allocation
22             Redevelopment Act;
23                  (M)  An   amount   equal   to  those  dividends
24             included  in  such  total  that  were  paid   by   a
25             corporation  that  conducts business operations in a
26             federally designated Foreign Trade Zone or  Sub-Zone
27             and  that  is  designated  a  High  Impact  Business
28             located   in   Illinois;   provided  that  dividends
29             eligible for the deduction provided in  subparagraph
30             (K) of paragraph (2) of this subsection shall not be
31             eligible  for  the  deduction  provided  under  this
32             subparagraph (M); and
33                  (N)  An  amount  equal  to  the  amount  of the
34             deduction used to compute  the  federal  income  tax
                            -21-         SDS/90SB0645pam1/dgd
 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        (e)  Gross income; adjusted gross income; taxable income.
 6             (1)  In  general.   Subject  to  the  provisions  of
 7        paragraph (2) and subsection (b)  (3),  for  purposes  of
 8        this  Section  and  Section  803(e),  a  taxpayer's gross
 9        income, adjusted gross income, or taxable income for  the
10        taxable  year  shall  mean  the  amount  of gross income,
11        adjusted  gross  income  or   taxable   income   properly
12        reportable  for  federal  income  tax  purposes  for  the
13        taxable year under the provisions of the Internal Revenue
14        Code.  Taxable income may be less than zero. However, for
15        taxable years ending on or after December 31,  1986,  net
16        operating  loss  carryforwards  from taxable years ending
17        prior to December 31, 1986, may not  exceed  the  sum  of
18        federal  taxable  income  for the taxable year before net
19        operating loss deduction, plus  the  excess  of  addition
20        modifications  over  subtraction  modifications  for  the
21        taxable year.  For taxable years ending prior to December
22        31, 1986, taxable income may never be an amount in excess
23        of the net operating loss for the taxable year as defined
24        in subsections (c) and (d) of Section 172 of the Internal
25        Revenue  Code,  provided  that  when  taxable income of a
26        corporation (other  than  a  Subchapter  S  corporation),
27        trust,   or   estate  is  less  than  zero  and  addition
28        modifications, other than those provided by  subparagraph
29        (E)  of  paragraph (2) of subsection (b) for corporations
30        or subparagraph (E) of paragraph (2)  of  subsection  (c)
31        for trusts and estates, exceed subtraction modifications,
32        an   addition  modification  must  be  made  under  those
33        subparagraphs for any other taxable  year  to  which  the
34        taxable  income  less  than  zero (net operating loss) is
                            -22-         SDS/90SB0645pam1/dgd
 1        applied under Section 172 of the Internal Revenue Code or
 2        under  subparagraph  (E)  of  paragraph   (2)   of   this
 3        subsection (e) applied in conjunction with Section 172 of
 4        the Internal Revenue Code.
 5             (2)  Special rule.  For purposes of paragraph (1) of
 6        this  subsection,  the taxable income properly reportable
 7        for federal income tax purposes shall mean:
 8                  (A)  Certain life insurance companies.  In  the
 9             case  of a life insurance company subject to the tax
10             imposed by Section 801 of the Internal Revenue Code,
11             life insurance  company  taxable  income,  plus  the
12             amount  of  distribution  from pre-1984 policyholder
13             surplus accounts as calculated under Section 815a of
14             the Internal Revenue Code;
15                  (B)  Certain other insurance companies.  In the
16             case of mutual insurance companies  subject  to  the
17             tax  imposed  by Section 831 of the Internal Revenue
18             Code, insurance company taxable income;
19                  (C)  Regulated investment  companies.   In  the
20             case  of  a  regulated investment company subject to
21             the tax imposed  by  Section  852  of  the  Internal
22             Revenue Code, investment company taxable income;
23                  (D)  Real  estate  investment  trusts.   In the
24             case of a real estate investment  trust  subject  to
25             the  tax  imposed  by  Section  857  of the Internal
26             Revenue Code, real estate investment  trust  taxable
27             income;
28                  (E)  Consolidated corporations.  In the case of
29             a  corporation  which  is  a member of an affiliated
30             group of corporations filing a  consolidated  income
31             tax  return  for the taxable year for federal income
32             tax purposes, taxable income determined as  if  such
33             corporation  had filed a separate return for federal
34             income tax purposes for the taxable  year  and  each
                            -23-         SDS/90SB0645pam1/dgd
 1             preceding  taxable year for which it was a member of
 2             an  affiliated   group.   For   purposes   of   this
 3             subparagraph, the taxpayer's separate taxable income
 4             shall  be  determined as if the election provided by
 5             Section 243(b) (2) of the Internal Revenue Code  had
 6             been in effect for all such years;
 7                  (F)  Cooperatives.     In   the   case   of   a
 8             cooperative corporation or association, the  taxable
 9             income of such organization determined in accordance
10             with  the provisions of Section 1381 through 1388 of
11             the Internal Revenue Code;
12                  (G)  Subchapter S corporations.   In  the  case
13             of:  (i)  a Subchapter S corporation for which there
14             is in effect an election for the taxable year  under
15             Section  1362  of  the  Internal  Revenue  Code, the
16             taxable income of  such  corporation  determined  in
17             accordance  with  Section  1363(b)  of  the Internal
18             Revenue Code, except that taxable income shall  take
19             into  account  those  items  which  are  required by
20             Section 1363(b)(1) of the Internal Revenue  Code  to
21             be  separately  stated;  and  (ii)  a  Subchapter  S
22             corporation  for  which there is in effect a federal
23             election  to  opt  out  of  the  provisions  of  the
24             Subchapter S Revision Act of 1982 and  have  applied
25             instead  the  prior federal Subchapter S rules as in
26             effect on July 1, 1982, the taxable income  of  such
27             corporation   determined   in  accordance  with  the
28             federal Subchapter S rules as in effect on  July  1,
29             1982; and
30                  (H)  Partnerships.     In   the   case   of   a
31             partnership, taxable income determined in accordance
32             with Section  703  of  the  Internal  Revenue  Code,
33             except  that  taxable income shall take into account
34             those items which are required by Section  703(a)(1)
                            -24-         SDS/90SB0645pam1/dgd
 1             to  be  separately  stated  but which would be taken
 2             into account by an  individual  in  calculating  his
 3             taxable income.
 4        (f)  Valuation limitation amount.
 5             (1)  In  general.   The  valuation limitation amount
 6        referred to in subsections (a) (2) (G), (c) (2)  (I)  and
 7        (d)(2) (E) is an amount equal to:
 8                  (A)  The   sum   of   the  pre-August  1,  1969
 9             appreciation amounts (to the  extent  consisting  of
10             gain reportable under the provisions of Section 1245
11             or  1250  of  the  Internal  Revenue  Code)  for all
12             property in respect of which such gain was  reported
13             for the taxable year; plus
14                  (B)  The   lesser   of   (i)  the  sum  of  the
15             pre-August 1,  1969  appreciation  amounts  (to  the
16             extent  consisting of capital gain) for all property
17             in respect of  which  such  gain  was  reported  for
18             federal income tax purposes for the taxable year, or
19             (ii)  the  net  capital  gain  for the taxable year,
20             reduced in either case by any amount  of  such  gain
21             included  in  the amount determined under subsection
22             (a) (2) (F) or (c) (2) (H).
23        (2)  Pre-August 1, 1969 appreciation amount.
24                  (A)  If  the  fair  market  value  of  property
25             referred   to   in   paragraph   (1)   was   readily
26             ascertainable on August 1, 1969, the  pre-August  1,
27             1969  appreciation  amount  for such property is the
28             lesser of (i) the excess of such fair  market  value
29             over the taxpayer's basis (for determining gain) for
30             such  property  on  that  date (determined under the
31             Internal Revenue Code as in effect on that date), or
32             (ii) the total  gain  realized  and  reportable  for
33             federal  income tax purposes in respect of the sale,
34             exchange or other disposition of such property.
                            -25-         SDS/90SB0645pam1/dgd
 1                  (B)  If  the  fair  market  value  of  property
 2             referred  to  in  paragraph  (1)  was  not   readily
 3             ascertainable  on  August 1, 1969, the pre-August 1,
 4             1969 appreciation amount for such property  is  that
 5             amount  which bears the same ratio to the total gain
 6             reported in respect  of  the  property  for  federal
 7             income  tax  purposes  for  the taxable year, as the
 8             number of full calendar months in that part  of  the
 9             taxpayer's  holding  period  for the property ending
10             July 31, 1969 bears to the number of  full  calendar
11             months  in  the taxpayer's entire holding period for
12             the property.
13                  (C)  The  Department   shall   prescribe   such
14             regulations  as  may  be  necessary to carry out the
15             purposes of this paragraph.
16        (g)  Double  deductions.   Unless  specifically  provided
17    otherwise, nothing in this Section shall permit the same item
18    to be deducted more than once.
19        (h)  Legislative intention.  Except as expressly provided
20    by  this  Section  there  shall  be   no   modifications   or
21    limitations on the amounts of income, gain, loss or deduction
22    taken  into  account  in  determining  gross income, adjusted
23    gross  income  or  taxable  income  for  federal  income  tax
24    purposes for the taxable year, or in the amount of such items
25    entering into the computation of base income and  net  income
26    under  this  Act for such taxable year, whether in respect of
27    property values as of August 1, 1969 or otherwise.
28    (Source: P.A. 88-195;  88-648,  eff.  9-16-94;  88-669,  eff.
29    11-29-94;  88-670, eff. 12-2-94; 89-89, eff. 6-30-95; 89-235,
30    eff. 8-4-95; 89-418, eff.  11-15-95;  89-460,  eff.  5-24-96;
31    89-626, eff. 8-9-96.)".

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