97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB4038

 

Introduced , by Rep. Jil Tracy - Dwight Kay

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/207  from Ch. 120, par. 2-207

    Amends the Illinois Income Tax Act. Removes a provision limiting the net loss carryover deduction to $100,000 for any taxable year ending on or after December 31, 2012 and prior to December 31, 2014. Provides that, for any taxable year ending on or after December 31, 2012, such a loss is allowed as a carryback to each of the 2 taxable years preceding the taxable year of the loss and is allowed as a net operating loss carryover to each of the 20 taxable years following the taxable year of the loss. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4038LRB097 17559 HLH 62765 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 Income Tax Act is amended by
5changing Section 207 as follows:
 
6    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
7    (Text of Section before amendment by P.A. 97-636)
8    Sec. 207. Net Losses.
9    (a) If after applying all of the (i) modifications provided
10for in paragraph (2) of Section 203(b), paragraph (2) of
11Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
12allocation and apportionment provisions of Article 3 of this
13Act and subsection (c) of this Section, the taxpayer's net
14income results in a loss;
15        (1) for any taxable year ending prior to December 31,
16    1999, such loss shall be allowed as a carryover or
17    carryback deduction in the manner allowed under Section 172
18    of the Internal Revenue Code;
19        (2) for any taxable year ending on or after December
20    31, 1999 and prior to December 31, 2003, such loss shall be
21    allowed as a carryback to each of the 2 taxable years
22    preceding the taxable year of such loss and shall be a net
23    operating loss carryover to each of the 20 taxable years

 

 

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1    following the taxable year of such loss; and
2        (3) for any taxable year ending on or after December
3    31, 2003, such loss shall be allowed as a net operating
4    loss carryover to each of the 12 taxable years following
5    the taxable year of such loss, except as provided in
6    subsection (d).
7    (a-5) Election to relinquish carryback and order of
8application of losses.
9            (A) For losses incurred in tax years ending prior
10        to December 31, 2003, the taxpayer may elect to
11        relinquish the entire carryback period with respect to
12        such loss. Such election shall be made in the form and
13        manner prescribed by the Department and shall be made
14        by the due date (including extensions of time) for
15        filing the taxpayer's return for the taxable year in
16        which such loss is incurred, and such election, once
17        made, shall be irrevocable.
18            (B) The entire amount of such loss shall be carried
19        to the earliest taxable year to which such loss may be
20        carried. The amount of such loss which shall be carried
21        to each of the other taxable years shall be the excess,
22        if any, of the amount of such loss over the sum of the
23        deductions for carryback or carryover of such loss
24        allowable for each of the prior taxable years to which
25        such loss may be carried.
26    (b) Any loss determined under subsection (a) of this

 

 

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1Section must be carried back or carried forward in the same
2manner for purposes of subsections (a) and (b) of Section 201
3of this Act as for purposes of subsections (c) and (d) of
4Section 201 of this Act.
5    (c) Notwithstanding any other provision of this Act, for
6each taxable year ending on or after December 31, 2008, for
7purposes of computing the loss for the taxable year under
8subsection (a) of this Section and the deduction taken into
9account for the taxable year for a net operating loss carryover
10under paragraphs (1), (2), and (3) of subsection (a) of this
11Section, the loss and net operating loss carryover shall be
12reduced in an amount equal to the reduction to the net
13operating loss and net operating loss carryover to the taxable
14year, respectively, required under Section 108(b)(2)(A) of the
15Internal Revenue Code, multiplied by a fraction, the numerator
16of which is the amount of discharge of indebtedness income that
17is excluded from gross income for the taxable year (but only if
18the taxable year ends on or after December 31, 2008) under
19Section 108(a) of the Internal Revenue Code and that would have
20been allocated and apportioned to this State under Article 3 of
21this Act but for that exclusion, and the denominator of which
22is the total amount of discharge of indebtedness income
23excluded from gross income under Section 108(a) of the Internal
24Revenue Code for the taxable year. The reduction required under
25this subsection (c) shall be made after the determination of
26Illinois net income for the taxable year in which the

 

 

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1indebtedness is discharged.
2    (d) In the case of a corporation (other than a Subchapter S
3corporation), no carryover deduction shall be allowed under
4this Section for any taxable year ending after December 31,
52010 and prior to December 31, 2014; provided that, for
6purposes of determining the taxable years to which a net loss
7may be carried under subsection (a) of this Section, no taxable
8year for which a deduction is disallowed under this subsection
9shall be counted.
10    (e) In the case of a residual interest holder in a real
11estate mortgage investment conduit subject to Section 860E of
12the Internal Revenue Code, the net loss in subsection (a) shall
13be equal to:
14        (1) the amount computed under subsection (a), without
15    regard to this subsection (e), or if that amount is
16    positive, zero;
17        (2) minus an amount equal to the amount computed under
18    subsection (a), without regard to this subsection (e),
19    minus the amount that would be computed under subsection
20    (a) if the taxpayer's federal taxable income were computed
21    without regard to Section 860E of the Internal Revenue Code
22    and without regard to this subsection (e).
23    The modification in this subsection (e) is exempt from the
24provisions of Section 250.
25(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11.)
 

 

 

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1    (Text of Section after amendment by P.A. 97-636)
2    Sec. 207. Net Losses.
3    (a) If after applying all of the (i) modifications provided
4for in paragraph (2) of Section 203(b), paragraph (2) of
5Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
6allocation and apportionment provisions of Article 3 of this
7Act and subsection (c) of this Section, the taxpayer's net
8income results in a loss;
9        (1) for any taxable year ending prior to December 31,
10    1999, such loss shall be allowed as a carryover or
11    carryback deduction in the manner allowed under Section 172
12    of the Internal Revenue Code;
13        (2) for any taxable year ending on or after December
14    31, 1999 and prior to December 31, 2003, such loss shall be
15    allowed as a carryback to each of the 2 taxable years
16    preceding the taxable year of such loss and shall be a net
17    operating loss carryover to each of the 20 taxable years
18    following the taxable year of such loss; and
19        (3) for any taxable year ending on or after December
20    31, 2003 and prior to December 31, 2012, such loss shall be
21    allowed as a net operating loss carryover to each of the 12
22    taxable years following the taxable year of such loss,
23    except as provided in subsection (d); and .
24        (4) except as provided in subsection (d), for any
25    taxable year ending on or after December 31, 2012, such
26    loss shall be allowed as a carryback to each of the 2

 

 

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1    taxable years preceding the taxable year of the loss and
2    shall be allowed as a net operating loss carryover to each
3    of the 20 taxable years following the taxable year of the
4    loss.
5    (a-5) Election to relinquish carryback and order of
6application of losses.
7            (A) For losses incurred in tax years ending prior
8        to December 31, 2003, the taxpayer may elect to
9        relinquish the entire carryback period with respect to
10        such loss. Such election shall be made in the form and
11        manner prescribed by the Department and shall be made
12        by the due date (including extensions of time) for
13        filing the taxpayer's return for the taxable year in
14        which such loss is incurred, and such election, once
15        made, shall be irrevocable.
16            (B) The entire amount of such loss shall be carried
17        to the earliest taxable year to which such loss may be
18        carried. The amount of such loss which shall be carried
19        to each of the other taxable years shall be the excess,
20        if any, of the amount of such loss over the sum of the
21        deductions for carryback or carryover of such loss
22        allowable for each of the prior taxable years to which
23        such loss may be carried.
24    (b) Any loss determined under subsection (a) of this
25Section must be carried back or carried forward in the same
26manner for purposes of subsections (a) and (b) of Section 201

 

 

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1of this Act as for purposes of subsections (c) and (d) of
2Section 201 of this Act.
3    (c) Notwithstanding any other provision of this Act, for
4each taxable year ending on or after December 31, 2008, for
5purposes of computing the loss for the taxable year under
6subsection (a) of this Section and the deduction taken into
7account for the taxable year for a net operating loss carryover
8under paragraphs (1), (2), and (3) of subsection (a) of this
9Section, the loss and net operating loss carryover shall be
10reduced in an amount equal to the reduction to the net
11operating loss and net operating loss carryover to the taxable
12year, respectively, required under Section 108(b)(2)(A) of the
13Internal Revenue Code, multiplied by a fraction, the numerator
14of which is the amount of discharge of indebtedness income that
15is excluded from gross income for the taxable year (but only if
16the taxable year ends on or after December 31, 2008) under
17Section 108(a) of the Internal Revenue Code and that would have
18been allocated and apportioned to this State under Article 3 of
19this Act but for that exclusion, and the denominator of which
20is the total amount of discharge of indebtedness income
21excluded from gross income under Section 108(a) of the Internal
22Revenue Code for the taxable year. The reduction required under
23this subsection (c) shall be made after the determination of
24Illinois net income for the taxable year in which the
25indebtedness is discharged.
26    (d) In the case of a corporation (other than a Subchapter S

 

 

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1corporation), no carryover deduction shall be allowed under
2this Section for any taxable year ending after December 31,
32010 and prior to December 31, 2012, and no carryover deduction
4shall exceed $100,000 for any taxable year ending on or after
5December 31, 2012 and prior to December 31, 2014; provided
6that, for purposes of determining the taxable years to which a
7net loss may be carried under subsection (a) of this Section,
8no taxable year for which a deduction is disallowed under this
9subsection, or for which the deduction would exceed $100,000 if
10not for this subsection, shall be counted.
11    (e) In the case of a residual interest holder in a real
12estate mortgage investment conduit subject to Section 860E of
13the Internal Revenue Code, the net loss in subsection (a) shall
14be equal to:
15        (1) the amount computed under subsection (a), without
16    regard to this subsection (e), or if that amount is
17    positive, zero;
18        (2) minus an amount equal to the amount computed under
19    subsection (a), without regard to this subsection (e),
20    minus the amount that would be computed under subsection
21    (a) if the taxpayer's federal taxable income were computed
22    without regard to Section 860E of the Internal Revenue Code
23    and without regard to this subsection (e).
24    The modification in this subsection (e) is exempt from the
25provisions of Section 250.
26(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;

 

 

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197-636, eff. 6-1-12.)
 
2    Section 95. No acceleration or delay. Where this Act makes
3changes in a statute that is represented in this Act by text
4that is not yet or no longer in effect (for example, a Section
5represented by multiple versions), the use of that text does
6not accelerate or delay the taking effect of (i) the changes
7made by this Act or (ii) provisions derived from any other
8Public Act.
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.