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Public Act 100-0519


 

Public Act 0519 100TH GENERAL ASSEMBLY



 


 
Public Act 100-0519
 
HB1542 EnrolledLRB100 03404 HEP 13409 b

    AN ACT concerning civil law.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Principal and Income Act is amended by
changing Sections 10 and 15 as follows:
 
    (760 ILCS 15/10)  (from Ch. 30, par. 510)
    Sec. 10. Disposition of natural resources.
    (a) If any part of the principal consists of a right to
receive royalties, overriding or limited royalties, working
interests, production payments, net profit interests, or other
interest in minerals, oil, gas or other natural resources in,
on or under land, except timber, water, soil, sod, dirt, peat,
turf or mosses, the receipts from taking the natural resources
from the land shall be allocated as follows:
        (1) if received as rent on a lease or extension
    payments on a lease, the receipts are income;
        (2) if received from a production payment, the receipts
    are income to the extent of any factor for interest or its
    equivalent provided in the governing instrument. There
    shall be allocated to principal the fraction of the balance
    of the receipts which the unrecovered cost of the
    production payment bears to the balance owed on the
    production payment, exclusive of any factor for interest or
    its equivalent. The receipts not allocated to principal are
    income;
        (3) except for oil or gas from non-coal formations, if
    received as a royalty, overriding or limited royalty, or
    bonus, or from a working, net profit, or any other interest
    in minerals, oil, gas, or other natural resources, receipts
    not provided for in the preceding paragraphs of this
    Section shall be apportioned on a yearly basis in
    accordance with this paragraph whether or not any natural
    resource was being taken from the land at the time the
    trust was established. The trustee shall allocate to
    principal as an allowance for depletion the greater of (i)
    that portion, if any, of the gross receipts that is allowed
    as a depletion deduction for federal income tax purposes
    and (ii) 10% of the gross receipts, except that that
    allocation shall not exceed 50% of the net receipts
    remaining after payment of all expenses, direct and
    indirect, computed without the allowance for depletion.
    The trustee shall allocate the balance of the gross
    receipts, after payment therefrom of all expenses, direct
    and indirect, to income; .
        (4) with respect only to nontrust estates described in
    Section 15 of this Act, for oil or gas from non-coal
    formations, proceeds from the sale of such minerals
    produced and received as royalty, overriding royalty,
    limited royalty, working interest, net profit interest,
    time-limited interest or term interest, or lease bonus
    shall be deemed income.
    (b) If an item of depletable property of a type specified
in this Section is held on the effective date of this Act,
receipts from the property shall be allocated in the manner
used before the effective date of this Act, but as to all
depletable property acquired after the effective date of this
Act by an existing or new trust, the method of allocation
provided herein shall be used.
    (c) If any part of the principal consists of timber, water,
soil, sod, dirt, peat, turf, or mosses, the receipts from those
resources shall be allocated in accordance with Section 3.
(Source: P.A. 87-714.)
 
    (760 ILCS 15/15)  (from Ch. 30, par. 515)
    Sec. 15. Non-trust estates.
    (a) The provisions of this Act, as far as applicable, shall
apply to nontrust estates subject to any agreement of the
parties or any specific direction by statute or otherwise, and
the references to trusts and trustees shall be read as applying
to nontrust estates and to legal tenants (including life
tenants, tenants for terms of years, or any other period of
tenancy) and remaindermen as the context requires; except that
if either a legal tenant or a remainderman has incurred a
charge for his benefit without the consent or agreement of the
other, he shall pay that charge in full.
    (b) If the costs of an improvement, including special taxes
or assessments, representing an addition to value of property
forming part of the principal cannot reasonably be expected to
outlast the legal tenancy, the costs shall be paid by the legal
tenant. If the improvement can reasonably be expected to
outlast the legal tenancy, only a portion of the costs shall be
paid by the legal tenant and the balance by the remainderman.
The portion payable by the legal tenant shall be that fraction
of the total found by dividing the present value of the legal
tenancy by the present value of an estate of the same form as
that of the legal tenancy but limited to a period corresponding
to the reasonably expected duration of the improvement. The
computation of present value of the legal tenancy shall be
computed on the basis of two-thirds of the value determined by
use of the tables set forth under Section 7520 of the Internal
Revenue Code of 1986 and the regulations thereunder for the
calculation of the values of annuities, life estates, and terms
for years, and no other evidence of duration or expectancy
shall be considered, except that any legal tenancy or remainder
interest acquired for consideration based on those tables shall
be computed on the basis of the tables in effect at the time
acquired. The method of computing the present value of a legal
tenancy established in this subsection shall apply to all legal
tenancies and remainders created after January 1, 1992 and to
all legal tenancies and remainders which were acquired for
consideration if the amount of the consideration was based on
the tables set forth under Section 2031 or 7520 of the Internal
Revenue Code then in effect.
    (c) If a legal tenant has leased any lands for agricultural
or farming operations and his legal tenancy terminates on or
after the day any rent has become due and payable, he or his
representative is entitled to recover that rent from the
lessee; and if a legal tenancy terminates before the rent under
the lease is fully paid, the legal tenant or his representative
is entitled to recover from the lessee:
        (1) that portion of the rent not due which the number
    of days from the beginning of the period for which the rent
    is not due to the date of the termination of the legal
    tenancy bears to the total number of days in the period for
    which the rent is unpaid; and
        (2) that portion of the landlord's share of actual
    expenses paid before the termination of the legal tenancy
    and not previously recovered by him, which the number of
    days in the lease period on and after the termination bears
    to the total number of days in the lease period.
    (d) This Section does not apply to life estates and
remainder interests in oil or gas from non-coal formations, or
royalties or overriding royalties created under leases of such
minerals.
(Source: P.A. 82-390; 87-714.)

Effective Date: 6/1/2018