100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB0648

 

Introduced , by Rep. Stephanie A. Kifowit

 

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 the value of farm property transferred to a qualified heir shall not be included in the decedent's taxable estate for the purposes of calculating the State tax credit if any qualified heir of the decedent will be engaged in active management of the farm for a period of at least 10 years after the date of the transfer, or until the death of that qualified heir, whichever occurs first. Defines "active management", "farm property", and "qualified heir". Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0648LRB100 07330 HLH 17392 b

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. For persons dying on or after July 1,
222017, for the purposes of computing the State tax credit, the
23person's adjusted taxable estate shall not include the value of
24farm property transferred to a qualified heir if any qualified
25heir of the decedent will be engaged in active management of
26the farm for a period of at least 10 years after the date of the

 

 

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1transfer, or until the death of that qualified heir, whichever
2occurs first. For the purposes of this subsection (b):
3        "Active management" means material participation, as
4    defined in Section 469 of the Internal Revenue Code.
5        "Farm property" means any real property or tangible
6    personal property used for farming purposes.
7        "Farming purposes" means:
8            (1) cultivating the soil or raising or harvesting
9        any agricultural or horticultural commodity, including
10        the raising, shearing, feeding, caring for, training,
11        and management of animals on a farm;
12            (2) handling, drying, packing, grading, or storing
13        on a farm any agricultural or horticultural commodity
14        in its unmanufactured state, but only if the owner,
15        tenant, or operator of the farm regularly produces more
16        than one-half of the commodity so treated; and
17            (3) the planting, cultivating, caring for, or
18        cutting of trees, or the preparation, other than
19        milling, of trees for market.
20        "Qualified heir" means:
21            (1) an ancestor of the decedent;
22            (2) the spouse of the decedent;
23            (3) a lineal descendant of any of the following:
24        (i) the decedent, (ii) the decedent's spouse, or (iii)
25        a parent of the decedent; or
26            (4) the spouse of any lineal descendant described

 

 

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1        in item (3).
2    (b-1) The person required to file the Illinois return may
3elect on a timely filed Illinois return a marital deduction for
4qualified terminable interest property under Section
52056(b)(7) of the Internal Revenue Code for purposes of the
6Illinois estate tax that is separate and independent of any
7qualified terminable interest property election for federal
8estate tax purposes. For purposes of the Illinois estate tax,
9the inclusion of property in the gross estate of a surviving
10spouse is the same as under Section 2044 of the Internal
11Revenue Code.
12    In the case of any trust for which a State or federal
13qualified terminable interest property election is made, the
14trustee may not retain non-income producing assets for more
15than a reasonable amount of time without the consent of the
16surviving spouse.
17    "Taxable transfer" means an event that gives rise to a
18state tax credit, including any credit as a result of the
19imposition of an additional tax under Section 2032A(c) of the
20Internal Revenue Code.
21    "Transferee" means a transferee within the meaning of
22Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
23Code.
24    "Transferred property" means:
25        (1) With respect to a taxable transfer occurring at the
26    death of an individual, the deceased individual's gross

 

 

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1    estate as defined in Section 2031 of the Internal Revenue
2    Code.
3        (2) With respect to a taxable transfer occurring as a
4    result of a taxable termination as defined in Section
5    2612(a) of the Internal Revenue Code, the taxable amount
6    determined under Section 2622(a) of the Internal Revenue
7    Code.
8        (3) With respect to a taxable transfer occurring as a
9    result of a taxable distribution as defined in Section
10    2612(b) of the Internal Revenue Code, the taxable amount
11    determined under Section 2621(a) of the Internal Revenue
12    Code.
13        (4) With respect to an event which causes the
14    imposition of an additional estate tax under Section
15    2032A(c) of the Internal Revenue Code, the qualified real
16    property that was disposed of or which ceased to be used
17    for the qualified use, within the meaning of Section
18    2032A(c)(1) of the Internal Revenue Code.
19    "Trust" includes a trust as defined in Section 2652(b)(1)
20of the Internal Revenue Code.
21(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
2297-636, eff. 6-1-12.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.