SB 2892 — INC TAX-BASE INCOME-TECH

SB2892 *LRB09317807SJM43488b*Engrossed 93RDLRB093 GENERAL17807 ASSEMBLYSJM State43488 ofb IllinoisAN andACT 2004concerning Introducedtaxes. 2/6/2004, by Antonio Munoz SYNOPSIS AS INTRODUCED:

ILCS 5/203 from Ch.

120, par.

2-203 provisions concerning the legislative intent behind the definition of base income.

LRB093 17807 SJM 43488 b A BILL FOR SB2892 LRB093 17807 SJM 43488 b AN ACT concerning taxes.

(C) An amount equal to the amount received 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, SB2892 Engrossed - 2 - LRB093 17807 SJM 43488 b 1991, the retrospective application date of Article 4 of Public Act 87-17.

and (D-16) 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 the aggregate amount of the deductions taken in all taxable SB2892 Engrossed - 3 - LRB093 17807 SJM 43488 b years under subparagraph (Z) with respect to that property.;

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 SB2892 Engrossed - 4 - LRB093 17807 SJM 43488 b 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.

(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 SB2892 Engrossed - 5 - LRB093 17807 SJM 43488 b Foreign Trade Zone or Sub-Zone and that is designated a High Impact Business located in Illinois;

SB2892 Engrossed - 6 - LRB093 17807 SJM 43488 b (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;

(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 SB2892 Engrossed - 7 - LRB093 17807 SJM 43488 b 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;

(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 SB2892 Engrossed - 8 - LRB093 17807 SJM 43488 b 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;

(Z) For taxable years 2001 and thereafter, for the SB2892 Engrossed - 9 - LRB093 17807 SJM 43488 b 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:

SB2892 Engrossed - 10 - LRB093 17807 SJM 43488 b (b) Corporations.

(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 SB2892 Engrossed - 11 - LRB093 17807 SJM 43488 b 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:

and (E-11) If the taxpayer reports a capital gain or SB2892 Engrossed - 12 - LRB093 17807 SJM 43488 b 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 provisions of this subparagraph are exempt from the SB2892 Engrossed - 13 - LRB093 17807 SJM 43488 b provisions of Section 250;

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 SB2892 Engrossed - 14 - LRB093 17807 SJM 43488 b 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.

(N) Two times any contribution made during the taxable year to a designated zone organization to the SB2892 Engrossed - 15 - LRB093 17807 SJM 43488 b 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 Community Affairs under Section 11 of the Illinois Enterprise Zone Act;

(P) An amount equal to any contribution made to a SB2892 Engrossed - 16 - LRB093 17807 SJM 43488 b job training project established pursuant to the Tax Increment Allocation Redevelopment Act;

(1) "y" equals the amount of the depreciation deduction taken for the taxable year on the SB2892 Engrossed - 17 - LRB093 17807 SJM 43488 b 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;

Subject to the provisions of paragraph (3), the taxable income referred to in paragraph SB2892 Engrossed - 18 - LRB093 17807 SJM 43488 b (1) shall be modified by adding thereto the sum of the following amounts:

(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 SB2892 Engrossed - 19 - LRB093 17807 SJM 43488 b 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;

and (G-11) If the taxpayer reports a capital gain or loss on the taxpayer’s federal income tax return for SB2892 Engrossed - 20 - LRB093 17807 SJM 43488 b 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.;

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 SB2892 Engrossed - 21 - LRB093 17807 SJM 43488 b exempted shall be the interest net of bond premium amortization;

(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 SB2892 Engrossed - 22 - LRB093 17807 SJM 43488 b right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;

(R) For taxable years 2001 and thereafter, for the SB2892 Engrossed - 23 - LRB093 17807 SJM 43488 b 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:

The amount of any modification otherwise required under this subsection shall, under regulations prescribed by the Department, be adjusted by SB2892 Engrossed - 24 - LRB093 17807 SJM 43488 b 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.

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 SB2892 Engrossed - 25 - LRB093 17807 SJM 43488 b 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.;

(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 SB2892 Engrossed - 26 - LRB093 17807 SJM 43488 b 501(a) of the Internal Revenue Code;

(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 SB2892 Engrossed - 27 - LRB093 17807 SJM 43488 b right for the taxable year pursuant to Section 1341 of the Internal Revenue Code of 1986;

SB2892 Engrossed - 28 - LRB093 17807 SJM 43488 b (e) Gross income;

For purposes of paragraph (1) of this subsection, the taxable income properly reportable for SB2892 Engrossed - 29 - LRB093 17807 SJM 43488 b federal income tax purposes shall mean:

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 SB2892 Engrossed - 30 - LRB093 17807 SJM 43488 b Revenue Code;

(I) Holders of residual interests in real estate mortgage investment conduits that also have net operating losses.

In the case of a holder of a residual interest in a real estate mortgage investment conduit (REMIC) with excess inclusion pursuant to Section 860E of the Internal Revenue Code, as now or hereafter amended, that also has a net operating loss pursuant to Section 860E(a)(3) of the Internal Revenue Code, as now or hereafter amended, the amount computed under Section 860E(a)(3) of the Internal Revenue Code (federal taxable income or loss without regard to such excess inclusion).

Notwithstanding any other provision SB2892 Engrossed - 31 - LRB093 17807 SJM 43488 b of this paragraph (I), such excess inclusion shall, in all events, be subject to tax.

The provisions added to this Section by this amendatory Act of the 93rd General Assembly shall be construed as declaratory of existing law and not as a new enactment.

plus (B) The lesser of (i) the sum of the pre-August 1, 1969 appreciation amounts (to the extent consisting of SB2892 - 31 - LRB093 17807 SJM 43488 b 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).

(B) If the fair market value of property referred SB2892 Engrossed - 32 - LRB093 17807 SJM 43488 b 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.