99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB6113

 

Introduced 2/11/2016, by Rep. Avery Bourne

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 405/2  from Ch. 120, par. 405A-2

    Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that, for persons dying on or after July 1, 2016, if the decedent was a farmer, then the exclusion amount for that decedent shall be the federal exclusion amount, including any deceased spousal unused exclusion amount. Provides that the term "farmer" means a decedent whose adjusted taxable estate consists of at least 75% farm property and who was engaged in active management of that farm property at any point during his or her lifetime. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Estate and Generation-Skipping
5Transfer Tax Act is amended by changing Section 2 as follows:
 
6    (35 ILCS 405/2)  (from Ch. 120, par. 405A-2)
7    Sec. 2. Definitions.
8    "Federal estate tax" means the tax due to the United States
9with respect to a taxable transfer under Chapter 11 of the
10Internal Revenue Code.
11    "Federal generation-skipping transfer tax" means the tax
12due to the United States with respect to a taxable transfer
13under Chapter 13 of the Internal Revenue Code.
14    "Federal return" means the federal estate tax return with
15respect to the federal estate tax and means the federal
16generation-skipping transfer tax return with respect to the
17federal generation-skipping transfer tax.
18    "Federal transfer tax" means the federal estate tax or the
19federal generation-skipping transfer tax.
20    "Illinois estate tax" means the tax due to this State with
21respect to a taxable transfer.
22    "Illinois generation-skipping transfer tax" means the tax
23due to this State with respect to a taxable transfer that gives

 

 

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1rise to a federal generation-skipping transfer tax.
2    "Illinois transfer tax" means the Illinois estate tax or
3the Illinois generation-skipping transfer tax.
4    "Internal Revenue Code" means, unless otherwise provided,
5the Internal Revenue Code of 1986, as amended from time to
6time.
7    "Non-resident trust" means a trust that is not a resident
8of this State for purposes of the Illinois Income Tax Act, as
9amended from time to time.
10    "Person" means and includes any individual, trust, estate,
11partnership, association, company or corporation.
12    "Qualified heir" means a qualified heir as defined in
13Section 2032A(e)(1) of the Internal Revenue Code.
14    "Resident trust" means a trust that is a resident of this
15State for purposes of the Illinois Income Tax Act, as amended
16from time to time.
17    "State" means any state, territory or possession of the
18United States and the District of Columbia.
19    "State tax credit" means:
20    (a) For persons dying on or after January 1, 2003 and
21through December 31, 2005, an amount equal to the full credit
22calculable under Section 2011 or Section 2604 of the Internal
23Revenue Code as the credit would have been computed and allowed
24under the Internal Revenue Code as in effect on December 31,
252001, without the reduction in the State Death Tax Credit as
26provided in Section 2011(b)(2) or the termination of the State

 

 

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1Death Tax Credit as provided in Section 2011(f) as enacted by
2the Economic Growth and Tax Relief Reconciliation Act of 2001,
3but recognizing the increased applicable exclusion amount
4through December 31, 2005.
5    (b) For persons dying after December 31, 2005 and on or
6before December 31, 2009, and for persons dying after December
731, 2010, an amount equal to the full credit calculable under
8Section 2011 or 2604 of the Internal Revenue Code as the credit
9would have been computed and allowed under the Internal Revenue
10Code as in effect on December 31, 2001, without the reduction
11in the State Death Tax Credit as provided in Section 2011(b)(2)
12or the termination of the State Death Tax Credit as provided in
13Section 2011(f) as enacted by the Economic Growth and Tax
14Relief Reconciliation Act of 2001, but recognizing the
15exclusion amount of only (i) $2,000,000 for persons dying prior
16to January 1, 2012, (ii) $3,500,000 for persons dying on or
17after January 1, 2012 and prior to January 1, 2013, and (iii)
18$4,000,000 for persons dying on or after January 1, 2013, and
19with reduction to the adjusted taxable estate for any qualified
20terminable interest property election as defined in subsection
21(b-1) of this Section. Notwithstanding any other provision of
22law, for persons dying on or after July 1, 2016, if the
23decedent was a farmer, then the exclusion amount for that
24decedent shall be the applicable exclusion amount calculated
25under Section 2010 of the Internal Revenue Code, including any
26deceased spousal unused exclusion amount available after a

 

 

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1valid election is made under subparagraph (A) of paragraph (5)
2of subsection (c) of that Section.
3    For the purposes of this subsection (b):
4    "Farmer" means a decedent whose adjusted taxable estate
5consists of at least 75% farm property and who was engaged in
6active management of that farm property at any point during his
7or her lifetime.
8        "Active management" means material participation, as
9    defined in Section 469 of the Internal Revenue Code.
10        "Farm property" means any real property or tangible
11    personal property used for farming purposes.
12        "Farming purposes" means:
13            (1) cultivating the soil or raising or harvesting
14        any agricultural or horticultural commodity, including
15        the raising, shearing, feeding, caring for, training,
16        and management of animals on a farm;
17            (2) handling, drying, packing, grading, or storing
18        on a farm any agricultural or horticultural commodity
19        in its unmanufactured state, but only if the owner,
20        tenant, or operator of the farm regularly produces more
21        than one-half of the commodity so treated; and
22            (3) the planting, cultivating, caring for, or
23        cutting of trees, or the preparation, other than
24        milling, of trees for market.
25    (b-1) The person required to file the Illinois return may
26elect on a timely filed Illinois return a marital deduction for

 

 

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1qualified terminable interest property under Section
22056(b)(7) of the Internal Revenue Code for purposes of the
3Illinois estate tax that is separate and independent of any
4qualified terminable interest property election for federal
5estate tax purposes. For purposes of the Illinois estate tax,
6the inclusion of property in the gross estate of a surviving
7spouse is the same as under Section 2044 of the Internal
8Revenue Code.
9    In the case of any trust for which a State or federal
10qualified terminable interest property election is made, the
11trustee may not retain non-income producing assets for more
12than a reasonable amount of time without the consent of the
13surviving spouse.
14    "Taxable transfer" means an event that gives rise to a
15state tax credit, including any credit as a result of the
16imposition of an additional tax under Section 2032A(c) of the
17Internal Revenue Code.
18    "Transferee" means a transferee within the meaning of
19Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
20Code.
21    "Transferred property" means:
22        (1) With respect to a taxable transfer occurring at the
23    death of an individual, the deceased individual's gross
24    estate as defined in Section 2031 of the Internal Revenue
25    Code.
26        (2) With respect to a taxable transfer occurring as a

 

 

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1    result of a taxable termination as defined in Section
2    2612(a) of the Internal Revenue Code, the taxable amount
3    determined under Section 2622(a) of the Internal Revenue
4    Code.
5        (3) With respect to a taxable transfer occurring as a
6    result of a taxable distribution as defined in Section
7    2612(b) of the Internal Revenue Code, the taxable amount
8    determined under Section 2621(a) of the Internal Revenue
9    Code.
10        (4) With respect to an event which causes the
11    imposition of an additional estate tax under Section
12    2032A(c) of the Internal Revenue Code, the qualified real
13    property that was disposed of or which ceased to be used
14    for the qualified use, within the meaning of Section
15    2032A(c)(1) of the Internal Revenue Code.
16    "Trust" includes a trust as defined in Section 2652(b)(1)
17of the Internal Revenue Code.
18(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
1997-636, eff. 6-1-12.)
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.