97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5473

 

Introduced 2/15/2012, by Rep. Lou Lang

 

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

    Amends the Illinois Income Tax Act. Provides that a limitation on net loss carryovers applies to losses for taxable years ending on or after December 31, 1999 and prior to December 31, 2003 and carried forward to years covered by the limitation period. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5473LRB097 19216 HLH 64458 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, except as provided
2    in subsection (d); and
3        (3) for any taxable year ending on or after December
4    31, 2003, such loss shall be allowed as a net operating
5    loss carryover to each of the 12 taxable years following
6    the taxable year of such loss, except as provided in
7    subsection (d).
8    (a-5) Election to relinquish carryback and order of
9application of losses.
10            (A) For losses incurred in tax years ending prior
11        to December 31, 2003, the taxpayer may elect to
12        relinquish the entire carryback period with respect to
13        such loss. Such election shall be made in the form and
14        manner prescribed by the Department and shall be made
15        by the due date (including extensions of time) for
16        filing the taxpayer's return for the taxable year in
17        which such loss is incurred, and such election, once
18        made, shall be irrevocable.
19            (B) The entire amount of such loss shall be carried
20        to the earliest taxable year to which such loss may be
21        carried. The amount of such loss which shall be carried
22        to each of the other taxable years shall be the excess,
23        if any, of the amount of such loss over the sum of the
24        deductions for carryback or carryover of such loss
25        allowable for each of the prior taxable years to which
26        such loss may be carried.

 

 

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

 

 

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1Illinois net income for the taxable year in which the
2indebtedness is discharged.
3    (d) In the case of a corporation (other than a Subchapter S
4corporation), no carryover deduction shall be allowed under
5this Section for any taxable year ending after December 31,
62010 and prior to December 31, 2014; provided that, for
7purposes of determining the taxable years to which a net loss
8may be carried under subsection (a) of this Section, no taxable
9year for which a deduction is disallowed under this subsection
10shall 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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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, except as provided
19    in subsection (d); and
20        (3) for any taxable year ending on or after December
21    31, 2003, such loss shall be allowed as a net operating
22    loss carryover to each of the 12 taxable years following
23    the taxable year of such loss, except as provided in
24    subsection (d).
25    (a-5) Election to relinquish carryback and order of

 

 

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1application of losses.
2            (A) For losses incurred in tax years ending prior
3        to December 31, 2003, the taxpayer may elect to
4        relinquish the entire carryback period with respect to
5        such loss. Such election shall be made in the form and
6        manner prescribed by the Department and shall be made
7        by the due date (including extensions of time) for
8        filing the taxpayer's return for the taxable year in
9        which such loss is incurred, and such election, once
10        made, shall be irrevocable.
11            (B) The entire amount of such loss shall be carried
12        to the earliest taxable year to which such loss may be
13        carried. The amount of such loss which shall be carried
14        to each of the other taxable years shall be the excess,
15        if any, of the amount of such loss over the sum of the
16        deductions for carryback or carryover of such loss
17        allowable for each of the prior taxable years to which
18        such loss may be carried.
19    (b) Any loss determined under subsection (a) of this
20Section must be carried back or carried forward in the same
21manner for purposes of subsections (a) and (b) of Section 201
22of this Act as for purposes of subsections (c) and (d) of
23Section 201 of this Act.
24    (c) Notwithstanding any other provision of this Act, for
25each taxable year ending on or after December 31, 2008, for
26purposes of computing the loss for the taxable year under

 

 

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1subsection (a) of this Section and the deduction taken into
2account for the taxable year for a net operating loss carryover
3under paragraphs (1), (2), and (3) of subsection (a) of this
4Section, the loss and net operating loss carryover shall be
5reduced in an amount equal to the reduction to the net
6operating loss and net operating loss carryover to the taxable
7year, respectively, required under Section 108(b)(2)(A) of the
8Internal Revenue Code, multiplied by a fraction, the numerator
9of which is the amount of discharge of indebtedness income that
10is excluded from gross income for the taxable year (but only if
11the taxable year ends on or after December 31, 2008) under
12Section 108(a) of the Internal Revenue Code and that would have
13been allocated and apportioned to this State under Article 3 of
14this Act but for that exclusion, and the denominator of which
15is the total amount of discharge of indebtedness income
16excluded from gross income under Section 108(a) of the Internal
17Revenue Code for the taxable year. The reduction required under
18this subsection (c) shall be made after the determination of
19Illinois net income for the taxable year in which the
20indebtedness is discharged.
21    (d) In the case of a corporation (other than a Subchapter S
22corporation), no carryover deduction shall be allowed under
23this Section for any taxable year ending after December 31,
242010 and prior to December 31, 2012, and no carryover deduction
25shall exceed $100,000 for any taxable year ending on or after
26December 31, 2012 and prior to December 31, 2014; provided

 

 

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1that, for purposes of determining the taxable years to which a
2net loss may be carried under subsection (a) of this Section,
3no taxable year for which a deduction is disallowed under this
4subsection, or for which the deduction would exceed $100,000 if
5not for this subsection, shall be counted.
6    (e) In the case of a residual interest holder in a real
7estate mortgage investment conduit subject to Section 860E of
8the Internal Revenue Code, the net loss in subsection (a) shall
9be equal to:
10        (1) the amount computed under subsection (a), without
11    regard to this subsection (e), or if that amount is
12    positive, zero;
13        (2) minus an amount equal to the amount computed under
14    subsection (a), without regard to this subsection (e),
15    minus the amount that would be computed under subsection
16    (a) if the taxpayer's federal taxable income were computed
17    without regard to Section 860E of the Internal Revenue Code
18    and without regard to this subsection (e).
19    The modification in this subsection (e) is exempt from the
20provisions of Section 250.
21(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
2297-636, eff. 6-1-12.)
 
23    Section 95. No acceleration or delay. Where this Act makes
24changes in a statute that is represented in this Act by text
25that is not yet or no longer in effect (for example, a Section

 

 

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1represented by multiple versions), the use of that text does
2not accelerate or delay the taking effect of (i) the changes
3made by this Act or (ii) provisions derived from any other
4Public Act.
 
5    Section 99. Effective date. This Act takes effect upon
6becoming law.