(35 ILCS 5/201) (from Ch. 120, par. 2‑201)
(Text of Section from P.A. 93‑840)
Sec. 201. Tax Imposed.
(a) In general. A tax measured by net income is hereby imposed on every
individual, corporation, trust and estate for each taxable year ending
after July 31, 1969 on the privilege of earning or receiving income in or
as a resident of this State. Such tax shall be in addition to all other
occupation or privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
(b) Rates. The tax imposed by subsection (a) of this Section shall be
determined as follows, except as adjusted by subsection (d‑1):
(1) In the case of an individual, trust or estate,
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for taxable years ending prior to July 1, 1989, an amount equal to 2 1/2% of the taxpayer's net income for the taxable year.
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(2) In the case of an individual, trust or estate,
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for taxable years beginning prior to July 1, 1989 and ending after June 30, 1989, an amount equal to the sum of (i) 2 1/2% of the taxpayer's net income for the period prior to July 1, 1989, as calculated under Section 202.3, and (ii) 3% of the taxpayer's net income for the period after June 30, 1989, as calculated under Section 202.3.
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(3) In the case of an individual, trust or estate,
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for taxable years beginning after June 30, 1989, an amount equal to 3% of the taxpayer's net income for the taxable year.
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(4) (Blank).
(5) (Blank).
(6) In the case of a corporation, for taxable years
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ending prior to July 1, 1989, an amount equal to 4% of the taxpayer's net income for the taxable year.
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(7) In the case of a corporation, for taxable years
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beginning prior to July 1, 1989 and ending after June 30, 1989, an amount equal to the sum of (i) 4% of the taxpayer's net income for the period prior to July 1, 1989, as calculated under Section 202.3, and (ii) 4.8% of the taxpayer's net income for the period after June 30, 1989, as calculated under Section 202.3.
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(8) In the case of a corporation, for taxable years
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beginning after June 30, 1989, an amount equal to 4.8% of the taxpayer's net income for the taxable year.
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(c) Personal Property Tax Replacement Income Tax.
Beginning on July 1, 1979 and thereafter, in addition to such income
tax, there is also hereby imposed the Personal Property Tax Replacement
Income Tax measured by net income on every corporation (including Subchapter
S corporations), partnership and trust, for each taxable year ending after
June 30, 1979. Such taxes are imposed on the privilege of earning or
receiving income in or as a resident of this State. The Personal Property
Tax Replacement Income Tax shall be in addition to the income tax imposed
by subsections (a) and (b) of this Section and in addition to all other
occupation or privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
(d) Additional Personal Property Tax Replacement Income Tax Rates.
The personal property tax replacement income tax imposed by this subsection
and subsection (c) of this Section in the case of a corporation, other
than a Subchapter S corporation and except as adjusted by subsection (d‑1),
shall be an additional amount equal to
2.85% of such taxpayer's net income for the taxable year, except that
beginning on January 1, 1981, and thereafter, the rate of 2.85% specified
in this subsection shall be reduced to 2.5%, and in the case of a
partnership, trust or a Subchapter S corporation shall be an additional
amount equal to 1.5% of such taxpayer's net income for the taxable year.
(d‑1) Rate reduction for certain foreign insurers. In the case of a
foreign insurer, as defined by Section 35A‑5 of the Illinois Insurance Code,
whose state or country of domicile imposes on insurers domiciled in Illinois
a retaliatory tax (excluding any insurer
whose premiums from reinsurance assumed are 50% or more of its total insurance
premiums as determined under paragraph (2) of subsection (b) of Section 304,
except that for purposes of this determination premiums from reinsurance do
not include premiums from inter‑affiliate reinsurance arrangements),
beginning with taxable years ending on or after December 31, 1999,
the sum of
the rates of tax imposed by subsections (b) and (d) shall be reduced (but not
increased) to the rate at which the total amount of tax imposed under this Act,
net of all credits allowed under this Act, shall equal (i) the total amount of
tax that would be imposed on the foreign insurer's net income allocable to
Illinois for the taxable year by such foreign insurer's state or country of
domicile if that net income were subject to all income taxes and taxes
measured by net income imposed by such foreign insurer's state or country of
domicile, net of all credits allowed or (ii) a rate of zero if no such tax is
imposed on such income by the foreign insurer's state of domicile.
For the purposes of this subsection (d‑1), an inter‑affiliate includes a
mutual insurer under common management.
(1) For the purposes of subsection (d‑1), in no
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event shall the sum of the rates of tax imposed by subsections (b) and (d) be reduced below the rate at which the sum of:
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(A) the total amount of tax imposed on such
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foreign insurer under this Act for a taxable year, net of all credits allowed under this Act, plus
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(B) the privilege tax imposed by Section 409 of
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the Illinois Insurance Code, the fire insurance company tax imposed by Section 12 of the Fire Investigation Act, and the fire department taxes imposed under Section 11‑10‑1 of the Illinois Municipal Code,
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equals 1.25% for taxable years ending prior to December
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31, 2003, or 1.75% for taxable years ending on or after December 31, 2003, of the net taxable premiums written for the taxable year, as described by subsection (1) of Section 409 of the Illinois Insurance Code. This paragraph will in no event increase the rates imposed under subsections (b) and (d).
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(2) Any reduction in the rates of tax imposed by
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this subsection shall be applied first against the rates imposed by subsection (b) and only after the tax imposed by subsection (a) net of all credits allowed under this Section other than the credit allowed under subsection (i) has been reduced to zero, against the rates imposed by subsection (d).
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This subsection (d‑1) is exempt from the provisions of Section 250.
(e) Investment credit. A taxpayer shall be allowed a credit
against the Personal Property Tax Replacement Income Tax for
investment in qualified property.
(1) A taxpayer shall be allowed a credit equal to
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.5% of the basis of qualified property placed in service during the taxable year, provided such property is placed in service on or after July 1, 1984. There shall be allowed an additional credit equal to .5% of the basis of qualified property placed in service during the taxable year, provided such property is placed in service on or after July 1, 1986, and the taxpayer's base employment within Illinois has increased by 1% or more over the preceding year as determined by the taxpayer's employment records filed with the Illinois Department of Employment Security. Taxpayers who are new to Illinois shall be deemed to have met the 1% growth in base employment for the first year in which they file employment records with the Illinois Department of Employment Security. The provisions added to this Section by Public Act 85‑1200 (and restored by Public Act 87‑895) shall be construed as declaratory of existing law and not as a new enactment. If, in any year, the increase in base employment within Illinois over the preceding year is less than 1%, the additional credit shall be limited to that percentage times a fraction, the numerator of which is .5% and the denominator of which is 1%, but shall not exceed .5%. The investment credit shall not be allowed to the extent that it would reduce a taxpayer's liability in any tax year below zero, nor may any credit for qualified property be allowed for any year other than the year in which the property was placed in service in Illinois. For tax years ending on or after December 31, 1987, and on or before December 31, 1988, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit years if the taxpayer (i) makes investments which cause the creation of a minimum of 2,000 full‑time equivalent jobs in Illinois, (ii) is located in an enterprise zone established pursuant to the Illinois Enterprise Zone Act and (iii) is certified by the Department of Commerce and Community Affairs (now Department of Commerce and Economic Opportunity) as complying with the requirements specified in clause (i) and (ii) by July 1, 1986. The Department of Commerce and Community Affairs (now Department of Commerce and Economic Opportunity) shall notify the Department of Revenue of all such certifications immediately. For tax years ending after December 31, 1988, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit years. The credit shall be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, earlier credit shall be applied first.
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(2) The term "qualified property" means property
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(A) is tangible, whether new or used, including
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buildings and structural components of buildings and signs that are real property, but not including land or improvements to real property that are not a structural component of a building such as landscaping, sewer lines, local access roads, fencing, parking lots, and other appurtenances;
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(B) is depreciable pursuant to Section 167 of
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the Internal Revenue Code, except that "3‑year property" as defined in Section 168(c)(2)(A) of that Code is not eligible for the credit provided by this subsection (e);
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(C) is acquired by purchase as defined in
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Section 179(d) of the Internal Revenue Code;
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(D) is used in Illinois by a taxpayer who is
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primarily engaged in manufacturing, or in mining coal or fluorite, or in retailing; and
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(E) has not previously been used in Illinois in
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such a manner and by such a person as would qualify for the credit provided by this subsection (e) or subsection (f).
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(3) For purposes of this subsection (e),
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"manufacturing" means the material staging and production of tangible personal property by procedures commonly regarded as manufacturing, processing, fabrication, or assembling which changes some existing material into new shapes, new qualities, or new combinations. For purposes of this subsection (e) the term "mining" shall have the same meaning as the term "mining" in Section 613(c) of the Internal Revenue Code. For purposes of this subsection (e), the term "retailing" means the sale of tangible personal property or services rendered in conjunction with the sale of tangible consumer goods or commodities.
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(4) The basis of qualified property shall be the
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basis used to compute the depreciation deduction for federal income tax purposes.
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(5) If the basis of the property for federal income
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tax depreciation purposes is increased after it has been placed in service in Illinois by the taxpayer, the amount of such increase shall be deemed property placed in service on the date of such increase in basis.
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(6) The term "placed in service" shall have the same
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meaning as under Section 46 of the Internal Revenue Code.
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(7) If during any taxable year, any property ceases
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to be qualified property in the hands of the taxpayer within 48 months after being placed in service, or the situs of any qualified property is moved outside Illinois within 48 months after being placed in service, the Personal Property Tax Replacement Income Tax for such taxable year shall be increased. Such increase shall be determined by (i) recomputing the investment credit which would have been allowed for the year in which credit for such property was originally allowed by eliminating such property from such computation and, (ii) subtracting such recomputed credit from the amount of credit previously allowed. For the purposes of this paragraph (7), a reduction of the basis of qualified property resulting from a redetermination of the purchase price shall be deemed a disposition of qualified property to the extent of such reduction.
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(8) Unless the investment credit is extended by law,
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the basis of qualified property shall not include costs incurred after December 31, 2003, except for costs incurred pursuant to a binding contract entered into on or before December 31, 2003.
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(9) Each taxable year ending before December 31,
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2000, a partnership may elect to pass through to its partners the credits to which the partnership is entitled under this subsection (e) for the taxable year. A partner may use the credit allocated to him or her under this paragraph only against the tax imposed in subsections (c) and (d) of this Section. If the partnership makes that election, those credits shall be allocated among the partners in the partnership in accordance with the rules set forth in Section 704(b) of the Internal Revenue Code, and the rules promulgated under that Section, and the allocated amount of the credits shall be allowed to the partners for that taxable year. The partnership shall make this election on its Personal Property Tax Replacement Income Tax return for that taxable year. The election to pass through the credits shall be irrevocable.
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For taxable years ending on or after December 31,
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2000, a partner that qualifies its partnership for a subtraction under subparagraph (I) of paragraph (2) of subsection (d) of Section 203 or a shareholder that qualifies a Subchapter S corporation for a subtraction under subparagraph (S) of paragraph (2) of subsection (b) of Section 203 shall be allowed a credit under this subsection (e) equal to its share of the credit earned under this subsection (e) during the taxable year by the partnership or Subchapter S corporation, determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code. This paragraph is exempt from the provisions of Section 250.
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(f) Investment credit; Enterprise Zone.
(1) A taxpayer shall be allowed a credit against the
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tax imposed by subsections (a) and (b) of this Section for investment in qualified property which is placed in service in an Enterprise Zone created pursuant to the Illinois Enterprise Zone Act. For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this subsection (f) to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code. The credit shall be .5% of the basis for such property. The credit shall be available only in the taxable year in which the property is placed in service in the Enterprise Zone and shall not be allowed to the extent that it would reduce a taxpayer's liability for the tax imposed by subsections (a) and (b) of this Section to below zero. For tax years ending on or after December 31, 1985, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, the credit accruing first in time shall be applied first.
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(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
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buildings and structural components of buildings;
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(B) is depreciable pursuant to Section 167 of
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the Internal Revenue Code, except that "3‑year property" as defined in Section 168(c)(2)(A) of that Code is not eligible for the credit provided by this subsection (f);
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(C) is acquired by purchase as defined in
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Section 179(d) of the Internal Revenue Code;
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(D) is used in the Enterprise Zone by the
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(E) has not been previously used in Illinois in
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such a manner and by such a person as would qualify for the credit provided by this subsection (f) or subsection (e).
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(3) The basis of qualified property shall be the
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basis used to compute the depreciation deduction for federal income tax purposes.
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(4) If the basis of the property for federal income
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tax depreciation purposes is increased after it has been placed in service in the Enterprise Zone by the taxpayer, the amount of such increase shall be deemed property placed in service on the date of such increase in basis.
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(5) The term "placed in service" shall have the same
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meaning as under Section 46 of the Internal Revenue Code.
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(6) If during any taxable year, any property ceases
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to be qualified property in the hands of the taxpayer within 48 months after being placed in service, or the situs of any qualified property is moved outside the Enterprise Zone within 48 months after being placed in service, the tax imposed under subsections (a) and (b) of this Section for such taxable year shall be increased. Such increase shall be determined by (i) recomputing the investment credit which would have been allowed for the year in which credit for such property was originally allowed by eliminating such property from such computation, and (ii) subtracting such recomputed credit from the amount of credit previously allowed. For the purposes of this paragraph (6), a reduction of the basis of qualified property resulting from a redetermination of the purchase price shall be deemed a disposition of qualified property to the extent of such reduction.
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(g) Jobs Tax Credit; Enterprise Zone and Foreign Trade Zone or Sub‑Zone.
(1) A taxpayer conducting a trade or business in an
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enterprise zone or a High Impact Business designated by the Department of Commerce and Economic Opportunity conducting a trade or business in a federally designated Foreign Trade Zone or Sub‑Zone shall be allowed a credit against the tax imposed by subsections (a) and (b) of this Section in the amount of $500 per eligible employee hired to work in the zone during the taxable year.
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(2) To qualify for the credit:
(A) the taxpayer must hire 5 or more eligible
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employees to work in an enterprise zone or federally designated Foreign Trade Zone or Sub‑Zone during the taxable year;
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(B) the taxpayer's total employment within the
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enterprise zone or federally designated Foreign Trade Zone or Sub‑Zone must increase by 5 or more full‑time employees beyond the total employed in that zone at the end of the previous tax year for which a jobs tax credit under this Section was taken, or beyond the total employed by the taxpayer as of December 31, 1985, whichever is later; and
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(C) the eligible employees must be employed 180
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consecutive days in order to be deemed hired for purposes of this subsection.
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(3) An "eligible employee" means an employee who is:
(A) Certified by the Department of Commerce and
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Economic Opportunity as "eligible for services" pursuant to regulations promulgated in accordance with Title II of the Job Training Partnership Act, Training Services for the Disadvantaged or Title III of the Job Training Partnership Act, Employment and Training Assistance for Dislocated Workers Program.
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(B) Hired after the enterprise zone or federally
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designated Foreign Trade Zone or Sub‑Zone was designated or the trade or business was located in that zone, whichever is later.
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(C) Employed in the enterprise zone or Foreign
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Trade Zone or Sub‑Zone. An employee is employed in an enterprise zone or federally designated Foreign Trade Zone or Sub‑Zone if his services are rendered there or it is the base of operations for the services performed.
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(D) A full‑time employee working 30 or more
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(4) For tax years ending on or after December 31,
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1985 and prior to December 31, 1988, the credit shall be allowed for the tax year in which the eligible employees are hired. For tax years ending on or after December 31, 1988, the credit shall be allowed for the tax year immediately following the tax year in which the eligible employees are hired. If the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, earlier credit shall be applied first.
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(5) The Department of Revenue shall promulgate such
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rules and regulations as may be deemed necessary to carry out the purposes of this subsection (g).
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(6) The credit shall be available for eligible
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employees hired on or after January 1, 1986.
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(h) Investment credit; High Impact Business.
(1) Subject to subsections (b) and (b‑5) of Section
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5.5 of the Illinois Enterprise Zone Act, a taxpayer shall be allowed a credit against the tax imposed by subsections (a) and (b) of this Section for investment in qualified property which is placed in service by a Department of Commerce and Economic Opportunity designated High Impact Business. The credit shall be .5% of the basis for such property. The credit shall not be available (i) until the minimum investments in qualified property set forth in subdivision (a)(3)(A) of Section 5.5 of the Illinois Enterprise Zone Act have been satisfied or (ii) until the time authorized in subsection (b‑5) of the Illinois Enterprise Zone Act for entities designated as High Impact Businesses under subdivisions (a)(3)(B), (a)(3)(C), and (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone Act, and shall not be allowed to the extent that it would reduce a taxpayer's liability for the tax imposed by subsections (a) and (b) of this Section to below zero. The credit applicable to such investments shall be taken in the taxable year in which such investments have been completed. The credit for additional investments beyond the minimum investment by a designated high impact business authorized under subdivision (a)(3)(A) of Section 5.5 of the Illinois Enterprise Zone Act shall be available only in the taxable year in which the property is placed in service and shall not be allowed to the extent that it would reduce a taxpayer's liability for the tax imposed by subsections (a) and (b) of this Section to below zero. For tax years ending on or after December 31, 1987, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, the credit accruing first in time shall be applied first.
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Changes made in this subdivision (h)(1) by Public
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Act 88‑670 restore changes made by Public Act 85‑1182 and reflect existing law.
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(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
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buildings and structural components of buildings;
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(B) is depreciable pursuant to Section 167 of
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the Internal Revenue Code, except that "3‑year property" as defined in Section 168(c)(2)(A) of that Code is not eligible for the credit provided by this subsection (h);
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(C) is acquired by purchase as defined in
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Section 179(d) of the Internal Revenue Code; and
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(D) is not eligible for the Enterprise Zone
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Investment Credit provided by subsection (f) of this Section.
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(3) The basis of qualified property shall be the
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basis used to compute the depreciation deduction for federal income tax purposes.
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(4) If the basis of the property for federal income
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tax depreciation purposes is increased after it has been placed in service in a federally designated Foreign Trade Zone or Sub‑Zone located in Illinois by the taxpayer, the amount of such increase shall be deemed property placed in service on the date of such increase in basis.
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(5) The term "placed in service" shall have the same
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meaning as under Section 46 of the Internal Revenue Code.
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(6) If during any taxable year ending on or before
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December 31, 1996, any property ceases to be qualified property in the hands of the taxpayer within 48 months after being placed in service, or the situs of any qualified property is moved outside Illinois within 48 months after being placed in service, the tax imposed under subsections (a) and (b) of this Section for such taxable year shall be increased. Such increase shall be determined by (i) recomputing the investment credit which would have been allowed for the year in which credit for such property was originally allowed by eliminating such property from such computation, and (ii) subtracting such recomputed credit from the amount of credit previously allowed. For the purposes of this paragraph (6), a reduction of the basis of qualified property resulting from a redetermination of the purchase price shall be deemed a disposition of qualified property to the extent of such reduction.
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(7) Beginning with tax years ending after December
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31, 1996, if a taxpayer qualifies for the credit under this subsection (h) and thereby is granted a tax abatement and the taxpayer relocates its entire facility in violation of the explicit terms and length of the contract under Section 18‑183 of the Property Tax Code, the tax imposed under subsections (a) and (b) of this Section shall be increased for the taxable year in which the taxpayer relocated its facility by an amount equal to the amount of credit received by the taxpayer under this subsection (h).
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(i) Credit for Personal Property Tax Replacement Income Tax.
For tax years ending prior to December 31, 2003, a credit shall be allowed
against the tax imposed by
subsections (a) and (b) of this Section for the tax imposed by subsections (c)
and (d) of this Section. This credit shall be computed by multiplying the tax
imposed by subsections (c) and (d) of this Section by a fraction, the numerator
of which is base income allocable to Illinois and the denominator of which is
Illinois base income, and further multiplying the product by the tax rate
imposed by subsections (a) and (b) of this Section.
Any credit earned on or after December 31, 1986 under
this subsection which is unused in the year
the credit is computed because it exceeds the tax liability imposed by
subsections (a) and (b) for that year (whether it exceeds the original
liability or the liability as later amended) may be carried forward and
applied to the tax liability imposed by subsections (a) and (b) of the 5
taxable years following the excess credit year, provided that no credit may
be carried forward to any year ending on or
after December 31, 2003. This credit shall be
applied first to the earliest year for which there is a liability. If
there is a credit under this subsection from more than one tax year that is
available to offset a liability the earliest credit arising under this
subsection shall be applied first.
If, during any taxable year ending on or after December 31, 1986, the
tax imposed by subsections (c) and (d) of this Section for which a taxpayer
has claimed a credit under this subsection (i) is reduced, the amount of
credit for such tax shall also be reduced. Such reduction shall be
determined by recomputing the credit to take into account the reduced tax
imposed by subsections (c) and (d). If any portion of the
reduced amount of credit has been carried to a different taxable year, an
amended return shall be filed for such taxable year to reduce the amount of
credit claimed.
(j) Training expense credit. Beginning with tax years ending on or
after December 31, 1986 and prior to December 31, 2003, a taxpayer shall be
allowed a credit against the
tax imposed by subsections (a) and (b) under this Section
for all amounts paid or accrued, on behalf of all persons
employed by the taxpayer in Illinois or Illinois residents employed
outside of Illinois by a taxpayer, for educational or vocational training in
semi‑technical or technical fields or semi‑skilled or skilled fields, which
were deducted from gross income in the computation of taxable income. The
credit against the tax imposed by subsections (a) and (b) shall be 1.6% of
such training expenses. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if the liability
company is treated as a partnership for purposes of federal and State income
taxation, there shall be allowed a credit under this subsection (j) to be
determined in accordance with the determination of income and distributive
share of income under Sections 702 and 704 and subchapter S of the Internal
Revenue Code.
Any credit allowed under this subsection which is unused in the year
the credit is earned may be carried forward to each of the 5 taxable
years following the year for which the credit is first computed until it is
used. This credit shall be applied first to the earliest year for which
there is a liability. If there is a credit under this subsection from more
than one tax year that is available to offset a liability the earliest
credit arising under this subsection shall be applied first. No carryforward
credit may be claimed in any tax year ending on or after
December 31, 2003.
(k) Research and development credit.
For tax years ending after July 1, 1990 and prior to
December 31, 2003, and beginning again for tax years ending on or after December 31, 2004, a taxpayer shall be
allowed a credit against the tax imposed by subsections (a) and (b) of this
Section for increasing research activities in this State. The credit
allowed against the tax imposed by subsections (a) and (b) shall be equal
to 6 1/2% of the qualifying expenditures for increasing research activities
in this State. For partners, shareholders of subchapter S corporations, and
owners of limited liability companies, if the liability company is treated as a
partnership for purposes of federal and State income taxation, there shall be
allowed a credit under this subsection to be determined in accordance with the
determination of income and distributive share of income under Sections 702 and
704 and subchapter S of the Internal Revenue Code.
For purposes of this subsection, "qualifying expenditures" means the
qualifying expenditures as defined for the federal credit for increasing
research activities which would be allowable under Section 41 of the
Internal Revenue Code and which are conducted in this State, "qualifying
expenditures for increasing research activities in this State" means the
excess of qualifying expenditures for the taxable year in which incurred
over qualifying expenditures for the base period, "qualifying expenditures
for the base period" means the average of the qualifying expenditures for
each year in the base period, and "base period" means the 3 taxable years
immediately preceding the taxable year for which the determination is
being made.
Any credit in excess of the tax liability for the taxable year
may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried over as a credit
against the tax liability for the following 5 taxable years or until it has
been fully used, whichever occurs first; provided that no credit earned in a tax year ending prior to December 31, 2003 may be carried forward to any year ending on or after December 31, 2003.
If an unused credit is carried forward to a given year from 2 or more
earlier years, that credit arising in the earliest year will be applied
first against the tax liability for the given year. If a tax liability for
the given year still remains, the credit from the next earliest year will
then be applied, and so on, until all credits have been used or no tax
liability for the given year remains. Any remaining unused credit or
credits then will be carried forward to the next following year in which a
tax liability is incurred, except that no credit can be carried forward to
a year which is more than 5 years after the year in which the expense for
which the credit is given was incurred.
No inference shall be drawn from this amendatory Act of the 91st General
Assembly in construing this Section for taxable years beginning before January
1, 1999.
(l) Environmental Remediation Tax Credit.
(i) For tax years ending after December 31, 1997
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and on or before December 31, 2001, a taxpayer shall be allowed a credit against the tax imposed by subsections (a) and (b) of this Section for certain amounts paid for unreimbursed eligible remediation costs, as specified in this subsection. For purposes of this Section, "unreimbursed eligible remediation costs" means costs approved by the Illinois Environmental Protection Agency ("Agency") under Section 58.14 of the Environmental Protection Act that were paid in performing environmental remediation at a site for which a No Further Remediation Letter was issued by the Agency and recorded under Section 58.10 of the Environmental Protection Act. The credit must be claimed for the taxable year in which Agency approval of the eligible remediation costs is granted. The credit is not available to any taxpayer if the taxpayer or any related party caused or contributed to, in any material respect, a release of regulated substances on, in, or under the site that was identified and addressed by the remedial action pursuant to the Site Remediation Program of the Environmental Protection Act. After the Pollution Control Board rules are adopted pursuant to the Illinois Administrative Procedure Act for the administration and enforcement of Section 58.9 of the Environmental Protection Act, determinations as to credit availability for purposes of this Section shall be made consistent with those rules. For purposes of this Section, "taxpayer" includes a person whose tax attributes the taxpayer has succeeded to under Section 381 of the Internal Revenue Code and "related party" includes the persons disallowed a deduction for losses by paragraphs (b), (c), and (f)(1) of Section 267 of the Internal Revenue Code by virtue of being a related taxpayer, as well as any of its partners. The credit allowed against the tax imposed by subsections (a) and (b) shall be equal to 25% of the unreimbursed eligible remediation costs in excess of $100,000 per site, except that the $100,000 threshold shall not apply to any site contained in an enterprise zone as determined by the Department of Commerce and Community Affairs (now Department of Commerce and Economic Opportunity). The total credit allowed shall not exceed $40,000 per year with a maximum total of $150,000 per site. For partners and shareholders of subchapter S corporations, there shall be allowed a credit under this subsection to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and subchapter S of the Internal Revenue Code.
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(ii) A credit allowed under this subsection that is
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unused in the year the credit is earned may be carried forward to each of the 5 taxable years following the year for which the credit is first earned until it is used. The term "unused credit" does not include any amounts of unreimbursed eligible remediation costs in excess of the maximum credit per site authorized under paragraph (i). This credit shall be applied first to the earliest year for which there is a liability. If there is a credit under this subsection from more than one tax year that is available to offset a liability, the earliest credit arising under this subsection shall be applied first. A credit allowed under this subsection may be sold to a buyer as part of a sale of all or part of the remediation site for which the credit was granted. The purchaser of a remediation site and the tax credit shall succeed to the unused credit and remaining carry‑forward period of the seller. To perfect the transfer, the assignor shall record the transfer in the chain of title for the site and provide written notice to the Director of the Illinois Department of Revenue of the assignor's intent to sell the remediation site and the amount of the tax credit to be transferred as a portion of the sale. In no event may a credit be transferred to any taxpayer if the taxpayer or a related party would not be eligible under the provisions of subsection (i).
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(iii) For purposes of this Section, the term "site"
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shall have the same meaning as under Section 58.2 of the Environmental Protection Act.
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(m) Education expense credit. Beginning with tax years ending after
December 31, 1999, a taxpayer who
is the custodian of one or more qualifying pupils shall be allowed a credit
against the tax imposed by subsections (a) and (b) of this Section for
qualified education expenses incurred on behalf of the qualifying pupils.
The credit shall be equal to 25% of qualified education expenses, but in no
event may the total credit under this subsection claimed by a
family that is the
custodian of qualifying pupils exceed $500. In no event shall a credit under
this subsection reduce the taxpayer's liability under this Act to less than
zero. This subsection is exempt from the provisions of Section 250 of this
Act.
For purposes of this subsection:
"Qualifying pupils" means individuals who (i) are residents of the State of
Illinois, (ii) are under the age of 21 at the close of the school year for
which a credit is sought, and (iii) during the school year for which a credit
is sought were full‑time pupils enrolled in a kindergarten through twelfth
grade education program at any school, as defined in this subsection.
"Qualified education expense" means the amount incurred
on behalf of a qualifying pupil in excess of $250 for tuition, book fees, and
lab fees at the school in which the pupil is enrolled during the regular school
year.
"School" means any public or nonpublic elementary or secondary school in
Illinois that is in compliance with Title VI of the Civil Rights Act of 1964
and attendance at which satisfies the requirements of Section 26‑1 of the
School Code, except that nothing shall be construed to require a child to
attend any particular public or nonpublic school to qualify for the credit
under this Section.
"Custodian" means, with respect to qualifying pupils, an Illinois resident
who is a parent, the parents, a legal guardian, or the legal guardians of the
qualifying pupils.
(Source: P.A. 92‑12, eff. 7‑1‑01; 92‑16, eff. 6‑28‑01; 92‑651, eff. 7‑11‑02; 92‑846, eff. 8‑23‑02; 93‑29, eff. 6‑20‑03; 93‑840, eff. 7‑30‑04.)
(Text of Section from P.A. 93‑871)
Sec. 201. Tax Imposed.
(a) In general. A tax measured by net income is hereby imposed on every
individual, corporation, trust and estate for each taxable year ending
after July 31, 1969 on the privilege of earning or receiving income in or
as a resident of this State. Such tax shall be in addition to all other
occupation or privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
(b) Rates. The tax imposed by subsection (a) of this Section shall be
determined as follows, except as adjusted by subsection (d‑1):
(1) In the case of an individual, trust or estate,
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for taxable years ending prior to July 1, 1989, an amount equal to 2 1/2% of the taxpayer's net income for the taxable year.
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(2) In the case of an individual, trust or estate,
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for taxable years beginning prior to July 1, 1989 and ending after June 30, 1989, an amount equal to the sum of (i) 2 1/2% of the taxpayer's net income for the period prior to July 1, 1989, as calculated under Section 202.3, and (ii) 3% of the taxpayer's net income for the period after June 30, 1989, as calculated under Section 202.3.
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(3) In the case of an individual, trust or estate,
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for taxable years beginning after June 30, 1989, an amount equal to 3% of the taxpayer's net income for the taxable year.
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(4) (Blank).
(5) (Blank).
(6) In the case of a corporation, for taxable years
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ending prior to July 1, 1989, an amount equal to 4% of the taxpayer's net income for the taxable year.
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(7) In the case of a corporation, for taxable years
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beginning prior to July 1, 1989 and ending after June 30, 1989, an amount equal to the sum of (i) 4% of the taxpayer's net income for the period prior to July 1, 1989, as calculated under Section 202.3, and (ii) 4.8% of the taxpayer's net income for the period after June 30, 1989, as calculated under Section 202.3.
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(8) In the case of a corporation, for taxable years
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beginning after June 30, 1989, an amount equal to 4.8% of the taxpayer's net income for the taxable year.
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(c) Personal Property Tax Replacement Income Tax.
Beginning on July 1, 1979 and thereafter, in addition to such income
tax, there is also hereby imposed the Personal Property Tax Replacement
Income Tax measured by net income on every corporation (including Subchapter
S corporations), partnership and trust, for each taxable year ending after
June 30, 1979. Such taxes are imposed on the privilege of earning or
receiving income in or as a resident of this State. The Personal Property
Tax Replacement Income Tax shall be in addition to the income tax imposed
by subsections (a) and (b) of this Section and in addition to all other
occupation or privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
(d) Additional Personal Property Tax Replacement Income Tax Rates.
The personal property tax replacement income tax imposed by this subsection
and subsection (c) of this Section in the case of a corporation, other
than a Subchapter S corporation and except as adjusted by subsection (d‑1),
shall be an additional amount equal to
2.85% of such taxpayer's net income for the taxable year, except that
beginning on January 1, 1981, and thereafter, the rate of 2.85% specified
in this subsection shall be reduced to 2.5%, and in the case of a
partnership, trust or a Subchapter S corporation shall be an additional
amount equal to 1.5% of such taxpayer's net income for the taxable year.
(d‑1) Rate reduction for certain foreign insurers. In the case of a
foreign insurer, as defined by Section 35A‑5 of the Illinois Insurance Code,
whose state or country of domicile imposes on insurers domiciled in Illinois
a retaliatory tax (excluding any insurer
whose premiums from reinsurance assumed are 50% or more of its total insurance
premiums as determined under paragraph (2) of subsection (b) of Section 304,
except that for purposes of this determination premiums from reinsurance do
not include premiums from inter‑affiliate reinsurance arrangements),
beginning with taxable years ending on or after December 31, 1999,
the sum of
the rates of tax imposed by subsections (b) and (d) shall be reduced (but not
increased) to the rate at which the total amount of tax imposed under this Act,
net of all credits allowed under this Act, shall equal (i) the total amount of
tax that would be imposed on the foreign insurer's net income allocable to
Illinois for the taxable year by such foreign insurer's state or country of
domicile if that net income were subject to all income taxes and taxes
measured by net income imposed by such foreign insurer's state or country of
domicile, net of all credits allowed or (ii) a rate of zero if no such tax is
imposed on such income by the foreign insurer's state of domicile.
For the purposes of this subsection (d‑1), an inter‑affiliate includes a
mutual insurer under common management.
(1) For the purposes of subsection (d‑1), in no
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event shall the sum of the rates of tax imposed by subsections (b) and (d) be reduced below the rate at which the sum of:
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(A) the total amount of tax imposed on such
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foreign insurer under this Act for a taxable year, net of all credits allowed under this Act, plus
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(B) the privilege tax imposed by Section 409 of
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the Illinois Insurance Code, the fire insurance company tax imposed by Section 12 of the Fire Investigation Act, and the fire department taxes imposed under Section 11‑10‑1 of the Illinois Municipal Code,
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equals 1.25% for taxable years ending prior to December
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31, 2003, or 1.75% for taxable years ending on or after December 31, 2003, of the net taxable premiums written for the taxable year, as described by subsection (1) of Section 409 of the Illinois Insurance Code. This paragraph will in no event increase the rates imposed under subsections (b) and (d).
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(2) Any reduction in the rates of tax imposed by
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this subsection shall be applied first against the rates imposed by subsection (b) and only after the tax imposed by subsection (a) net of all credits allowed under this Section other than the credit allowed under subsection (i) has been reduced to zero, against the rates imposed by subsection (d).
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This subsection (d‑1) is exempt from the provisions of Section 250.
(e) Investment credit. A taxpayer shall be allowed a credit
against the Personal Property Tax Replacement Income Tax for
investment in qualified property.
(1) A taxpayer shall be allowed a credit equal to
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.5% of the basis of qualified property placed in service during the taxable year, provided such property is placed in service on or after July 1, 1984. There shall be allowed an additional credit equal to .5% of the basis of qualified property placed in service during the taxable year, provided such property is placed in service on or after July 1, 1986, and the taxpayer's base employment within Illinois has increased by 1% or more over the preceding year as determined by the taxpayer's employment records filed with the Illinois Department of Employment Security. Taxpayers who are new to Illinois shall be deemed to have met the 1% growth in base employment for the first year in which they file employment records with the Illinois Department of Employment Security. The provisions added to this Section by Public Act 85‑1200 (and restored by Public Act 87‑895) shall be construed as declaratory of existing law and not as a new enactment. If, in any year, the increase in base employment within Illinois over the preceding year is less than 1%, the additional credit shall be limited to that percentage times a fraction, the numerator of which is .5% and the denominator of which is 1%, but shall not exceed .5%. The investment credit shall not be allowed to the extent that it would reduce a taxpayer's liability in any tax year below zero, nor may any credit for qualified property be allowed for any year other than the year in which the property was placed in service in Illinois. For tax years ending on or after December 31, 1987, and on or before December 31, 1988, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit years if the taxpayer (i) makes investments which cause the creation of a minimum of 2,000 full‑time equivalent jobs in Illinois, (ii) is located in an enterprise zone established pursuant to the Illinois Enterprise Zone Act and (iii) is certified by the Department of Commerce and Community Affairs (now Department of Commerce and Economic Opportunity) as complying with the requirements specified in clause (i) and (ii) by July 1, 1986. The Department of Commerce and Community Affairs (now Department of Commerce and Economic Opportunity) shall notify the Department of Revenue of all such certifications immediately. For tax years ending after December 31, 1988, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit years. The credit shall be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, earlier credit shall be applied first.
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(2) The term "qualified property" means property
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(A) is tangible, whether new or used, including
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buildings and structural components of buildings and signs that are real property, but not including land or improvements to real property that are not a structural component of a building such as landscaping, sewer lines, local access roads, fencing, parking lots, and other appurtenances;
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(B) is depreciable pursuant to Section 167 of
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the Internal Revenue Code, except that "3‑year property" as defined in Section 168(c)(2)(A) of that Code is not eligible for the credit provided by this subsection (e);
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(C) is acquired by purchase as defined in
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Section 179(d) of the Internal Revenue Code;
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(D) is used in Illinois by a taxpayer who is
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primarily engaged in manufacturing, or in mining coal or fluorite, or in retailing; and
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(E) has not previously been used in Illinois in
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such a manner and by such a person as would qualify for the credit provided by this subsection (e) or subsection (f).
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(3) For purposes of this subsection (e),
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"manufacturing" means the material staging and production of tangible personal property by procedures commonly regarded as manufacturing, processing, fabrication, or assembling which changes some existing material into new shapes, new qualities, or new combinations. For purposes of this subsection (e) the term "mining" shall have the same meaning as the term "mining" in Section 613(c) of the Internal Revenue Code. For purposes of this subsection (e), the term "retailing" means the sale of tangible personal property or services rendered in conjunction with the sale of tangible consumer goods or commodities.
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(4) The basis of qualified property shall be the
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basis used to compute the depreciation deduction for federal income tax purposes.
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(5) If the basis of the property for federal income
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tax depreciation purposes is increased after it has been placed in service in Illinois by the taxpayer, the amount of such increase shall be deemed property placed in service on the date of such increase in basis.
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(6) The term "placed in service" shall have the same
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meaning as under Section 46 of the Internal Revenue Code.
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(7) If during any taxable year, any property ceases
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to be qualified property in the hands of the taxpayer within 48 months after being placed in service, or the situs of any qualified property is moved outside Illinois within 48 months after being placed in service, the Personal Property Tax Replacement Income Tax for such taxable year shall be increased. Such increase shall be determined by (i) recomputing the investment credit which would have been allowed for the year in which credit for such property was originally allowed by eliminating such property from such computation and, (ii) subtracting such recomputed credit from the amount of credit previously allowed. For the purposes of this paragraph (7), a reduction of the basis of qualified property resulting from a redetermination of the purchase price shall be deemed a disposition of qualified property to the extent of such reduction.
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(8) Unless the investment credit is extended by law,
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the basis of qualified property shall not include costs incurred after December 31, 2008, except for costs incurred pursuant to a binding contract entered into on or before December 31, 2008.
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(9) Each taxable year ending before December 31,
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2000, a partnership may elect to pass through to its partners the credits to which the partnership is entitled under this subsection (e) for the taxable year. A partner may use the credit allocated to him or her under this paragraph only against the tax imposed in subsections (c) and (d) of this Section. If the partnership makes that election, those credits shall be allocated among the partners in the partnership in accordance with the rules set forth in Section 704(b) of the Internal Revenue Code, and the rules promulgated under that Section, and the allocated amount of the credits shall be allowed to the partners for that taxable year. The partnership shall make this election on its Personal Property Tax Replacement Income Tax return for that taxable year. The election to pass through the credits shall be irrevocable.
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For taxable years ending on or after December 31,
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2000, a partner that qualifies its partnership for a subtraction under subparagraph (I) of paragraph (2) of subsection (d) of Section 203 or a shareholder that qualifies a Subchapter S corporation for a subtraction under subparagraph (S) of paragraph (2) of subsection (b) of Section 203 shall be allowed a credit under this subsection (e) equal to its share of the credit earned under this subsection (e) during the taxable year by the partnership or Subchapter S corporation, determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code. This paragraph is exempt from the provisions of Section 250.
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(f) Investment credit; Enterprise Zone.
(1) A taxpayer shall be allowed a credit against the
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tax imposed by subsections (a) and (b) of this Section for investment in qualified property which is placed in service in an Enterprise Zone created pursuant to the Illinois Enterprise Zone Act. For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this subsection (f) to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code. The credit shall be .5% of the basis for such property. The credit shall be available only in the taxable year in which the property is placed in service in the Enterprise Zone and shall not be allowed to the extent that it would reduce a taxpayer's liability for the tax imposed by subsections (a) and (b) of this Section to below zero. For tax years ending on or after December 31, 1985, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, the credit accruing first in time shall be applied first.
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(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
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buildings and structural components of buildings;
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(B) is depreciable pursuant to Section 167 of
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the Internal Revenue Code, except that "3‑year property" as defined in Section 168(c)(2)(A) of that Code is not eligible for the credit provided by this subsection (f);
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(C) is acquired by purchase as defined in
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Section 179(d) of the Internal Revenue Code;
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(D) is used in the Enterprise Zone by the
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(E) has not been previously used in Illinois in
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such a manner and by such a person as would qualify for the credit provided by this subsection (f) or subsection (e).
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(3) The basis of qualified property shall be the
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basis used to compute the depreciation deduction for federal income tax purposes.
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(4) If the basis of the property for federal income
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tax depreciation purposes is increased after it has been placed in service in the Enterprise Zone by the taxpayer, the amount of such increase shall be deemed property placed in service on the date of such increase in basis.
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(5) The term "placed in service" shall have the same
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meaning as under Section 46 of the Internal Revenue Code.
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(6) If during any taxable year, any property ceases
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to be qualified property in the hands of the taxpayer within 48 months after being placed in service, or the situs of any qualified property is moved outside the Enterprise Zone within 48 months after being placed in service, the tax imposed under subsections (a) and (b) of this Section for such taxable year shall be increased. Such increase shall be determined by (i) recomputing the investment credit which would have been allowed for the year in which credit for such property was originally allowed by eliminating such property from such computation, and (ii) subtracting such recomputed credit from the amount of credit previously allowed. For the purposes of this paragraph (6), a reduction of the basis of qualified property resulting from a redetermination of the purchase price shall be deemed a disposition of qualified property to the extent of such reduction.
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(g) Jobs Tax Credit; Enterprise Zone and Foreign Trade Zone or Sub‑Zone.
(1) A taxpayer conducting a trade or business in an
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enterprise zone or a High Impact Business designated by the Department of Commerce and Economic Opportunity conducting a trade or business in a federally designated Foreign Trade Zone or Sub‑Zone shall be allowed a credit against the tax imposed by subsections (a) and (b) of this Section in the amount of $500 per eligible employee hired to work in the zone during the taxable year.
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(2) To qualify for the credit:
(A) the taxpayer must hire 5 or more eligible
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employees to work in an enterprise zone or federally designated Foreign Trade Zone or Sub‑Zone during the taxable year;
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(B) the taxpayer's total employment within the
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enterprise zone or federally designated Foreign Trade Zone or Sub‑Zone must increase by 5 or more full‑time employees beyond the total employed in that zone at the end of the previous tax year for which a jobs tax credit under this Section was taken, or beyond the total employed by the taxpayer as of December 31, 1985, whichever is later; and
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(C) the eligible employees must be employed 180
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consecutive days in order to be deemed hired for purposes of this subsection.
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(3) An "eligible employee" means an employee who is:
(A) Certified by the Department of Commerce and
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Economic Opportunity as "eligible for services" pursuant to regulations promulgated in accordance with Title II of the Job Training Partnership Act, Training Services for the Disadvantaged or Title III of the Job Training Partnership Act, Employment and Training Assistance for Dislocated Workers Program.
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(B) Hired after the enterprise zone or federally
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designated Foreign Trade Zone or Sub‑Zone was designated or the trade or business was located in that zone, whichever is later.
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(C) Employed in the enterprise zone or Foreign
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Trade Zone or Sub‑Zone. An employee is employed in an enterprise zone or federally designated Foreign Trade Zone or Sub‑Zone if his services are rendered there or it is the base of operations for the services performed.
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(D) A full‑time employee working 30 or more
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(4) For tax years ending on or after December 31,
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1985 and prior to December 31, 1988, the credit shall be allowed for the tax year in which the eligible employees are hired. For tax years ending on or after December 31, 1988, the credit shall be allowed for the tax year immediately following the tax year in which the eligible employees are hired. If the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, earlier credit shall be applied first.
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(5) The Department of Revenue shall promulgate such
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rules and regulations as may be deemed necessary to carry out the purposes of this subsection (g).
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(6) The credit shall be available for eligible
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employees hired on or after January 1, 1986.
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(h) Investment credit; High Impact Business.
(1) Subject to subsections (b) and (b‑5) of Section
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5.5 of the Illinois Enterprise Zone Act, a taxpayer shall be allowed a credit against the tax imposed by subsections (a) and (b) of this Section for investment in qualified property which is placed in service by a Department of Commerce and Economic Opportunity designated High Impact Business. The credit shall be .5% of the basis for such property. The credit shall not be available (i) until the minimum investments in qualified property set forth in subdivision (a)(3)(A) of Section 5.5 of the Illinois Enterprise Zone Act have been satisfied or (ii) until the time authorized in subsection (b‑5) of the Illinois Enterprise Zone Act for entities designated as High Impact Businesses under subdivisions (a)(3)(B), (a)(3)(C), and (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone Act, and shall not be allowed to the extent that it would reduce a taxpayer's liability for the tax imposed by subsections (a) and (b) of this Section to below zero. The credit applicable to such investments shall be taken in the taxable year in which such investments have been completed. The credit for additional investments beyond the minimum investment by a designated high impact business authorized under subdivision (a)(3)(A) of Section 5.5 of the Illinois Enterprise Zone Act shall be available only in the taxable year in which the property is placed in service and shall not be allowed to the extent that it would reduce a taxpayer's liability for the tax imposed by subsections (a) and (b) of this Section to below zero. For tax years ending on or after December 31, 1987, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, the credit accruing first in time shall be applied first.
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Changes made in this subdivision (h)(1) by Public
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Act 88‑670 restore changes made by Public Act 85‑1182 and reflect existing law.
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(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
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buildings and structural components of buildings;
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(B) is depreciable pursuant to Section 167 of
|
|
the Internal Revenue Code, except that "3‑year property" as defined in Section 168(c)(2)(A) of that Code is not eligible for the credit provided by this subsection (h);
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(C) is acquired by purchase as defined in
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Section 179(d) of the Internal Revenue Code; and
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(D) is not eligible for the Enterprise Zone
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Investment Credit provided by subsection (f) of this Section.
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(3) The basis of qualified property shall be the
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basis used to compute the depreciation deduction for federal income tax purposes.
|
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(4) If the basis of the property for federal income
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tax depreciation purposes is increased after it has been placed in service in a federally designated Foreign Trade Zone or Sub‑Zone located in Illinois by the taxpayer, the amount of such increase shall be deemed property placed in service on the date of such increase in basis.
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(5) The term "placed in service" shall have the same
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meaning as under Section 46 of the Internal Revenue Code.
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(6) If during any taxable year ending on or before
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December 31, 1996, any property ceases to be qualified property in the hands of the taxpayer within 48 months after being placed in service, or the situs of any qualified property is moved outside Illinois within 48 months after being placed in service, the tax imposed under subsections (a) and (b) of this Section for such taxable year shall be increased. Such increase shall be determined by (i) recomputing the investment credit which would have been allowed for the year in which credit for such property was originally allowed by eliminating such property from such computation, and (ii) subtracting such recomputed credit from the amount of credit previously allowed. For the purposes of this paragraph (6), a reduction of the basis of qualified property resulting from a redetermination of the purchase price shall be deemed a disposition of qualified property to the extent of such reduction.
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(7) Beginning with tax years ending after December
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31, 1996, if a taxpayer qualifies for the credit under this subsection (h) and thereby is granted a tax abatement and the taxpayer relocates its entire facility in violation of the explicit terms and length of the contract under Section 18‑183 of the Property Tax Code, the tax imposed under subsections (a) and (b) of this Section shall be increased for the taxable year in which the taxpayer relocated its facility by an amount equal to the amount of credit received by the taxpayer under this subsection (h).
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(i) Credit for Personal Property Tax Replacement Income Tax.
For tax years ending prior to December 31, 2003, a credit shall be allowed
against the tax imposed by
subsections (a) and (b) of this Section for the tax imposed by subsections (c)
and (d) of this Section. This credit shall be computed by multiplying the tax
imposed by subsections (c) and (d) of this Section by a fraction, the numerator
of which is base income allocable to Illinois and the denominator of which is
Illinois base income, and further multiplying the product by the tax rate
imposed by subsections (a) and (b) of this Section.
Any credit earned on or after December 31, 1986 under
this subsection which is unused in the year
the credit is computed because it exceeds the tax liability imposed by
subsections (a) and (b) for that year (whether it exceeds the original
liability or the liability as later amended) may be carried forward and
applied to the tax liability imposed by subsections (a) and (b) of the 5
taxable years following the excess credit year, provided that no credit may
be carried forward to any year ending on or
after December 31, 2003. This credit shall be
applied first to the earliest year for which there is a liability. If
there is a credit under this subsection from more than one tax year that is
available to offset a liability the earliest credit arising under this
subsection shall be applied first.
If, during any taxable year ending on or after December 31, 1986, the
tax imposed by subsections (c) and (d) of this Section for which a taxpayer
has claimed a credit under this subsection (i) is reduced, the amount of
credit for such tax shall also be reduced. Such reduction shall be
determined by recomputing the credit to take into account the reduced tax
imposed by subsections (c) and (d). If any portion of the
reduced amount of credit has been carried to a different taxable year, an
amended return shall be filed for such taxable year to reduce the amount of
credit claimed.
(j) Training expense credit. Beginning with tax years ending on or
after December 31, 1986 and prior to December 31, 2003, a taxpayer shall be
allowed a credit against the
tax imposed by subsections (a) and (b) under this Section
for all amounts paid or accrued, on behalf of all persons
employed by the taxpayer in Illinois or Illinois residents employed
outside of Illinois by a taxpayer, for educational or vocational training in
semi‑technical or technical fields or semi‑skilled or skilled fields, which
were deducted from gross income in the computation of taxable income. The
credit against the tax imposed by subsections (a) and (b) shall be 1.6% of
such training expenses. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if the liability
company is treated as a partnership for purposes of federal and State income
taxation, there shall be allowed a credit under this subsection (j) to be
determined in accordance with the determination of income and distributive
share of income under Sections 702 and 704 and subchapter S of the Internal
Revenue Code.
Any credit allowed under this subsection which is unused in the year
the credit is earned may be carried forward to each of the 5 taxable
years following the year for which the credit is first computed until it is
used. This credit shall be applied first to the earliest year for which
there is a liability. If there is a credit under this subsection from more
than one tax year that is available to offset a liability the earliest
credit arising under this subsection shall be applied first. No carryforward
credit may be claimed in any tax year ending on or after
December 31, 2003.
(k) Research and development credit.
For tax years ending after July 1, 1990 and prior to
December 31, 2003, a taxpayer shall be
allowed a credit against the tax imposed by subsections (a) and (b) of this
Section for increasing research activities in this State. The credit
allowed against the tax imposed by subsections (a) and (b) shall be equal
to 6 1/2% of the qualifying expenditures for increasing research activities
in this State. For partners, shareholders of subchapter S corporations, and
owners of limited liability companies, if the liability company is treated as a
partnership for purposes of federal and State income taxation, there shall be
allowed a credit under this subsection to be determined in accordance with the
determination of income and distributive share of income under Sections 702 and
704 and subchapter S of the Internal Revenue Code.
For purposes of this subsection, "qualifying expenditures" means the
qualifying expenditures as defined for the federal credit for increasing
research activities which would be allowable under Section 41 of the
Internal Revenue Code and which are conducted in this State, "qualifying
expenditures for increasing research activities in this State" means the
excess of qualifying expenditures for the taxable year in which incurred
over qualifying expenditures for the base period, "qualifying expenditures
for the base period" means the average of the qualifying expenditures for
each year in the base period, and "base period" means the 3 taxable years
immediately preceding the taxable year for which the determination is
being made.
Any credit in excess of the tax liability for the taxable year
may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried over as a credit
against the tax liability for the following 5 taxable years or until it has
been fully used, whichever occurs first; provided that no credit may be
carried forward to any year ending on or
after December 31, 2003.
If an unused credit is carried forward to a given year from 2 or more
earlier years, that credit arising in the earliest year will be applied
first against the tax liability for the given year. If a tax liability for
the given year still remains, the credit from the next earliest year will
then be applied, and so on, until all credits have been used or no tax
liability for the given year remains. Any remaining unused credit or
credits then will be carried forward to the next following year in which a
tax liability is incurred, except that no credit can be carried forward to
a year which is more than 5 years after the year in which the expense for
which the credit is given was incurred.
No inference shall be drawn from this amendatory Act of the 91st General
Assembly in construing this Section for taxable years beginning before January
1, 1999.
(l) Environmental Remediation Tax Credit.
(i) For tax years ending after December 31, 1997
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and on or before December 31, 2001, a taxpayer shall be allowed a credit against the tax imposed by subsections (a) and (b) of this Section for certain amounts paid for unreimbursed eligible remediation costs, as specified in this subsection. For purposes of this Section, "unreimbursed eligible remediation costs" means costs approved by the Illinois Environmental Protection Agency ("Agency") under Section 58.14 of the Environmental Protection Act that were paid in performing environmental remediation at a site for which a No Further Remediation Letter was issued by the Agency and recorded under Section 58.10 of the Environmental Protection Act. The credit must be claimed for the taxable year in which Agency approval of the eligible remediation costs is granted. The credit is not available to any taxpayer if the taxpayer or any related party caused or contributed to, in any material respect, a release of regulated substances on, in, or under the site that was identified and addressed by the remedial action pursuant to the Site Remediation Program of the Environmental Protection Act. After the Pollution Control Board rules are adopted pursuant to the Illinois Administrative Procedure Act for the administration and enforcement of Section 58.9 of the Environmental Protection Act, determinations as to credit availability for purposes of this Section shall be made consistent with those rules. For purposes of this Section, "taxpayer" includes a person whose tax attributes the taxpayer has succeeded to under Section 381 of the Internal Revenue Code and "related party" includes the persons disallowed a deduction for losses by paragraphs (b), (c), and (f)(1) of Section 267 of the Internal Revenue Code by virtue of being a related taxpayer, as well as any of its partners. The credit allowed against the tax imposed by subsections (a) and (b) shall be equal to 25% of the unreimbursed eligible remediation costs in excess of $100,000 per site, except that the $100,000 threshold shall not apply to any site contained in an enterprise zone as determined by the Department of Commerce and Community Affairs (now Department of Commerce and Economic Opportunity). The total credit allowed shall not exceed $40,000 per year with a maximum total of $150,000 per site. For partners and shareholders of subchapter S corporations, there shall be allowed a credit under this subsection to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and subchapter S of the Internal Revenue Code.
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(ii) A credit allowed under this subsection that is
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unused in the year the credit is earned may be carried forward to each of the 5 taxable years following the year for which the credit is first earned until it is used. The term "unused credit" does not include any amounts of unreimbursed eligible remediation costs in excess of the maximum credit per site authorized under paragraph (i). This credit shall be applied first to the earliest year for which there is a liability. If there is a credit under this subsection from more than one tax year that is available to offset a liability, the earliest credit arising under this subsection shall be applied first. A credit allowed under this subsection may be sold to a buyer as part of a sale of all or part of the remediation site for which the credit was granted. The purchaser of a remediation site and the tax credit shall succeed to the unused credit and remaining carry‑forward period of the seller. To perfect the transfer, the assignor shall record the transfer in the chain of title for the site and provide written notice to the Director of the Illinois Department of Revenue of the assignor's intent to sell the remediation site and the amount of the tax credit to be transferred as a portion of the sale. In no event may a credit be transferred to any taxpayer if the taxpayer or a related party would not be eligible under the provisions of subsection (i).
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(iii) For purposes of this Section, the term "site"
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shall have the same meaning as under Section 58.2 of the Environmental Protection Act.
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(m) Education expense credit. Beginning with tax years ending after
December 31, 1999, a taxpayer who
is the custodian of one or more qualifying pupils shall be allowed a credit
against the tax imposed by subsections (a) and (b) of this Section for
qualified education expenses incurred on behalf of the qualifying pupils.
The credit shall be equal to 25% of qualified education expenses, but in no
event may the total credit under this subsection claimed by a
family that is the
custodian of qualifying pupils exceed $500. In no event shall a credit under
this subsection reduce the taxpayer's liability under this Act to less than
zero. This subsection is exempt from the provisions of Section 250 of this
Act.
For purposes of this subsection:
"Qualifying pupils" means individuals who (i) are residents of the State of
Illinois, (ii) are under the age of 21 at the close of the school year for
which a credit is sought, and (iii) during the school year for which a credit
is sought were full‑time pupils enrolled in a kindergarten through twelfth
grade education program at any school, as defined in this subsection.
"Qualified education expense" means the amount incurred
on behalf of a qualifying pupil in excess of $250 for tuition, book fees, and
lab fees at the school in which the pupil is enrolled during the regular school
year.
"School" means any public or nonpublic elementary or secondary school in
Illinois that is in compliance with Title VI of the Civil Rights Act of 1964
and attendance at which satisfies the requirements of Section 26‑1 of the
School Code, except that nothing shall be construed to require a child to
attend any particular public or nonpublic school to qualify for the credit
under this Section.
"Custodian" means, with respect to qualifying pupils, an Illinois resident
who is a parent, the parents, a legal guardian, or the legal guardians of the
qualifying pupils.
(Source: P.A. 92‑12, eff. 7‑1‑01; 92‑16, eff. 6‑28‑01; 92‑651, eff. 7‑11‑02; 92‑846, eff. 8‑23‑02; 93‑29, eff. 6‑20‑03; 93‑871, eff. 8‑6‑04.)
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(35 ILCS 5/203) (from Ch. 120, par. 2‑203)
(Text of Section from P.A. 93‑812)
Sec. 203. Base income defined.
(a) Individuals.
(1) In general. In the case of an individual, base
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income means an amount equal to the taxpayer's adjusted gross income for the taxable year as modified by paragraph (2).
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(2) Modifications. The adjusted gross income
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referred to in paragraph (1) shall be modified by adding thereto the sum of the following amounts:
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(A) An amount equal to all amounts paid or
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accrued to the taxpayer as interest or dividends during the taxable year to the extent excluded from gross income in the computation of adjusted gross income, except stock dividends of qualified public utilities described in Section 305(e) of the Internal Revenue Code;
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(B) An amount equal to the amount of tax imposed
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by this Act to the extent deducted from gross income in the computation of adjusted gross income for the taxable year;
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(C) An amount equal to the amount received
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during the taxable year as a recovery or refund of real property taxes paid with respect to the taxpayer's principal residence under the Revenue Act of 1939 and for which a deduction was previously taken under subparagraph (L) of this paragraph (2) prior to July 1, 1991, the retrospective application date of Article 4 of Public Act 87‑17. In the case of multi‑unit or multi‑use structures and farm dwellings, the taxes on the taxpayer's principal residence shall be that portion of the total taxes for the entire property which is attributable to such principal residence;
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(D) An amount equal to the amount of the capital
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gain deduction allowable under the Internal Revenue Code, to the extent deducted from gross income in the computation of adjusted gross income;
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(D‑5) An amount, to the extent not included in
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adjusted gross income, equal to the amount of money withdrawn by the taxpayer in the taxable year from a medical care savings account and the interest earned on the account in the taxable year of a withdrawal pursuant to subsection (b) of Section 20 of the Medical Care Savings Account Act or subsection (b) of Section 20 of the Medical Care Savings Account Act of 2000;
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(D‑10) For taxable years ending after December
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31, 1997, an amount equal to any eligible remediation costs that the individual deducted in computing adjusted gross income and for which the individual claims a credit under subsection (l) of Section 201;
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(D‑15) For taxable years 2001 and thereafter, an
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amount equal to the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on the taxpayer's federal income tax return for the taxable year under subsection (k) of Section 168 of the Internal Revenue Code;
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(D‑16) If the taxpayer reports a capital gain or
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loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (D‑15), then an amount equal to the aggregate amount of the deductions taken in all taxable years under subparagraph (Z) with respect to that property.
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The taxpayer is required to make the addition
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modification under this subparagraph only once with respect to any one piece of property; and
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(D‑20) For taxable years beginning on or after
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January 1, 2002, in the case of a distribution from a qualified tuition program under Section 529 of the Internal Revenue Code, other than (i) a distribution from a College Savings Pool created under Section 16.5 of the State Treasurer Act or (ii) a distribution from the Illinois Prepaid Tuition Trust Fund, an amount equal to the amount excluded from gross income under Section 529(c)(3)(B);
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and by deducting from the total so obtained the sum of
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(E) For taxable years ending before December 31,
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2001, any amount included in such total in respect of any compensation (including but not limited to any compensation paid or accrued to a serviceman while a prisoner of war or missing in action) paid to a resident by reason of being on active duty in the Armed Forces of the United States and in respect of any compensation paid or accrued to a resident who as a governmental employee was a prisoner of war or missing in action, and in respect of any compensation paid to a resident in 1971 or thereafter for annual training performed pursuant to Sections 502 and 503, Title 32, United States Code as a member of the Illinois National Guard. For taxable years ending on or after December 31, 2001, any amount included in such total in respect of any compensation (including but not limited to any compensation paid or accrued to a serviceman while a prisoner of war or missing in action) paid to a resident by reason of being a member of any component of the Armed Forces of the United States and in respect of any compensation paid or accrued to a resident who as a governmental employee was a prisoner of war or missing in action, and in respect of any compensation paid to a resident in 2001 or thereafter by reason of being a member of the Illinois National Guard. The provisions of this amendatory Act of the 92nd General Assembly are exempt from the provisions of Section 250;
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(F) An amount equal to all amounts included in
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such total pursuant to the provisions of Sections 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the Internal Revenue Code, or included in such total as distributions under the provisions of any retirement or disability plan for employees of any governmental agency or unit, or retirement payments to retired partners, which payments are excluded in computing net earnings from self employment by Section 1402 of the Internal Revenue Code and regulations adopted pursuant thereto;
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(G) The valuation limitation amount;
(H) An amount equal to the amount of any tax
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imposed by this Act which was refunded to the taxpayer and included in such total for the taxable year;
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(I) An amount equal to all amounts included in
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such total pursuant to the provisions of Section 111 of the Internal Revenue Code as a recovery of items previously deducted from adjusted gross income in the computation of taxable income;
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(J) An amount equal to those dividends included
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in such total which were paid by a corporation which conducts business operations in an Enterprise Zone or zones created under the Illinois Enterprise Zone Act, and conducts substantially all of its operations in an Enterprise Zone or zones;
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(K) An amount equal to those dividends included
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in such total that were paid by a corporation that conducts business operations in a federally designated Foreign Trade Zone or Sub‑Zone and that is designated a High Impact Business located in Illinois; provided that dividends eligible for the deduction provided in subparagraph (J) of paragraph (2) of this subsection shall not be eligible for the deduction provided under this subparagraph (K);
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(L) For taxable years ending after December 31,
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1983, an amount equal to all social security benefits and railroad retirement benefits included in such total pursuant to Sections 72(r) and 86 of the Internal Revenue Code;
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(M) With the exception of any amounts subtracted
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under subparagraph (N), an amount equal to the sum of all amounts disallowed as deductions by (i) Sections 171(a) (2), and 265(2) of the Internal Revenue Code of 1954, as now or hereafter amended, and all amounts of expenses allocable to interest and disallowed as deductions by Section 265(1) of the Internal Revenue Code of 1954, as now or hereafter amended; and (ii) for taxable years ending on or after August 13, 1999, Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue Code; the provisions of this subparagraph are exempt from the provisions of Section 250;
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(N) An amount equal to all amounts included in
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such total which are exempt from taxation by this State either by reason of its statutes or Constitution or by reason of the Constitution, treaties or statutes of the United States; provided that, in the case of any statute of this State that exempts income derived from bonds or other obligations from the tax imposed under this Act, the amount exempted shall be the interest net of bond premium amortization;
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(O) An amount equal to any contribution made to
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a job training project established pursuant to the Tax Increment Allocation Redevelopment Act;
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(P) An amount equal to the amount of the
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deduction used to compute the federal income tax credit for restoration of substantial amounts held under claim of right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;
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(Q) An amount equal to any amounts included in
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such total, received by the taxpayer as an acceleration in the payment of life, endowment or annuity benefits in advance of the time they would otherwise be payable as an indemnity for a terminal illness;
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(R) An amount equal to the amount of any federal
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or State bonus paid to veterans of the Persian Gulf War;
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(S) An amount, to the extent included in
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adjusted gross income, equal to the amount of a contribution made in the taxable year on behalf of the taxpayer to a medical care savings account established under the Medical Care Savings Account Act or the Medical Care Savings Account Act of 2000 to the extent the contribution is accepted by the account administrator as provided in that Act;
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(T) An amount, to the extent included in
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adjusted gross income, equal to the amount of interest earned in the taxable year on a medical care savings account established under the Medical Care Savings Account Act or the Medical Care Savings Account Act of 2000 on behalf of the taxpayer, other than interest added pursuant to item (D‑5) of this paragraph (2);
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(U) For one taxable year beginning on or after
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January 1, 1994, an amount equal to the total amount of tax imposed and paid under subsections (a) and (b) of Section 201 of this Act on grant amounts received by the taxpayer under the Nursing Home Grant Assistance Act during the taxpayer's taxable years 1992 and 1993;
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(V) Beginning with tax years ending on or after
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December 31, 1995 and ending with tax years ending on or before December 31, 2004, an amount equal to the amount paid by a taxpayer who is a self‑employed taxpayer, a partner of a partnership, or a shareholder in a Subchapter S corporation for health insurance or long‑term care insurance for that taxpayer or that taxpayer's spouse or dependents, to the extent that the amount paid for that health insurance or long‑term care insurance may be deducted under Section 213 of the Internal Revenue Code of 1986, has not been deducted on the federal income tax return of the taxpayer, and does not exceed the taxable income attributable to that taxpayer's income, self‑employment income, or Subchapter S corporation income; except that no deduction shall be allowed under this item (V) if the taxpayer is eligible to participate in any health insurance or long‑term care insurance plan of an employer of the taxpayer or the taxpayer's spouse. The amount of the health insurance and long‑term care insurance subtracted under this item (V) shall be determined by multiplying total health insurance and long‑term care insurance premiums paid by the taxpayer times a number that represents the fractional percentage of eligible medical expenses under Section 213 of the Internal Revenue Code of 1986 not actually deducted on the taxpayer's federal income tax return;
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(W) For taxable years beginning on or after
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January 1, 1998, all amounts included in the taxpayer's federal gross income in the taxable year from amounts converted from a regular IRA to a Roth IRA. This paragraph is exempt from the provisions of Section 250;
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(X) For taxable year 1999 and thereafter, an
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amount equal to the amount of any (i) distributions, to the extent includible in gross income for federal income tax purposes, made to the taxpayer because of his or her status as a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime or as an heir of the victim and (ii) items of income, to the extent includible in gross income for federal income tax purposes, attributable to, derived from or in any way related to assets stolen from, hidden from, or otherwise lost to a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime immediately prior to, during, and immediately after World War II, including, but not limited to, interest on the proceeds receivable as insurance under policies issued to a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime by European insurance companies immediately prior to and during World War II; provided, however, this subtraction from federal adjusted gross income does not apply to assets acquired with such assets or with the proceeds from the sale of such assets; provided, further, this paragraph shall only apply to a taxpayer who was the first recipient of such assets after their recovery and who is a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime or as an heir of the victim. The amount of and the eligibility for any public assistance, benefit, or similar entitlement is not affected by the inclusion of items (i) and (ii) of this paragraph in gross income for federal income tax purposes. This paragraph is exempt from the provisions of Section 250;
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(Y) For taxable years beginning on or after
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January 1, 2002 and ending on or before December 31, 2004, moneys contributed in the taxable year to a College Savings Pool account under Section 16.5 of the State Treasurer Act, except that amounts excluded from gross income under Section 529(c)(3)(C)(i) of the Internal Revenue Code shall not be considered moneys contributed under this subparagraph (Y). For taxable years beginning on or after January 1, 2005, a maximum of $10,000 contributed in the taxable year to (i) a College Savings Pool account under Section 16.5 of the State Treasurer Act or (ii) the Illinois Prepaid Tuition Trust Fund, except that amounts excluded from gross income under Section 529(c)(3)(C)(i) of the Internal Revenue Code shall not be considered moneys contributed under this subparagraph (Y). This subparagraph (Y) is exempt from the provisions of Section 250;
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(Z) For taxable years 2001 and thereafter, for
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the taxable year in which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) is taken on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code and for each applicable taxable year thereafter, an amount equal to "x", where:
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(1) "y" equals the amount of the
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depreciation deduction taken for the taxable year on the taxpayer's federal income tax return on property for which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) was taken in any year under subsection (k) of Section 168 of the Internal Revenue Code, but not including the bonus depreciation deduction; and
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(2) "x" equals "y" multiplied by 30 and then
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divided by 70 (or "y" multiplied by 0.429).
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The aggregate amount deducted under this
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subparagraph in all taxable years for any one piece of property may not exceed the amount of the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on that property on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code;
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(AA) If the taxpayer reports a capital gain or
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loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (D‑15), then an amount equal to that addition modification.
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The taxpayer is allowed to take the deduction
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under this subparagraph only once with respect to any one piece of property; and
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(BB) Any amount included in adjusted gross
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income, other than salary, received by a driver in a ridesharing arrangement using a motor vehicle.
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(b) Corporations.
(1) In general. In the case of a corporation, base
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income means an amount equal to the taxpayer's taxable income for the taxable year as modified by paragraph (2).
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(2) Modifications. The taxable income referred to
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in paragraph (1) shall be modified by adding thereto the sum of the following amounts:
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(A) An amount equal to all amounts paid or
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accrued to the taxpayer as interest and all distributions received from regulated investment companies during the taxable year to the extent excluded from gross income in the computation of taxable income;
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(B) An amount equal to the amount of tax imposed
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by this Act to the extent deducted from gross income in the computation of taxable income for the taxable year;
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(C) In the case of a regulated investment
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company, an amount equal to the excess of (i) the net long‑term capital gain for the taxable year, over (ii) the amount of the capital gain dividends designated as such in accordance with Section 852(b)(3)(C) of the Internal Revenue Code and any amount designated under Section 852(b)(3)(D) of the Internal Revenue Code, attributable to the taxable year (this amendatory Act of 1995 (Public Act 89‑89) is declarative of existing law and is not a new enactment);
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(D) The amount of any net operating loss
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deduction taken in arriving at taxable income, other than a net operating loss carried forward from a taxable year ending prior to December 31, 1986;
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(E) For taxable years in which a net operating
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loss carryback or carryforward from a taxable year ending prior to December 31, 1986 is an element of taxable income under paragraph (1) of subsection (e) or subparagraph (E) of paragraph (2) of subsection (e), the amount by which addition modifications other than those provided by this subparagraph (E) exceeded subtraction modifications in such earlier taxable year, with the following limitations applied in the order that they are listed:
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(i) the addition modification relating to
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the net operating loss carried back or forward to the taxable year from any taxable year ending prior to December 31, 1986 shall be reduced by the amount of addition modification under this subparagraph (E) which related to that net operating loss and which was taken into account in calculating the base income of an earlier taxable year, and
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(ii) the addition modification relating to
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the net operating loss carried back or forward to the taxable year from any taxable year ending prior to December 31, 1986 shall not exceed the amount of such carryback or carryforward;
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For taxable years in which there is a net
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operating loss carryback or carryforward from more than one other taxable year ending prior to December 31, 1986, the addition modification provided in this subparagraph (E) shall be the sum of the amounts computed independently under the preceding provisions of this subparagraph (E) for each such taxable year;
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(E‑5) For taxable years ending after December
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31, 1997, an amount equal to any eligible remediation costs that the corporation deducted in computing adjusted gross income and for which the corporation claims a credit under subsection (l) of Section 201;
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(E‑10) For taxable years 2001 and thereafter, an
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amount equal to the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on the taxpayer's federal income tax return for the taxable year under subsection (k) of Section 168 of the Internal Revenue Code; and
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(E‑11) If the taxpayer reports a capital gain or
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loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (E‑10), then an amount equal to the aggregate amount of the deductions taken in all taxable years under subparagraph (T) with respect to that property.
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The taxpayer is required to make the addition
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modification under this subparagraph only once with respect to any one piece of property;
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and by deducting from the total so obtained the sum of
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(F) An amount equal to the amount of any tax
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imposed by this Act which was refunded to the taxpayer and included in such total for the taxable year;
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(G) An amount equal to any amount included in
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such total under Section 78 of the Internal Revenue Code;
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(H) In the case of a regulated investment
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company, an amount equal to the amount of exempt interest dividends as defined in subsection (b) (5) of Section 852 of the Internal Revenue Code, paid to shareholders for the taxable year;
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(I) With the exception of any amounts subtracted
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under subparagraph (J), an amount equal to the sum of all amounts disallowed as deductions by (i) Sections 171(a) (2), and 265(a)(2) and amounts disallowed as interest expense by Section 291(a)(3) of the Internal Revenue Code, as now or hereafter amended, and all amounts of expenses allocable to interest and disallowed as deductions by Section 265(a)(1) of the Internal Revenue Code, as now or hereafter amended; and (ii) for taxable years ending on or after August 13, 1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i) of the Internal Revenue Code; the provisions of this subparagraph are exempt from the provisions of Section 250;
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(J) An amount equal to all amounts included in
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such total which are exempt from taxation by this State either by reason of its statutes or Constitution or by reason of the Constitution, treaties or statutes of the United States; provided that, in the case of any statute of this State that exempts income derived from bonds or other obligations from the tax imposed under this Act, the amount exempted shall be the interest net of bond premium amortization;
|
|
(K) An amount equal to those dividends included
|
|
in such total which were paid by a corporation which conducts business operations in an Enterprise Zone or zones created under the Illinois Enterprise Zone Act and conducts substantially all of its operations in an Enterprise Zone or zones;
|
|
(L) An amount equal to those dividends included
|
|
in such total that were paid by a corporation that conducts business operations in a federally designated Foreign Trade Zone or Sub‑Zone and that is designated a High Impact Business located in Illinois; provided that dividends eligible for the deduction provided in subparagraph (K) of paragraph 2 of this subsection shall not be eligible for the deduction provided under this subparagraph (L);
|
|
(M) For any taxpayer that is a financial
|
|
organization within the meaning of Section 304(c) of this Act, an amount included in such total as interest income from a loan or loans made by such taxpayer to a borrower, to the extent that such a loan is secured by property which is eligible for the Enterprise Zone Investment Credit. To determine the portion of a loan or loans that is secured by property eligible for a Section 201(f) investment credit to the borrower, the entire principal amount of the loan or loans between the taxpayer and the borrower should be divided into the basis of the Section 201(f) investment credit property which secures the loan or loans, using for this purpose the original basis of such property on the date that it was placed in service in the Enterprise Zone. The subtraction modification available to taxpayer in any year under this subsection shall be that portion of the total interest paid by the borrower with respect to such loan attributable to the eligible property as calculated under the previous sentence;
|
|
(M‑1) For any taxpayer that is a financial
|
|
organization within the meaning of Section 304(c) of this Act, an amount included in such total as interest income from a loan or loans made by such taxpayer to a borrower, to the extent that such a loan is secured by property which is eligible for the High Impact Business Investment Credit. To determine the portion of a loan or loans that is secured by property eligible for a Section 201(h) investment credit to the borrower, the entire principal amount of the loan or loans between the taxpayer and the borrower should be divided into the basis of the Section 201(h) investment credit property which secures the loan or loans, using for this purpose the original basis of such property on the date that it was placed in service in a federally designated Foreign Trade Zone or Sub‑Zone located in Illinois. No taxpayer that is eligible for the deduction provided in subparagraph (M) of paragraph (2) of this subsection shall be eligible for the deduction provided under this subparagraph (M‑1). The subtraction modification available to taxpayers in any year under this subsection shall be that portion of the total interest paid by the borrower with respect to such loan attributable to the eligible property as calculated under the previous sentence;
|
|
(N) Two times any contribution made during the
|
|
taxable year to a designated zone organization to the extent that the contribution (i) qualifies as a charitable contribution under subsection (c) of Section 170 of the Internal Revenue Code and (ii) must, by its terms, be used for a project approved by the Department of Commerce and Economic Opportunity under Section 11 of the Illinois Enterprise Zone Act;
|
|
(O) An amount equal to: (i) 85% for taxable
|
|
years ending on or before December 31, 1992, or, a percentage equal to the percentage allowable under Section 243(a)(1) of the Internal Revenue Code of 1986 for taxable years ending after December 31, 1992, of the amount by which dividends included in taxable income and received from a corporation that is not created or organized under the laws of the United States or any state or political subdivision thereof, including, for taxable years ending on or after December 31, 1988, dividends received or deemed received or paid or deemed paid under Sections 951 through 964 of the Internal Revenue Code, exceed the amount of the modification provided under subparagraph (G) of paragraph (2) of this subsection (b) which is related to such dividends; plus (ii) 100% of the amount by which dividends, included in taxable income and received, including, for taxable years ending on or after December 31, 1988, dividends received or deemed received or paid or deemed paid under Sections 951 through 964 of the Internal Revenue Code, from any such corporation specified in clause (i) that would but for the provisions of Section 1504 (b) (3) of the Internal Revenue Code be treated as a member of the affiliated group which includes the dividend recipient, exceed the amount of the modification provided under subparagraph (G) of paragraph (2) of this subsection (b) which is related to such dividends;
|
|
(P) An amount equal to any contribution made to
|
|
a job training project established pursuant to the Tax Increment Allocation Redevelopment Act;
|
|
(Q) An amount equal to the amount of the
|
|
deduction used to compute the federal income tax credit for restoration of substantial amounts held under claim of right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;
|
|
(R) In the case of an attorney‑in‑fact with
|
|
respect to whom an interinsurer or a reciprocal insurer has made the election under Section 835 of the Internal Revenue Code, 26 U.S.C. 835, an amount equal to the excess, if any, of the amounts paid or incurred by that interinsurer or reciprocal insurer in the taxable year to the attorney‑in‑fact over the deduction allowed to that interinsurer or reciprocal insurer with respect to the attorney‑in‑fact under Section 835(b) of the Internal Revenue Code for the taxable year;
|
|
(S) For taxable years ending on or after
|
|
December 31, 1997, in the case of a Subchapter S corporation, an amount equal to all amounts of income allocable to a shareholder subject to the Personal Property Tax Replacement Income Tax imposed by subsections (c) and (d) of Section 201 of this Act, including amounts allocable to organizations exempt from federal income tax by reason of Section 501(a) of the Internal Revenue Code. This subparagraph (S) is exempt from the provisions of Section 250;
|
|
(T) For taxable years 2001 and thereafter, for
|
|
the taxable year in which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) is taken on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code and for each applicable taxable year thereafter, an amount equal to "x", where:
|
|
(1) "y" equals the amount of the
|
|
depreciation deduction taken for the taxable year on the taxpayer's federal income tax return on property for which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) was taken in any year under subsection (k) of Section 168 of the Internal Revenue Code, but not including the bonus depreciation deduction; and
|
|
(2) "x" equals "y" multiplied by 30 and then
|
|
divided by 70 (or "y" multiplied by 0.429).
|
|
The aggregate amount deducted under this
|
|
subparagraph in all taxable years for any one piece of property may not exceed the amount of the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on that property on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code; and
|
|
(U) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (E‑10), then an amount equal to that addition modification.
|
|
The taxpayer is allowed to take the deduction
|
|
under this subparagraph only once with respect to any one piece of property.
|
|
(3) Special rule. For purposes of paragraph (2)
|
|
(A), "gross income" in the case of a life insurance company, for tax years ending on and after December 31, 1994, shall mean the gross investment income for the taxable year.
|
|
(c) Trusts and estates.
(1) In general. In the case of a trust or estate,
|
|
base income means an amount equal to the taxpayer's taxable income for the taxable year as modified by paragraph (2).
|
|
(2) Modifications. Subject to the provisions of
|
|
paragraph (3), the taxable income referred to in paragraph (1) shall be modified by adding thereto the sum of the following amounts:
|
|
(A) An amount equal to all amounts paid or
|
|
accrued to the taxpayer as interest or dividends during the taxable year to the extent excluded from gross income in the computation of taxable income;
|
|
(B) In the case of (i) an estate, $600; (ii) a
|
|
trust which, under its governing instrument, is required to distribute all of its income currently, $300; and (iii) any other trust, $100, but in each such case, only to the extent such amount was deducted in the computation of taxable income;
|
|
(C) An amount equal to the amount of tax imposed
|
|
by this Act to the extent deducted from gross income in the computation of taxable income for the taxable year;
|
|
(D) The amount of any net operating loss
|
|
deduction taken in arriving at taxable income, other than a net operating loss carried forward from a taxable year ending prior to December 31, 1986;
|
|
(E) For taxable years in which a net operating
|
|
loss carryback or carryforward from a taxable year ending prior to December 31, 1986 is an element of taxable income under paragraph (1) of subsection (e) or subparagraph (E) of paragraph (2) of subsection (e), the amount by which addition modifications other than those provided by this subparagraph (E) exceeded subtraction modifications in such taxable year, with the following limitations applied in the order that they are listed:
|
|
(i) the addition modification relating to
|
|
the net operating loss carried back or forward to the taxable year from any taxable year ending prior to December 31, 1986 shall be reduced by the amount of addition modification under this subparagraph (E) which related to that net operating loss and which was taken into account in calculating the base income of an earlier taxable year, and
|
|
(ii) the addition modification relating to
|
|
the net operating loss carried back or forward to the taxable year from any taxable year ending prior to December 31, 1986 shall not exceed the amount of such carryback or carryforward;
|
|
For taxable years in which there is a net
|
|
operating loss carryback or carryforward from more than one other taxable year ending prior to December 31, 1986, the addition modification provided in this subparagraph (E) shall be the sum of the amounts computed independently under the preceding provisions of this subparagraph (E) for each such taxable year;
|
|
(F) For taxable years ending on or after January
|
|
1, 1989, an amount equal to the tax deducted pursuant to Section 164 of the Internal Revenue Code if the trust or estate is claiming the same tax for purposes of the Illinois foreign tax credit under Section 601 of this Act;
|
|
(G) An amount equal to the amount of the capital
|
|
gain deduction allowable under the Internal Revenue Code, to the extent deducted from gross income in the computation of taxable income;
|
|
(G‑5) For taxable years ending after December
|
|
31, 1997, an amount equal to any eligible remediation costs that the trust or estate deducted in computing adjusted gross income and for which the trust or estate claims a credit under subsection (l) of Section 201;
|
|
(G‑10) For taxable years 2001 and thereafter, an
|
|
amount equal to the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on the taxpayer's federal income tax return for the taxable year under subsection (k) of Section 168 of the Internal Revenue Code; and
|
|
(G‑11) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (G‑10), then an amount equal to the aggregate amount of the deductions taken in all taxable years under subparagraph (R) with respect to that property.
|
|
The taxpayer is required to make the addition
|
|
modification under this subparagraph only once with respect to any one piece of property;
|
|
and by deducting from the total so obtained the sum of
|
|
|
(H) An amount equal to all amounts included in
|
|
such total pursuant to the provisions of Sections 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the Internal Revenue Code or included in such total as distributions under the provisions of any retirement or disability plan for employees of any governmental agency or unit, or retirement payments to retired partners, which payments are excluded in computing net earnings from self employment by Section 1402 of the Internal Revenue Code and regulations adopted pursuant thereto;
|
|
(I) The valuation limitation amount;
(J) An amount equal to the amount of any tax
|
|
imposed by this Act which was refunded to the taxpayer and included in such total for the taxable year;
|
|
(K) An amount equal to all amounts included in
|
|
taxable income as modified by subparagraphs (A), (B), (C), (D), (E), (F) and (G) which are exempt from taxation by this State either by reason of its statutes or Constitution or by reason of the Constitution, treaties or statutes of the United States; provided that, in the case of any statute of this State that exempts income derived from bonds or other obligations from the tax imposed under this Act, the amount exempted shall be the interest net of bond premium amortization;
|
|
(L) With the exception of any amounts subtracted
|
|
under subparagraph (K), an amount equal to the sum of all amounts disallowed as deductions by (i) Sections 171(a) (2) and 265(a)(2) of the Internal Revenue Code, as now or hereafter amended, and all amounts of expenses allocable to interest and disallowed as deductions by Section 265(1) of the Internal Revenue Code of 1954, as now or hereafter amended; and (ii) for taxable years ending on or after August 13, 1999, Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue Code; the provisions of this subparagraph are exempt from the provisions of Section 250;
|
|
(M) An amount equal to those dividends included
|
|
in such total which were paid by a corporation which conducts business operations in an Enterprise Zone or zones created under the Illinois Enterprise Zone Act and conducts substantially all of its operations in an Enterprise Zone or Zones;
|
|
(N) An amount equal to any contribution made to
|
|
a job training project established pursuant to the Tax Increment Allocation Redevelopment Act;
|
|
(O) An amount equal to those dividends included
|
|
in such total that were paid by a corporation that conducts business operations in a federally designated Foreign Trade Zone or Sub‑Zone and that is designated a High Impact Business located in Illinois; provided that dividends eligible for the deduction provided in subparagraph (M) of paragraph (2) of this subsection shall not be eligible for the deduction provided under this subparagraph (O);
|
|
(P) An amount equal to the amount of the
|
|
deduction used to compute the federal income tax credit for restoration of substantial amounts held under claim of right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;
|
|
(Q) For taxable year 1999 and thereafter, an
|
|
amount equal to the amount of any (i) distributions, to the extent includible in gross income for federal income tax purposes, made to the taxpayer because of his or her status as a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime or as an heir of the victim and (ii) items of income, to the extent includible in gross income for federal income tax purposes, attributable to, derived from or in any way related to assets stolen from, hidden from, or otherwise lost to a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime immediately prior to, during, and immediately after World War II, including, but not limited to, interest on the proceeds receivable as insurance under policies issued to a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime by European insurance companies immediately prior to and during World War II; provided, however, this subtraction from federal adjusted gross income does not apply to assets acquired with such assets or with the proceeds from the sale of such assets; provided, further, this paragraph shall only apply to a taxpayer who was the first recipient of such assets after their recovery and who is a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime or as an heir of the victim. The amount of and the eligibility for any public assistance, benefit, or similar entitlement is not affected by the inclusion of items (i) and (ii) of this paragraph in gross income for federal income tax purposes. This paragraph is exempt from the provisions of Section 250;
|
|
(R) For taxable years 2001 and thereafter, for
|
|
the taxable year in which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) is taken on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code and for each applicable taxable year thereafter, an amount equal to "x", where:
|
|
(1) "y" equals the amount of the
|
|
depreciation deduction taken for the taxable year on the taxpayer's federal income tax return on property for which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) was taken in any year under subsection (k) of Section 168 of the Internal Revenue Code, but not including the bonus depreciation deduction; and
|
|
(2) "x" equals "y" multiplied by 30 and then
|
|
divided by 70 (or "y" multiplied by 0.429).
|
|
The aggregate amount deducted under this
|
|
subparagraph in all taxable years for any one piece of property may not exceed the amount of the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on that property on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code; and
|
|
(S) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (G‑10), then an amount equal to that addition modification.
|
|
The taxpayer is allowed to take the deduction
|
|
under this subparagraph only once with respect to any one piece of property.
|
|
(3) Limitation. The amount of any modification
|
|
otherwise required under this subsection shall, under regulations prescribed by the Department, be adjusted by any amounts included therein which were properly paid, credited, or required to be distributed, or permanently set aside for charitable purposes pursuant to Internal Revenue Code Section 642(c) during the taxable year.
|
|
(d) Partnerships.
(1) In general. In the case of a partnership, base
|
|
income means an amount equal to the taxpayer's taxable income for the taxable year as modified by paragraph (2).
|
|
(2) Modifications. The taxable income referred to in
|
|
paragraph (1) shall be modified by adding thereto the sum of the following amounts:
|
|
(A) An amount equal to all amounts paid or
|
|
accrued to the taxpayer as interest or dividends during the taxable year to the extent excluded from gross income in the computation of taxable income;
|
|
(B) An amount equal to the amount of tax imposed
|
|
by this Act to the extent deducted from gross income for the taxable year;
|
|
(C) The amount of deductions allowed to the
|
|
partnership pursuant to Section 707 (c) of the Internal Revenue Code in calculating its taxable income;
|
|
(D) An amount equal to the amount of the capital
|
|
gain deduction allowable under the Internal Revenue Code, to the extent deducted from gross income in the computation of taxable income;
|
|
(D‑5) For taxable years 2001 and thereafter, an
|
|
amount equal to the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on the taxpayer's federal income tax return for the taxable year under subsection (k) of Section 168 of the Internal Revenue Code; and
|
|
(D‑6) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (D‑5), then an amount equal to the aggregate amount of the deductions taken in all taxable years under subparagraph (O) with respect to that property.
|
|
The taxpayer is required to make the addition
|
|
modification under this subparagraph only once with respect to any one piece of property;
|
|
and by deducting from the total so obtained the
|
|
|
(E) The valuation limitation amount;
(F) An amount equal to the amount of any tax
|
|
imposed by this Act which was refunded to the taxpayer and included in such total for the taxable year;
|
|
(G) An amount equal to all amounts included in
|
|
taxable income as modified by subparagraphs (A), (B), (C) and (D) which are exempt from taxation by this State either by reason of its statutes or Constitution or by reason of the Constitution, treaties or statutes of the United States; provided that, in the case of any statute of this State that exempts income derived from bonds or other obligations from the tax imposed under this Act, the amount exempted shall be the interest net of bond premium amortization;
|
|
(H) Any income of the partnership which
|
|
constitutes personal service income as defined in Section 1348 (b) (1) of the Internal Revenue Code (as in effect December 31, 1981) or a reasonable allowance for compensation paid or accrued for services rendered by partners to the partnership, whichever is greater;
|
|
(I) An amount equal to all amounts of income
|
|
distributable to an entity subject to the Personal Property Tax Replacement Income Tax imposed by subsections (c) and (d) of Section 201 of this Act including amounts distributable to organizations exempt from federal income tax by reason of Section 501(a) of the Internal Revenue Code;
|
|
(J) With the exception of any amounts subtracted
|
|
under subparagraph (G), an amount equal to the sum of all amounts disallowed as deductions by (i) Sections 171(a) (2), and 265(2) of the Internal Revenue Code of 1954, as now or hereafter amended, and all amounts of expenses allocable to interest and disallowed as deductions by Section 265(1) of the Internal Revenue Code, as now or hereafter amended; and (ii) for taxable years ending on or after August 13, 1999, Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue Code; the provisions of this subparagraph are exempt from the provisions of Section 250;
|
|
(K) An amount equal to those dividends included
|
|
in such total which were paid by a corporation which conducts business operations in an Enterprise Zone or zones created under the Illinois Enterprise Zone Act, enacted by the 82nd General Assembly, and conducts substantially all of its operations in an Enterprise Zone or Zones;
|
|
(L) An amount equal to any contribution made to
|
|
a job training project established pursuant to the Real Property Tax Increment Allocation Redevelopment Act;
|
|
(M) An amount equal to those dividends included
|
|
in such total that were paid by a corporation that conducts business operations in a federally designated Foreign Trade Zone or Sub‑Zone and that is designated a High Impact Business located in Illinois; provided that dividends eligible for the deduction provided in subparagraph (K) of paragraph (2) of this subsection shall not be eligible for the deduction provided under this subparagraph (M);
|
|
(N) An amount equal to the amount of the
|
|
deduction used to compute the federal income tax credit for restoration of substantial amounts held under claim of right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;
|
|
(O) For taxable years 2001 and thereafter, for
|
|
the taxable year in which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) is taken on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code and for each applicable taxable year thereafter, an amount equal to "x", where:
|
|
(1) "y" equals the amount of the
|
|
depreciation deduction taken for the taxable year on the taxpayer's federal income tax return on property for which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) was taken in any year under subsection (k) of Section 168 of the Internal Revenue Code, but not including the bonus depreciation deduction; and
|
|
(2) "x" equals "y" multiplied by 30 and then
|
|
divided by 70 (or "y" multiplied by 0.429).
|
|
The aggregate amount deducted under this
|
|
subparagraph in all taxable years for any one piece of property may not exceed the amount of the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on that property on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code; and
|
|
(P) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (D‑5), then an amount equal to that addition modification.
|
|
The taxpayer is allowed to take the deduction
|
|
under this subparagraph only once with respect to any one piece of property.
|
|
(e) Gross income; adjusted gross income; taxable income.
(1) In general. Subject to the provisions of
|
|
paragraph (2) and subsection (b) (3), for purposes of this Section and Section 803(e), a taxpayer's gross income, adjusted gross income, or taxable income for the taxable year shall mean the amount of gross income, adjusted gross income or taxable income properly reportable for federal income tax purposes for the taxable year under the provisions of the Internal Revenue Code. Taxable income may be less than zero. However, for taxable years ending on or after December 31, 1986, net operating loss carryforwards from taxable years ending prior to December 31, 1986, may not exceed the sum of federal taxable income for the taxable year before net operating loss deduction, plus the excess of addition modifications over subtraction modifications for the taxable year. For taxable years ending prior to December 31, 1986, taxable income may never be an amount in excess of the net operating loss for the taxable year as defined in subsections (c) and (d) of Section 172 of the Internal Revenue Code, provided that when taxable income of a corporation (other than a Subchapter S corporation), trust, or estate is less than zero and addition modifications, other than those provided by subparagraph (E) of paragraph (2) of subsection (b) for corporations or subparagraph (E) of paragraph (2) of subsection (c) for trusts and estates, exceed subtraction modifications, an addition modification must be made under those subparagraphs for any other taxable year to which the taxable income less than zero (net operating loss) is applied under Section 172 of the Internal Revenue Code or under subparagraph (E) of paragraph (2) of this subsection (e) applied in conjunction with Section 172 of the Internal Revenue Code.
|
|
(2) Special rule. For purposes of paragraph (1) of
|
|
this subsection, the taxable income properly reportable for federal income tax purposes shall mean:
|
|
(A) Certain life insurance companies. In the
|
|
case of a life insurance company subject to the tax imposed by Section 801 of the Internal Revenue Code, life insurance company taxable income, plus the amount of distribution from pre‑1984 policyholder surplus accounts as calculated under Section 815a of the Internal Revenue Code;
|
|
(B) Certain other insurance companies. In the
|
|
case of mutual insurance companies subject to the tax imposed by Section 831 of the Internal Revenue Code, insurance company taxable income;
|
|
(C) Regulated investment companies. In the case
|
|
of a regulated investment company subject to the tax imposed by Section 852 of the Internal Revenue Code, investment company taxable income;
|
|
(D) Real estate investment trusts. In the case
|
|
of a real estate investment trust subject to the tax imposed by Section 857 of the Internal Revenue Code, real estate investment trust taxable income;
|
|
(E) Consolidated corporations. In the case of a
|
|
corporation which is a member of an affiliated group of corporations filing a consolidated income tax return for the taxable year for federal income tax purposes, taxable income determined as if such corporation had filed a separate return for federal income tax purposes for the taxable year and each preceding taxable year for which it was a member of an affiliated group. For purposes of this subparagraph, the taxpayer's separate taxable income shall be determined as if the election provided by Section 243(b) (2) of the Internal Revenue Code had been in effect for all such years;
|
|
(F) Cooperatives. In the case of a cooperative
|
|
corporation or association, the taxable income of such organization determined in accordance with the provisions of Section 1381 through 1388 of the Internal Revenue Code;
|
|
(G) Subchapter S corporations. In the case of:
|
|
(i) a Subchapter S corporation for which there is in effect an election for the taxable year under Section 1362 of the Internal Revenue Code, the taxable income of such corporation determined in accordance with Section 1363(b) of the Internal Revenue Code, except that taxable income shall take into account those items which are required by Section 1363(b)(1) of the Internal Revenue Code to be separately stated; and (ii) a Subchapter S corporation for which there is in effect a federal election to opt out of the provisions of the Subchapter S Revision Act of 1982 and have applied instead the prior federal Subchapter S rules as in effect on July 1, 1982, the taxable income of such corporation determined in accordance with the federal Subchapter S rules as in effect on July 1, 1982; and
|
|
(H) Partnerships. In the case of a partnership,
|
|
taxable income determined in accordance with Section 703 of the Internal Revenue Code, except that taxable income shall take into account those items which are required by Section 703(a)(1) to be separately stated but which would be taken into account by an individual in calculating his taxable income.
|
|
(f) Valuation limitation amount.
(1) In general. The valuation limitation amount
|
|
referred to in subsections (a) (2) (G), (c) (2) (I) and (d)(2) (E) is an amount equal to:
|
|
(A) The sum of the pre‑August 1, 1969
|
|
appreciation amounts (to the extent consisting of gain reportable under the provisions of Section 1245 or 1250 of the Internal Revenue Code) for all property in respect of which such gain was reported for the taxable year; plus
|
|
(B) The lesser of (i) the sum of the pre‑August
|
|
1, 1969 appreciation amounts (to the extent consisting of capital gain) for all property in respect of which such gain was reported for federal income tax purposes for the taxable year, or (ii) the net capital gain for the taxable year, reduced in either case by any amount of such gain included in the amount determined under subsection (a) (2) (F) or (c) (2) (H).
|
|
(2) Pre‑August 1, 1969 appreciation amount.
(A) If the fair market value of property
|
|
referred to in paragraph (1) was readily ascertainable on August 1, 1969, the pre‑August 1, 1969 appreciation amount for such property is the lesser of (i) the excess of such fair market value over the taxpayer's basis (for determining gain) for such property on that date (determined under the Internal Revenue Code as in effect on that date), or (ii) the total gain realized and reportable for federal income tax purposes in respect of the sale, exchange or other disposition of such property.
|
|
(B) If the fair market value of property
|
|
referred to in paragraph (1) was not readily ascertainable on August 1, 1969, the pre‑August 1, 1969 appreciation amount for such property is that amount which bears the same ratio to the total gain reported in respect of the property for federal income tax purposes for the taxable year, as the number of full calendar months in that part of the taxpayer's holding period for the property ending July 31, 1969 bears to the number of full calendar months in the taxpayer's entire holding period for the property.
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(C) The Department shall prescribe such
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regulations as may be necessary to carry out the purposes of this paragraph.
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(g) Double deductions. Unless specifically provided otherwise, nothing
in this Section shall permit the same item to be deducted more than once.
(h) Legislative intention. Except as expressly provided by this
Section there shall be no modifications or limitations on the amounts
of income, gain, loss or deduction taken into account in determining
gross income, adjusted gross income or taxable income for federal income
tax purposes for the taxable year, or in the amount of such items
entering into the computation of base income and net income under this
Act for such taxable year, whether in respect of property values as of
August 1, 1969 or otherwise.
(Source: P.A. 92‑16, eff. 6‑28‑01; 92‑244, eff. 8‑3‑01; 92‑439, eff. 8‑17‑01; 92‑603, eff. 6‑28‑02; 92‑626, eff. 7‑11‑02; 92‑651, eff. 7‑11‑02; 92‑846, eff. 8‑23‑02; 93‑812, eff. 7‑26‑04.)
(Text of Section from P.A. 93‑840)
Sec. 203. Base income defined.
(a) Individuals.
(1) In general. In the case of an individual, base
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income means an amount equal to the taxpayer's adjusted gross income for the taxable year as modified by paragraph (2).
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(2) Modifications. The adjusted gross income
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referred to in paragraph (1) shall be modified by adding thereto the sum of the following amounts:
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(A) An amount equal to all amounts paid or
|
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accrued to the taxpayer as interest or dividends during the taxable year to the extent excluded from gross income in the computation of adjusted gross income, except stock dividends of qualified public utilities described in Section 305(e) of the Internal Revenue Code;
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(B) An amount equal to the amount of tax imposed
|
|
by this Act to the extent deducted from gross income in the computation of adjusted gross income for the taxable year;
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(C) An amount equal to the amount received
|
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during the taxable year as a recovery or refund of real property taxes paid with respect to the taxpayer's principal residence under the Revenue Act of 1939 and for which a deduction was previously taken under subparagraph (L) of this paragraph (2) prior to July 1, 1991, the retrospective application date of Article 4 of Public Act 87‑17. In the case of multi‑unit or multi‑use structures and farm dwellings, the taxes on the taxpayer's principal residence shall be that portion of the total taxes for the entire property which is attributable to such principal residence;
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(D) An amount equal to the amount of the capital
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gain deduction allowable under the Internal Revenue Code, to the extent deducted from gross income in the computation of adjusted gross income;
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(D‑5) An amount, to the extent not included in
|
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adjusted gross income, equal to the amount of money withdrawn by the taxpayer in the taxable year from a medical care savings account and the interest earned on the account in the taxable year of a withdrawal pursuant to subsection (b) of Section 20 of the Medical Care Savings Account Act or subsection (b) of Section 20 of the Medical Care Savings Account Act of 2000;
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(D‑10) For taxable years ending after December
|
|
31, 1997, an amount equal to any eligible remediation costs that the individual deducted in computing adjusted gross income and for which the individual claims a credit under subsection (l) of Section 201;
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(D‑15) For taxable years 2001 and thereafter, an
|
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amount equal to the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on the taxpayer's federal income tax return for the taxable year under subsection (k) of Section 168 of the Internal Revenue Code;
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(D‑16) If the taxpayer reports a capital gain or
|
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loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (D‑15), then an amount equal to the aggregate amount of the deductions taken in all taxable years under subparagraph (Z) with respect to that property.
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The taxpayer is required to make the addition
|
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modification under this subparagraph only once with respect to any one piece of property;
|
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(D‑17) For taxable years ending on or after
|
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December 31, 2004, an amount equal to the amount otherwise allowed as a deduction in computing base income for interest paid, accrued, or incurred, directly or indirectly, to a foreign person who would be a member of the same unitary business group but for the fact that foreign person's business activity outside the United States is 80% or more of the foreign person's total business activity. The addition modification required by this subparagraph shall be reduced to the extent that dividends were included in base income of the unitary group for the same taxable year and received by the taxpayer or by a member of the taxpayer's unitary business group (including amounts included in gross income under Sections 951 through 964 of the Internal Revenue Code and amounts included in gross income under Section 78 of the Internal Revenue Code) with respect to the stock of the same person to whom the interest was paid, accrued, or incurred.
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This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person who is subject in a foreign country or state, other than a state which requires mandatory unitary reporting, to a tax on or measured by net income with respect to such interest; or
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(ii) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person if the taxpayer can establish, based on a preponderance of the evidence, both of the following:
|
|
(a) the foreign person, during the same
|
|
taxable year, paid, accrued, or incurred, the interest to a person that is not a related member, and
|
|
(b) the transaction giving rise to the
|
|
interest expense between the taxpayer and the foreign person did not have as a principal purpose the avoidance of Illinois income tax, and is paid pursuant to a contract or agreement that reflects an arm's‑length interest rate and terms; or
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(iii) the taxpayer can establish, based on
|
|
clear and convincing evidence, that the interest paid, accrued, or incurred relates to a contract or agreement entered into at arm's‑length rates and terms and the principal purpose for the payment is not federal or Illinois tax avoidance; or
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|
(iv) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person if the taxpayer establishes by clear and convincing evidence that the adjustments are unreasonable; or if the taxpayer and the Director agree in writing to the application or use of an alternative method of apportionment under Section 304(f).
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Nothing in this subsection shall preclude the
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Director from making any other adjustment otherwise allowed under Section 404 of this Act for any tax year beginning after the effective date of this amendment provided such adjustment is made pursuant to regulation adopted by the Department and such regulations provide methods and standards by which the Department will utilize its authority under Section 404 of this Act;
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(D‑18) For taxable years ending on or after
|
|
December 31, 2004, an amount equal to the amount of intangible expenses and costs otherwise allowed as a deduction in computing base income, and that were paid, accrued, or incurred, directly or indirectly, to a foreign person who would be a member of the same unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity. The addition modification required by this subparagraph shall be reduced to the extent that dividends were included in base income of the unitary group for the same taxable year and received by the taxpayer or by a member of the taxpayer's unitary business group (including amounts included in gross income under Sections 951 through 964 of the Internal Revenue Code and amounts included in gross income under Section 78 of the Internal Revenue Code) with respect to the stock of the same person to whom the intangible expenses and costs were directly or indirectly paid, incurred, or accrued. The preceding sentence does not apply to the extent that the same dividends caused a reduction to the addition modification required under Section 203(a)(2)(D‑17) of this Act. As used in this subparagraph, the term "intangible expenses and costs" includes (1) expenses, losses, and costs for, or related to, the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property; (2) losses incurred, directly or indirectly, from factoring transactions or discounting transactions; (3) royalty, patent, technical, and copyright fees; (4) licensing fees; and (5) other similar expenses and costs. For purposes of this subparagraph, "intangible property" includes patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets.
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This paragraph shall not apply to the following:
(i) any item of intangible expenses
|
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or costs paid, accrued, or incurred, directly or indirectly, from a transaction with a foreign person who is subject in a foreign country or state, other than a state which requires mandatory unitary reporting, to a tax on or measured by net income with respect to such item; or
|
|
(ii) any item of intangible expense or
|
|
cost paid, accrued, or incurred, directly or indirectly, if the taxpayer can establish, based on a preponderance of the evidence, both of the following:
|
|
(a) the foreign person during the same
|
|
taxable year paid, accrued, or incurred, the intangible expense or cost to a person that is not a related member, and
|
|
(b) the transaction giving rise to the
|
|
intangible expense or cost between the taxpayer and the foreign person did not have as a principal purpose the avoidance of Illinois income tax, and is paid pursuant to a contract or agreement that reflects arm's‑length terms; or
|
|
(iii) any item of intangible expense or
|
|
cost paid, accrued, or incurred, directly or indirectly, from a transaction with a foreign person if the taxpayer establishes by clear and convincing evidence, that the adjustments are unreasonable; or if the taxpayer and the Director agree in writing to the application or use of an alternative method of apportionment under Section 304(f);
|
|
Nothing in this subsection shall preclude the
|
|
Director from making any other adjustment otherwise allowed under Section 404 of this Act for any tax year beginning after the effective date of this amendment provided such adjustment is made pursuant to regulation adopted by the Department and such regulations provide methods and standards by which the Department will utilize its authority under Section 404 of this Act;
|
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(D‑20) For taxable years beginning on or after
|
|
January 1, 2002, in the case of a distribution from a qualified tuition program under Section 529 of the Internal Revenue Code, other than (i) a distribution from a College Savings Pool created under Section 16.5 of the State Treasurer Act or (ii) a distribution from the Illinois Prepaid Tuition Trust Fund, an amount equal to the amount excluded from gross income under Section 529(c)(3)(B);
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and by deducting from the total so obtained the sum of
|
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(E) For taxable years ending before December 31,
|
|
2001, any amount included in such total in respect of any compensation (including but not limited to any compensation paid or accrued to a serviceman while a prisoner of war or missing in action) paid to a resident by reason of being on active duty in the Armed Forces of the United States and in respect of any compensation paid or accrued to a resident who as a governmental employee was a prisoner of war or missing in action, and in respect of any compensation paid to a resident in 1971 or thereafter for annual training performed pursuant to Sections 502 and 503, Title 32, United States Code as a member of the Illinois National Guard. For taxable years ending on or after December 31, 2001, any amount included in such total in respect of any compensation (including but not limited to any compensation paid or accrued to a serviceman while a prisoner of war or missing in action) paid to a resident by reason of being a member of any component of the Armed Forces of the United States and in respect of any compensation paid or accrued to a resident who as a governmental employee was a prisoner of war or missing in action, and in respect of any compensation paid to a resident in 2001 or thereafter by reason of being a member of the Illinois National Guard. The provisions of this amendatory Act of the 92nd General Assembly are exempt from the provisions of Section 250;
|
|
(F) An amount equal to all amounts included in
|
|
such total pursuant to the provisions of Sections 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the Internal Revenue Code, or included in such total as distributions under the provisions of any retirement or disability plan for employees of any governmental agency or unit, or retirement payments to retired partners, which payments are excluded in computing net earnings from self employment by Section 1402 of the Internal Revenue Code and regulations adopted pursuant thereto;
|
|
(G) The valuation limitation amount;
(H) An amount equal to the amount of any tax
|
|
imposed by this Act which was refunded to the taxpayer and included in such total for the taxable year;
|
|
(I) An amount equal to all amounts included in
|
|
such total pursuant to the provisions of Section 111 of the Internal Revenue Code as a recovery of items previously deducted from adjusted gross income in the computation of taxable income;
|
|
(J) An amount equal to those dividends included
|
|
in such total which were paid by a corporation which conducts business operations in an Enterprise Zone or zones created under the Illinois Enterprise Zone Act, and conducts substantially all of its operations in an Enterprise Zone or zones;
|
|
(K) An amount equal to those dividends included
|
|
in such total that were paid by a corporation that conducts business operations in a federally designated Foreign Trade Zone or Sub‑Zone and that is designated a High Impact Business located in Illinois; provided that dividends eligible for the deduction provided in subparagraph (J) of paragraph (2) of this subsection shall not be eligible for the deduction provided under this subparagraph (K);
|
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(L) For taxable years ending after December 31,
|
|
1983, an amount equal to all social security benefits and railroad retirement benefits included in such total pursuant to Sections 72(r) and 86 of the Internal Revenue Code;
|
|
(M) With the exception of any amounts subtracted
|
|
under subparagraph (N), an amount equal to the sum of all amounts disallowed as deductions by (i) Sections 171(a) (2), and 265(2) of the Internal Revenue Code of 1954, as now or hereafter amended, and all amounts of expenses allocable to interest and disallowed as deductions by Section 265(1) of the Internal Revenue Code of 1954, as now or hereafter amended; and (ii) for taxable years ending on or after August 13, 1999, Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue Code; the provisions of this subparagraph are exempt from the provisions of Section 250;
|
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(N) An amount equal to all amounts included in
|
|
such total which are exempt from taxation by this State either by reason of its statutes or Constitution or by reason of the Constitution, treaties or statutes of the United States; provided that, in the case of any statute of this State that exempts income derived from bonds or other obligations from the tax imposed under this Act, the amount exempted shall be the interest net of bond premium amortization;
|
|
(O) An amount equal to any contribution made to
|
|
a job training project established pursuant to the Tax Increment Allocation Redevelopment Act;
|
|
(P) An amount equal to the amount of the
|
|
deduction used to compute the federal income tax credit for restoration of substantial amounts held under claim of right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;
|
|
(Q) An amount equal to any amounts included in
|
|
such total, received by the taxpayer as an acceleration in the payment of life, endowment or annuity benefits in advance of the time they would otherwise be payable as an indemnity for a terminal illness;
|
|
(R) An amount equal to the amount of any federal
|
|
or State bonus paid to veterans of the Persian Gulf War;
|
|
(S) An amount, to the extent included in
|
|
adjusted gross income, equal to the amount of a contribution made in the taxable year on behalf of the taxpayer to a medical care savings account established under the Medical Care Savings Account Act or the Medical Care Savings Account Act of 2000 to the extent the contribution is accepted by the account administrator as provided in that Act;
|
|
(T) An amount, to the extent included in
|
|
adjusted gross income, equal to the amount of interest earned in the taxable year on a medical care savings account established under the Medical Care Savings Account Act or the Medical Care Savings Account Act of 2000 on behalf of the taxpayer, other than interest added pursuant to item (D‑5) of this paragraph (2);
|
|
(U) For one taxable year beginning on or after
|
|
January 1, 1994, an amount equal to the total amount of tax imposed and paid under subsections (a) and (b) of Section 201 of this Act on grant amounts received by the taxpayer under the Nursing Home Grant Assistance Act during the taxpayer's taxable years 1992 and 1993;
|
|
(V) Beginning with tax years ending on or after
|
|
December 31, 1995 and ending with tax years ending on or before December 31, 2004, an amount equal to the amount paid by a taxpayer who is a self‑employed taxpayer, a partner of a partnership, or a shareholder in a Subchapter S corporation for health insurance or long‑term care insurance for that taxpayer or that taxpayer's spouse or dependents, to the extent that the amount paid for that health insurance or long‑term care insurance may be deducted under Section 213 of the Internal Revenue Code of 1986, has not been deducted on the federal income tax return of the taxpayer, and does not exceed the taxable income attributable to that taxpayer's income, self‑employment income, or Subchapter S corporation income; except that no deduction shall be allowed under this item (V) if the taxpayer is eligible to participate in any health insurance or long‑term care insurance plan of an employer of the taxpayer or the taxpayer's spouse. The amount of the health insurance and long‑term care insurance subtracted under this item (V) shall be determined by multiplying total health insurance and long‑term care insurance premiums paid by the taxpayer times a number that represents the fractional percentage of eligible medical expenses under Section 213 of the Internal Revenue Code of 1986 not actually deducted on the taxpayer's federal income tax return;
|
|
(W) For taxable years beginning on or after
|
|
January 1, 1998, all amounts included in the taxpayer's federal gross income in the taxable year from amounts converted from a regular IRA to a Roth IRA. This paragraph is exempt from the provisions of Section 250;
|
|
(X) For taxable year 1999 and thereafter, an
|
|
amount equal to the amount of any (i) distributions, to the extent includible in gross income for federal income tax purposes, made to the taxpayer because of his or her status as a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime or as an heir of the victim and (ii) items of income, to the extent includible in gross income for federal income tax purposes, attributable to, derived from or in any way related to assets stolen from, hidden from, or otherwise lost to a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime immediately prior to, during, and immediately after World War II, including, but not limited to, interest on the proceeds receivable as insurance under policies issued to a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime by European insurance companies immediately prior to and during World War II; provided, however, this subtraction from federal adjusted gross income does not apply to assets acquired with such assets or with the proceeds from the sale of such assets; provided, further, this paragraph shall only apply to a taxpayer who was the first recipient of such assets after their recovery and who is a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime or as an heir of the victim. The amount of and the eligibility for any public assistance, benefit, or similar entitlement is not affected by the inclusion of items (i) and (ii) of this paragraph in gross income for federal income tax purposes. This paragraph is exempt from the provisions of Section 250;
|
|
(Y) For taxable years beginning on or after
|
|
January 1, 2002, moneys contributed in the taxable year to a College Savings Pool account under Section 16.5 of the State Treasurer Act, except that amounts excluded from gross income under Section 529(c)(3)(C)(i) of the Internal Revenue Code shall not be considered moneys contributed under this subparagraph (Y). This subparagraph (Y) is exempt from the provisions of Section 250;
|
|
(Z) For taxable years 2001 and thereafter, for
|
|
the taxable year in which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) is taken on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code and for each applicable taxable year thereafter, an amount equal to "x", where:
|
|
(1) "y" equals the amount of the
|
|
depreciation deduction taken for the taxable year on the taxpayer's federal income tax return on property for which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) was taken in any year under subsection (k) of Section 168 of the Internal Revenue Code, but not including the bonus depreciation deduction; and
|
|
(2) "x" equals "y" multiplied by 30 and then
|
|
divided by 70 (or "y" multiplied by 0.429).
|
|
The aggregate amount deducted under this
|
|
subparagraph in all taxable years for any one piece of property may not exceed the amount of the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on that property on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code;
|
|
(AA) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (D‑15), then an amount equal to that addition modification.
|
|
The taxpayer is allowed to take the deduction
|
|
under this subparagraph only once with respect to any one piece of property;
|
|
(BB) Any amount included in adjusted gross
|
|
income, other than salary, received by a driver in a ridesharing arrangement using a motor vehicle;
|
|
(CC) The amount of (i) any interest income (net
|
|
of the deductions allocable thereto) taken into account for the taxable year with respect to a transaction with a taxpayer that is required to make an addition modification with respect to such transaction under Section 203(a)(2)(D‑17), 203(b)(2)(E‑13), 203(c)(2)(G‑12), or 203(d)(2)(D‑7), but not to exceed the amount of that addition modification, and (ii) any income from intangible property (net of the deductions allocable thereto) taken into account for the taxable year with respect to a transaction with a taxpayer that is required to make an addition modification with respect to such transaction under Section 203(a)(2)(D‑18), 203(b)(2)(E‑14), 203(c)(2)(G‑13), or 203(d)(2)(D‑8), but not to exceed the amount of that addition modification;
|
|
(DD) An amount equal to the interest income taken
|
|
into account for the taxable year (net of the deductions allocable thereto) with respect to transactions with a foreign person who would be a member of the taxpayer's unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity, but not to exceed the addition modification required to be made for the same taxable year under Section 203(a)(2)(D‑17) for interest paid, accrued, or incurred, directly or indirectly, to the same foreign person; and
|
|
(EE) An amount equal to the income from
|
|
intangible property taken into account for the taxable year (net of the deductions allocable thereto) with respect to transactions with a foreign person who would be a member of the taxpayer's unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity, but not to exceed the addition modification required to be made for the same taxable year under Section 203(a)(2)(D‑18) for intangible expenses and costs paid, accrued, or incurred, directly or indirectly, to the same foreign person.
|
|
(b) Corporations.
(1) In general. In the case of a corporation, base
|
|
income means an amount equal to the taxpayer's taxable income for the taxable year as modified by paragraph (2).
|
|
(2) Modifications. The taxable income referred to
|
|
in paragraph (1) shall be modified by adding thereto the sum of the following amounts:
|
|
(A) An amount equal to all amounts paid or
|
|
accrued to the taxpayer as interest and all distributions received from regulated investment companies during the taxable year to the extent excluded from gross income in the computation of taxable income;
|
|
(B) An amount equal to the amount of tax imposed
|
|
by this Act to the extent deducted from gross income in the computation of taxable income for the taxable year;
|
|
(C) In the case of a regulated investment
|
|
company, an amount equal to the excess of (i) the net long‑term capital gain for the taxable year, over (ii) the amount of the capital gain dividends designated as such in accordance with Section 852(b)(3)(C) of the Internal Revenue Code and any amount designated under Section 852(b)(3)(D) of the Internal Revenue Code, attributable to the taxable year (this amendatory Act of 1995 (Public Act 89‑89) is declarative of existing law and is not a new enactment);
|
|
(D) The amount of any net operating loss
|
|
deduction taken in arriving at taxable income, other than a net operating loss carried forward from a taxable year ending prior to December 31, 1986;
|
|
(E) For taxable years in which a net operating
|
|
loss carryback or carryforward from a taxable year ending prior to December 31, 1986 is an element of taxable income under paragraph (1) of subsection (e) or subparagraph (E) of paragraph (2) of subsection (e), the amount by which addition modifications other than those provided by this subparagraph (E) exceeded subtraction modifications in such earlier taxable year, with the following limitations applied in the order that they are listed:
|
|
(i) the addition modification relating to
|
|
the net operating loss carried back or forward to the taxable year from any taxable year ending prior to December 31, 1986 shall be reduced by the amount of addition modification under this subparagraph (E) which related to that net operating loss and which was taken into account in calculating the base income of an earlier taxable year, and
|
|
(ii) the addition modification relating to
|
|
the net operating loss carried back or forward to the taxable year from any taxable year ending prior to December 31, 1986 shall not exceed the amount of such carryback or carryforward;
|
|
For taxable years in which there is a net
|
|
operating loss carryback or carryforward from more than one other taxable year ending prior to December 31, 1986, the addition modification provided in this subparagraph (E) shall be the sum of the amounts computed independently under the preceding provisions of this subparagraph (E) for each such taxable year;
|
|
(E‑5) For taxable years ending after December
|
|
31, 1997, an amount equal to any eligible remediation costs that the corporation deducted in computing adjusted gross income and for which the corporation claims a credit under subsection (l) of Section 201;
|
|
(E‑10) For taxable years 2001 and thereafter, an
|
|
amount equal to the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on the taxpayer's federal income tax return for the taxable year under subsection (k) of Section 168 of the Internal Revenue Code; and
|
|
(E‑11) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (E‑10), then an amount equal to the aggregate amount of the deductions taken in all taxable years under subparagraph (T) with respect to that property;
|
|
The taxpayer is required to make the addition
|
|
modification under this subparagraph only once with respect to any one piece of property;
|
|
(E‑12) For taxable years ending on or after
|
|
December 31, 2004, an amount equal to the amount otherwise allowed as a deduction in computing base income for interest paid, accrued, or incurred, directly or indirectly, to a foreign person who would be a member of the same unitary business group but for the fact the foreign person's business activity outside the United States is 80% or more of the foreign person's total business activity. The addition modification required by this subparagraph shall be reduced to the extent that dividends were included in base income of the unitary group for the same taxable year and received by the taxpayer or by a member of the taxpayer's unitary business group (including amounts included in gross income pursuant to Sections 951 through 964 of the Internal Revenue Code and amounts included in gross income under Section 78 of the Internal Revenue Code) with respect to the stock of the same person to whom the interest was paid, accrued, or incurred.
|
|
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person who is subject in a foreign country or state, other than a state which requires mandatory unitary reporting, to a tax on or measured by net income with respect to such interest; or
|
|
(ii) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person if the taxpayer can establish, based on a preponderance of the evidence, both of the following:
|
|
(a) the foreign person, during the same
|
|
taxable year, paid, accrued, or incurred, the interest to a person that is not a related member, and
|
|
(b) the transaction giving rise to the
|
|
interest expense between the taxpayer and the foreign person did not have as a principal purpose the avoidance of Illinois income tax, and is paid pursuant to a contract or agreement that reflects an arm's‑length interest rate and terms; or
|
|
(iii) the taxpayer can establish, based on
|
|
clear and convincing evidence, that the interest paid, accrued, or incurred relates to a contract or agreement entered into at arm's‑length rates and terms and the principal purpose for the payment is not federal or Illinois tax avoidance; or
|
|
(iv) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person if the taxpayer establishes by clear and convincing evidence that the adjustments are unreasonable; or if the taxpayer and the Director agree in writing to the application or use of an alternative method of apportionment under Section 304(f).
|
|
Nothing in this subsection shall preclude the
|
|
Director from making any other adjustment otherwise allowed under Section 404 of this Act for any tax year beginning after the effective date of this amendment provided such adjustment is made pursuant to regulation adopted by the Department and such regulations provide methods and standards by which the Department will utilize its authority under Section 404 of this Act;
|
|
(E‑13) For taxable years ending on or after
|
|
December 31, 2004, an amount equal to the amount of intangible expenses and costs otherwise allowed as a deduction in computing base income, and that were paid, accrued, or incurred, directly or indirectly, to a foreign person who would be a member of the same unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity. The addition modification required by this subparagraph shall be reduced to the extent that dividends were included in base income of the unitary group for the same taxable year and received by the taxpayer or by a member of the taxpayer's unitary business group (including amounts included in gross income pursuant to Sections 951 through 964 of the Internal Revenue Code and amounts included in gross income under Section 78 of the Internal Revenue Code) with respect to the stock of the same person to whom the intangible expenses and costs were directly or indirectly paid, incurred, or accrued. The preceding sentence shall not apply to the extent that the same dividends caused a reduction to the addition modification required under Section 203(b)(2)(E‑12) of this Act. As used in this subparagraph, the term "intangible expenses and costs" includes (1) expenses, losses, and costs for, or related to, the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property; (2) losses incurred, directly or indirectly, from factoring transactions or discounting transactions; (3) royalty, patent, technical, and copyright fees; (4) licensing fees; and (5) other similar expenses and costs. For purposes of this subparagraph, "intangible property" includes patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets.
|
|
This paragraph shall not apply to the following:
(i) any item of intangible expenses
|
|
or costs paid, accrued, or incurred, directly or indirectly, from a transaction with a foreign person who is subject in a foreign country or state, other than a state which requires mandatory unitary reporting, to a tax on or measured by net income with respect to such item; or
|
|
(ii) any item of intangible expense or
|
|
cost paid, accrued, or incurred, directly or indirectly, if the taxpayer can establish, based on a preponderance of the evidence, both of the following:
|
|
(a) the foreign person during the same
|
|
taxable year paid, accrued, or incurred, the intangible expense or cost to a person that is not a related member, and
|
|
(b) the transaction giving rise to the
|
|
intangible expense or cost between the taxpayer and the foreign person did not have as a principal purpose the avoidance of Illinois income tax, and is paid pursuant to a contract or agreement that reflects arm's‑length terms; or
|
|
(iii) any item of intangible expense or
|
|
cost paid, accrued, or incurred, directly or indirectly, from a transaction with a foreign person if the taxpayer establishes by clear and convincing evidence, that the adjustments are unreasonable; or if the taxpayer and the Director agree in writing to the application or use of an alternative method of apportionment under Section 304(f);
|
|
Nothing in this subsection shall preclude the
|
|
Director from making any other adjustment otherwise allowed under Section 404 of this Act for any tax year beginning after the effective date of this amendment provided such adjustment is made pursuant to regulation adopted by the Department and such regulations provide methods and standards by which the Department will utilize its authority under Section 404 of this Act;
|
|
and by deducting from the total so obtained the sum of
|
|
|
(F) An amount equal to the amount of any tax
|
|
imposed by this Act which was refunded to the taxpayer and included in such total for the taxable year;
|
|
(G) An amount equal to any amount included in
|
|
such total under Section 78 of the Internal Revenue Code;
|
|
(H) In the case of a regulated investment
|
|
company, an amount equal to the amount of exempt interest dividends as defined in subsection (b) (5) of Section 852 of the Internal Revenue Code, paid to shareholders for the taxable year;
|
|
(I) With the exception of any amounts subtracted
|
|
under subparagraph (J), an amount equal to the sum of all amounts disallowed as deductions by (i) Sections 171(a) (2), and 265(a)(2) and amounts disallowed as interest expense by Section 291(a)(3) of the Internal Revenue Code, as now or hereafter amended, and all amounts of expenses allocable to interest and disallowed as deductions by Section 265(a)(1) of the Internal Revenue Code, as now or hereafter amended; and (ii) for taxable years ending on or after August 13, 1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and 832(b)(5)(B)(i) of the Internal Revenue Code; the provisions of this subparagraph are exempt from the provisions of Section 250;
|
|
(J) An amount equal to all amounts included in
|
|
such total which are exempt from taxation by this State either by reason of its statutes or Constitution or by reason of the Constitution, treaties or statutes of the United States; provided that, in the case of any statute of this State that exempts income derived from bonds or other obligations from the tax imposed under this Act, the amount exempted shall be the interest net of bond premium amortization;
|
|
(K) An amount equal to those dividends included
|
|
in such total which were paid by a corporation which conducts business operations in an Enterprise Zone or zones created under the Illinois Enterprise Zone Act and conducts substantially all of its operations in an Enterprise Zone or zones;
|
|
(L) An amount equal to those dividends included
|
|
in such total that were paid by a corporation that conducts business operations in a federally designated Foreign Trade Zone or Sub‑Zone and that is designated a High Impact Business located in Illinois; provided that dividends eligible for the deduction provided in subparagraph (K) of paragraph 2 of this subsection shall not be eligible for the deduction provided under this subparagraph (L);
|
|
(M) For any taxpayer that is a financial
|
|
organization within the meaning of Section 304(c) of this Act, an amount included in such total as interest income from a loan or loans made by such taxpayer to a borrower, to the extent that such a loan is secured by property which is eligible for the Enterprise Zone Investment Credit. To determine the portion of a loan or loans that is secured by property eligible for a Section 201(f) investment credit to the borrower, the entire principal amount of the loan or loans between the taxpayer and the borrower should be divided into the basis of the Section 201(f) investment credit property which secures the loan or loans, using for this purpose the original basis of such property on the date that it was placed in service in the Enterprise Zone. The subtraction modification available to taxpayer in any year under this subsection shall be that portion of the total interest paid by the borrower with respect to such loan attributable to the eligible property as calculated under the previous sentence;
|
|
(M‑1) For any taxpayer that is a financial
|
|
organization within the meaning of Section 304(c) of this Act, an amount included in such total as interest income from a loan or loans made by such taxpayer to a borrower, to the extent that such a loan is secured by property which is eligible for the High Impact Business Investment Credit. To determine the portion of a loan or loans that is secured by property eligible for a Section 201(h) investment credit to the borrower, the entire principal amount of the loan or loans between the taxpayer and the borrower should be divided into the basis of the Section 201(h) investment credit property which secures the loan or loans, using for this purpose the original basis of such property on the date that it was placed in service in a federally designated Foreign Trade Zone or Sub‑Zone located in Illinois. No taxpayer that is eligible for the deduction provided in subparagraph (M) of paragraph (2) of this subsection shall be eligible for the deduction provided under this subparagraph (M‑1). The subtraction modification available to taxpayers in any year under this subsection shall be that portion of the total interest paid by the borrower with respect to such loan attributable to the eligible property as calculated under the previous sentence;
|
|
(N) Two times any contribution made during the
|
|
taxable year to a designated zone organization to the extent that the contribution (i) qualifies as a charitable contribution under subsection (c) of Section 170 of the Internal Revenue Code and (ii) must, by its terms, be used for a project approved by the Department of Commerce and Economic Opportunity under Section 11 of the Illinois Enterprise Zone Act;
|
|
(O) An amount equal to: (i) 85% for taxable
|
|
years ending on or before December 31, 1992, or, a percentage equal to the percentage allowable under Section 243(a)(1) of the Internal Revenue Code of 1986 for taxable years ending after December 31, 1992, of the amount by which dividends included in taxable income and received from a corporation that is not created or organized under the laws of the United States or any state or political subdivision thereof, including, for taxable years ending on or after December 31, 1988, dividends received or deemed received or paid or deemed paid under Sections 951 through 964 of the Internal Revenue Code, exceed the amount of the modification provided under subparagraph (G) of paragraph (2) of this subsection (b) which is related to such dividends; plus (ii) 100% of the amount by which dividends, included in taxable income and received, including, for taxable years ending on or after December 31, 1988, dividends received or deemed received or paid or deemed paid under Sections 951 through 964 of the Internal Revenue Code, from any such corporation specified in clause (i) that would but for the provisions of Section 1504 (b) (3) of the Internal Revenue Code be treated as a member of the affiliated group which includes the dividend recipient, exceed the amount of the modification provided under subparagraph (G) of paragraph (2) of this subsection (b) which is related to such dividends;
|
|
(P) An amount equal to any contribution made to
|
|
a job training project established pursuant to the Tax Increment Allocation Redevelopment Act;
|
|
(Q) An amount equal to the amount of the
|
|
deduction used to compute the federal income tax credit for restoration of substantial amounts held under claim of right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;
|
|
(R) In the case of an attorney‑in‑fact with
|
|
respect to whom an interinsurer or a reciprocal insurer has made the election under Section 835 of the Internal Revenue Code, 26 U.S.C. 835, an amount equal to the excess, if any, of the amounts paid or incurred by that interinsurer or reciprocal insurer in the taxable year to the attorney‑in‑fact over the deduction allowed to that interinsurer or reciprocal insurer with respect to the attorney‑in‑fact under Section 835(b) of the Internal Revenue Code for the taxable year;
|
|
(S) For taxable years ending on or after
|
|
December 31, 1997, in the case of a Subchapter S corporation, an amount equal to all amounts of income allocable to a shareholder subject to the Personal Property Tax Replacement Income Tax imposed by subsections (c) and (d) of Section 201 of this Act, including amounts allocable to organizations exempt from federal income tax by reason of Section 501(a) of the Internal Revenue Code. This subparagraph (S) is exempt from the provisions of Section 250;
|
|
(T) For taxable years 2001 and thereafter, for
|
|
the taxable year in which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) is taken on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code and for each applicable taxable year thereafter, an amount equal to "x", where:
|
|
(1) "y" equals the amount of the
|
|
depreciation deduction taken for the taxable year on the taxpayer's federal income tax return on property for which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) was taken in any year under subsection (k) of Section 168 of the Internal Revenue Code, but not including the bonus depreciation deduction; and
|
|
(2) "x" equals "y" multiplied by 30 and then
|
|
divided by 70 (or "y" multiplied by 0.429).
|
|
The aggregate amount deducted under this
|
|
subparagraph in all taxable years for any one piece of property may not exceed the amount of the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on that property on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code;
|
|
(U) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (E‑10), then an amount equal to that addition modification.
|
|
The taxpayer is allowed to take the deduction
|
|
under this subparagraph only once with respect to any one piece of property;
|
|
(V) The amount of: (i) any interest income (net
|
|
of the deductions allocable thereto) taken into account for the taxable year with respect to a transaction with a taxpayer that is required to make an addition modification with respect to such transaction under Section 203(a)(2)(D‑17), 203(b)(2)(E‑12), 203(c)(2)(G‑12), or 203(d)(2)(D‑7), but not to exceed the amount of such addition modification and (ii) any income from intangible property (net of the deductions allocable thereto) taken into account for the taxable year with respect to a transaction with a taxpayer that is required to make an addition modification with respect to such transaction under Section 203(a)(2)(D‑18), 203(b)(2)(E‑13), 203(c)(2)(G‑13), or 203(d)(2)(D‑8), but not to exceed the amount of such addition modification;
|
|
(W) An amount equal to the interest income taken
|
|
into account for the taxable year (net of the deductions allocable thereto) with respect to transactions with a foreign person who would be a member of the taxpayer's unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity, but not to exceed the addition modification required to be made for the same taxable year under Section 203(b)(2)(E‑12) for interest paid, accrued, or incurred, directly or indirectly, to the same foreign person; and
|
|
(X) An amount equal to the income from intangible
|
|
property taken into account for the taxable year (net of the deductions allocable thereto) with respect to transactions with a foreign person who would be a member of the taxpayer's unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity, but not to exceed the addition modification required to be made for the same taxable year under Section 203(b)(2)(E‑13) for intangible expenses and costs paid, accrued, or incurred, directly or indirectly, to the same foreign person.
|
|
(3) Special rule. For purposes of paragraph (2)
|
|
(A), "gross income" in the case of a life insurance company, for tax years ending on and after December 31, 1994, shall mean the gross investment income for the taxable year.
|
|
(c) Trusts and estates.
(1) In general. In the case of a trust or estate,
|
|
base income means an amount equal to the taxpayer's taxable income for the taxable year as modified by paragraph (2).
|
|
(2) Modifications. Subject to the provisions of
|
|
paragraph (3), the taxable income referred to in paragraph (1) shall be modified by adding thereto the sum of the following amounts:
|
|
(A) An amount equal to all amounts paid or
|
|
accrued to the taxpayer as interest or dividends during the taxable year to the extent excluded from gross income in the computation of taxable income;
|
|
(B) In the case of (i) an estate, $600; (ii) a
|
|
trust which, under its governing instrument, is required to distribute all of its income currently, $300; and (iii) any other trust, $100, but in each such case, only to the extent such amount was deducted in the computation of taxable income;
|
|
(C) An amount equal to the amount of tax imposed
|
|
by this Act to the extent deducted from gross income in the computation of taxable income for the taxable year;
|
|
(D) The amount of any net operating loss
|
|
deduction taken in arriving at taxable income, other than a net operating loss carried forward from a taxable year ending prior to December 31, 1986;
|
|
(E) For taxable years in which a net operating
|
|
loss carryback or carryforward from a taxable year ending prior to December 31, 1986 is an element of taxable income under paragraph (1) of subsection (e) or subparagraph (E) of paragraph (2) of subsection (e), the amount by which addition modifications other than those provided by this subparagraph (E) exceeded subtraction modifications in such taxable year, with the following limitations applied in the order that they are listed:
|
|
(i) the addition modification relating to
|
|
the net operating loss carried back or forward to the taxable year from any taxable year ending prior to December 31, 1986 shall be reduced by the amount of addition modification under this subparagraph (E) which related to that net operating loss and which was taken into account in calculating the base income of an earlier taxable year, and
|
|
(ii) the addition modification relating to
|
|
the net operating loss carried back or forward to the taxable year from any taxable year ending prior to December 31, 1986 shall not exceed the amount of such carryback or carryforward;
|
|
For taxable years in which there is a net
|
|
operating loss carryback or carryforward from more than one other taxable year ending prior to December 31, 1986, the addition modification provided in this subparagraph (E) shall be the sum of the amounts computed independently under the preceding provisions of this subparagraph (E) for each such taxable year;
|
|
(F) For taxable years ending on or after January
|
|
1, 1989, an amount equal to the tax deducted pursuant to Section 164 of the Internal Revenue Code if the trust or estate is claiming the same tax for purposes of the Illinois foreign tax credit under Section 601 of this Act;
|
|
(G) An amount equal to the amount of the capital
|
|
gain deduction allowable under the Internal Revenue Code, to the extent deducted from gross income in the computation of taxable income;
|
|
(G‑5) For taxable years ending after December
|
|
31, 1997, an amount equal to any eligible remediation costs that the trust or estate deducted in computing adjusted gross income and for which the trust or estate claims a credit under subsection (l) of Section 201;
|
|
(G‑10) For taxable years 2001 and thereafter, an
|
|
amount equal to the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on the taxpayer's federal income tax return for the taxable year under subsection (k) of Section 168 of the Internal Revenue Code; and
|
|
(G‑11) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (G‑10), then an amount equal to the aggregate amount of the deductions taken in all taxable years under subparagraph (R) with respect to that property;
|
|
The taxpayer is required to make the addition
|
|
modification under this subparagraph only once with respect to any one piece of property;
|
|
(G‑12) For taxable years ending on or after
|
|
December 31, 2004, an amount equal to the amount otherwise allowed as a deduction in computing base income for interest paid, accrued, or incurred, directly or indirectly, to a foreign person who would be a member of the same unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of the foreign person's total business activity. The addition modification required by this subparagraph shall be reduced to the extent that dividends were included in base income of the unitary group for the same taxable year and received by the taxpayer or by a member of the taxpayer's unitary business group (including amounts included in gross income pursuant to Sections 951 through 964 of the Internal Revenue Code and amounts included in gross income under Section 78 of the Internal Revenue Code) with respect to the stock of the same person to whom the interest was paid, accrued, or incurred.
|
|
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person who is subject in a foreign country or state, other than a state which requires mandatory unitary reporting, to a tax on or measured by net income with respect to such interest; or
|
|
(ii) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person if the taxpayer can establish, based on a preponderance of the evidence, both of the following:
|
|
(a) the foreign person, during the same
|
|
taxable year, paid, accrued, or incurred, the interest to a person that is not a related member, and
|
|
(b) the transaction giving rise to the
|
|
interest expense between the taxpayer and the foreign person did not have as a principal purpose the avoidance of Illinois income tax, and is paid pursuant to a contract or agreement that reflects an arm's‑length interest rate and terms; or
|
|
(iii) the taxpayer can establish, based on
|
|
clear and convincing evidence, that the interest paid, accrued, or incurred relates to a contract or agreement entered into at arm's‑length rates and terms and the principal purpose for the payment is not federal or Illinois tax avoidance; or
|
|
(iv) an item of interest paid, accrued, or
|
|
incurred, directly or indirectly, to a foreign person if the taxpayer establishes by clear and convincing evidence that the adjustments are unreasonable; or if the taxpayer and the Director agree in writing to the application or use of an alternative method of apportionment under Section 304(f).
|
|
Nothing in this subsection shall preclude the
|
|
Director from making any other adjustment otherwise allowed under Section 404 of this Act for any tax year beginning after the effective date of this amendment provided such adjustment is made pursuant to regulation adopted by the Department and such regulations provide methods and standards by which the Department will utilize its authority under Section 404 of this Act;
|
|
(G‑13) For taxable years ending on or after
|
|
December 31, 2004, an amount equal to the amount of intangible expenses and costs otherwise allowed as a deduction in computing base income, and that were paid, accrued, or incurred, directly or indirectly, to a foreign person who would be a member of the same unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity. The addition modification required by this subparagraph shall be reduced to the extent that dividends were included in base income of the unitary group for the same taxable year and received by the taxpayer or by a member of the taxpayer's unitary business group (including amounts included in gross income pursuant to Sections 951 through 964 of the Internal Revenue Code and amounts included in gross income under Section 78 of the Internal Revenue Code) with respect to the stock of the same person to whom the intangible expenses and costs were directly or indirectly paid, incurred, or accrued. The preceding sentence shall not apply to the extent that the same dividends caused a reduction to the addition modification required under Section 203(c)(2)(G‑12) of this Act. As used in this subparagraph, the term "intangible expenses and costs" includes: (1) expenses, losses, and costs for or related to the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property; (2) losses incurred, directly or indirectly, from factoring transactions or discounting transactions; (3) royalty, patent, technical, and copyright fees; (4) licensing fees; and (5) other similar expenses and costs. For purposes of this subparagraph, "intangible property" includes patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets.
|
|
This paragraph shall not apply to the following:
(i) any item of intangible expenses
|
|
or costs paid, accrued, or incurred, directly or indirectly, from a transaction with a foreign person who is subject in a foreign country or state, other than a state which requires mandatory unitary reporting, to a tax on or measured by net income with respect to such item; or
|
|
(ii) any item of intangible expense or
|
|
cost paid, accrued, or incurred, directly or indirectly, if the taxpayer can establish, based on a preponderance of the evidence, both of the following:
|
|
(a) the foreign person during the same
|
|
taxable year paid, accrued, or incurred, the intangible expense or cost to a person that is not a related member, and
|
|
(b) the transaction giving rise to the
|
|
intangible expense or cost between the taxpayer and the foreign person did not have as a principal purpose the avoidance of Illinois income tax, and is paid pursuant to a contract or agreement that reflects arm's‑length terms; or
|
|
(iii) any item of intangible expense or
|
|
cost paid, accrued, or incurred, directly or indirectly, from a transaction with a foreign person if the taxpayer establishes by clear and convincing evidence, that the adjustments are unreasonable; or if the taxpayer and the Director agree in writing to the application or use of an alternative method of apportionment under Section 304(f);
|
|
Nothing in this subsection shall preclude the
|
|
Director from making any other adjustment otherwise allowed under Section 404 of this Act for any tax year beginning after the effective date of this amendment provided such adjustment is made pursuant to regulation adopted by the Department and such regulations provide methods and standards by which the Department will utilize its authority under Section 404 of this Act;
|
|
and by deducting from the total so obtained the sum of
|
|
|
(H) An amount equal to all amounts included in
|
|
such total pursuant to the provisions of Sections 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the Internal Revenue Code or included in such total as distributions under the provisions of any retirement or disability plan for employees of any governmental agency or unit, or retirement payments to retired partners, which payments are excluded in computing net earnings from self employment by Section 1402 of the Internal Revenue Code and regulations adopted pursuant thereto;
|
|
(I) The valuation limitation amount;
(J) An amount equal to the amount of any tax
|
|
imposed by this Act which was refunded to the taxpayer and included in such total for the taxable year;
|
|
(K) An amount equal to all amounts included in
|
|
taxable income as modified by subparagraphs (A), (B), (C), (D), (E), (F) and (G) which are exempt from taxation by this State either by reason of its statutes or Constitution or by reason of the Constitution, treaties or statutes of the United States; provided that, in the case of any statute of this State that exempts income derived from bonds or other obligations from the tax imposed under this Act, the amount exempted shall be the interest net of bond premium amortization;
|
|
(L) With the exception of any amounts subtracted
|
|
under subparagraph (K), an amount equal to the sum of all amounts disallowed as deductions by (i) Sections 171(a) (2) and 265(a)(2) of the Internal Revenue Code, as now or hereafter amended, and all amounts of expenses allocable to interest and disallowed as deductions by Section 265(1) of the Internal Revenue Code of 1954, as now or hereafter amended; and (ii) for taxable years ending on or after August 13, 1999, Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue Code; the provisions of this subparagraph are exempt from the provisions of Section 250;
|
|
(M) An amount equal to those dividends included
|
|
in such total which were paid by a corporation which conducts business operations in an Enterprise Zone or zones created under the Illinois Enterprise Zone Act and conducts substantially all of its operations in an Enterprise Zone or Zones;
|
|
(N) An amount equal to any contribution made to
|
|
a job training project established pursuant to the Tax Increment Allocation Redevelopment Act;
|
|
(O) An amount equal to those dividends included
|
|
in such total that were paid by a corporation that conducts business operations in a federally designated Foreign Trade Zone or Sub‑Zone and that is designated a High Impact Business located in Illinois; provided that dividends eligible for the deduction provided in subparagraph (M) of paragraph (2) of this subsection shall not be eligible for the deduction provided under this subparagraph (O);
|
|
(P) An amount equal to the amount of the
|
|
deduction used to compute the federal income tax credit for restoration of substantial amounts held under claim of right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;
|
|
(Q) For taxable year 1999 and thereafter, an
|
|
amount equal to the amount of any (i) distributions, to the extent includible in gross income for federal income tax purposes, made to the taxpayer because of his or her status as a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime or as an heir of the victim and (ii) items of income, to the extent includible in gross income for federal income tax purposes, attributable to, derived from or in any way related to assets stolen from, hidden from, or otherwise lost to a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime immediately prior to, during, and immediately after World War II, including, but not limited to, interest on the proceeds receivable as insurance under policies issued to a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime by European insurance companies immediately prior to and during World War II; provided, however, this subtraction from federal adjusted gross income does not apply to assets acquired with such assets or with the proceeds from the sale of such assets; provided, further, this paragraph shall only apply to a taxpayer who was the first recipient of such assets after their recovery and who is a victim of persecution for racial or religious reasons by Nazi Germany or any other Axis regime or as an heir of the victim. The amount of and the eligibility for any public assistance, benefit, or similar entitlement is not affected by the inclusion of items (i) and (ii) of this paragraph in gross income for federal income tax purposes. This paragraph is exempt from the provisions of Section 250;
|
|
(R) For taxable years 2001 and thereafter, for
|
|
the taxable year in which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) is taken on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code and for each applicable taxable year thereafter, an amount equal to "x", where:
|
|
(1) "y" equals the amount of the
|
|
depreciation deduction taken for the taxable year on the taxpayer's federal income tax return on property for which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) was taken in any year under subsection (k) of Section 168 of the Internal Revenue Code, but not including the bonus depreciation deduction; and
|
|
(2) "x" equals "y" multiplied by 30 and then
|
|
divided by 70 (or "y" multiplied by 0.429).
|
|
The aggregate amount deducted under this
|
|
subparagraph in all taxable years for any one piece of property may not exceed the amount of the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on that property on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code;
|
|
(S) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (G‑10), then an amount equal to that addition modification.
|
|
The taxpayer is allowed to take the deduction
|
|
under this subparagraph only once with respect to any one piece of property;
|
|
(T) The amount of (i) any interest income (net of
|
|
the deductions allocable thereto) taken into account for the taxable year with respect to a transaction with a taxpayer that is required to make an addition modification with respect to such transaction under Section 203(a)(2)(D‑17), 203(b)(2)(E‑12), 203(c)(2)(G‑12), or 203(d)(2)(D‑7), but not to exceed the amount of such addition modification and (ii) any income from intangible property (net of the deductions allocable thereto) taken into account for the taxable year with respect to a transaction with a taxpayer that is required to make an addition modification with respect to such transaction under Section 203(a)(2)(D‑18), 203(b)(2)(E‑13), 203(c)(2)(G‑13), or 203(d)(2)(D‑8), but not to exceed the amount of such addition modification;
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(U) An amount equal to the interest income taken
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into account for the taxable year (net of the deductions allocable thereto) with respect to transactions with a foreign person who would be a member of the taxpayer's unitary business group but for the fact the foreign person's business activity outside the United States is 80% or more of that person's total business activity, but not to exceed the addition modification required to be made for the same taxable year under Section 203(c)(2)(G‑12) for interest paid, accrued, or incurred, directly or indirectly, to the same foreign person; and
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(V) An amount equal to the income from intangible
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property taken into account for the taxable year (net of the deductions allocable thereto) with respect to transactions with a foreign person who would be a member of the taxpayer's unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity, but not to exceed the addition modification required to be made for the same taxable year under Section 203(c)(2)(G‑13) for intangible expenses and costs paid, accrued, or incurred, directly or indirectly, to the same foreign person.
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(3) Limitation. The amount of any modification
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otherwise required under this subsection shall, under regulations prescribed by the Department, be adjusted by any amounts included therein which were properly paid, credited, or required to be distributed, or permanently set aside for charitable purposes pursuant to Internal Revenue Code Section 642(c) during the taxable year.
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(d) Partnerships.
(1) In general. In the case of a partnership, base
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income means an amount equal to the taxpayer's taxable income for the taxable year as modified by paragraph (2).
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(2) Modifications. The taxable income referred to in
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paragraph (1) shall be modified by adding thereto the sum of the following amounts:
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(A) An amount equal to all amounts paid or
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accrued to the taxpayer as interest or dividends during the taxable year to the extent excluded from gross income in the computation of taxable income;
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(B) An amount equal to the amount of tax imposed
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by this Act to the extent deducted from gross income for the taxable year;
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(C) The amount of deductions allowed to the
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partnership pursuant to Section 707 (c) of the Internal Revenue Code in calculating its taxable income;
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(D) An amount equal to the amount of the capital
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gain deduction allowable under the Internal Revenue Code, to the extent deducted from gross income in the computation of taxable income;
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(D‑5) For taxable years 2001 and thereafter, an
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amount equal to the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on the taxpayer's federal income tax return for the taxable year under subsection (k) of Section 168 of the Internal Revenue Code;
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(D‑6) If the taxpayer reports a capital gain or
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loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (D‑5), then an amount equal to the aggregate amount of the deductions taken in all taxable years under subparagraph (O) with respect to that property;
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The taxpayer is required to make the addition
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modification under this subparagraph only once with respect to any one piece of property;
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(D‑7) For taxable years ending on or after
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December 31, 2004, an amount equal to the amount otherwise allowed as a deduction in computing base income for interest paid, accrued, or incurred, directly or indirectly, to a foreign person who would be a member of the same unitary business group but for the fact the foreign person's business activity outside the United States is 80% or more of the foreign person's total business activity. The addition modification required by this subparagraph shall be reduced to the extent that dividends were included in base income of the unitary group for the same taxable year and received by the taxpayer or by a member of the taxpayer's unitary business group (including amounts included in gross income pursuant to Sections 951 through 964 of the Internal Revenue Code and amounts included in gross income under Section 78 of the Internal Revenue Code) with respect to the stock of the same person to whom the interest was paid, accrued, or incurred.
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This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
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incurred, directly or indirectly, to a foreign person who is subject in a foreign country or state, other than a state which requires mandatory unitary reporting, to a tax on or measured by net income with respect to such interest; or
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(ii) an item of interest paid, accrued, or
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incurred, directly or indirectly, to a foreign person if the taxpayer can establish, based on a preponderance of the evidence, both of the following:
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(a) the foreign person, during the same
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taxable year, paid, accrued, or incurred, the interest to a person that is not a related member, and
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(b) the transaction giving rise to the
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interest expense between the taxpayer and the foreign person did not have as a principal purpose the avoidance of Illinois income tax, and is paid pursuant to a contract or agreement that reflects an arm's‑length interest rate and terms; or
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(iii) the taxpayer can establish, based on
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clear and convincing evidence, that the interest paid, accrued, or incurred relates to a contract or agreement entered into at arm's‑length rates and terms and the principal purpose for the payment is not federal or Illinois tax avoidance; or
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(iv) an item of interest paid, accrued, or
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incurred, directly or indirectly, to a foreign person if the taxpayer establishes by clear and convincing evidence that the adjustments are unreasonable; or if the taxpayer and the Director agree in writing to the application or use of an alternative method of apportionment under Section 304(f).
|
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Nothing in this subsection shall preclude the
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Director from making any other adjustment otherwise allowed under Section 404 of this Act for any tax year beginning after the effective date of this amendment provided such adjustment is made pursuant to regulation adopted by the Department and such regulations provide methods and standards by which the Department will utilize its authority under Section 404 of this Act; and
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(D‑8) For taxable years ending on or after
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December 31, 2004, an amount equal to the amount of intangible expenses and costs otherwise allowed as a deduction in computing base income, and that were paid, accrued, or incurred, directly or indirectly, to a foreign person who would be a member of the same unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity. The addition modification required by this subparagraph shall be reduced to the extent that dividends were included in base income of the unitary group for the same taxable year and received by the taxpayer or by a member of the taxpayer's unitary business group (including amounts included in gross income pursuant to Sections 951 through 964 of the Internal Revenue Code and amounts included in gross income under Section 78 of the Internal Revenue Code) with respect to the stock of the same person to whom the intangible expenses and costs were directly or indirectly paid, incurred or accrued. The preceding sentence shall not apply to the extent that the same dividends caused a reduction to the addition modification required under Section 203(d)(2)(D‑7) of this Act. As used in this subparagraph, the term "intangible expenses and costs" includes (1) expenses, losses, and costs for, or related to, the direct or indirect acquisition, use, maintenance or management, ownership, sale, exchange, or any other disposition of intangible property; (2) losses incurred, directly or indirectly, from factoring transactions or discounting transactions; (3) royalty, patent, technical, and copyright fees; (4) licensing fees; and (5) other similar expenses and costs. For purposes of this subparagraph, "intangible property" includes patents, patent applications, trade names, trademarks, service marks, copyrights, mask works, trade secrets, and similar types of intangible assets;
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This paragraph shall not apply to the following:
(i) any item of intangible expenses
|
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or costs paid, accrued, or incurred, directly or indirectly, from a transaction with a foreign person who is subject in a foreign country or state, other than a state which requires mandatory unitary reporting, to a tax on or measured by net income with respect to such item; or
|
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(ii) any item of intangible expense or
|
|
cost paid, accrued, or incurred, directly or indirectly, if the taxpayer can establish, based on a preponderance of the evidence, both of the following:
|
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(a) the foreign person during the same
|
|
taxable year paid, accrued, or incurred, the intangible expense or cost to a person that is not a related member, and
|
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(b) the transaction giving rise to the
|
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intangible expense or cost between the taxpayer and the foreign person did not have as a principal purpose the avoidance of Illinois income tax, and is paid pursuant to a contract or agreement that reflects arm's‑length terms; or
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(iii) any item of intangible expense or
|
|
cost paid, accrued, or incurred, directly or indirectly, from a transaction with a foreign person if the taxpayer establishes by clear and convincing evidence, that the adjustments are unreasonable; or if the taxpayer and the Director agree in writing to the application or use of an alternative method of apportionment under Section 304(f);
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Nothing in this subsection shall preclude the
|
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Director from making any other adjustment otherwise allowed under Section 404 of this Act for any tax year beginning after the effective date of this amendment provided such adjustment is made pursuant to regulation adopted by the Department and such regulations provide methods and standards by which the Department will utilize its authority under Section 404 of this Act;
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and by deducting from the total so obtained the
|
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(E) The valuation limitation amount;
(F) An amount equal to the amount of any tax
|
|
imposed by this Act which was refunded to the taxpayer and included in such total for the taxable year;
|
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(G) An amount equal to all amounts included in
|
|
taxable income as modified by subparagraphs (A), (B), (C) and (D) which are exempt from taxation by this State either by reason of its statutes or Constitution or by reason of the Constitution, treaties or statutes of the United States; provided that, in the case of any statute of this State that exempts income derived from bonds or other obligations from the tax imposed under this Act, the amount exempted shall be the interest net of bond premium amortization;
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(H) Any income of the partnership which
|
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constitutes personal service income as defined in Section 1348 (b) (1) of the Internal Revenue Code (as in effect December 31, 1981) or a reasonable allowance for compensation paid or accrued for services rendered by partners to the partnership, whichever is greater;
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(I) An amount equal to all amounts of income
|
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distributable to an entity subject to the Personal Property Tax Replacement Income Tax imposed by subsections (c) and (d) of Section 201 of this Act including amounts distributable to organizations exempt from federal income tax by reason of Section 501(a) of the Internal Revenue Code;
|
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(J) With the exception of any amounts subtracted
|
|
under subparagraph (G), an amount equal to the sum of all amounts disallowed as deductions by (i) Sections 171(a) (2), and 265(2) of the Internal Revenue Code of 1954, as now or hereafter amended, and all amounts of expenses allocable to interest and disallowed as deductions by Section 265(1) of the Internal Revenue Code, as now or hereafter amended; and (ii) for taxable years ending on or after August 13, 1999, Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue Code; the provisions of this subparagraph are exempt from the provisions of Section 250;
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(K) An amount equal to those dividends included
|
|
in such total which were paid by a corporation which conducts business operations in an Enterprise Zone or zones created under the Illinois Enterprise Zone Act, enacted by the 82nd General Assembly, and conducts substantially all of its operations in an Enterprise Zone or Zones;
|
|
(L) An amount equal to any contribution made to
|
|
a job training project established pursuant to the Real Property Tax Increment Allocation Redevelopment Act;
|
|
(M) An amount equal to those dividends included
|
|
in such total that were paid by a corporation that conducts business operations in a federally designated Foreign Trade Zone or Sub‑Zone and that is designated a High Impact Business located in Illinois; provided that dividends eligible for the deduction provided in subparagraph (K) of paragraph (2) of this subsection shall not be eligible for the deduction provided under this subparagraph (M);
|
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(N) An amount equal to the amount of the
|
|
deduction used to compute the federal income tax credit for restoration of substantial amounts held under claim of right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;
|
|
(O) For taxable years 2001 and thereafter, for
|
|
the taxable year in which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) is taken on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code and for each applicable taxable year thereafter, an amount equal to "x", where:
|
|
(1) "y" equals the amount of the
|
|
depreciation deduction taken for the taxable year on the taxpayer's federal income tax return on property for which the bonus depreciation deduction (30% of the adjusted basis of the qualified property) was taken in any year under subsection (k) of Section 168 of the Internal Revenue Code, but not including the bonus depreciation deduction; and
|
|
(2) "x" equals "y" multiplied by 30 and then
|
|
divided by 70 (or "y" multiplied by 0.429).
|
|
The aggregate amount deducted under this
|
|
subparagraph in all taxable years for any one piece of property may not exceed the amount of the bonus depreciation deduction (30% of the adjusted basis of the qualified property) taken on that property on the taxpayer's federal income tax return under subsection (k) of Section 168 of the Internal Revenue Code;
|
|
(P) If the taxpayer reports a capital gain or
|
|
loss on the taxpayer's federal income tax return for the taxable year based on a sale or transfer of property for which the taxpayer was required in any taxable year to make an addition modification under subparagraph (D‑5), then an amount equal to that addition modification.
|
|
The taxpayer is allowed to take the deduction
|
|
under this subparagraph only once with respect to any one piece of property;
|
|
(Q) The amount of (i) any interest income (net of
|
|
the deductions allocable thereto) taken into account for the taxable year with respect to a transaction with a taxpayer that is required to make an addition modification with respect to such transaction under Section 203(a)(2)(D‑17), 203(b)(2)(E‑12), 203(c)(2)(G‑12), or 203(d)(2)(D‑7), but not to exceed the amount of such addition modification and (ii) any income from intangible property (net of the deductions allocable thereto) taken into account for the taxable year with respect to a transaction with a taxpayer that is required to make an addition modification with respect to such transaction under Section 203(a)(2)(D‑18), 203(b)(2)(E‑13), 203(c)(2)(G‑13), or 203(d)(2)(D‑8), but not to exceed the amount of such addition modification;
|
|
(R) An amount equal to the interest income taken
|
|
into account for the taxable year (net of the deductions allocable thereto) with respect to transactions with a foreign person who would be a member of the taxpayer's unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity, but not to exceed the addition modification required to be made for the same taxable year under Section 203(d)(2)(D‑7) for interest paid, accrued, or incurred, directly or indirectly, to the same foreign person; and
|
|
(S) An amount equal to the income from intangible
|
|
property taken into account for the taxable year (net of the deductions allocable thereto) with respect to transactions with a foreign person who would be a member of the taxpayer's unitary business group but for the fact that the foreign person's business activity outside the United States is 80% or more of that person's total business activity, but not to exceed the addition modification required to be made for the same taxable year under Section 203(d)(2)(D‑8) for intangible expenses and costs paid, accrued, or incurred, directly or indirectly, to the same foreign person.
|
|
(e) Gross income; adjusted gross income; taxable income.
(1) In general. Subject to the provisions of
|
|
paragraph (2) and subsection (b) (3), for purposes of this Section and Section 803(e), a taxpayer's gross income, adjusted gross income, or taxable income for the taxable year shall mean the amount of gross income, adjusted gross income or taxable income properly reportable for federal income tax purposes for the taxable year under the provisions of the Internal Revenue Code. Taxable income may be less than zero. However, for taxable years ending on or after December 31, 1986, net operating loss carryforwards from taxable years ending prior to December 31, 1986, may not exceed the sum of federal taxable income for the taxable year before net operating loss deduction, plus the excess of addition modifications over subtraction modifications for the taxable year. For taxable years ending prior to December 31, 1986, taxable income may never be an amount in excess of the net operating loss for the taxable year as defined in subsections (c) and (d) of Section 172 of the Internal Revenue Code, provided that when taxable income of a corporation (other than a Subchapter S corporation), trust, or estate is less than zero and addition modifications, other than those provided by subparagraph (E) of paragraph (2) of subsection (b) for corporations or subparagraph (E) of paragraph (2) of subsection (c) for trusts and estates, exceed subtraction modifications, an addition modification must be made under those subparagraphs for any other taxable year to which the taxable income less than zero (net operating loss) is applied under Section 172 of the Internal Revenue Code or under subparagraph (E) of paragraph (2) of this subsection (e) applied in conjunction with Section 172 of the Internal Revenue Code.
|
|
(2) Special rule. For purposes of paragraph (1) of
|
|
this subsection, the taxable income properly reportable for federal income tax purposes shall mean:
|
|
(A) Certain life insurance companies. In the
|
|
case of a life insurance company subject to the tax imposed by Section 801 of the Internal Revenue Code, life insurance company taxable income, plus the amount of distribution from pre‑1984 policyholder surplus accounts as calculated under Section 815a of the Internal Revenue Code;
|
|
(B) Certain other insurance companies. In the
|
|
case of mutual insurance companies subject to the tax imposed by Section 831 of the Internal Revenue Code, insurance company taxable income;
|
|
(C) Regulated investment companies. In the case
|
|
of a regulated investment company subject to the tax imposed by Section 852 of the Internal Revenue Code, investment company taxable income;
|
|
(D) Real estate investment trusts. In the case
|
|
of a real estate investment trust subject to the tax imposed by Section 857 of the Internal Revenue Code, real estate investment trust taxable income;
|
|
(E) Consolidated corporations. In the case of a
|
|
corporation which is a member of an affiliated group of corporations filing a consolidated income tax return for the taxable year for federal income tax purposes, taxable income determined as if such corporation had filed a separate return for federal income tax purposes for the taxable year and each preceding taxable year for which it was a member of an affiliated group. For purposes of this subparagraph, the taxpayer's separate taxable income shall be determined as if the election provided by Section 243(b) (2) of the Internal Revenue Code had been in effect for all such years;
|
|
(F) Cooperatives. In the case of a cooperative
|
|
corporation or association, the taxable income of such organization determined in accordance with the provisions of Section 1381 through 1388 of the Internal Revenue Code;
|
|
(G) Subchapter S corporations. In the case of:
|
|
(i) a Subchapter S corporation for which there is in effect an election for the taxable year under Section 1362 of the Internal Revenue Code, the taxable income of such corporation determined in accordance with Section 1363(b) of the Internal Revenue Code, except that taxable income shall take into account those items which are required by Section 1363(b)(1) of the Internal Revenue Code to be separately stated; and (ii) a Subchapter S corporation for which there is in effect a federal election to opt out of the provisions of the Subchapter S Revision Act of 1982 and have applied instead the prior federal Subchapter S rules as in effect on July 1, 1982, the taxable income of such corporation determined in accordance with the federal Subchapter S rules as in effect on July 1, 1982; and
|
|
(H) Partnerships. In the case of a partnership,
|
|
taxable income determined in accordance with Section 703 of the Internal Revenue Code, except that taxable income shall take into account those items which are required by Section 703(a)(1) to be separately stated but which would be taken into account by an individual in calculating his taxable income.
|
|
(3) Recapture of business expenses on disposition of
|
|
asset or business. Notwithstanding any other law to the contrary, if in prior years income from an asset or business has been classified as business income and in a later year is demonstrated to be non‑business income, then all expenses, without limitation, deducted in such later year and in the 2 immediately preceding taxable years related to that asset or business that generated the non‑business income shall be added back and recaptured as business income in the year of the disposition of the asset or business. Such amount shall be apportioned to Illinois using the greater of the apportionment fraction computed for the business under Section 304 of this Act for the taxable year or the average of the apportionment fractions computed for the business under Section 304 of this Act for the taxable year and for the 2 immediately preceding taxable years.
|
|
(f) Valuation limitation amount.
(1) In general. The valuation limitation amount
|
|
referred to in subsections (a) (2) (G), (c) (2) (I) and (d)(2) (E) is an amount equal to:
|
|
(A) The sum of the pre‑August 1, 1969
|
|
appreciation amounts (to the extent consisting of gain reportable under the provisions of Section 1245 or 1250 of the Internal Revenue Code) for all property in respect of which such gain was reported for the taxable year; plus
|
|
(B) The lesser of (i) the sum of the pre‑August
|
|
1, 1969 appreciation amounts (to the extent consisting of capital gain) for all property in respect of which such gain was reported for federal income tax purposes for the taxable year, or (ii) the net capital gain for the taxable year, reduced in either case by any amount of such gain included in the amount determined under subsection (a) (2) (F) or (c) (2) (H).
|
|
(2) Pre‑August 1, 1969 appreciation amount.
(A) If the fair market value of property
|
|
referred to in paragraph (1) was readily ascertainable on August 1, 1969, the pre‑August 1, 1969 appreciation amount for such property is the lesser of (i) the excess of such fair market value over the taxpayer's basis (for determining gain) for such property on that date (determined under the Internal Revenue Code as in effect on that date), or (ii) the total gain realized and reportable for federal income tax purposes in respect of the sale, exchange or other disposition of such property.
|
|
(B) If the fair market value of property
|
|
referred to in paragraph (1) was not readily ascertainable on August 1, 1969, the pre‑August 1, 1969 appreciation amount for such property is that amount which bears the same ratio to the total gain reported in respect of the property for federal income tax purposes for the taxable year, as the number of full calendar months in that part of the taxpayer's holding period for the property ending July 31, 1969 bears to the number of full calendar months in the taxpayer's entire holding period for the property.
|
|
(C) The Department shall prescribe such
|
|
regulations as may be necessary to carry out the purposes of this paragraph.
|
|
(g) Double deductions. Unless specifically provided otherwise, nothing
in this Section shall permit the same item to be deducted more than once.
(h) Legislative intention. Except as expressly provided by this
Section there shall be no modifications or limitations on the amounts
of income, gain, loss or deduction taken into account in determining
gross income, adjusted gross income or taxable income for federal income
tax purposes for the taxable year, or in the amount of such items
entering into the computation of base income and net income under this
Act for such taxable year, whether in respect of property values as of
August 1, 1969 or otherwise.
(Source: P.A. 92‑16, eff. 6‑28‑01; 92‑244, eff. 8‑3‑01; 92‑439, eff. 8‑17‑01; 92‑603, eff. 6‑28‑02; 92‑626, eff. 7‑11‑02; 92‑651, eff. 7‑11‑02; 92‑846, eff. 8‑23‑02; 93‑840, eff. 7‑30‑04.)
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