HB4920 EnrolledLRB100 19136 HEP 34401 b

1    AN ACT concerning civil law.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Principal and Income Act is amended by
5changing Sections 10 and 15 as follows:
 
6    (760 ILCS 15/10)  (from Ch. 30, par. 510)
7    (Text of Section before amendment by P.A. 100-519)
8    Sec. 10. Disposition of natural resources.
9    (a) If any part of the principal consists of a right to
10receive royalties, overriding or limited royalties, working
11interests, production payments, net profit interests, or other
12interest in minerals, oil, gas or other natural resources in,
13on or under land, except timber, water, soil, sod, dirt, peat,
14turf or mosses, the receipts from taking the natural resources
15from the land shall be allocated as follows:
16        (1) if received as rent on a lease or extension
17    payments on a lease, the receipts are income;
18        (2) if received from a production payment, the receipts
19    are income to the extent of any factor for interest or its
20    equivalent provided in the governing instrument. There
21    shall be allocated to principal the fraction of the balance
22    of the receipts which the unrecovered cost of the
23    production payment bears to the balance owed on the

 

 

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1    production payment, exclusive of any factor for interest or
2    its equivalent. The receipts not allocated to principal are
3    income;
4        (3) if received as a royalty, overriding or limited
5    royalty, or bonus, or from a working, net profit, or any
6    other interest in minerals, oil, gas, or other natural
7    resources, receipts not provided for in the preceding
8    paragraphs of this Section shall be apportioned on a yearly
9    basis in accordance with this paragraph whether or not any
10    natural resource was being taken from the land at the time
11    the trust was established. The trustee shall allocate to
12    principal as an allowance for depletion the greater of (i)
13    that portion, if any, of the gross receipts that is allowed
14    as a depletion deduction for federal income tax purposes
15    and (ii) 10% of the gross receipts, except that that
16    allocation shall not exceed 50% of the net receipts
17    remaining after payment of all expenses, direct and
18    indirect, computed without the allowance for depletion.
19    The trustee shall allocate the balance of the gross
20    receipts, after payment therefrom of all expenses, direct
21    and indirect, to income.
22    (b) If an item of depletable property of a type specified
23in this Section is held on the effective date of this Act,
24receipts from the property shall be allocated in the manner
25used before the effective date of this Act, but as to all
26depletable property acquired after the effective date of this

 

 

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1Act by an existing or new trust, the method of allocation
2provided herein shall be used.
3    (c) If any part of the principal consists of timber, water,
4soil, sod, dirt, peat, turf, or mosses, the receipts from those
5resources shall be allocated in accordance with Section 3.
6(Source: P.A. 87-714.)
 
7    (Text of Section after amendment by P.A. 100-519)
8    Sec. 10. Disposition of natural resources.
9    (a) If any part of the principal consists of a right to
10receive royalties, overriding or limited royalties, working
11interests, production payments, net profit interests, or other
12interest in minerals, oil, gas or other natural resources in,
13on or under land, except timber, water, soil, sod, dirt, peat,
14turf or mosses, the receipts from taking the natural resources
15from the land shall be allocated as follows:
16        (1) if received as rent on a lease or extension
17    payments on a lease, the receipts are income;
18        (2) if received from a production payment, the receipts
19    are income to the extent of any factor for interest or its
20    equivalent provided in the governing instrument. There
21    shall be allocated to principal the fraction of the balance
22    of the receipts which the unrecovered cost of the
23    production payment bears to the balance owed on the
24    production payment, exclusive of any factor for interest or
25    its equivalent. The receipts not allocated to principal are

 

 

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1    income;
2        (3) except for oil or gas from non-coal formations held
3    in nontrust estates and by legal tenants and remaindermen
4    as described in Section 15 of this Act, if received as a
5    royalty, overriding or limited royalty, or bonus, or from a
6    working, net profit, or any other interest in minerals,
7    oil, gas, or other natural resources, receipts not provided
8    for in the preceding paragraphs of this Section shall be
9    apportioned on a yearly basis in accordance with this
10    paragraph whether or not any natural resource was being
11    taken from the land at the time the trust was established.
12    The trustee shall allocate to principal as an allowance for
13    depletion the greater of (i) that portion, if any, of the
14    gross receipts that is allowed as a depletion deduction for
15    federal income tax purposes and (ii) 10% of the gross
16    receipts, except that that allocation shall not exceed 50%
17    of the net receipts remaining after payment of all
18    expenses, direct and indirect, computed without the
19    allowance for depletion. The trustee shall allocate the
20    balance of the gross receipts, after payment therefrom of
21    all expenses, direct and indirect, to income;
22        (4) Only for oil or gas from non-coal formations held
23    in nontrust estates and by legal tenants and remaindermen
24    as described in Section 15 of this Act, proceeds from the
25    sale of such minerals produced and received as royalty,
26    overriding royalty, limited royalty, working interest, net

 

 

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1    profit interest, time-limited interest or term interest,
2    or lease bonus shall be deemed income with respect only to
3    nontrust estates described in Section 15 of this Act, for
4    oil or gas from non-coal formations, proceeds from the sale
5    of such minerals produced and received as royalty,
6    overriding royalty, limited royalty, working interest, net
7    profit interest, time-limited interest or term interest,
8    or lease bonus shall be deemed income.
9    (b) If an item of depletable property of a type specified
10in this Section is held on the effective date of this Act,
11receipts from the property shall be allocated in the manner
12used before the effective date of this Act, but as to all
13depletable property acquired after the effective date of this
14Act by an existing or new trust, the method of allocation
15provided herein shall be used.
16    (c) If any part of the principal consists of timber, water,
17soil, sod, dirt, peat, turf, or mosses, the receipts from those
18resources shall be allocated in accordance with Section 3.
19(Source: P.A. 100-519, eff. 6-1-18.)
 
20    (760 ILCS 15/15)  (from Ch. 30, par. 515)
21    (Text of Section before amendment by P.A. 100-519)
22    Sec. 15. Non-trust estates.
23    (a) The provisions of this Act, as far as applicable, shall
24apply to nontrust estates subject to any agreement of the
25parties or any specific direction by statute or otherwise, and

 

 

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1the references to trusts and trustees shall be read as applying
2to nontrust estates and to legal tenants (including life
3tenants, tenants for terms of years, or any other period of
4tenancy) and remaindermen as the context requires; except that
5if either a legal tenant or a remainderman has incurred a
6charge for his benefit without the consent or agreement of the
7other, he shall pay that charge in full.
8    (b) If the costs of an improvement, including special taxes
9or assessments, representing an addition to value of property
10forming part of the principal cannot reasonably be expected to
11outlast the legal tenancy, the costs shall be paid by the legal
12tenant. If the improvement can reasonably be expected to
13outlast the legal tenancy, only a portion of the costs shall be
14paid by the legal tenant and the balance by the remainderman.
15The portion payable by the legal tenant shall be that fraction
16of the total found by dividing the present value of the legal
17tenancy by the present value of an estate of the same form as
18that of the legal tenancy but limited to a period corresponding
19to the reasonably expected duration of the improvement. The
20computation of present value of the legal tenancy shall be
21computed on the basis of two-thirds of the value determined by
22use of the tables set forth under Section 7520 of the Internal
23Revenue Code of 1986 and the regulations thereunder for the
24calculation of the values of annuities, life estates, and terms
25for years, and no other evidence of duration or expectancy
26shall be considered, except that any legal tenancy or remainder

 

 

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1interest acquired for consideration based on those tables shall
2be computed on the basis of the tables in effect at the time
3acquired. The method of computing the present value of a legal
4tenancy established in this subsection shall apply to all legal
5tenancies and remainders created after January 1, 1992 and to
6all legal tenancies and remainders which were acquired for
7consideration if the amount of the consideration was based on
8the tables set forth under Section 2031 or 7520 of the Internal
9Revenue Code then in effect.
10    (c) If a legal tenant has leased any lands for agricultural
11or farming operations and his legal tenancy terminates on or
12after the day any rent has become due and payable, he or his
13representative is entitled to recover that rent from the
14lessee; and if a legal tenancy terminates before the rent under
15the lease is fully paid, the legal tenant or his representative
16is entitled to recover from the lessee:
17        (1) that portion of the rent not due which the number
18    of days from the beginning of the period for which the rent
19    is not due to the date of the termination of the legal
20    tenancy bears to the total number of days in the period for
21    which the rent is unpaid; and
22        (2) that portion of the landlord's share of actual
23    expenses paid before the termination of the legal tenancy
24    and not previously recovered by him, which the number of
25    days in the lease period on and after the termination bears
26    to the total number of days in the lease period.

 

 

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1(Source: P.A. 82-390; 87-714.)
 
2    (Text of Section after amendment by P.A. 100-519)
3    Sec. 15. Non-trust estates.
4    (a) The provisions of this Act, as far as applicable, shall
5apply to nontrust estates subject to any agreement of the
6parties or any specific direction by statute or otherwise, and
7the references to trusts and trustees shall be read as applying
8to nontrust estates and to legal tenants (including life
9tenants, tenants for terms of years, or any other period of
10tenancy) and remaindermen as the context requires; except that
11if either a legal tenant or a remainderman has incurred a
12charge for his benefit without the consent or agreement of the
13other, he shall pay that charge in full.
14    (b) If the costs of an improvement, including special taxes
15or assessments, representing an addition to value of property
16forming part of the principal cannot reasonably be expected to
17outlast the legal tenancy, the costs shall be paid by the legal
18tenant. If the improvement can reasonably be expected to
19outlast the legal tenancy, only a portion of the costs shall be
20paid by the legal tenant and the balance by the remainderman.
21The portion payable by the legal tenant shall be that fraction
22of the total found by dividing the present value of the legal
23tenancy by the present value of an estate of the same form as
24that of the legal tenancy but limited to a period corresponding
25to the reasonably expected duration of the improvement. The

 

 

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1computation of present value of the legal tenancy shall be
2computed on the basis of two-thirds of the value determined by
3use of the tables set forth under Section 7520 of the Internal
4Revenue Code of 1986 and the regulations thereunder for the
5calculation of the values of annuities, life estates, and terms
6for years, and no other evidence of duration or expectancy
7shall be considered, except that any legal tenancy or remainder
8interest acquired for consideration based on those tables shall
9be computed on the basis of the tables in effect at the time
10acquired. The method of computing the present value of a legal
11tenancy established in this subsection shall apply to all legal
12tenancies and remainders created after January 1, 1992 and to
13all legal tenancies and remainders which were acquired for
14consideration if the amount of the consideration was based on
15the tables set forth under Section 2031 or 7520 of the Internal
16Revenue Code then in effect.
17    (c) If a legal tenant has leased any lands for agricultural
18or farming operations and his legal tenancy terminates on or
19after the day any rent has become due and payable, he or his
20representative is entitled to recover that rent from the
21lessee; and if a legal tenancy terminates before the rent under
22the lease is fully paid, the legal tenant or his representative
23is entitled to recover from the lessee:
24        (1) that portion of the rent not due which the number
25    of days from the beginning of the period for which the rent
26    is not due to the date of the termination of the legal

 

 

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1    tenancy bears to the total number of days in the period for
2    which the rent is unpaid; and
3        (2) that portion of the landlord's share of actual
4    expenses paid before the termination of the legal tenancy
5    and not previously recovered by him, which the number of
6    days in the lease period on and after the termination bears
7    to the total number of days in the lease period.
8    (d) (Blank). This Section does not apply to life estates
9and remainder interests in oil or gas from non-coal formations,
10or royalties or overriding royalties created under leases of
11such minerals.
12(Source: P.A. 100-519, eff. 6-1-18.)
 
13    Section 95. No acceleration or delay. Where this Act makes
14changes in a statute that is represented in this Act by text
15that is not yet or no longer in effect (for example, a Section
16represented by multiple versions), the use of that text does
17not accelerate or delay the taking effect of (i) the changes
18made by this Act or (ii) provisions derived from any other
19Public Act.