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92_HB0069
LRB9200880SMdv
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 (D-5) An amount, to the extent not included in
15 adjusted gross income, equal to the amount of money
16 withdrawn by the taxpayer in the taxable year from a
17 medical care savings account and the interest earned
18 on the account in the taxable year of a withdrawal
19 pursuant to subsection (b) of Section 20 of the
20 Medical Care Savings Account Act or subsection (b)
21 of Section 20 of the Medical Care Savings Account
22 Act of 2000; and
23 (D-10) For taxable years ending after December
24 31, 1997, an amount equal to any eligible
25 remediation costs that the individual deducted in
26 computing adjusted gross income and for which the
27 individual claims a credit under subsection (l) of
28 Section 201;
29 and by deducting from the total so obtained the sum of
30 the following amounts:
31 (E) Any amount included in such total in
32 respect of any compensation (including but not
33 limited to any compensation paid or accrued to a
34 serviceman while a prisoner of war or missing in
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1 action) paid to a resident by reason of being on
2 active duty in the Armed Forces of the United States
3 and in respect of any compensation paid or accrued
4 to a resident who as a governmental employee was a
5 prisoner of war or missing in action, and in respect
6 of any compensation paid to a resident in 1971 or
7 thereafter for annual training performed pursuant to
8 Sections 502 and 503, Title 32, United States Code
9 as a member of the Illinois National Guard;
10 (F) An amount equal to all amounts included in
11 such total pursuant to the provisions of Sections
12 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
13 408 of the Internal Revenue Code, or included in
14 such total as distributions under the provisions of
15 any retirement or disability plan for employees of
16 any governmental agency or unit, or retirement
17 payments to retired partners, which payments are
18 excluded in computing net earnings from self
19 employment by Section 1402 of the Internal Revenue
20 Code and regulations adopted pursuant thereto;
21 (G) The valuation limitation amount;
22 (H) An amount equal to the amount of any tax
23 imposed by this Act which was refunded to the
24 taxpayer and included in such total for the taxable
25 year;
26 (I) An amount equal to all amounts included in
27 such total pursuant to the provisions of Section 111
28 of the Internal Revenue Code as a recovery of items
29 previously deducted from adjusted gross income in
30 the computation of taxable income;
31 (J) An amount equal to those dividends
32 included in such total which were paid by a
33 corporation which conducts business operations in an
34 Enterprise Zone or zones created under the Illinois
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1 Enterprise Zone Act, and conducts substantially all
2 of its operations in an Enterprise Zone or zones;
3 (K) An amount equal to those dividends
4 included in such total that were paid by a
5 corporation that conducts business operations in a
6 federally designated Foreign Trade Zone or Sub-Zone
7 and that is designated a High Impact Business
8 located in Illinois; provided that dividends
9 eligible for the deduction provided in subparagraph
10 (J) of paragraph (2) of this subsection shall not be
11 eligible for the deduction provided under this
12 subparagraph (K);
13 (L) For taxable years ending after December
14 31, 1983, an amount equal to all social security
15 benefits and railroad retirement benefits included
16 in such total pursuant to Sections 72(r) and 86 of
17 the Internal Revenue Code;
18 (M) With the exception of any amounts
19 subtracted under subparagraph (N), an amount equal
20 to the sum of all amounts disallowed as deductions
21 by (i) Sections 171(a) (2), and 265(2) of the
22 Internal Revenue Code of 1954, as now or hereafter
23 amended, and all amounts of expenses allocable to
24 interest and disallowed as deductions by Section
25 265(1) of the Internal Revenue Code of 1954, as now
26 or hereafter amended; and (ii) for taxable years
27 ending on or after August 13, 1999, Sections
28 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
29 Internal Revenue Code; the provisions of this
30 subparagraph are exempt from the provisions of
31 Section 250;
32 (N) An amount equal to all amounts included in
33 such total which are exempt from taxation by this
34 State either by reason of its statutes or
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1 Constitution or by reason of the Constitution,
2 treaties or statutes of the United States; provided
3 that, in the case of any statute of this State that
4 exempts income derived from bonds or other
5 obligations from the tax imposed under this Act, the
6 amount exempted shall be the interest net of bond
7 premium amortization;
8 (O) An amount equal to any contribution made
9 to a job training project established pursuant to
10 the Tax Increment Allocation Redevelopment Act;
11 (P) An amount equal to the amount of the
12 deduction used to compute the federal income tax
13 credit for restoration of substantial amounts held
14 under claim of right for the taxable year pursuant
15 to Section 1341 of the Internal Revenue Code of
16 1986;
17 (Q) An amount equal to any amounts included in
18 such total, received by the taxpayer as an
19 acceleration in the payment of life, endowment or
20 annuity benefits in advance of the time they would
21 otherwise be payable as an indemnity for a terminal
22 illness;
23 (R) An amount equal to the amount of any
24 federal or State bonus paid to veterans of the
25 Persian Gulf War;
26 (S) An amount, to the extent included in
27 adjusted gross income, equal to the amount of a
28 contribution made in the taxable year on behalf of
29 the taxpayer to a medical care savings account
30 established under the Medical Care Savings Account
31 Act or the Medical Care Savings Account Act of 2000
32 to the extent the contribution is accepted by the
33 account administrator as provided in that Act;
34 (T) An amount, to the extent included in
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1 adjusted gross income, equal to the amount of
2 interest earned in the taxable year on a medical
3 care savings account established under the Medical
4 Care Savings Account Act or the Medical Care Savings
5 Account Act of 2000 on behalf of the taxpayer, other
6 than interest added pursuant to item (D-5) of this
7 paragraph (2);
8 (U) For one taxable year beginning on or after
9 January 1, 1994, an amount equal to the total amount
10 of tax imposed and paid under subsections (a) and
11 (b) of Section 201 of this Act on grant amounts
12 received by the taxpayer under the Nursing Home
13 Grant Assistance Act during the taxpayer's taxable
14 years 1992 and 1993;
15 (V) Beginning with tax years ending on or
16 after December 31, 1995 and ending with tax years
17 ending on or before December 31, 2004, an amount
18 equal to the amount paid by a taxpayer who is a
19 self-employed taxpayer, a partner of a partnership,
20 or a shareholder in a Subchapter S corporation for
21 health insurance or long-term care insurance for
22 that taxpayer or that taxpayer's spouse or
23 dependents, to the extent that the amount paid for
24 that health insurance or long-term care insurance
25 may be deducted under Section 213 of the Internal
26 Revenue Code of 1986, has not been deducted on the
27 federal income tax return of the taxpayer, and does
28 not exceed the taxable income attributable to that
29 taxpayer's income, self-employment income, or
30 Subchapter S corporation income; except that no
31 deduction shall be allowed under this item (V) if
32 the taxpayer is eligible to participate in any
33 health insurance or long-term care insurance plan of
34 an employer of the taxpayer or the taxpayer's
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1 spouse. The amount of the health insurance and
2 long-term care insurance subtracted under this item
3 (V) shall be determined by multiplying total health
4 insurance and long-term care insurance premiums paid
5 by the taxpayer times a number that represents the
6 fractional percentage of eligible medical expenses
7 under Section 213 of the Internal Revenue Code of
8 1986 not actually deducted on the taxpayer's federal
9 income tax return;
10 (W) For taxable years beginning on or after
11 January 1, 1998, all amounts included in the
12 taxpayer's federal gross income in the taxable year
13 from amounts converted from a regular IRA to a Roth
14 IRA. This paragraph is exempt from the provisions of
15 Section 250; and
16 (X) For taxable year 1999 and thereafter, an
17 amount equal to the amount of any (i) distributions,
18 to the extent includible in gross income for federal
19 income tax purposes, made to the taxpayer because of
20 his or her status as a victim of persecution for
21 racial or religious reasons by Nazi Germany or any
22 other Axis regime or as an heir of the victim and
23 (ii) items of income, to the extent includible in
24 gross income for federal income tax purposes,
25 attributable to, derived from or in any way related
26 to assets stolen from, hidden from, or otherwise
27 lost to a victim of persecution for racial or
28 religious reasons by Nazi Germany or any other Axis
29 regime immediately prior to, during, and immediately
30 after World War II, including, but not limited to,
31 interest on the proceeds receivable as insurance
32 under policies issued to a victim of persecution for
33 racial or religious reasons by Nazi Germany or any
34 other Axis regime by European insurance companies
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1 immediately prior to and during World War II;
2 provided, however, this subtraction from federal
3 adjusted gross income does not apply to assets
4 acquired with such assets or with the proceeds from
5 the sale of such assets; provided, further, this
6 paragraph shall only apply to a taxpayer who was the
7 first recipient of such assets after their recovery
8 and who is a victim of persecution for racial or
9 religious reasons by Nazi Germany or any other Axis
10 regime or as an heir of the victim. The amount of
11 and the eligibility for any public assistance,
12 benefit, or similar entitlement is not affected by
13 the inclusion of items (i) and (ii) of this
14 paragraph in gross income for federal income tax
15 purposes. This paragraph is exempt from the
16 provisions of Section 250; and
17 (Y) Beginning with tax years ending on or
18 after December 31, 2001, and ending with tax years
19 ending on or before December 31, 2010, all
20 unreimbursed amounts, but not more than a total
21 amount that would result in a tax liability of less
22 than zero for the taxpayer, expended by persons 65
23 years of age or older for home health services, as
24 defined by Section 2.05 of the Home Health Agency
25 Licensing Act, if provided by a public or private
26 organization licensed under that Act, or for
27 services provided to a person at that person's
28 residence by a licensed practical nurse or
29 registered nurse in accordance with a plan of
30 treatment for illness or infirmity prescribed by a
31 physician.
32 (b) Corporations.
33 (1) In general. In the case of a corporation, base
34 income means an amount equal to the taxpayer's taxable
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1 income for the taxable year as modified by paragraph (2).
2 (2) Modifications. The taxable income referred to
3 in paragraph (1) shall be modified by adding thereto the
4 sum of the following amounts:
5 (A) An amount equal to all amounts paid or
6 accrued to the taxpayer as interest and all
7 distributions received from regulated investment
8 companies during the taxable year to the extent
9 excluded from gross income in the computation of
10 taxable income;
11 (B) An amount equal to the amount of tax
12 imposed by this Act to the extent deducted from
13 gross income in the computation of taxable income
14 for the taxable year;
15 (C) In the case of a regulated investment
16 company, an amount equal to the excess of (i) the
17 net long-term capital gain for the taxable year,
18 over (ii) the amount of the capital gain dividends
19 designated as such in accordance with Section
20 852(b)(3)(C) of the Internal Revenue Code and any
21 amount designated under Section 852(b)(3)(D) of the
22 Internal Revenue Code, attributable to the taxable
23 year (this amendatory Act of 1995 (Public Act 89-89)
24 is declarative of existing law and is not a new
25 enactment);
26 (D) The amount of any net operating loss
27 deduction taken in arriving at taxable income, other
28 than a net operating loss carried forward from a
29 taxable year ending prior to December 31, 1986;
30 (E) For taxable years in which a net operating
31 loss carryback or carryforward from a taxable year
32 ending prior to December 31, 1986 is an element of
33 taxable income under paragraph (1) of subsection (e)
34 or subparagraph (E) of paragraph (2) of subsection
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1 (e), the amount by which addition modifications
2 other than those provided by this subparagraph (E)
3 exceeded subtraction modifications in such earlier
4 taxable year, with the following limitations applied
5 in the order that they are listed:
6 (i) the addition modification relating to
7 the net operating loss carried back or forward
8 to the taxable year from any taxable year
9 ending prior to December 31, 1986 shall be
10 reduced by the amount of addition modification
11 under this subparagraph (E) which related to
12 that net operating loss and which was taken
13 into account in calculating the base income of
14 an earlier taxable year, and
15 (ii) the addition modification relating
16 to the net operating loss carried back or
17 forward to the taxable year from any taxable
18 year ending prior to December 31, 1986 shall
19 not exceed the amount of such carryback or
20 carryforward;
21 For taxable years in which there is a net
22 operating loss carryback or carryforward from more
23 than one other taxable year ending prior to December
24 31, 1986, the addition modification provided in this
25 subparagraph (E) shall be the sum of the amounts
26 computed independently under the preceding
27 provisions of this subparagraph (E) for each such
28 taxable year; and
29 (E-5) For taxable years ending after December
30 31, 1997, an amount equal to any eligible
31 remediation costs that the corporation deducted in
32 computing adjusted gross income and for which the
33 corporation claims a credit under subsection (l) of
34 Section 201;
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1 and by deducting from the total so obtained the sum of
2 the following amounts:
3 (F) An amount equal to the amount of any tax
4 imposed by this Act which was refunded to the
5 taxpayer and included in such total for the taxable
6 year;
7 (G) An amount equal to any amount included in
8 such total under Section 78 of the Internal Revenue
9 Code;
10 (H) In the case of a regulated investment
11 company, an amount equal to the amount of exempt
12 interest dividends as defined in subsection (b) (5)
13 of Section 852 of the Internal Revenue Code, paid to
14 shareholders for the taxable year;
15 (I) With the exception of any amounts
16 subtracted under subparagraph (J), an amount equal
17 to the sum of all amounts disallowed as deductions
18 by (i) Sections 171(a) (2), and 265(a)(2) and
19 amounts disallowed as interest expense by Section
20 291(a)(3) of the Internal Revenue Code, as now or
21 hereafter amended, and all amounts of expenses
22 allocable to interest and disallowed as deductions
23 by Section 265(a)(1) of the Internal Revenue Code,
24 as now or hereafter amended; and (ii) for taxable
25 years ending on or after August 13, 1999, Sections
26 171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
27 of the Internal Revenue Code; the provisions of this
28 subparagraph are exempt from the provisions of
29 Section 250;
30 (J) An amount equal to all amounts included in
31 such total which are exempt from taxation by this
32 State either by reason of its statutes or
33 Constitution or by reason of the Constitution,
34 treaties or statutes of the United States; provided
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1 that, in the case of any statute of this State that
2 exempts income derived from bonds or other
3 obligations from the tax imposed under this Act, the
4 amount exempted shall be the interest net of bond
5 premium amortization;
6 (K) An amount equal to those dividends
7 included in such total which were paid by a
8 corporation which conducts business operations in an
9 Enterprise Zone or zones created under the Illinois
10 Enterprise Zone Act and conducts substantially all
11 of its operations in an Enterprise Zone or zones;
12 (L) An amount equal to those dividends
13 included in such total that were paid by a
14 corporation that conducts business operations in a
15 federally designated Foreign Trade Zone or Sub-Zone
16 and that is designated a High Impact Business
17 located in Illinois; provided that dividends
18 eligible for the deduction provided in subparagraph
19 (K) of paragraph 2 of this subsection shall not be
20 eligible for the deduction provided under this
21 subparagraph (L);
22 (M) For any taxpayer that is a financial
23 organization within the meaning of Section 304(c) of
24 this Act, an amount included in such total as
25 interest income from a loan or loans made by such
26 taxpayer to a borrower, to the extent that such a
27 loan is secured by property which is eligible for
28 the Enterprise Zone Investment Credit. To determine
29 the portion of a loan or loans that is secured by
30 property eligible for a Section 201(f) 201(h)
31 investment credit to the borrower, the entire
32 principal amount of the loan or loans between the
33 taxpayer and the borrower should be divided into the
34 basis of the Section 201(f) 201(h) investment credit
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1 property which secures the loan or loans, using for
2 this purpose the original basis of such property on
3 the date that it was placed in service in the
4 Enterprise Zone. The subtraction modification
5 available to taxpayer in any year under this
6 subsection shall be that portion of the total
7 interest paid by the borrower with respect to such
8 loan attributable to the eligible property as
9 calculated under the previous sentence;
10 (M-1) For any taxpayer that is a financial
11 organization within the meaning of Section 304(c) of
12 this Act, an amount included in such total as
13 interest income from a loan or loans made by such
14 taxpayer to a borrower, to the extent that such a
15 loan is secured by property which is eligible for
16 the High Impact Business Investment Credit. To
17 determine the portion of a loan or loans that is
18 secured by property eligible for a Section 201(h)
19 201(i) investment credit to the borrower, the entire
20 principal amount of the loan or loans between the
21 taxpayer and the borrower should be divided into the
22 basis of the Section 201(h) 201(i) investment credit
23 property which secures the loan or loans, using for
24 this purpose the original basis of such property on
25 the date that it was placed in service in a
26 federally designated Foreign Trade Zone or Sub-Zone
27 located in Illinois. No taxpayer that is eligible
28 for the deduction provided in subparagraph (M) of
29 paragraph (2) of this subsection shall be eligible
30 for the deduction provided under this subparagraph
31 (M-1). The subtraction modification available to
32 taxpayers in any year under this subsection shall be
33 that portion of the total interest paid by the
34 borrower with respect to such loan attributable to
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1 the eligible property as calculated under the
2 previous sentence;
3 (N) Two times any contribution made during the
4 taxable year to a designated zone organization to
5 the extent that the contribution (i) qualifies as a
6 charitable contribution under subsection (c) of
7 Section 170 of the Internal Revenue Code and (ii)
8 must, by its terms, be used for a project approved
9 by the Department of Commerce and Community Affairs
10 under Section 11 of the Illinois Enterprise Zone
11 Act;
12 (O) An amount equal to: (i) 85% for taxable
13 years ending on or before December 31, 1992, or, a
14 percentage equal to the percentage allowable under
15 Section 243(a)(1) of the Internal Revenue Code of
16 1986 for taxable years ending after December 31,
17 1992, of the amount by which dividends included in
18 taxable income and received from a corporation that
19 is not created or organized under the laws of the
20 United States or any state or political subdivision
21 thereof, including, for taxable years ending on or
22 after December 31, 1988, dividends received or
23 deemed received or paid or deemed paid under
24 Sections 951 through 964 of the Internal Revenue
25 Code, exceed the amount of the modification provided
26 under subparagraph (G) of paragraph (2) of this
27 subsection (b) which is related to such dividends;
28 plus (ii) 100% of the amount by which dividends,
29 included in taxable income and received, including,
30 for taxable years ending on or after December 31,
31 1988, dividends received or deemed received or paid
32 or deemed paid under Sections 951 through 964 of the
33 Internal Revenue Code, from any such corporation
34 specified in clause (i) that would but for the
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1 provisions of Section 1504 (b) (3) of the Internal
2 Revenue Code be treated as a member of the
3 affiliated group which includes the dividend
4 recipient, exceed the amount of the modification
5 provided under subparagraph (G) of paragraph (2) of
6 this subsection (b) which is related to such
7 dividends;
8 (P) An amount equal to any contribution made
9 to a job training project established pursuant to
10 the Tax Increment Allocation Redevelopment Act;
11 (Q) An amount equal to the amount of the
12 deduction used to compute the federal income tax
13 credit for restoration of substantial amounts held
14 under claim of right for the taxable year pursuant
15 to Section 1341 of the Internal Revenue Code of
16 1986;
17 (R) In the case of an attorney-in-fact with
18 respect to whom an interinsurer or a reciprocal
19 insurer has made the election under Section 835 of
20 the Internal Revenue Code, 26 U.S.C. 835, an amount
21 equal to the excess, if any, of the amounts paid or
22 incurred by that interinsurer or reciprocal insurer
23 in the taxable year to the attorney-in-fact over the
24 deduction allowed to that interinsurer or reciprocal
25 insurer with respect to the attorney-in-fact under
26 Section 835(b) of the Internal Revenue Code for the
27 taxable year; and
28 (S) For taxable years ending on or after
29 December 31, 1997, in the case of a Subchapter S
30 corporation, an amount equal to all amounts of
31 income allocable to a shareholder subject to the
32 Personal Property Tax Replacement Income Tax imposed
33 by subsections (c) and (d) of Section 201 of this
34 Act, including amounts allocable to organizations
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1 exempt from federal income tax by reason of Section
2 501(a) of the Internal Revenue Code. This
3 subparagraph (S) is exempt from the provisions of
4 Section 250.
5 (3) Special rule. For purposes of paragraph (2)
6 (A), "gross income" in the case of a life insurance
7 company, for tax years ending on and after December 31,
8 1994, shall mean the gross investment income for the
9 taxable year.
10 (c) Trusts and estates.
11 (1) In general. In the case of a trust or estate,
12 base income means an amount equal to the taxpayer's
13 taxable income for the taxable year as modified by
14 paragraph (2).
15 (2) Modifications. Subject to the provisions of
16 paragraph (3), the taxable income referred to in
17 paragraph (1) shall be modified by adding thereto the sum
18 of the following amounts:
19 (A) An amount equal to all amounts paid or
20 accrued to the taxpayer as interest or dividends
21 during the taxable year to the extent excluded from
22 gross income in the computation of taxable income;
23 (B) In the case of (i) an estate, $600; (ii) a
24 trust which, under its governing instrument, is
25 required to distribute all of its income currently,
26 $300; and (iii) any other trust, $100, but in each
27 such case, only to the extent such amount was
28 deducted in the computation of taxable income;
29 (C) An amount equal to the amount of tax
30 imposed by this Act to the extent deducted from
31 gross income in the computation of taxable income
32 for the taxable year;
33 (D) The amount of any net operating loss
34 deduction taken in arriving at taxable income, other
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1 than a net operating loss carried forward from a
2 taxable year ending prior to December 31, 1986;
3 (E) For taxable years in which a net operating
4 loss carryback or carryforward from a taxable year
5 ending prior to December 31, 1986 is an element of
6 taxable income under paragraph (1) of subsection (e)
7 or subparagraph (E) of paragraph (2) of subsection
8 (e), the amount by which addition modifications
9 other than those provided by this subparagraph (E)
10 exceeded subtraction modifications in such taxable
11 year, with the following limitations applied in the
12 order that they are listed:
13 (i) the addition modification relating to
14 the net operating loss carried back or forward
15 to the taxable year from any taxable year
16 ending prior to December 31, 1986 shall be
17 reduced by the amount of addition modification
18 under this subparagraph (E) which related to
19 that net operating loss and which was taken
20 into account in calculating the base income of
21 an earlier taxable year, and
22 (ii) the addition modification relating
23 to the net operating loss carried back or
24 forward to the taxable year from any taxable
25 year ending prior to December 31, 1986 shall
26 not exceed the amount of such carryback or
27 carryforward;
28 For taxable years in which there is a net
29 operating loss carryback or carryforward from more
30 than one other taxable year ending prior to December
31 31, 1986, the addition modification provided in this
32 subparagraph (E) shall be the sum of the amounts
33 computed independently under the preceding
34 provisions of this subparagraph (E) for each such
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1 taxable year;
2 (F) For taxable years ending on or after
3 January 1, 1989, an amount equal to the tax deducted
4 pursuant to Section 164 of the Internal Revenue Code
5 if the trust or estate is claiming the same tax for
6 purposes of the Illinois foreign tax credit under
7 Section 601 of this Act;
8 (G) An amount equal to the amount of the
9 capital gain deduction allowable under the Internal
10 Revenue Code, to the extent deducted from gross
11 income in the computation of taxable income; and
12 (G-5) For taxable years ending after December
13 31, 1997, an amount equal to any eligible
14 remediation costs that the trust or estate deducted
15 in computing adjusted gross income and for which the
16 trust or estate claims a credit under subsection (l)
17 of Section 201;
18 and by deducting from the total so obtained the sum of
19 the following amounts:
20 (H) An amount equal to all amounts included in
21 such total pursuant to the provisions of Sections
22 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
23 408 of the Internal Revenue Code or included in such
24 total as distributions under the provisions of any
25 retirement or disability plan for employees of any
26 governmental agency or unit, or retirement payments
27 to retired partners, which payments are excluded in
28 computing net earnings from self employment by
29 Section 1402 of the Internal Revenue Code and
30 regulations adopted pursuant thereto;
31 (I) The valuation limitation amount;
32 (J) An amount equal to the amount of any tax
33 imposed by this Act which was refunded to the
34 taxpayer and included in such total for the taxable
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1 year;
2 (K) An amount equal to all amounts included in
3 taxable income as modified by subparagraphs (A),
4 (B), (C), (D), (E), (F) and (G) which are exempt
5 from taxation by this State either by reason of its
6 statutes or Constitution or by reason of the
7 Constitution, treaties or statutes of the United
8 States; provided that, in the case of any statute of
9 this State that exempts income derived from bonds or
10 other obligations from the tax imposed under this
11 Act, the amount exempted shall be the interest net
12 of bond premium amortization;
13 (L) With the exception of any amounts
14 subtracted under subparagraph (K), an amount equal
15 to the sum of all amounts disallowed as deductions
16 by (i) Sections 171(a) (2) and 265(a)(2) of the
17 Internal Revenue Code, as now or hereafter amended,
18 and all amounts of expenses allocable to interest
19 and disallowed as deductions by Section 265(1) of
20 the Internal Revenue Code of 1954, as now or
21 hereafter amended; and (ii) for taxable years ending
22 on or after August 13, 1999, Sections 171(a)(2),
23 265, 280C, and 832(b)(5)(B)(i) of the Internal
24 Revenue Code; the provisions of this subparagraph
25 are exempt from the provisions of Section 250;
26 (M) An amount equal to those dividends
27 included in such total which were paid by a
28 corporation which conducts business operations in an
29 Enterprise Zone or zones created under the Illinois
30 Enterprise Zone Act and conducts substantially all
31 of its operations in an Enterprise Zone or Zones;
32 (N) An amount equal to any contribution made
33 to a job training project established pursuant to
34 the Tax Increment Allocation Redevelopment Act;
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1 (O) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (M) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (O);
11 (P) An amount equal to the amount of the
12 deduction used to compute the federal income tax
13 credit for restoration of substantial amounts held
14 under claim of right for the taxable year pursuant
15 to Section 1341 of the Internal Revenue Code of
16 1986; and
17 (Q) For taxable year 1999 and thereafter, an
18 amount equal to the amount of any (i) distributions,
19 to the extent includible in gross income for federal
20 income tax purposes, made to the taxpayer because of
21 his or her status as a victim of persecution for
22 racial or religious reasons by Nazi Germany or any
23 other Axis regime or as an heir of the victim and
24 (ii) items of income, to the extent includible in
25 gross income for federal income tax purposes,
26 attributable to, derived from or in any way related
27 to assets stolen from, hidden from, or otherwise
28 lost to a victim of persecution for racial or
29 religious reasons by Nazi Germany or any other Axis
30 regime immediately prior to, during, and immediately
31 after World War II, including, but not limited to,
32 interest on the proceeds receivable as insurance
33 under policies issued to a victim of persecution for
34 racial or religious reasons by Nazi Germany or any
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1 other Axis regime by European insurance companies
2 immediately prior to and during World War II;
3 provided, however, this subtraction from federal
4 adjusted gross income does not apply to assets
5 acquired with such assets or with the proceeds from
6 the sale of such assets; provided, further, this
7 paragraph shall only apply to a taxpayer who was the
8 first recipient of such assets after their recovery
9 and who is a victim of persecution for racial or
10 religious reasons by Nazi Germany or any other Axis
11 regime or as an heir of the victim. The amount of
12 and the eligibility for any public assistance,
13 benefit, or similar entitlement is not affected by
14 the inclusion of items (i) and (ii) of this
15 paragraph in gross income for federal income tax
16 purposes. This paragraph is exempt from the
17 provisions of Section 250.
18 (3) Limitation. The amount of any modification
19 otherwise required under this subsection shall, under
20 regulations prescribed by the Department, be adjusted by
21 any amounts included therein which were properly paid,
22 credited, or required to be distributed, or permanently
23 set aside for charitable purposes pursuant to Internal
24 Revenue Code Section 642(c) during the taxable year.
25 (d) Partnerships.
26 (1) In general. In the case of a partnership, base
27 income means an amount equal to the taxpayer's taxable
28 income for the taxable year as modified by paragraph (2).
29 (2) Modifications. The taxable income referred to
30 in paragraph (1) shall be modified by adding thereto the
31 sum of the following amounts:
32 (A) An amount equal to all amounts paid or
33 accrued to the taxpayer as interest or dividends
34 during the taxable year to the extent excluded from
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1 gross income in the computation of taxable income;
2 (B) An amount equal to the amount of tax
3 imposed by this Act to the extent deducted from
4 gross income for the taxable year;
5 (C) The amount of deductions allowed to the
6 partnership pursuant to Section 707 (c) of the
7 Internal Revenue Code in calculating its taxable
8 income; and
9 (D) An amount equal to the amount of the
10 capital gain deduction allowable under the Internal
11 Revenue Code, to the extent deducted from gross
12 income in the computation of taxable income;
13 and by deducting from the total so obtained the following
14 amounts:
15 (E) The valuation limitation amount;
16 (F) An amount equal to the amount of any tax
17 imposed by this Act which was refunded to the
18 taxpayer and included in such total for the taxable
19 year;
20 (G) An amount equal to all amounts included in
21 taxable income as modified by subparagraphs (A),
22 (B), (C) and (D) which are exempt from taxation by
23 this State either by reason of its statutes or
24 Constitution or by reason of the Constitution,
25 treaties or statutes of the United States; provided
26 that, in the case of any statute of this State that
27 exempts income derived from bonds or other
28 obligations from the tax imposed under this Act, the
29 amount exempted shall be the interest net of bond
30 premium amortization;
31 (H) Any income of the partnership which
32 constitutes personal service income as defined in
33 Section 1348 (b) (1) of the Internal Revenue Code
34 (as in effect December 31, 1981) or a reasonable
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1 allowance for compensation paid or accrued for
2 services rendered by partners to the partnership,
3 whichever is greater;
4 (I) An amount equal to all amounts of income
5 distributable to an entity subject to the Personal
6 Property Tax Replacement Income Tax imposed by
7 subsections (c) and (d) of Section 201 of this Act
8 including amounts distributable to organizations
9 exempt from federal income tax by reason of Section
10 501(a) of the Internal Revenue Code;
11 (J) With the exception of any amounts
12 subtracted under subparagraph (G), an amount equal
13 to the sum of all amounts disallowed as deductions
14 by (i) Sections 171(a) (2), and 265(2) of the
15 Internal Revenue Code of 1954, as now or hereafter
16 amended, and all amounts of expenses allocable to
17 interest and disallowed as deductions by Section
18 265(1) of the Internal Revenue Code, as now or
19 hereafter amended; and (ii) for taxable years ending
20 on or after August 13, 1999, Sections 171(a)(2),
21 265, 280C, and 832(b)(5)(B)(i) of the Internal
22 Revenue Code; the provisions of this subparagraph
23 are exempt from the provisions of Section 250;
24 (K) 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, enacted by the 82nd General
29 Assembly, and which does not conduct such operations
30 other than in an Enterprise Zone or Zones;
31 (L) An amount equal to any contribution made
32 to a job training project established pursuant to
33 the Real Property Tax Increment Allocation
34 Redevelopment Act;
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1 (M) An amount equal to those dividends
2 included in such total that were paid by a
3 corporation that conducts business operations in a
4 federally designated Foreign Trade Zone or Sub-Zone
5 and that is designated a High Impact Business
6 located in Illinois; provided that dividends
7 eligible for the deduction provided in subparagraph
8 (K) of paragraph (2) of this subsection shall not be
9 eligible for the deduction provided under this
10 subparagraph (M); and
11 (N) An amount equal to the amount of the
12 deduction used to compute the federal income tax
13 credit for restoration of substantial amounts held
14 under claim of right for the taxable year pursuant
15 to Section 1341 of the Internal Revenue Code of
16 1986.
17 (e) Gross income; adjusted gross income; taxable income.
18 (1) In general. Subject to the provisions of
19 paragraph (2) and subsection (b) (3), for purposes of
20 this Section and Section 803(e), a taxpayer's gross
21 income, adjusted gross income, or taxable income for the
22 taxable year shall mean the amount of gross income,
23 adjusted gross income or taxable income properly
24 reportable for federal income tax purposes for the
25 taxable year under the provisions of the Internal Revenue
26 Code. Taxable income may be less than zero. However, for
27 taxable years ending on or after December 31, 1986, net
28 operating loss carryforwards from taxable years ending
29 prior to December 31, 1986, may not exceed the sum of
30 federal taxable income for the taxable year before net
31 operating loss deduction, plus the excess of addition
32 modifications over subtraction modifications for the
33 taxable year. For taxable years ending prior to December
34 31, 1986, taxable income may never be an amount in excess
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1 of the net operating loss for the taxable year as defined
2 in subsections (c) and (d) of Section 172 of the Internal
3 Revenue Code, provided that when taxable income of a
4 corporation (other than a Subchapter S corporation),
5 trust, or estate is less than zero and addition
6 modifications, other than those provided by subparagraph
7 (E) of paragraph (2) of subsection (b) for corporations
8 or subparagraph (E) of paragraph (2) of subsection (c)
9 for trusts and estates, exceed subtraction modifications,
10 an addition modification must be made under those
11 subparagraphs for any other taxable year to which the
12 taxable income less than zero (net operating loss) is
13 applied under Section 172 of the Internal Revenue Code or
14 under subparagraph (E) of paragraph (2) of this
15 subsection (e) applied in conjunction with Section 172 of
16 the Internal Revenue Code.
17 (2) Special rule. For purposes of paragraph (1) of
18 this subsection, the taxable income properly reportable
19 for federal income tax purposes shall mean:
20 (A) Certain life insurance companies. In the
21 case of a life insurance company subject to the tax
22 imposed by Section 801 of the Internal Revenue Code,
23 life insurance company taxable income, plus the
24 amount of distribution from pre-1984 policyholder
25 surplus accounts as calculated under Section 815a of
26 the Internal Revenue Code;
27 (B) Certain other insurance companies. In the
28 case of mutual insurance companies subject to the
29 tax imposed by Section 831 of the Internal Revenue
30 Code, insurance company taxable income;
31 (C) Regulated investment companies. In the
32 case of a regulated investment company subject to
33 the tax imposed by Section 852 of the Internal
34 Revenue Code, investment company taxable income;
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1 (D) Real estate investment trusts. In the
2 case of a real estate investment trust subject to
3 the tax imposed by Section 857 of the Internal
4 Revenue Code, real estate investment trust taxable
5 income;
6 (E) Consolidated corporations. In the case of
7 a corporation which is a member of an affiliated
8 group of corporations filing a consolidated income
9 tax return for the taxable year for federal income
10 tax purposes, taxable income determined as if such
11 corporation had filed a separate return for federal
12 income tax purposes for the taxable year and each
13 preceding taxable year for which it was a member of
14 an affiliated group. For purposes of this
15 subparagraph, the taxpayer's separate taxable income
16 shall be determined as if the election provided by
17 Section 243(b) (2) of the Internal Revenue Code had
18 been in effect for all such years;
19 (F) Cooperatives. In the case of a
20 cooperative corporation or association, the taxable
21 income of such organization determined in accordance
22 with the provisions of Section 1381 through 1388 of
23 the Internal Revenue Code;
24 (G) Subchapter S corporations. In the case
25 of: (i) a Subchapter S corporation for which there
26 is in effect an election for the taxable year under
27 Section 1362 of the Internal Revenue Code, the
28 taxable income of such corporation determined in
29 accordance with Section 1363(b) of the Internal
30 Revenue Code, except that taxable income shall take
31 into account those items which are required by
32 Section 1363(b)(1) of the Internal Revenue Code to
33 be separately stated; and (ii) a Subchapter S
34 corporation for which there is in effect a federal
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1 election to opt out of the provisions of the
2 Subchapter S Revision Act of 1982 and have applied
3 instead the prior federal Subchapter S rules as in
4 effect on July 1, 1982, the taxable income of such
5 corporation determined in accordance with the
6 federal Subchapter S rules as in effect on July 1,
7 1982; and
8 (H) Partnerships. In the case of a
9 partnership, taxable income determined in accordance
10 with Section 703 of the Internal Revenue Code,
11 except that taxable income shall take into account
12 those items which are required by Section 703(a)(1)
13 to be separately stated but which would be taken
14 into account by an individual in calculating his
15 taxable income.
16 (f) Valuation limitation amount.
17 (1) In general. The valuation limitation amount
18 referred to in subsections (a) (2) (G), (c) (2) (I) and
19 (d)(2) (E) is an amount equal to:
20 (A) The sum of the pre-August 1, 1969
21 appreciation amounts (to the extent consisting of
22 gain reportable under the provisions of Section 1245
23 or 1250 of the Internal Revenue Code) for all
24 property in respect of which such gain was reported
25 for the taxable year; plus
26 (B) The lesser of (i) the sum of the
27 pre-August 1, 1969 appreciation amounts (to the
28 extent consisting of capital gain) for all property
29 in respect of which such gain was reported for
30 federal income tax purposes for the taxable year, or
31 (ii) the net capital gain for the taxable year,
32 reduced in either case by any amount of such gain
33 included in the amount determined under subsection
34 (a) (2) (F) or (c) (2) (H).
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1 (2) Pre-August 1, 1969 appreciation amount.
2 (A) If the fair market value of property
3 referred to in paragraph (1) was readily
4 ascertainable on August 1, 1969, the pre-August 1,
5 1969 appreciation amount for such property is the
6 lesser of (i) the excess of such fair market value
7 over the taxpayer's basis (for determining gain) for
8 such property on that date (determined under the
9 Internal Revenue Code as in effect on that date), or
10 (ii) the total gain realized and reportable for
11 federal income tax purposes in respect of the sale,
12 exchange or other disposition of such property.
13 (B) If the fair market value of property
14 referred to in paragraph (1) was not readily
15 ascertainable on August 1, 1969, the pre-August 1,
16 1969 appreciation amount for such property is that
17 amount which bears the same ratio to the total gain
18 reported in respect of the property for federal
19 income tax purposes for the taxable year, as the
20 number of full calendar months in that part of the
21 taxpayer's holding period for the property ending
22 July 31, 1969 bears to the number of full calendar
23 months in the taxpayer's entire holding period for
24 the property.
25 (C) The Department shall prescribe such
26 regulations as may be necessary to carry out the
27 purposes of this paragraph.
28 (g) Double deductions. Unless specifically provided
29 otherwise, nothing in this Section shall permit the same item
30 to be deducted more than once.
31 (h) Legislative intention. Except as expressly provided
32 by this Section there shall be no modifications or
33 limitations on the amounts of income, gain, loss or deduction
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1 taken into account in determining gross income, adjusted
2 gross income or taxable income for federal income tax
3 purposes for the taxable year, or in the amount of such items
4 entering into the computation of base income and net income
5 under this Act for such taxable year, whether in respect of
6 property values as of August 1, 1969 or otherwise.
7 (Source: P.A. 90-491, eff. 1-1-98; 90-717, eff. 8-7-98;
8 90-770, eff. 8-14-98; 91-192, eff. 7-20-99; 91-205, eff.
9 7-20-99; 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676,
10 eff. 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01;
11 revised 10-24-00)
12 Section 99. Effective date. This Act takes effect upon
13 becoming law.