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92_HB4006
LRB9214118SMdv
1 AN ACT in relation to taxes.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Income Tax Act is amended by
5 changing Section 2-203 as follows:
6 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
7 Sec. 203. Base income defined.
8 (a) Individuals.
9 (1) In general. In the case of an individual, base
10 income means an amount equal to the taxpayer's adjusted
11 gross income for the taxable year as modified by
12 paragraph (2).
13 (2) Modifications. The adjusted gross income
14 referred to in paragraph (1) shall be modified by adding
15 thereto the sum of the following amounts:
16 (A) An amount equal to all amounts paid or
17 accrued to the taxpayer as interest or dividends
18 during the taxable year to the extent excluded from
19 gross income in the computation of adjusted gross
20 income, except stock dividends of qualified public
21 utilities described in Section 305(e) of the
22 Internal Revenue Code;
23 (B) An amount equal to the amount of tax
24 imposed by this Act to the extent deducted from
25 gross income in the computation of adjusted gross
26 income for the taxable year;
27 (C) An amount equal to the amount received
28 during the taxable year as a recovery or refund of
29 real property taxes paid with respect to the
30 taxpayer's principal residence under the Revenue Act
31 of 1939 and for which a deduction was previously
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1 taken under subparagraph (L) of this paragraph (2)
2 prior to July 1, 1991, the retrospective application
3 date of Article 4 of Public Act 87-17. In the case
4 of multi-unit or multi-use structures and farm
5 dwellings, the taxes on the taxpayer's principal
6 residence shall be that portion of the total taxes
7 for the entire property which is attributable to
8 such principal residence;
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 adjusted gross income;
13 (D-5) An amount, to the extent not included in
14 adjusted gross income, equal to the amount of money
15 withdrawn by the taxpayer in the taxable year from a
16 medical care savings account and the interest earned
17 on the account in the taxable year of a withdrawal
18 pursuant to subsection (b) of Section 20 of the
19 Medical Care Savings Account Act or subsection (b)
20 of Section 20 of the Medical Care Savings Account
21 Act of 2000; and
22 (D-10) For taxable years ending after December
23 31, 1997, an amount equal to any eligible
24 remediation costs that the individual deducted in
25 computing adjusted gross income and for which the
26 individual claims a credit under subsection (l) of
27 Section 201;
28 and by deducting from the total so obtained the sum of
29 the following amounts:
30 (E) For taxable years ending before December
31 31, 2001, 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. For
10 taxable years ending on or after December 31, 2001,
11 any amount included in such total in respect of any
12 compensation (including but not limited to any
13 compensation paid or accrued to a serviceman while a
14 prisoner of war or missing in action) paid to a
15 resident by reason of being a member of any
16 component of the Armed Forces of the United States
17 and in respect of any compensation paid or accrued
18 to a resident who as a governmental employee was a
19 prisoner of war or missing in action, and in respect
20 of any compensation paid to a resident in 2001 or
21 thereafter by reason of being a member of the
22 Illinois National Guard. The provisions of this
23 amendatory Act of the 92nd General Assembly are
24 exempt from the provisions of Section 250;
25 (F) An amount equal to all amounts included in
26 such total pursuant to the provisions of Sections
27 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
28 408 of the Internal Revenue Code, or included in
29 such total as distributions under the provisions of
30 any retirement or disability plan for employees of
31 any governmental agency or unit, or retirement
32 payments to retired partners, which payments are
33 excluded in computing net earnings from self
34 employment by Section 1402 of the Internal Revenue
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1 Code and regulations adopted pursuant thereto;
2 (G) The valuation limitation amount;
3 (H) 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 (I) An amount equal to all amounts included in
8 such total pursuant to the provisions of Section 111
9 of the Internal Revenue Code as a recovery of items
10 previously deducted from adjusted gross income in
11 the computation of taxable income;
12 (J) 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, and conducts substantially all
17 of its operations in an Enterprise Zone or zones;
18 (K) An amount equal to those dividends
19 included in such total that were paid by a
20 corporation that conducts business operations in a
21 federally designated Foreign Trade Zone or Sub-Zone
22 and that is designated a High Impact Business
23 located in Illinois; provided that dividends
24 eligible for the deduction provided in subparagraph
25 (J) of paragraph (2) of this subsection shall not be
26 eligible for the deduction provided under this
27 subparagraph (K);
28 (L) For taxable years ending after December
29 31, 1983, an amount equal to all social security
30 benefits and railroad retirement benefits included
31 in such total pursuant to Sections 72(r) and 86 of
32 the Internal Revenue Code;
33 (M) With the exception of any amounts
34 subtracted under subparagraph (N), an amount equal
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1 to the sum of all amounts disallowed as deductions
2 by (i) Sections 171(a) (2), and 265(2) of the
3 Internal Revenue Code of 1954, as now or hereafter
4 amended, and all amounts of expenses allocable to
5 interest and disallowed as deductions by Section
6 265(1) of the Internal Revenue Code of 1954, as now
7 or hereafter amended; and (ii) for taxable years
8 ending on or after August 13, 1999, Sections
9 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
10 Internal Revenue Code; the provisions of this
11 subparagraph are exempt from the provisions of
12 Section 250;
13 (N) An amount equal to all amounts included in
14 such total which are exempt from taxation by this
15 State either by reason of its statutes or
16 Constitution or by reason of the Constitution,
17 treaties or statutes of the United States; provided
18 that, in the case of any statute of this State that
19 exempts income derived from bonds or other
20 obligations from the tax imposed under this Act, the
21 amount exempted shall be the interest net of bond
22 premium amortization;
23 (O) An amount equal to any contribution made
24 to a job training project established pursuant to
25 the Tax Increment Allocation Redevelopment Act;
26 (P) An amount equal to the amount of the
27 deduction used to compute the federal income tax
28 credit for restoration of substantial amounts held
29 under claim of right for the taxable year pursuant
30 to Section 1341 of the Internal Revenue Code of
31 1986;
32 (Q) An amount equal to any amounts included in
33 such total, received by the taxpayer as an
34 acceleration in the payment of life, endowment or
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1 annuity benefits in advance of the time they would
2 otherwise be payable as an indemnity for a terminal
3 illness;
4 (R) An amount equal to the amount of any
5 federal or State bonus paid to veterans of the
6 Persian Gulf War;
7 (S) An amount, to the extent included in
8 adjusted gross income, equal to the amount of a
9 contribution made in the taxable year on behalf of
10 the taxpayer to a medical care savings account
11 established under the Medical Care Savings Account
12 Act or the Medical Care Savings Account Act of 2000
13 to the extent the contribution is accepted by the
14 account administrator as provided in that Act;
15 (T) An amount, to the extent included in
16 adjusted gross income, equal to the amount of
17 interest earned in the taxable year on a medical
18 care savings account established under the Medical
19 Care Savings Account Act or the Medical Care Savings
20 Account Act of 2000 on behalf of the taxpayer, other
21 than interest added pursuant to item (D-5) of this
22 paragraph (2);
23 (U) For one taxable year beginning on or after
24 January 1, 1994, an amount equal to the total amount
25 of tax imposed and paid under subsections (a) and
26 (b) of Section 201 of this Act on grant amounts
27 received by the taxpayer under the Nursing Home
28 Grant Assistance Act during the taxpayer's taxable
29 years 1992 and 1993;
30 (V) Beginning with tax years ending on or
31 after December 31, 1995 and ending with tax years
32 ending on or before December 31, 2004, an amount
33 equal to the amount paid by a taxpayer who is a
34 self-employed taxpayer, a partner of a partnership,
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1 or a shareholder in a Subchapter S corporation for
2 health insurance or long-term care insurance for
3 that taxpayer or that taxpayer's spouse or
4 dependents, to the extent that the amount paid for
5 that health insurance or long-term care insurance
6 may be deducted under Section 213 of the Internal
7 Revenue Code of 1986, has not been deducted on the
8 federal income tax return of the taxpayer, and does
9 not exceed the taxable income attributable to that
10 taxpayer's income, self-employment income, or
11 Subchapter S corporation income; except that no
12 deduction shall be allowed under this item (V) if
13 the taxpayer is eligible to participate in any
14 health insurance or long-term care insurance plan of
15 an employer of the taxpayer or the taxpayer's
16 spouse. The amount of the health insurance and
17 long-term care insurance subtracted under this item
18 (V) shall be determined by multiplying total health
19 insurance and long-term care insurance premiums paid
20 by the taxpayer times a number that represents the
21 fractional percentage of eligible medical expenses
22 under Section 213 of the Internal Revenue Code of
23 1986 not actually deducted on the taxpayer's federal
24 income tax return;
25 (W) For taxable years beginning on or after
26 January 1, 1998, all amounts included in the
27 taxpayer's federal gross income in the taxable year
28 from amounts converted from a regular IRA to a Roth
29 IRA. This paragraph is exempt from the provisions of
30 Section 250;
31 (X) For taxable year 1999 and thereafter, an
32 amount equal to the amount of any (i) distributions,
33 to the extent includible in gross income for federal
34 income tax purposes, made to the taxpayer because of
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1 his or her status as a victim of persecution for
2 racial or religious reasons by Nazi Germany or any
3 other Axis regime or as an heir of the victim and
4 (ii) items of income, to the extent includible in
5 gross income for federal income tax purposes,
6 attributable to, derived from or in any way related
7 to assets stolen from, hidden from, or otherwise
8 lost to a victim of persecution for racial or
9 religious reasons by Nazi Germany or any other Axis
10 regime immediately prior to, during, and immediately
11 after World War II, including, but not limited to,
12 interest on the proceeds receivable as insurance
13 under policies issued to a victim of persecution for
14 racial or religious reasons by Nazi Germany or any
15 other Axis regime by European insurance companies
16 immediately prior to and during World War II;
17 provided, however, this subtraction from federal
18 adjusted gross income does not apply to assets
19 acquired with such assets or with the proceeds from
20 the sale of such assets; provided, further, this
21 paragraph shall only apply to a taxpayer who was the
22 first recipient of such assets after their recovery
23 and who is a victim of persecution for racial or
24 religious reasons by Nazi Germany or any other Axis
25 regime or as an heir of the victim. The amount of
26 and the eligibility for any public assistance,
27 benefit, or similar entitlement is not affected by
28 the inclusion of items (i) and (ii) of this
29 paragraph in gross income for federal income tax
30 purposes. This paragraph is exempt from the
31 provisions of Section 250; and
32 (Y) For taxable years beginning on or after
33 January 1, 2002, moneys contributed in the taxable
34 year to a College Savings Pool account under Section
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1 16.5 of the State Treasurer Act. This subparagraph
2 (Y) is exempt from the provisions of Section 250;
3 and
4 (Z) For taxable years ending on or after
5 December 31, 2002, $1,000 per child or the amount of
6 the taxpayer's adjusted gross income, whichever is
7 less, for a married couple filing a joint return who
8 have a minor child or children, if one parent is a
9 full-time stay-at-home parent responsible for the
10 care of the children. A deduction under this
11 subparagraph in excess of the taxpayer's adjusted
12 gross income may not be carried forward or back.
13 This subparagraph is exempt from the provisions of
14 Section 250.
15 (b) Corporations.
16 (1) In general. In the case of a corporation, base
17 income means an amount equal to the taxpayer's taxable
18 income for the taxable year as modified by paragraph (2).
19 (2) Modifications. The taxable income referred to
20 in paragraph (1) shall be modified by adding thereto the
21 sum of the following amounts:
22 (A) An amount equal to all amounts paid or
23 accrued to the taxpayer as interest and all
24 distributions received from regulated investment
25 companies during the taxable year to the extent
26 excluded from gross income in the computation of
27 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 in the computation of taxable income
31 for the taxable year;
32 (C) In the case of a regulated investment
33 company, an amount equal to the excess of (i) the
34 net long-term capital gain for the taxable year,
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1 over (ii) the amount of the capital gain dividends
2 designated as such in accordance with Section
3 852(b)(3)(C) of the Internal Revenue Code and any
4 amount designated under Section 852(b)(3)(D) of the
5 Internal Revenue Code, attributable to the taxable
6 year (this amendatory Act of 1995 (Public Act 89-89)
7 is declarative of existing law and is not a new
8 enactment);
9 (D) The amount of any net operating loss
10 deduction taken in arriving at taxable income, other
11 than a net operating loss carried forward from a
12 taxable year ending prior to December 31, 1986;
13 (E) For taxable years in which a net operating
14 loss carryback or carryforward from a taxable year
15 ending prior to December 31, 1986 is an element of
16 taxable income under paragraph (1) of subsection (e)
17 or subparagraph (E) of paragraph (2) of subsection
18 (e), the amount by which addition modifications
19 other than those provided by this subparagraph (E)
20 exceeded subtraction modifications in such earlier
21 taxable year, with the following limitations applied
22 in the order that they are listed:
23 (i) the addition modification relating to
24 the net operating loss carried back or forward
25 to the taxable year from any taxable year
26 ending prior to December 31, 1986 shall be
27 reduced by the amount of addition modification
28 under this subparagraph (E) which related to
29 that net operating loss and which was taken
30 into account in calculating the base income of
31 an earlier taxable year, and
32 (ii) the addition modification relating
33 to the net operating loss carried back or
34 forward to the taxable year from any taxable
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1 year ending prior to December 31, 1986 shall
2 not exceed the amount of such carryback or
3 carryforward;
4 For taxable years in which there is a net
5 operating loss carryback or carryforward from more
6 than one other taxable year ending prior to December
7 31, 1986, the addition modification provided in this
8 subparagraph (E) shall be the sum of the amounts
9 computed independently under the preceding
10 provisions of this subparagraph (E) for each such
11 taxable year; and
12 (E-5) For taxable years ending after December
13 31, 1997, an amount equal to any eligible
14 remediation costs that the corporation deducted in
15 computing adjusted gross income and for which the
16 corporation claims a credit under subsection (l) of
17 Section 201;
18 and by deducting from the total so obtained the sum of
19 the following amounts:
20 (F) An amount equal to the amount of any tax
21 imposed by this Act which was refunded to the
22 taxpayer and included in such total for the taxable
23 year;
24 (G) An amount equal to any amount included in
25 such total under Section 78 of the Internal Revenue
26 Code;
27 (H) In the case of a regulated investment
28 company, an amount equal to the amount of exempt
29 interest dividends as defined in subsection (b) (5)
30 of Section 852 of the Internal Revenue Code, paid to
31 shareholders for the taxable year;
32 (I) With the exception of any amounts
33 subtracted under subparagraph (J), an amount equal
34 to the sum of all amounts disallowed as deductions
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1 by (i) Sections 171(a) (2), and 265(a)(2) and
2 amounts disallowed as interest expense by Section
3 291(a)(3) of the Internal Revenue Code, as now or
4 hereafter amended, and all amounts of expenses
5 allocable to interest and disallowed as deductions
6 by Section 265(a)(1) of the Internal Revenue Code,
7 as now or hereafter amended; and (ii) for taxable
8 years ending on or after August 13, 1999, Sections
9 171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i)
10 of the Internal Revenue Code; the provisions of this
11 subparagraph are exempt from the provisions of
12 Section 250;
13 (J) An amount equal to all amounts included in
14 such total which are exempt from taxation by this
15 State either by reason of its statutes or
16 Constitution or by reason of the Constitution,
17 treaties or statutes of the United States; provided
18 that, in the case of any statute of this State that
19 exempts income derived from bonds or other
20 obligations from the tax imposed under this Act, the
21 amount exempted shall be the interest net of bond
22 premium amortization;
23 (K) An amount equal to those dividends
24 included in such total which were paid by a
25 corporation which conducts business operations in an
26 Enterprise Zone or zones created under the Illinois
27 Enterprise Zone Act and conducts substantially all
28 of its operations in an Enterprise Zone or zones;
29 (L) An amount equal to those dividends
30 included in such total that were paid by a
31 corporation that conducts business operations in a
32 federally designated Foreign Trade Zone or Sub-Zone
33 and that is designated a High Impact Business
34 located in Illinois; provided that dividends
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1 eligible for the deduction provided in subparagraph
2 (K) of paragraph 2 of this subsection shall not be
3 eligible for the deduction provided under this
4 subparagraph (L);
5 (M) For any taxpayer that is a financial
6 organization within the meaning of Section 304(c) of
7 this Act, an amount included in such total as
8 interest income from a loan or loans made by such
9 taxpayer to a borrower, to the extent that such a
10 loan is secured by property which is eligible for
11 the Enterprise Zone Investment Credit. To determine
12 the portion of a loan or loans that is secured by
13 property eligible for a Section 201(f) investment
14 credit to the borrower, the entire principal amount
15 of the loan or loans between the taxpayer and the
16 borrower should be divided into the basis of the
17 Section 201(f) investment credit property which
18 secures the loan or loans, using for this purpose
19 the original basis of such property on the date that
20 it was placed in service in the Enterprise Zone.
21 The subtraction modification available to taxpayer
22 in any year under this subsection shall be that
23 portion of the total interest paid by the borrower
24 with respect to such loan attributable to the
25 eligible property as calculated under the previous
26 sentence;
27 (M-1) For any taxpayer that is a financial
28 organization within the meaning of Section 304(c) of
29 this Act, an amount included in such total as
30 interest income from a loan or loans made by such
31 taxpayer to a borrower, to the extent that such a
32 loan is secured by property which is eligible for
33 the High Impact Business Investment Credit. To
34 determine the portion of a loan or loans that is
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1 secured by property eligible for a Section 201(h)
2 investment credit to the borrower, the entire
3 principal amount of the loan or loans between the
4 taxpayer and the borrower should be divided into the
5 basis of the Section 201(h) investment credit
6 property which secures the loan or loans, using for
7 this purpose the original basis of such property on
8 the date that it was placed in service in a
9 federally designated Foreign Trade Zone or Sub-Zone
10 located in Illinois. No taxpayer that is eligible
11 for the deduction provided in subparagraph (M) of
12 paragraph (2) of this subsection shall be eligible
13 for the deduction provided under this subparagraph
14 (M-1). The subtraction modification available to
15 taxpayers in any year under this subsection shall be
16 that portion of the total interest paid by the
17 borrower with respect to such loan attributable to
18 the eligible property as calculated under the
19 previous sentence;
20 (N) Two times any contribution made during the
21 taxable year to a designated zone organization to
22 the extent that the contribution (i) qualifies as a
23 charitable contribution under subsection (c) of
24 Section 170 of the Internal Revenue Code and (ii)
25 must, by its terms, be used for a project approved
26 by the Department of Commerce and Community Affairs
27 under Section 11 of the Illinois Enterprise Zone
28 Act;
29 (O) An amount equal to: (i) 85% for taxable
30 years ending on or before December 31, 1992, or, a
31 percentage equal to the percentage allowable under
32 Section 243(a)(1) of the Internal Revenue Code of
33 1986 for taxable years ending after December 31,
34 1992, of the amount by which dividends included in
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1 taxable income and received from a corporation that
2 is not created or organized under the laws of the
3 United States or any state or political subdivision
4 thereof, including, for taxable years ending on or
5 after December 31, 1988, dividends received or
6 deemed received or paid or deemed paid under
7 Sections 951 through 964 of the Internal Revenue
8 Code, exceed the amount of the modification provided
9 under subparagraph (G) of paragraph (2) of this
10 subsection (b) which is related to such dividends;
11 plus (ii) 100% of the amount by which dividends,
12 included in taxable income and received, including,
13 for taxable years ending on or after December 31,
14 1988, dividends received or deemed received or paid
15 or deemed paid under Sections 951 through 964 of the
16 Internal Revenue Code, from any such corporation
17 specified in clause (i) that would but for the
18 provisions of Section 1504 (b) (3) of the Internal
19 Revenue Code be treated as a member of the
20 affiliated group which includes the dividend
21 recipient, exceed the amount of the modification
22 provided under subparagraph (G) of paragraph (2) of
23 this subsection (b) which is related to such
24 dividends;
25 (P) An amount equal to any contribution made
26 to a job training project established pursuant to
27 the Tax Increment Allocation Redevelopment Act;
28 (Q) An amount equal to the amount of the
29 deduction used to compute the federal income tax
30 credit for restoration of substantial amounts held
31 under claim of right for the taxable year pursuant
32 to Section 1341 of the Internal Revenue Code of
33 1986;
34 (R) In the case of an attorney-in-fact with
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1 respect to whom an interinsurer or a reciprocal
2 insurer has made the election under Section 835 of
3 the Internal Revenue Code, 26 U.S.C. 835, an amount
4 equal to the excess, if any, of the amounts paid or
5 incurred by that interinsurer or reciprocal insurer
6 in the taxable year to the attorney-in-fact over the
7 deduction allowed to that interinsurer or reciprocal
8 insurer with respect to the attorney-in-fact under
9 Section 835(b) of the Internal Revenue Code for the
10 taxable year; and
11 (S) For taxable years ending on or after
12 December 31, 1997, in the case of a Subchapter S
13 corporation, an amount equal to all amounts of
14 income allocable to a shareholder subject to the
15 Personal Property Tax Replacement Income Tax imposed
16 by subsections (c) and (d) of Section 201 of this
17 Act, including amounts allocable to organizations
18 exempt from federal income tax by reason of Section
19 501(a) of the Internal Revenue Code. This
20 subparagraph (S) is exempt from the provisions of
21 Section 250.
22 (3) Special rule. For purposes of paragraph (2)
23 (A), "gross income" in the case of a life insurance
24 company, for tax years ending on and after December 31,
25 1994, shall mean the gross investment income for the
26 taxable year.
27 (c) Trusts and estates.
28 (1) In general. In the case of a trust or estate,
29 base income means an amount equal to the taxpayer's
30 taxable income for the taxable year as modified by
31 paragraph (2).
32 (2) Modifications. Subject to the provisions of
33 paragraph (3), the taxable income referred to in
34 paragraph (1) shall be modified by adding thereto the sum
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1 of the following amounts:
2 (A) An amount equal to all amounts paid or
3 accrued to the taxpayer as interest or dividends
4 during the taxable year to the extent excluded from
5 gross income in the computation of taxable income;
6 (B) In the case of (i) an estate, $600; (ii) a
7 trust which, under its governing instrument, is
8 required to distribute all of its income currently,
9 $300; and (iii) any other trust, $100, but in each
10 such case, only to the extent such amount was
11 deducted in the computation of taxable income;
12 (C) An amount equal to the amount of tax
13 imposed by this Act to the extent deducted from
14 gross income in the computation of taxable income
15 for the taxable year;
16 (D) The amount of any net operating loss
17 deduction taken in arriving at taxable income, other
18 than a net operating loss carried forward from a
19 taxable year ending prior to December 31, 1986;
20 (E) For taxable years in which a net operating
21 loss carryback or carryforward from a taxable year
22 ending prior to December 31, 1986 is an element of
23 taxable income under paragraph (1) of subsection (e)
24 or subparagraph (E) of paragraph (2) of subsection
25 (e), the amount by which addition modifications
26 other than those provided by this subparagraph (E)
27 exceeded subtraction modifications in such taxable
28 year, with the following limitations applied in the
29 order that they are listed:
30 (i) the addition modification relating to
31 the net operating loss carried back or forward
32 to the taxable year from any taxable year
33 ending prior to December 31, 1986 shall be
34 reduced by the amount of addition modification
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1 under this subparagraph (E) which related to
2 that net operating loss and which was taken
3 into account in calculating the base income of
4 an earlier taxable year, and
5 (ii) the addition modification relating
6 to the net operating loss carried back or
7 forward to the taxable year from any taxable
8 year ending prior to December 31, 1986 shall
9 not exceed the amount of such carryback or
10 carryforward;
11 For taxable years in which there is a net
12 operating loss carryback or carryforward from more
13 than one other taxable year ending prior to December
14 31, 1986, the addition modification provided in this
15 subparagraph (E) shall be the sum of the amounts
16 computed independently under the preceding
17 provisions of this subparagraph (E) for each such
18 taxable year;
19 (F) For taxable years ending on or after
20 January 1, 1989, an amount equal to the tax deducted
21 pursuant to Section 164 of the Internal Revenue Code
22 if the trust or estate is claiming the same tax for
23 purposes of the Illinois foreign tax credit under
24 Section 601 of this Act;
25 (G) An amount equal to the amount of the
26 capital gain deduction allowable under the Internal
27 Revenue Code, to the extent deducted from gross
28 income in the computation of taxable income; and
29 (G-5) For taxable years ending after December
30 31, 1997, an amount equal to any eligible
31 remediation costs that the trust or estate deducted
32 in computing adjusted gross income and for which the
33 trust or estate claims a credit under subsection (l)
34 of Section 201;
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1 and by deducting from the total so obtained the sum of
2 the following amounts:
3 (H) An amount equal to all amounts included in
4 such total pursuant to the provisions of Sections
5 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
6 408 of the Internal Revenue Code or included in such
7 total as distributions under the provisions of any
8 retirement or disability plan for employees of any
9 governmental agency or unit, or retirement payments
10 to retired partners, which payments are excluded in
11 computing net earnings from self employment by
12 Section 1402 of the Internal Revenue Code and
13 regulations adopted pursuant thereto;
14 (I) The valuation limitation amount;
15 (J) An amount equal to the amount of any tax
16 imposed by this Act which was refunded to the
17 taxpayer and included in such total for the taxable
18 year;
19 (K) An amount equal to all amounts included in
20 taxable income as modified by subparagraphs (A),
21 (B), (C), (D), (E), (F) and (G) which are exempt
22 from taxation by this State either by reason of its
23 statutes or Constitution or by reason of the
24 Constitution, treaties or statutes of the United
25 States; provided that, in the case of any statute of
26 this State that exempts income derived from bonds or
27 other obligations from the tax imposed under this
28 Act, the amount exempted shall be the interest net
29 of bond premium amortization;
30 (L) With the exception of any amounts
31 subtracted under subparagraph (K), an amount equal
32 to the sum of all amounts disallowed as deductions
33 by (i) Sections 171(a) (2) and 265(a)(2) of the
34 Internal Revenue Code, as now or hereafter amended,
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1 and all amounts of expenses allocable to interest
2 and disallowed as deductions by Section 265(1) of
3 the Internal Revenue Code of 1954, as now or
4 hereafter amended; and (ii) for taxable years ending
5 on or after August 13, 1999, Sections 171(a)(2),
6 265, 280C, and 832(b)(5)(B)(i) of the Internal
7 Revenue Code; the provisions of this subparagraph
8 are exempt from the provisions of Section 250;
9 (M) An amount equal to those dividends
10 included in such total which were paid by a
11 corporation which conducts business operations in an
12 Enterprise Zone or zones created under the Illinois
13 Enterprise Zone Act and conducts substantially all
14 of its operations in an Enterprise Zone or Zones;
15 (N) An amount equal to any contribution made
16 to a job training project established pursuant to
17 the Tax Increment Allocation Redevelopment Act;
18 (O) An amount equal to those dividends
19 included in such total that were paid by a
20 corporation that conducts business operations in a
21 federally designated Foreign Trade Zone or Sub-Zone
22 and that is designated a High Impact Business
23 located in Illinois; provided that dividends
24 eligible for the deduction provided in subparagraph
25 (M) of paragraph (2) of this subsection shall not be
26 eligible for the deduction provided under this
27 subparagraph (O);
28 (P) An amount equal to the amount of the
29 deduction used to compute the federal income tax
30 credit for restoration of substantial amounts held
31 under claim of right for the taxable year pursuant
32 to Section 1341 of the Internal Revenue Code of
33 1986; and
34 (Q) For taxable year 1999 and thereafter, an
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1 amount equal to the amount of any (i) distributions,
2 to the extent includible in gross income for federal
3 income tax purposes, made to the taxpayer because of
4 his or her status as a victim of persecution for
5 racial or religious reasons by Nazi Germany or any
6 other Axis regime or as an heir of the victim and
7 (ii) items of income, to the extent includible in
8 gross income for federal income tax purposes,
9 attributable to, derived from or in any way related
10 to assets stolen from, hidden from, or otherwise
11 lost to a victim of persecution for racial or
12 religious reasons by Nazi Germany or any other Axis
13 regime immediately prior to, during, and immediately
14 after World War II, including, but not limited to,
15 interest on the proceeds receivable as insurance
16 under policies issued to a victim of persecution for
17 racial or religious reasons by Nazi Germany or any
18 other Axis regime by European insurance companies
19 immediately prior to and during World War II;
20 provided, however, this subtraction from federal
21 adjusted gross income does not apply to assets
22 acquired with such assets or with the proceeds from
23 the sale of such assets; provided, further, this
24 paragraph shall only apply to a taxpayer who was the
25 first recipient of such assets after their recovery
26 and who is a victim of persecution for racial or
27 religious reasons by Nazi Germany or any other Axis
28 regime or as an heir of the victim. The amount of
29 and the eligibility for any public assistance,
30 benefit, or similar entitlement is not affected by
31 the inclusion of items (i) and (ii) of this
32 paragraph in gross income for federal income tax
33 purposes. This paragraph is exempt from the
34 provisions of Section 250.
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1 (3) Limitation. The amount of any modification
2 otherwise required under this subsection shall, under
3 regulations prescribed by the Department, be adjusted by
4 any amounts included therein which were properly paid,
5 credited, or required to be distributed, or permanently
6 set aside for charitable purposes pursuant to Internal
7 Revenue Code Section 642(c) during the taxable year.
8 (d) Partnerships.
9 (1) In general. In the case of a partnership, base
10 income means an amount equal to the taxpayer's taxable
11 income for the taxable year as modified by paragraph (2).
12 (2) Modifications. The taxable income referred to
13 in paragraph (1) shall be modified by adding thereto the
14 sum of the following amounts:
15 (A) An amount equal to all amounts paid or
16 accrued to the taxpayer as interest or dividends
17 during the taxable year to the extent excluded from
18 gross income in the computation of taxable income;
19 (B) An amount equal to the amount of tax
20 imposed by this Act to the extent deducted from
21 gross income for the taxable year;
22 (C) The amount of deductions allowed to the
23 partnership pursuant to Section 707 (c) of the
24 Internal Revenue Code in calculating its taxable
25 income; and
26 (D) An amount equal to the amount of the
27 capital gain deduction allowable under the Internal
28 Revenue Code, to the extent deducted from gross
29 income in the computation of taxable income;
30 and by deducting from the total so obtained the following
31 amounts:
32 (E) The valuation limitation amount;
33 (F) An amount equal to the amount of any tax
34 imposed by this Act which was refunded to the
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1 taxpayer and included in such total for the taxable
2 year;
3 (G) An amount equal to all amounts included in
4 taxable income as modified by subparagraphs (A),
5 (B), (C) and (D) which are exempt from taxation by
6 this State either by reason of its statutes or
7 Constitution or by reason of the Constitution,
8 treaties or statutes of the United States; provided
9 that, in the case of any statute of this State that
10 exempts income derived from bonds or other
11 obligations from the tax imposed under this Act, the
12 amount exempted shall be the interest net of bond
13 premium amortization;
14 (H) Any income of the partnership which
15 constitutes personal service income as defined in
16 Section 1348 (b) (1) of the Internal Revenue Code
17 (as in effect December 31, 1981) or a reasonable
18 allowance for compensation paid or accrued for
19 services rendered by partners to the partnership,
20 whichever is greater;
21 (I) An amount equal to all amounts of income
22 distributable to an entity subject to the Personal
23 Property Tax Replacement Income Tax imposed by
24 subsections (c) and (d) of Section 201 of this Act
25 including amounts distributable to organizations
26 exempt from federal income tax by reason of Section
27 501(a) of the Internal Revenue Code;
28 (J) With the exception of any amounts
29 subtracted under subparagraph (G), an amount equal
30 to the sum of all amounts disallowed as deductions
31 by (i) Sections 171(a) (2), and 265(2) of the
32 Internal Revenue Code of 1954, as now or hereafter
33 amended, and all amounts of expenses allocable to
34 interest and disallowed as deductions by Section
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1 265(1) of the Internal Revenue Code, as now or
2 hereafter amended; and (ii) for taxable years ending
3 on or after August 13, 1999, Sections 171(a)(2),
4 265, 280C, and 832(b)(5)(B)(i) of the Internal
5 Revenue Code; the provisions of this subparagraph
6 are exempt from the provisions of Section 250;
7 (K) An amount equal to those dividends
8 included in such total which were paid by a
9 corporation which conducts business operations in an
10 Enterprise Zone or zones created under the Illinois
11 Enterprise Zone Act, enacted by the 82nd General
12 Assembly, and which does not conduct such operations
13 other than in an Enterprise Zone or Zones;
14 (L) An amount equal to any contribution made
15 to a job training project established pursuant to
16 the Real Property Tax Increment Allocation
17 Redevelopment Act;
18 (M) An amount equal to those dividends
19 included in such total that were paid by a
20 corporation that conducts business operations in a
21 federally designated Foreign Trade Zone or Sub-Zone
22 and that is designated a High Impact Business
23 located in Illinois; provided that dividends
24 eligible for the deduction provided in subparagraph
25 (K) of paragraph (2) of this subsection shall not be
26 eligible for the deduction provided under this
27 subparagraph (M); and
28 (N) An amount equal to the amount of the
29 deduction used to compute the federal income tax
30 credit for restoration of substantial amounts held
31 under claim of right for the taxable year pursuant
32 to Section 1341 of the Internal Revenue Code of
33 1986.
34 (e) Gross income; adjusted gross income; taxable income.
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1 (1) In general. Subject to the provisions of
2 paragraph (2) and subsection (b) (3), for purposes of
3 this Section and Section 803(e), a taxpayer's gross
4 income, adjusted gross income, or taxable income for the
5 taxable year shall mean the amount of gross income,
6 adjusted gross income or taxable income properly
7 reportable for federal income tax purposes for the
8 taxable year under the provisions of the Internal Revenue
9 Code. Taxable income may be less than zero. However, for
10 taxable years ending on or after December 31, 1986, net
11 operating loss carryforwards from taxable years ending
12 prior to December 31, 1986, may not exceed the sum of
13 federal taxable income for the taxable year before net
14 operating loss deduction, plus the excess of addition
15 modifications over subtraction modifications for the
16 taxable year. For taxable years ending prior to December
17 31, 1986, taxable income may never be an amount in excess
18 of the net operating loss for the taxable year as defined
19 in subsections (c) and (d) of Section 172 of the Internal
20 Revenue Code, provided that when taxable income of a
21 corporation (other than a Subchapter S corporation),
22 trust, or estate is less than zero and addition
23 modifications, other than those provided by subparagraph
24 (E) of paragraph (2) of subsection (b) for corporations
25 or subparagraph (E) of paragraph (2) of subsection (c)
26 for trusts and estates, exceed subtraction modifications,
27 an addition modification must be made under those
28 subparagraphs for any other taxable year to which the
29 taxable income less than zero (net operating loss) is
30 applied under Section 172 of the Internal Revenue Code or
31 under subparagraph (E) of paragraph (2) of this
32 subsection (e) applied in conjunction with Section 172 of
33 the Internal Revenue Code.
34 (2) Special rule. For purposes of paragraph (1) of
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1 this subsection, the taxable income properly reportable
2 for federal income tax purposes shall mean:
3 (A) Certain life insurance companies. In the
4 case of a life insurance company subject to the tax
5 imposed by Section 801 of the Internal Revenue Code,
6 life insurance company taxable income, plus the
7 amount of distribution from pre-1984 policyholder
8 surplus accounts as calculated under Section 815a of
9 the Internal Revenue Code;
10 (B) Certain other insurance companies. In the
11 case of mutual insurance companies subject to the
12 tax imposed by Section 831 of the Internal Revenue
13 Code, insurance company taxable income;
14 (C) Regulated investment companies. In the
15 case of a regulated investment company subject to
16 the tax imposed by Section 852 of the Internal
17 Revenue Code, investment company taxable income;
18 (D) Real estate investment trusts. In the
19 case of a real estate investment trust subject to
20 the tax imposed by Section 857 of the Internal
21 Revenue Code, real estate investment trust taxable
22 income;
23 (E) Consolidated corporations. In the case of
24 a corporation which is a member of an affiliated
25 group of corporations filing a consolidated income
26 tax return for the taxable year for federal income
27 tax purposes, taxable income determined as if such
28 corporation had filed a separate return for federal
29 income tax purposes for the taxable year and each
30 preceding taxable year for which it was a member of
31 an affiliated group. For purposes of this
32 subparagraph, the taxpayer's separate taxable income
33 shall be determined as if the election provided by
34 Section 243(b) (2) of the Internal Revenue Code had
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1 been in effect for all such years;
2 (F) Cooperatives. In the case of a
3 cooperative corporation or association, the taxable
4 income of such organization determined in accordance
5 with the provisions of Section 1381 through 1388 of
6 the Internal Revenue Code;
7 (G) Subchapter S corporations. In the case
8 of: (i) a Subchapter S corporation for which there
9 is in effect an election for the taxable year under
10 Section 1362 of the Internal Revenue Code, the
11 taxable income of such corporation determined in
12 accordance with Section 1363(b) of the Internal
13 Revenue Code, except that taxable income shall take
14 into account those items which are required by
15 Section 1363(b)(1) of the Internal Revenue Code to
16 be separately stated; and (ii) a Subchapter S
17 corporation for which there is in effect a federal
18 election to opt out of the provisions of the
19 Subchapter S Revision Act of 1982 and have applied
20 instead the prior federal Subchapter S rules as in
21 effect on July 1, 1982, the taxable income of such
22 corporation determined in accordance with the
23 federal Subchapter S rules as in effect on July 1,
24 1982; and
25 (H) Partnerships. In the case of a
26 partnership, taxable income determined in accordance
27 with Section 703 of the Internal Revenue Code,
28 except that taxable income shall take into account
29 those items which are required by Section 703(a)(1)
30 to be separately stated but which would be taken
31 into account by an individual in calculating his
32 taxable income.
33 (f) Valuation limitation amount.
34 (1) In general. The valuation limitation amount
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1 referred to in subsections (a) (2) (G), (c) (2) (I) and
2 (d)(2) (E) is an amount equal to:
3 (A) The sum of the pre-August 1, 1969
4 appreciation amounts (to the extent consisting of
5 gain reportable under the provisions of Section 1245
6 or 1250 of the Internal Revenue Code) for all
7 property in respect of which such gain was reported
8 for the taxable year; plus
9 (B) The lesser of (i) the sum of the
10 pre-August 1, 1969 appreciation amounts (to the
11 extent consisting of capital gain) for all property
12 in respect of which such gain was reported for
13 federal income tax purposes for the taxable year, or
14 (ii) the net capital gain for the taxable year,
15 reduced in either case by any amount of such gain
16 included in the amount determined under subsection
17 (a) (2) (F) or (c) (2) (H).
18 (2) Pre-August 1, 1969 appreciation amount.
19 (A) If the fair market value of property
20 referred to in paragraph (1) was readily
21 ascertainable on August 1, 1969, the pre-August 1,
22 1969 appreciation amount for such property is the
23 lesser of (i) the excess of such fair market value
24 over the taxpayer's basis (for determining gain) for
25 such property on that date (determined under the
26 Internal Revenue Code as in effect on that date), or
27 (ii) the total gain realized and reportable for
28 federal income tax purposes in respect of the sale,
29 exchange or other disposition of such property.
30 (B) If the fair market value of property
31 referred to in paragraph (1) was not readily
32 ascertainable on August 1, 1969, the pre-August 1,
33 1969 appreciation amount for such property is that
34 amount which bears the same ratio to the total gain
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1 reported in respect of the property for federal
2 income tax purposes for the taxable year, as the
3 number of full calendar months in that part of the
4 taxpayer's holding period for the property ending
5 July 31, 1969 bears to the number of full calendar
6 months in the taxpayer's entire holding period for
7 the property.
8 (C) The Department shall prescribe such
9 regulations as may be necessary to carry out the
10 purposes of this paragraph.
11 (g) Double deductions. Unless specifically provided
12 otherwise, nothing in this Section shall permit the same item
13 to be deducted more than once.
14 (h) Legislative intention. Except as expressly provided
15 by this Section there shall be no modifications or
16 limitations on the amounts of income, gain, loss or deduction
17 taken into account in determining gross income, adjusted
18 gross income or taxable income for federal income tax
19 purposes for the taxable year, or in the amount of such items
20 entering into the computation of base income and net income
21 under this Act for such taxable year, whether in respect of
22 property values as of August 1, 1969 or otherwise.
23 (Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
24 91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
25 12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
26 eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
27 revised 9-21-01.)
28 Section 99. Effective date. This Act takes effect upon
29 becoming law.