97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3215

 

Introduced 2/1/2012, by Sen. Susan Garrett

 

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. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3215LRB097 17607 HLH 62814 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, such loss shall be allowed as a net operating
21    loss carryover to each of the 12 taxable years following
22    the taxable year of such loss, except as provided in
23    subsection (d).
24    (a-5) Election to relinquish carryback and order of
25application of losses.
26            (A) For losses incurred in tax years ending prior

 

 

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

 

 

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1under paragraphs (1), (2), and (3) of subsection (a) of this
2Section, the loss and net operating loss carryover shall be
3reduced in an amount equal to the reduction to the net
4operating loss and net operating loss carryover to the taxable
5year, respectively, required under Section 108(b)(2)(A) of the
6Internal Revenue Code, multiplied by a fraction, the numerator
7of which is the amount of discharge of indebtedness income that
8is excluded from gross income for the taxable year (but only if
9the taxable year ends on or after December 31, 2008) under
10Section 108(a) of the Internal Revenue Code and that would have
11been allocated and apportioned to this State under Article 3 of
12this Act but for that exclusion, and the denominator of which
13is the total amount of discharge of indebtedness income
14excluded from gross income under Section 108(a) of the Internal
15Revenue Code for the taxable year. The reduction required under
16this subsection (c) shall be made after the determination of
17Illinois net income for the taxable year in which the
18indebtedness is discharged.
19    (d) In the case of a corporation (other than a Subchapter S
20corporation), no carryover deduction shall be allowed under
21this Section for any taxable year ending after December 31,
222010 and prior to December 31, 2012, and no carryover deduction
23shall exceed $100,000 for any taxable year ending on or after
24December 31, 2012 and prior to December 31, 2014; provided
25that, for purposes of determining the taxable years to which a
26net loss may be carried under subsection (a) of this Section,

 

 

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1no taxable year for which a deduction is disallowed under this
2subsection, or for which the deduction would exceed $100,000 if
3not for this subsection, shall be counted.
4    (e) In the case of a residual interest holder in a real
5estate mortgage investment conduit subject to Section 860E of
6the Internal Revenue Code, the net loss in subsection (a) shall
7be equal to:
8        (1) the amount computed under subsection (a), without
9    regard to this subsection (e), or if that amount is
10    positive, zero;
11        (2) minus an amount equal to the amount computed under
12    subsection (a), without regard to this subsection (e),
13    minus the amount that would be computed under subsection
14    (a) if the taxpayer's federal taxable income were computed
15    without regard to Section 860E of the Internal Revenue Code
16    and without regard to this subsection (e).
17    The modification in this subsection (e) is exempt from the
18provisions of Section 250.
19(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
2097-636, eff. 6-1-12.)
 
21    Section 95. No acceleration or delay. Where this Act makes
22changes in a statute that is represented in this Act by text
23that is not yet or no longer in effect (for example, a Section
24represented by multiple versions), the use of that text does
25not accelerate or delay the taking effect of (i) the changes

 

 

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1made by this Act or (ii) provisions derived from any other
2Public Act.
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.