Illinois General Assembly - Full Text of HB5828
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Full Text of HB5828  97th General Assembly

HB5828 97TH GENERAL ASSEMBLY

  
  

 


 
97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5828

 

Introduced 2/16/2012, by Rep. Kent Gaffney

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201  from Ch. 120, par. 2-201
35 ILCS 5/207  from Ch. 120, par. 2-207
35 ILCS 405/2  from Ch. 120, par. 405A-2
35 ILCS 405/3  from Ch. 120, par. 405A-3

    Amends the Illinois Income Tax Act. Reduces the rate of the tax imposed on individuals, trusts, and estates to 3% for taxable years beginning on or after January 1, 2012 (now, 5% for taxable years ending prior to January 1, 2015, 3.75% for taxable years beginning on or after January 1, 2015 and ending prior to January 1, 2025, and 3.25% for taxable years beginning on or after January 1, 2025). Reduces the rate of the tax imposed on corporations to 4.8% for taxable years beginning on or after January 1, 2012 (now, 7% for taxable years ending prior to January 1, 2015, 5.25% for taxable years beginning on or after January 1, 2015 and ending prior to January 1, 2025, and 4.8% for taxable years beginning on or after January 1, 2025). 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. Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that no tax shall be imposed under the Act for persons dying after December 31, 2009.


LRB097 19361 HLH 64610 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5828LRB097 19361 HLH 64610 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 Sections 201 and 207 as follows:
 
6    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7    (Text of Section before amendment by P.A. 97-636)
8    Sec. 201. Tax Imposed.
9    (a) In general. A tax measured by net income is hereby
10imposed on every individual, corporation, trust and estate for
11each taxable year ending after July 31, 1969 on the privilege
12of earning or receiving income in or as a resident of this
13State. Such tax shall be in addition to all other occupation or
14privilege taxes imposed by this State or by any municipal
15corporation or political subdivision thereof.
16    (b) Rates. The tax imposed by subsection (a) of this
17Section shall be determined as follows, except as adjusted by
18subsection (d-1):
19        (1) In the case of an individual, trust or estate, for
20    taxable years ending prior to July 1, 1989, an amount equal
21    to 2 1/2% of the taxpayer's net income for the taxable
22    year.
23        (2) In the case of an individual, trust or estate, for

 

 

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1    taxable years beginning prior to July 1, 1989 and ending
2    after June 30, 1989, an amount equal to the sum of (i) 2
3    1/2% of the taxpayer's net income for the period prior to
4    July 1, 1989, as calculated under Section 202.3, and (ii)
5    3% of the taxpayer's net income for the period after June
6    30, 1989, as calculated under Section 202.3.
7        (3) In the case of an individual, trust or estate, for
8    taxable years beginning after June 30, 1989, and ending
9    prior to January 1, 2011, an amount equal to 3% of the
10    taxpayer's net income for the taxable year.
11        (4) In the case of an individual, trust, or estate, for
12    taxable years beginning prior to January 1, 2011, and
13    ending after December 31, 2010, an amount equal to the sum
14    of (i) 3% of the taxpayer's net income for the period prior
15    to January 1, 2011, as calculated under Section 202.5, and
16    (ii) 5% of the taxpayer's net income for the period after
17    December 31, 2010, as calculated under Section 202.5.
18        (5) In the case of an individual, trust, or estate, for
19    taxable years beginning on or after January 1, 2011, and
20    ending prior to January 1, 2012 2015, an amount equal to 5%
21    of the taxpayer's net income for the taxable year.
22        (5.1) In the case of an individual, trust, or estate,
23    for taxable years beginning prior to January 1, 2012 2015,
24    and ending after December 31, 2011 2014, an amount equal to
25    the sum of (i) 5% of the taxpayer's net income for the
26    period prior to January 1, 2012 2015, as calculated under

 

 

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1    Section 202.5, and (ii) 3% 3.75% of the taxpayer's net
2    income for the period after December 31, 2011 2014, as
3    calculated under Section 202.5.
4        (5.2) In the case of an individual, trust, or estate,
5    for taxable years beginning on or after January 1, 2012
6    2015, and ending prior to January 1, 2025, an amount equal
7    to 3% 3.75% of the taxpayer's net income for the taxable
8    year.
9        (5.3) (Blank) In the case of an individual, trust, or
10    estate, for taxable years beginning prior to January 1,
11    2025, and ending after December 31, 2024, an amount equal
12    to the sum of (i) 3.75% of the taxpayer's net income for
13    the period prior to January 1, 2025, as calculated under
14    Section 202.5, and (ii) 3.25% of the taxpayer's net income
15    for the period after December 31, 2024, as calculated under
16    Section 202.5.
17        (5.4) (Blank) In the case of an individual, trust, or
18    estate, for taxable years beginning on or after January 1,
19    2025, an amount equal to 3.25% of the taxpayer's net income
20    for the taxable year.
21        (6) In the case of a corporation, for taxable years
22    ending prior to July 1, 1989, an amount equal to 4% of the
23    taxpayer's net income for the taxable year.
24        (7) In the case of a corporation, for taxable years
25    beginning prior to July 1, 1989 and ending after June 30,
26    1989, an amount equal to the sum of (i) 4% of the

 

 

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1    taxpayer's net income for the period prior to July 1, 1989,
2    as calculated under Section 202.3, and (ii) 4.8% of the
3    taxpayer's net income for the period after June 30, 1989,
4    as calculated under Section 202.3.
5        (8) In the case of a corporation, for taxable years
6    beginning after June 30, 1989, and ending prior to January
7    1, 2011, an amount equal to 4.8% of the taxpayer's net
8    income for the taxable year.
9        (9) In the case of a corporation, for taxable years
10    beginning prior to January 1, 2011, and ending after
11    December 31, 2010, an amount equal to the sum of (i) 4.8%
12    of the taxpayer's net income for the period prior to
13    January 1, 2011, as calculated under Section 202.5, and
14    (ii) 7% of the taxpayer's net income for the period after
15    December 31, 2010, as calculated under Section 202.5.
16        (10) In the case of a corporation, for taxable years
17    beginning on or after January 1, 2011, and ending prior to
18    January 1, 2012 2015, an amount equal to 7% of the
19    taxpayer's net income for the taxable year.
20        (11) In the case of a corporation, for taxable years
21    beginning prior to January 1, 2012 2015, and ending after
22    December 31, 2011 2014, an amount equal to the sum of (i)
23    7% of the taxpayer's net income for the period prior to
24    January 1, 2012 2015, as calculated under Section 202.5,
25    and (ii) 4.8% 5.25% of the taxpayer's net income for the
26    period after December 31, 2011 2014, as calculated under

 

 

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1    Section 202.5.
2        (12) In the case of a corporation, for taxable years
3    beginning on or after January 1, 2012 2015, and ending
4    prior to January 1, 2025, an amount equal to 4.8% 5.25% of
5    the taxpayer's net income for the taxable year.
6        (13) (Blank) In the case of a corporation, for taxable
7    years beginning prior to January 1, 2025, and ending after
8    December 31, 2024, an amount equal to the sum of (i) 5.25%
9    of the taxpayer's net income for the period prior to
10    January 1, 2025, as calculated under Section 202.5, and
11    (ii) 4.8% of the taxpayer's net income for the period after
12    December 31, 2024, as calculated under Section 202.5.
13        (14) (Blank) In the case of a corporation, for taxable
14    years beginning on or after January 1, 2025, an amount
15    equal to 4.8% of the taxpayer's net income for the taxable
16    year.
17    The rates under this subsection (b) are subject to the
18provisions of Section 201.5.
19    (c) Personal Property Tax Replacement Income Tax.
20Beginning on July 1, 1979 and thereafter, in addition to such
21income tax, there is also hereby imposed the Personal Property
22Tax Replacement Income Tax measured by net income on every
23corporation (including Subchapter S corporations), partnership
24and trust, for each taxable year ending after June 30, 1979.
25Such taxes are imposed on the privilege of earning or receiving
26income in or as a resident of this State. The Personal Property

 

 

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1Tax Replacement Income Tax shall be in addition to the income
2tax imposed by subsections (a) and (b) of this Section and in
3addition to all other occupation or privilege taxes imposed by
4this State or by any municipal corporation or political
5subdivision thereof.
6    (d) Additional Personal Property Tax Replacement Income
7Tax Rates. The personal property tax replacement income tax
8imposed by this subsection and subsection (c) of this Section
9in the case of a corporation, other than a Subchapter S
10corporation and except as adjusted by subsection (d-1), shall
11be an additional amount equal to 2.85% of such taxpayer's net
12income for the taxable year, except that beginning on January
131, 1981, and thereafter, the rate of 2.85% specified in this
14subsection shall be reduced to 2.5%, and in the case of a
15partnership, trust or a Subchapter S corporation shall be an
16additional amount equal to 1.5% of such taxpayer's net income
17for the taxable year.
18    (d-1) Rate reduction for certain foreign insurers. In the
19case of a foreign insurer, as defined by Section 35A-5 of the
20Illinois Insurance Code, whose state or country of domicile
21imposes on insurers domiciled in Illinois a retaliatory tax
22(excluding any insurer whose premiums from reinsurance assumed
23are 50% or more of its total insurance premiums as determined
24under paragraph (2) of subsection (b) of Section 304, except
25that for purposes of this determination premiums from
26reinsurance do not include premiums from inter-affiliate

 

 

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1reinsurance arrangements), beginning with taxable years ending
2on or after December 31, 1999, the sum of the rates of tax
3imposed by subsections (b) and (d) shall be reduced (but not
4increased) to the rate at which the total amount of tax imposed
5under this Act, net of all credits allowed under this Act,
6shall equal (i) the total amount of tax that would be imposed
7on the foreign insurer's net income allocable to Illinois for
8the taxable year by such foreign insurer's state or country of
9domicile if that net income were subject to all income taxes
10and taxes measured by net income imposed by such foreign
11insurer's state or country of domicile, net of all credits
12allowed or (ii) a rate of zero if no such tax is imposed on such
13income by the foreign insurer's state of domicile. For the
14purposes of this subsection (d-1), an inter-affiliate includes
15a mutual insurer under common management.
16        (1) For the purposes of subsection (d-1), in no event
17    shall the sum of the rates of tax imposed by subsections
18    (b) and (d) be reduced below the rate at which the sum of:
19            (A) the total amount of tax imposed on such foreign
20        insurer under this Act for a taxable year, net of all
21        credits allowed under this Act, plus
22            (B) the privilege tax imposed by Section 409 of the
23        Illinois Insurance Code, the fire insurance company
24        tax imposed by Section 12 of the Fire Investigation
25        Act, and the fire department taxes imposed under
26        Section 11-10-1 of the Illinois Municipal Code,

 

 

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1    equals 1.25% for taxable years ending prior to December 31,
2    2003, or 1.75% for taxable years ending on or after
3    December 31, 2003, of the net taxable premiums written for
4    the taxable year, as described by subsection (1) of Section
5    409 of the Illinois Insurance Code. This paragraph will in
6    no event increase the rates imposed under subsections (b)
7    and (d).
8        (2) Any reduction in the rates of tax imposed by this
9    subsection shall be applied first against the rates imposed
10    by subsection (b) and only after the tax imposed by
11    subsection (a) net of all credits allowed under this
12    Section other than the credit allowed under subsection (i)
13    has been reduced to zero, against the rates imposed by
14    subsection (d).
15    This subsection (d-1) is exempt from the provisions of
16Section 250.
17    (e) Investment credit. A taxpayer shall be allowed a credit
18against the Personal Property Tax Replacement Income Tax for
19investment in qualified property.
20        (1) A taxpayer shall be allowed a credit equal to .5%
21    of the basis of qualified property placed in service during
22    the taxable year, provided such property is placed in
23    service on or after July 1, 1984. There shall be allowed an
24    additional credit equal to .5% of the basis of qualified
25    property placed in service during the taxable year,
26    provided such property is placed in service on or after

 

 

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1    July 1, 1986, and the taxpayer's base employment within
2    Illinois has increased by 1% or more over the preceding
3    year as determined by the taxpayer's employment records
4    filed with the Illinois Department of Employment Security.
5    Taxpayers who are new to Illinois shall be deemed to have
6    met the 1% growth in base employment for the first year in
7    which they file employment records with the Illinois
8    Department of Employment Security. The provisions added to
9    this Section by Public Act 85-1200 (and restored by Public
10    Act 87-895) shall be construed as declaratory of existing
11    law and not as a new enactment. If, in any year, the
12    increase in base employment within Illinois over the
13    preceding year is less than 1%, the additional credit shall
14    be limited to that percentage times a fraction, the
15    numerator of which is .5% and the denominator of which is
16    1%, but shall not exceed .5%. The investment credit shall
17    not be allowed to the extent that it would reduce a
18    taxpayer's liability in any tax year below zero, nor may
19    any credit for qualified property be allowed for any year
20    other than the year in which the property was placed in
21    service in Illinois. For tax years ending on or after
22    December 31, 1987, and on or before December 31, 1988, the
23    credit shall be allowed for the tax year in which the
24    property is placed in service, or, if the amount of the
25    credit exceeds the tax liability for that year, whether it
26    exceeds the original liability or the liability as later

 

 

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1    amended, such excess may be carried forward and applied to
2    the tax liability of the 5 taxable years following the
3    excess credit years if the taxpayer (i) makes investments
4    which cause the creation of a minimum of 2,000 full-time
5    equivalent jobs in Illinois, (ii) is located in an
6    enterprise zone established pursuant to the Illinois
7    Enterprise Zone Act and (iii) is certified by the
8    Department of Commerce and Community Affairs (now
9    Department of Commerce and Economic Opportunity) as
10    complying with the requirements specified in clause (i) and
11    (ii) by July 1, 1986. The Department of Commerce and
12    Community Affairs (now Department of Commerce and Economic
13    Opportunity) shall notify the Department of Revenue of all
14    such certifications immediately. For tax years ending
15    after December 31, 1988, the credit shall be allowed for
16    the tax year in which the property is placed in service,
17    or, if the amount of the credit exceeds the tax liability
18    for that year, whether it exceeds the original liability or
19    the liability as later amended, such excess may be carried
20    forward and applied to the tax liability of the 5 taxable
21    years following the excess credit years. The credit shall
22    be applied to the earliest year for which there is a
23    liability. If there is credit from more than one tax year
24    that is available to offset a liability, earlier credit
25    shall be applied first.
26        (2) The term "qualified property" means property

 

 

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1    which:
2            (A) is tangible, whether new or used, including
3        buildings and structural components of buildings and
4        signs that are real property, but not including land or
5        improvements to real property that are not a structural
6        component of a building such as landscaping, sewer
7        lines, local access roads, fencing, parking lots, and
8        other appurtenances;
9            (B) is depreciable pursuant to Section 167 of the
10        Internal Revenue Code, except that "3-year property"
11        as defined in Section 168(c)(2)(A) of that Code is not
12        eligible for the credit provided by this subsection
13        (e);
14            (C) is acquired by purchase as defined in Section
15        179(d) of the Internal Revenue Code;
16            (D) is used in Illinois by a taxpayer who is
17        primarily engaged in manufacturing, or in mining coal
18        or fluorite, or in retailing, or was placed in service
19        on or after July 1, 2006 in a River Edge Redevelopment
20        Zone established pursuant to the River Edge
21        Redevelopment Zone Act; and
22            (E) has not previously been used in Illinois in
23        such a manner and by such a person as would qualify for
24        the credit provided by this subsection (e) or
25        subsection (f).
26        (3) For purposes of this subsection (e),

 

 

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1    "manufacturing" means the material staging and production
2    of tangible personal property by procedures commonly
3    regarded as manufacturing, processing, fabrication, or
4    assembling which changes some existing material into new
5    shapes, new qualities, or new combinations. For purposes of
6    this subsection (e) the term "mining" shall have the same
7    meaning as the term "mining" in Section 613(c) of the
8    Internal Revenue Code. For purposes of this subsection (e),
9    the term "retailing" means the sale of tangible personal
10    property for use or consumption and not for resale, or
11    services rendered in conjunction with the sale of tangible
12    personal property for use or consumption and not for
13    resale. For purposes of this subsection (e), "tangible
14    personal property" has the same meaning as when that term
15    is used in the Retailers' Occupation Tax Act, and, for
16    taxable years ending after December 31, 2008, does not
17    include the generation, transmission, or distribution of
18    electricity.
19        (4) The basis of qualified property shall be the basis
20    used to compute the depreciation deduction for federal
21    income tax purposes.
22        (5) If the basis of the property for federal income tax
23    depreciation purposes is increased after it has been placed
24    in service in Illinois by the taxpayer, the amount of such
25    increase shall be deemed property placed in service on the
26    date of such increase in basis.

 

 

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1        (6) The term "placed in service" shall have the same
2    meaning as under Section 46 of the Internal Revenue Code.
3        (7) If during any taxable year, any property ceases to
4    be qualified property in the hands of the taxpayer within
5    48 months after being placed in service, or the situs of
6    any qualified property is moved outside Illinois within 48
7    months after being placed in service, the Personal Property
8    Tax Replacement Income Tax for such taxable year shall be
9    increased. Such increase shall be determined by (i)
10    recomputing the investment credit which would have been
11    allowed for the year in which credit for such property was
12    originally allowed by eliminating such property from such
13    computation and, (ii) subtracting such recomputed credit
14    from the amount of credit previously allowed. For the
15    purposes of this paragraph (7), a reduction of the basis of
16    qualified property resulting from a redetermination of the
17    purchase price shall be deemed a disposition of qualified
18    property to the extent of such reduction.
19        (8) Unless the investment credit is extended by law,
20    the basis of qualified property shall not include costs
21    incurred after December 31, 2013, except for costs incurred
22    pursuant to a binding contract entered into on or before
23    December 31, 2013.
24        (9) Each taxable year ending before December 31, 2000,
25    a partnership may elect to pass through to its partners the
26    credits to which the partnership is entitled under this

 

 

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1    subsection (e) for the taxable year. A partner may use the
2    credit allocated to him or her under this paragraph only
3    against the tax imposed in subsections (c) and (d) of this
4    Section. If the partnership makes that election, those
5    credits shall be allocated among the partners in the
6    partnership in accordance with the rules set forth in
7    Section 704(b) of the Internal Revenue Code, and the rules
8    promulgated under that Section, and the allocated amount of
9    the credits shall be allowed to the partners for that
10    taxable year. The partnership shall make this election on
11    its Personal Property Tax Replacement Income Tax return for
12    that taxable year. The election to pass through the credits
13    shall be irrevocable.
14        For taxable years ending on or after December 31, 2000,
15    a partner that qualifies its partnership for a subtraction
16    under subparagraph (I) of paragraph (2) of subsection (d)
17    of Section 203 or a shareholder that qualifies a Subchapter
18    S corporation for a subtraction under subparagraph (S) of
19    paragraph (2) of subsection (b) of Section 203 shall be
20    allowed a credit under this subsection (e) equal to its
21    share of the credit earned under this subsection (e) during
22    the taxable year by the partnership or Subchapter S
23    corporation, determined in accordance with the
24    determination of income and distributive share of income
25    under Sections 702 and 704 and Subchapter S of the Internal
26    Revenue Code. This paragraph is exempt from the provisions

 

 

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1    of Section 250.
2    (f) Investment credit; Enterprise Zone; River Edge
3Redevelopment Zone.
4        (1) A taxpayer shall be allowed a credit against the
5    tax imposed by subsections (a) and (b) of this Section for
6    investment in qualified property which is placed in service
7    in an Enterprise Zone created pursuant to the Illinois
8    Enterprise Zone Act or, for property placed in service on
9    or after July 1, 2006, a River Edge Redevelopment Zone
10    established pursuant to the River Edge Redevelopment Zone
11    Act. For partners, shareholders of Subchapter S
12    corporations, and owners of limited liability companies,
13    if the liability company is treated as a partnership for
14    purposes of federal and State income taxation, there shall
15    be allowed a credit under this subsection (f) to be
16    determined in accordance with the determination of income
17    and distributive share of income under Sections 702 and 704
18    and Subchapter S of the Internal Revenue Code. The credit
19    shall be .5% of the basis for such property. The credit
20    shall be available only in the taxable year in which the
21    property is placed in service in the Enterprise Zone or
22    River Edge Redevelopment Zone and shall not be allowed to
23    the extent that it would reduce a taxpayer's liability for
24    the tax imposed by subsections (a) and (b) of this Section
25    to below zero. For tax years ending on or after December
26    31, 1985, the credit shall be allowed for the tax year in

 

 

HB5828- 16 -LRB097 19361 HLH 64610 b

1    which the property is placed in service, or, if the amount
2    of the credit exceeds the tax liability for that year,
3    whether it exceeds the original liability or the liability
4    as later amended, such excess may be carried forward and
5    applied to the tax liability of the 5 taxable years
6    following the excess credit year. The credit shall be
7    applied to the earliest year for which there is a
8    liability. If there is credit from more than one tax year
9    that is available to offset a liability, the credit
10    accruing first in time shall be applied first.
11        (2) The term qualified property means property which:
12            (A) is tangible, whether new or used, including
13        buildings and structural components of buildings;
14            (B) is depreciable pursuant to Section 167 of the
15        Internal Revenue Code, except that "3-year property"
16        as defined in Section 168(c)(2)(A) of that Code is not
17        eligible for the credit provided by this subsection
18        (f);
19            (C) is acquired by purchase as defined in Section
20        179(d) of the Internal Revenue Code;
21            (D) is used in the Enterprise Zone or River Edge
22        Redevelopment Zone by the taxpayer; and
23            (E) has not been previously used in Illinois in
24        such a manner and by such a person as would qualify for
25        the credit provided by this subsection (f) or
26        subsection (e).

 

 

HB5828- 17 -LRB097 19361 HLH 64610 b

1        (3) The basis of qualified property shall be the basis
2    used to compute the depreciation deduction for federal
3    income tax purposes.
4        (4) If the basis of the property for federal income tax
5    depreciation purposes is increased after it has been placed
6    in service in the Enterprise Zone or River Edge
7    Redevelopment Zone by the taxpayer, the amount of such
8    increase shall be deemed property placed in service on the
9    date of such increase in basis.
10        (5) The term "placed in service" shall have the same
11    meaning as under Section 46 of the Internal Revenue Code.
12        (6) If during any taxable year, any property ceases to
13    be qualified property in the hands of the taxpayer within
14    48 months after being placed in service, or the situs of
15    any qualified property is moved outside the Enterprise Zone
16    or River Edge Redevelopment Zone within 48 months after
17    being placed in service, the tax imposed under subsections
18    (a) and (b) of this Section for such taxable year shall be
19    increased. Such increase shall be determined by (i)
20    recomputing the investment credit which would have been
21    allowed for the year in which credit for such property was
22    originally allowed by eliminating such property from such
23    computation, and (ii) subtracting such recomputed credit
24    from the amount of credit previously allowed. For the
25    purposes of this paragraph (6), a reduction of the basis of
26    qualified property resulting from a redetermination of the

 

 

HB5828- 18 -LRB097 19361 HLH 64610 b

1    purchase price shall be deemed a disposition of qualified
2    property to the extent of such reduction.
3        (7) There shall be allowed an additional credit equal
4    to 0.5% of the basis of qualified property placed in
5    service during the taxable year in a River Edge
6    Redevelopment Zone, provided such property is placed in
7    service on or after July 1, 2006, and the taxpayer's base
8    employment within Illinois has increased by 1% or more over
9    the preceding year as determined by the taxpayer's
10    employment records filed with the Illinois Department of
11    Employment Security. Taxpayers who are new to Illinois
12    shall be deemed to have met the 1% growth in base
13    employment for the first year in which they file employment
14    records with the Illinois Department of Employment
15    Security. If, in any year, the increase in base employment
16    within Illinois over the preceding year is less than 1%,
17    the additional credit shall be limited to that percentage
18    times a fraction, the numerator of which is 0.5% and the
19    denominator of which is 1%, but shall not exceed 0.5%.
20    (g) Jobs Tax Credit; Enterprise Zone, River Edge
21Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
22        (1) A taxpayer conducting a trade or business in an
23    enterprise zone or a High Impact Business designated by the
24    Department of Commerce and Economic Opportunity or for
25    taxable years ending on or after December 31, 2006, in a
26    River Edge Redevelopment Zone conducting a trade or

 

 

HB5828- 19 -LRB097 19361 HLH 64610 b

1    business in a federally designated Foreign Trade Zone or
2    Sub-Zone shall be allowed a credit against the tax imposed
3    by subsections (a) and (b) of this Section in the amount of
4    $500 per eligible employee hired to work in the zone during
5    the taxable year.
6        (2) To qualify for the credit:
7            (A) the taxpayer must hire 5 or more eligible
8        employees to work in an enterprise zone, River Edge
9        Redevelopment Zone, or federally designated Foreign
10        Trade Zone or Sub-Zone during the taxable year;
11            (B) the taxpayer's total employment within the
12        enterprise zone, River Edge Redevelopment Zone, or
13        federally designated Foreign Trade Zone or Sub-Zone
14        must increase by 5 or more full-time employees beyond
15        the total employed in that zone at the end of the
16        previous tax year for which a jobs tax credit under
17        this Section was taken, or beyond the total employed by
18        the taxpayer as of December 31, 1985, whichever is
19        later; and
20            (C) the eligible employees must be employed 180
21        consecutive days in order to be deemed hired for
22        purposes of this subsection.
23        (3) An "eligible employee" means an employee who is:
24            (A) Certified by the Department of Commerce and
25        Economic Opportunity as "eligible for services"
26        pursuant to regulations promulgated in accordance with

 

 

HB5828- 20 -LRB097 19361 HLH 64610 b

1        Title II of the Job Training Partnership Act, Training
2        Services for the Disadvantaged or Title III of the Job
3        Training Partnership Act, Employment and Training
4        Assistance for Dislocated Workers Program.
5            (B) Hired after the enterprise zone, River Edge
6        Redevelopment Zone, or federally designated Foreign
7        Trade Zone or Sub-Zone was designated or the trade or
8        business was located in that zone, whichever is later.
9            (C) Employed in the enterprise zone, River Edge
10        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
11        An employee is employed in an enterprise zone or
12        federally designated Foreign Trade Zone or Sub-Zone if
13        his services are rendered there or it is the base of
14        operations for the services performed.
15            (D) A full-time employee working 30 or more hours
16        per week.
17        (4) For tax years ending on or after December 31, 1985
18    and prior to December 31, 1988, the credit shall be allowed
19    for the tax year in which the eligible employees are hired.
20    For tax years ending on or after December 31, 1988, the
21    credit shall be allowed for the tax year immediately
22    following the tax year in which the eligible employees are
23    hired. If the amount of the credit exceeds the tax
24    liability for that year, whether it exceeds the original
25    liability or the liability as later amended, such excess
26    may be carried forward and applied to the tax liability of

 

 

HB5828- 21 -LRB097 19361 HLH 64610 b

1    the 5 taxable years following the excess credit year. The
2    credit shall be applied to the earliest year for which
3    there is a liability. If there is credit from more than one
4    tax year that is available to offset a liability, earlier
5    credit shall be applied first.
6        (5) The Department of Revenue shall promulgate such
7    rules and regulations as may be deemed necessary to carry
8    out the purposes of this subsection (g).
9        (6) The credit shall be available for eligible
10    employees hired on or after January 1, 1986.
11    (h) Investment credit; High Impact Business.
12        (1) Subject to subsections (b) and (b-5) of Section 5.5
13    of the Illinois Enterprise Zone Act, a taxpayer shall be
14    allowed a credit against the tax imposed by subsections (a)
15    and (b) of this Section for investment in qualified
16    property which is placed in service by a Department of
17    Commerce and Economic Opportunity designated High Impact
18    Business. The credit shall be .5% of the basis for such
19    property. The credit shall not be available (i) until the
20    minimum investments in qualified property set forth in
21    subdivision (a)(3)(A) of Section 5.5 of the Illinois
22    Enterprise Zone Act have been satisfied or (ii) until the
23    time authorized in subsection (b-5) of the Illinois
24    Enterprise Zone Act for entities designated as High Impact
25    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
26    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone

 

 

HB5828- 22 -LRB097 19361 HLH 64610 b

1    Act, and shall not be allowed to the extent that it would
2    reduce a taxpayer's liability for the tax imposed by
3    subsections (a) and (b) of this Section to below zero. The
4    credit applicable to such investments shall be taken in the
5    taxable year in which such investments have been completed.
6    The credit for additional investments beyond the minimum
7    investment by a designated high impact business authorized
8    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
9    Enterprise Zone Act shall be available only in the taxable
10    year in which the property is placed in service and shall
11    not be allowed to the extent that it would reduce a
12    taxpayer's liability for the tax imposed by subsections (a)
13    and (b) of this Section to below zero. For tax years ending
14    on or after December 31, 1987, the credit shall be allowed
15    for the tax year in which the property is placed in
16    service, or, if the amount of the credit exceeds the tax
17    liability for that year, whether it exceeds the original
18    liability or the liability as later amended, such excess
19    may be carried forward and applied to the tax liability of
20    the 5 taxable years following the excess credit year. The
21    credit shall be applied to the earliest year for which
22    there is a liability. If there is credit from more than one
23    tax year that is available to offset a liability, the
24    credit accruing first in time shall be applied first.
25        Changes made in this subdivision (h)(1) by Public Act
26    88-670 restore changes made by Public Act 85-1182 and

 

 

HB5828- 23 -LRB097 19361 HLH 64610 b

1    reflect existing law.
2        (2) The term qualified property means property which:
3            (A) is tangible, whether new or used, including
4        buildings and structural components of buildings;
5            (B) is depreciable pursuant to Section 167 of the
6        Internal Revenue Code, except that "3-year property"
7        as defined in Section 168(c)(2)(A) of that Code is not
8        eligible for the credit provided by this subsection
9        (h);
10            (C) is acquired by purchase as defined in Section
11        179(d) of the Internal Revenue Code; and
12            (D) is not eligible for the Enterprise Zone
13        Investment Credit provided by subsection (f) of this
14        Section.
15        (3) The basis of qualified property shall be the basis
16    used to compute the depreciation deduction for federal
17    income tax purposes.
18        (4) If the basis of the property for federal income tax
19    depreciation purposes is increased after it has been placed
20    in service in a federally designated Foreign Trade Zone or
21    Sub-Zone located in Illinois by the taxpayer, the amount of
22    such increase shall be deemed property placed in service on
23    the date of such increase in basis.
24        (5) The term "placed in service" shall have the same
25    meaning as under Section 46 of the Internal Revenue Code.
26        (6) If during any taxable year ending on or before

 

 

HB5828- 24 -LRB097 19361 HLH 64610 b

1    December 31, 1996, any property ceases to be qualified
2    property in the hands of the taxpayer within 48 months
3    after being placed in service, or the situs of any
4    qualified property is moved outside Illinois within 48
5    months after being placed in service, the tax imposed under
6    subsections (a) and (b) of this Section for such taxable
7    year shall be increased. Such increase shall be determined
8    by (i) recomputing the investment credit which would have
9    been allowed for the year in which credit for such property
10    was originally allowed by eliminating such property from
11    such computation, and (ii) subtracting such recomputed
12    credit from the amount of credit previously allowed. For
13    the purposes of this paragraph (6), a reduction of the
14    basis of qualified property resulting from a
15    redetermination of the purchase price shall be deemed a
16    disposition of qualified property to the extent of such
17    reduction.
18        (7) Beginning with tax years ending after December 31,
19    1996, if a taxpayer qualifies for the credit under this
20    subsection (h) and thereby is granted a tax abatement and
21    the taxpayer relocates its entire facility in violation of
22    the explicit terms and length of the contract under Section
23    18-183 of the Property Tax Code, the tax imposed under
24    subsections (a) and (b) of this Section shall be increased
25    for the taxable year in which the taxpayer relocated its
26    facility by an amount equal to the amount of credit

 

 

HB5828- 25 -LRB097 19361 HLH 64610 b

1    received by the taxpayer under this subsection (h).
2    (i) Credit for Personal Property Tax Replacement Income
3Tax. For tax years ending prior to December 31, 2003, a credit
4shall be allowed against the tax imposed by subsections (a) and
5(b) of this Section for the tax imposed by subsections (c) and
6(d) of this Section. This credit shall be computed by
7multiplying the tax imposed by subsections (c) and (d) of this
8Section by a fraction, the numerator of which is base income
9allocable to Illinois and the denominator of which is Illinois
10base income, and further multiplying the product by the tax
11rate imposed by subsections (a) and (b) of this Section.
12    Any credit earned on or after December 31, 1986 under this
13subsection which is unused in the year the credit is computed
14because it exceeds the tax liability imposed by subsections (a)
15and (b) for that year (whether it exceeds the original
16liability or the liability as later amended) may be carried
17forward and applied to the tax liability imposed by subsections
18(a) and (b) of the 5 taxable years following the excess credit
19year, provided that no credit may be carried forward to any
20year ending on or after December 31, 2003. This credit shall be
21applied first to the earliest year for which there is a
22liability. If there is a credit under this subsection from more
23than one tax year that is available to offset a liability the
24earliest credit arising under this subsection shall be applied
25first.
26    If, during any taxable year ending on or after December 31,

 

 

HB5828- 26 -LRB097 19361 HLH 64610 b

11986, the tax imposed by subsections (c) and (d) of this
2Section for which a taxpayer has claimed a credit under this
3subsection (i) is reduced, the amount of credit for such tax
4shall also be reduced. Such reduction shall be determined by
5recomputing the credit to take into account the reduced tax
6imposed by subsections (c) and (d). If any portion of the
7reduced amount of credit has been carried to a different
8taxable year, an amended return shall be filed for such taxable
9year to reduce the amount of credit claimed.
10    (j) Training expense credit. Beginning with tax years
11ending on or after December 31, 1986 and prior to December 31,
122003, a taxpayer shall be allowed a credit against the tax
13imposed by subsections (a) and (b) under this Section for all
14amounts paid or accrued, on behalf of all persons employed by
15the taxpayer in Illinois or Illinois residents employed outside
16of Illinois by a taxpayer, for educational or vocational
17training in semi-technical or technical fields or semi-skilled
18or skilled fields, which were deducted from gross income in the
19computation of taxable income. The credit against the tax
20imposed by subsections (a) and (b) shall be 1.6% of such
21training expenses. For partners, shareholders of subchapter S
22corporations, and owners of limited liability companies, if the
23liability company is treated as a partnership for purposes of
24federal and State income taxation, there shall be allowed a
25credit under this subsection (j) to be determined in accordance
26with the determination of income and distributive share of

 

 

HB5828- 27 -LRB097 19361 HLH 64610 b

1income under Sections 702 and 704 and subchapter S of the
2Internal Revenue Code.
3    Any credit allowed under this subsection which is unused in
4the year the credit is earned may be carried forward to each of
5the 5 taxable years following the year for which the credit is
6first computed until it is used. This credit shall be applied
7first to the earliest year for which there is a liability. If
8there is a credit under this subsection from more than one tax
9year that is available to offset a liability the earliest
10credit arising under this subsection shall be applied first. No
11carryforward credit may be claimed in any tax year ending on or
12after December 31, 2003.
13    (k) Research and development credit.
14    For tax years ending after July 1, 1990 and prior to
15December 31, 2003, and beginning again for tax years ending on
16or after December 31, 2004, and ending prior to January 1,
172011, a taxpayer shall be allowed a credit against the tax
18imposed by subsections (a) and (b) of this Section for
19increasing research activities in this State. The credit
20allowed against the tax imposed by subsections (a) and (b)
21shall be equal to 6 1/2% of the qualifying expenditures for
22increasing research activities in this State. For partners,
23shareholders of subchapter S corporations, and owners of
24limited liability companies, if the liability company is
25treated as a partnership for purposes of federal and State
26income taxation, there shall be allowed a credit under this

 

 

HB5828- 28 -LRB097 19361 HLH 64610 b

1subsection to be determined in accordance with the
2determination of income and distributive share of income under
3Sections 702 and 704 and subchapter S of the Internal Revenue
4Code.
5    For purposes of this subsection, "qualifying expenditures"
6means the qualifying expenditures as defined for the federal
7credit for increasing research activities which would be
8allowable under Section 41 of the Internal Revenue Code and
9which are conducted in this State, "qualifying expenditures for
10increasing research activities in this State" means the excess
11of qualifying expenditures for the taxable year in which
12incurred over qualifying expenditures for the base period,
13"qualifying expenditures for the base period" means the average
14of the qualifying expenditures for each year in the base
15period, and "base period" means the 3 taxable years immediately
16preceding the taxable year for which the determination is being
17made.
18    Any credit in excess of the tax liability for the taxable
19year may be carried forward. A taxpayer may elect to have the
20unused credit shown on its final completed return carried over
21as a credit against the tax liability for the following 5
22taxable years or until it has been fully used, whichever occurs
23first; provided that no credit earned in a tax year ending
24prior to December 31, 2003 may be carried forward to any year
25ending on or after December 31, 2003, and no credit may be
26carried forward to any taxable year ending on or after January

 

 

HB5828- 29 -LRB097 19361 HLH 64610 b

11, 2011.
2    If an unused credit is carried forward to a given year from
32 or more earlier years, that credit arising in the earliest
4year will be applied first against the tax liability for the
5given year. If a tax liability for the given year still
6remains, the credit from the next earliest year will then be
7applied, and so on, until all credits have been used or no tax
8liability for the given year remains. Any remaining unused
9credit or credits then will be carried forward to the next
10following year in which a tax liability is incurred, except
11that no credit can be carried forward to a year which is more
12than 5 years after the year in which the expense for which the
13credit is given was incurred.
14    No inference shall be drawn from this amendatory Act of the
1591st General Assembly in construing this Section for taxable
16years beginning before January 1, 1999.
17    (l) Environmental Remediation Tax Credit.
18        (i) For tax years ending after December 31, 1997 and on
19    or before December 31, 2001, a taxpayer shall be allowed a
20    credit against the tax imposed by subsections (a) and (b)
21    of this Section for certain amounts paid for unreimbursed
22    eligible remediation costs, as specified in this
23    subsection. For purposes of this Section, "unreimbursed
24    eligible remediation costs" means costs approved by the
25    Illinois Environmental Protection Agency ("Agency") under
26    Section 58.14 of the Environmental Protection Act that were

 

 

HB5828- 30 -LRB097 19361 HLH 64610 b

1    paid in performing environmental remediation at a site for
2    which a No Further Remediation Letter was issued by the
3    Agency and recorded under Section 58.10 of the
4    Environmental Protection Act. The credit must be claimed
5    for the taxable year in which Agency approval of the
6    eligible remediation costs is granted. The credit is not
7    available to any taxpayer if the taxpayer or any related
8    party caused or contributed to, in any material respect, a
9    release of regulated substances on, in, or under the site
10    that was identified and addressed by the remedial action
11    pursuant to the Site Remediation Program of the
12    Environmental Protection Act. After the Pollution Control
13    Board rules are adopted pursuant to the Illinois
14    Administrative Procedure Act for the administration and
15    enforcement of Section 58.9 of the Environmental
16    Protection Act, determinations as to credit availability
17    for purposes of this Section shall be made consistent with
18    those rules. For purposes of this Section, "taxpayer"
19    includes a person whose tax attributes the taxpayer has
20    succeeded to under Section 381 of the Internal Revenue Code
21    and "related party" includes the persons disallowed a
22    deduction for losses by paragraphs (b), (c), and (f)(1) of
23    Section 267 of the Internal Revenue Code by virtue of being
24    a related taxpayer, as well as any of its partners. The
25    credit allowed against the tax imposed by subsections (a)
26    and (b) shall be equal to 25% of the unreimbursed eligible

 

 

HB5828- 31 -LRB097 19361 HLH 64610 b

1    remediation costs in excess of $100,000 per site, except
2    that the $100,000 threshold shall not apply to any site
3    contained in an enterprise zone as determined by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity). The
6    total credit allowed shall not exceed $40,000 per year with
7    a maximum total of $150,000 per site. For partners and
8    shareholders of subchapter S corporations, there shall be
9    allowed a credit under this subsection to be determined in
10    accordance with the determination of income and
11    distributive share of income under Sections 702 and 704 and
12    subchapter S of the Internal Revenue Code.
13        (ii) A credit allowed under this subsection that is
14    unused in the year the credit is earned may be carried
15    forward to each of the 5 taxable years following the year
16    for which the credit is first earned until it is used. The
17    term "unused credit" does not include any amounts of
18    unreimbursed eligible remediation costs in excess of the
19    maximum credit per site authorized under paragraph (i).
20    This credit shall be applied first to the earliest year for
21    which there is a liability. If there is a credit under this
22    subsection from more than one tax year that is available to
23    offset a liability, the earliest credit arising under this
24    subsection shall be applied first. A credit allowed under
25    this subsection may be sold to a buyer as part of a sale of
26    all or part of the remediation site for which the credit

 

 

HB5828- 32 -LRB097 19361 HLH 64610 b

1    was granted. The purchaser of a remediation site and the
2    tax credit shall succeed to the unused credit and remaining
3    carry-forward period of the seller. To perfect the
4    transfer, the assignor shall record the transfer in the
5    chain of title for the site and provide written notice to
6    the Director of the Illinois Department of Revenue of the
7    assignor's intent to sell the remediation site and the
8    amount of the tax credit to be transferred as a portion of
9    the sale. In no event may a credit be transferred to any
10    taxpayer if the taxpayer or a related party would not be
11    eligible under the provisions of subsection (i).
12        (iii) For purposes of this Section, the term "site"
13    shall have the same meaning as under Section 58.2 of the
14    Environmental Protection Act.
15    (m) Education expense credit. Beginning with tax years
16ending after December 31, 1999, a taxpayer who is the custodian
17of one or more qualifying pupils shall be allowed a credit
18against the tax imposed by subsections (a) and (b) of this
19Section for qualified education expenses incurred on behalf of
20the qualifying pupils. The credit shall be equal to 25% of
21qualified education expenses, but in no event may the total
22credit under this subsection claimed by a family that is the
23custodian of qualifying pupils exceed $500. In no event shall a
24credit under this subsection reduce the taxpayer's liability
25under this Act to less than zero. This subsection is exempt
26from the provisions of Section 250 of this Act.

 

 

HB5828- 33 -LRB097 19361 HLH 64610 b

1    For purposes of this subsection:
2    "Qualifying pupils" means individuals who (i) are
3residents of the State of Illinois, (ii) are under the age of
421 at the close of the school year for which a credit is
5sought, and (iii) during the school year for which a credit is
6sought were full-time pupils enrolled in a kindergarten through
7twelfth grade education program at any school, as defined in
8this subsection.
9    "Qualified education expense" means the amount incurred on
10behalf of a qualifying pupil in excess of $250 for tuition,
11book fees, and lab fees at the school in which the pupil is
12enrolled during the regular school year.
13    "School" means any public or nonpublic elementary or
14secondary school in Illinois that is in compliance with Title
15VI of the Civil Rights Act of 1964 and attendance at which
16satisfies the requirements of Section 26-1 of the School Code,
17except that nothing shall be construed to require a child to
18attend any particular public or nonpublic school to qualify for
19the credit under this Section.
20    "Custodian" means, with respect to qualifying pupils, an
21Illinois resident who is a parent, the parents, a legal
22guardian, or the legal guardians of the qualifying pupils.
23    (n) River Edge Redevelopment Zone site remediation tax
24credit.
25        (i) For tax years ending on or after December 31, 2006,
26    a taxpayer shall be allowed a credit against the tax

 

 

HB5828- 34 -LRB097 19361 HLH 64610 b

1    imposed by subsections (a) and (b) of this Section for
2    certain amounts paid for unreimbursed eligible remediation
3    costs, as specified in this subsection. For purposes of
4    this Section, "unreimbursed eligible remediation costs"
5    means costs approved by the Illinois Environmental
6    Protection Agency ("Agency") under Section 58.14a of the
7    Environmental Protection Act that were paid in performing
8    environmental remediation at a site within a River Edge
9    Redevelopment Zone for which a No Further Remediation
10    Letter was issued by the Agency and recorded under Section
11    58.10 of the Environmental Protection Act. The credit must
12    be claimed for the taxable year in which Agency approval of
13    the eligible remediation costs is granted. The credit is
14    not available to any taxpayer if the taxpayer or any
15    related party caused or contributed to, in any material
16    respect, a release of regulated substances on, in, or under
17    the site that was identified and addressed by the remedial
18    action pursuant to the Site Remediation Program of the
19    Environmental Protection Act. Determinations as to credit
20    availability for purposes of this Section shall be made
21    consistent with rules adopted by the Pollution Control
22    Board pursuant to the Illinois Administrative Procedure
23    Act for the administration and enforcement of Section 58.9
24    of the Environmental Protection Act. For purposes of this
25    Section, "taxpayer" includes a person whose tax attributes
26    the taxpayer has succeeded to under Section 381 of the

 

 

HB5828- 35 -LRB097 19361 HLH 64610 b

1    Internal Revenue Code and "related party" includes the
2    persons disallowed a deduction for losses by paragraphs
3    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
4    Code by virtue of being a related taxpayer, as well as any
5    of its partners. The credit allowed against the tax imposed
6    by subsections (a) and (b) shall be equal to 25% of the
7    unreimbursed eligible remediation costs in excess of
8    $100,000 per site.
9        (ii) A credit allowed under this subsection that is
10    unused in the year the credit is earned may be carried
11    forward to each of the 5 taxable years following the year
12    for which the credit is first earned until it is used. This
13    credit shall be applied first to the earliest year for
14    which there is a liability. If there is a credit under this
15    subsection from more than one tax year that is available to
16    offset a liability, the earliest credit arising under this
17    subsection shall be applied first. A credit allowed under
18    this subsection may be sold to a buyer as part of a sale of
19    all or part of the remediation site for which the credit
20    was granted. The purchaser of a remediation site and the
21    tax credit shall succeed to the unused credit and remaining
22    carry-forward period of the seller. To perfect the
23    transfer, the assignor shall record the transfer in the
24    chain of title for the site and provide written notice to
25    the Director of the Illinois Department of Revenue of the
26    assignor's intent to sell the remediation site and the

 

 

HB5828- 36 -LRB097 19361 HLH 64610 b

1    amount of the tax credit to be transferred as a portion of
2    the sale. In no event may a credit be transferred to any
3    taxpayer if the taxpayer or a related party would not be
4    eligible under the provisions of subsection (i).
5        (iii) For purposes of this Section, the term "site"
6    shall have the same meaning as under Section 58.2 of the
7    Environmental Protection Act.
8(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
996-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
101-13-11; 97-2, eff. 5-6-11.)
 
11    (Text of Section after amendment by P.A. 97-636)
12    Sec. 201. Tax Imposed.
13    (a) In general. A tax measured by net income is hereby
14imposed on every individual, corporation, trust and estate for
15each taxable year ending after July 31, 1969 on the privilege
16of earning or receiving income in or as a resident of this
17State. Such tax shall be in addition to all other occupation or
18privilege taxes imposed by this State or by any municipal
19corporation or political subdivision thereof.
20    (b) Rates. The tax imposed by subsection (a) of this
21Section shall be determined as follows, except as adjusted by
22subsection (d-1):
23        (1) In the case of an individual, trust or estate, for
24    taxable years ending prior to July 1, 1989, an amount equal
25    to 2 1/2% of the taxpayer's net income for the taxable

 

 

HB5828- 37 -LRB097 19361 HLH 64610 b

1    year.
2        (2) In the case of an individual, trust or estate, for
3    taxable years beginning prior to July 1, 1989 and ending
4    after June 30, 1989, an amount equal to the sum of (i) 2
5    1/2% of the taxpayer's net income for the period prior to
6    July 1, 1989, as calculated under Section 202.3, and (ii)
7    3% of the taxpayer's net income for the period after June
8    30, 1989, as calculated under Section 202.3.
9        (3) In the case of an individual, trust or estate, for
10    taxable years beginning after June 30, 1989, and ending
11    prior to January 1, 2011, an amount equal to 3% of the
12    taxpayer's net income for the taxable year.
13        (4) In the case of an individual, trust, or estate, for
14    taxable years beginning prior to January 1, 2011, and
15    ending after December 31, 2010, an amount equal to the sum
16    of (i) 3% of the taxpayer's net income for the period prior
17    to January 1, 2011, as calculated under Section 202.5, and
18    (ii) 5% of the taxpayer's net income for the period after
19    December 31, 2010, as calculated under Section 202.5.
20        (5) In the case of an individual, trust, or estate, for
21    taxable years beginning on or after January 1, 2011, and
22    ending prior to January 1, 2012 2015, an amount equal to 5%
23    of the taxpayer's net income for the taxable year.
24        (5.1) In the case of an individual, trust, or estate,
25    for taxable years beginning prior to January 1, 2012 2015,
26    and ending after December 31, 2011 2014, an amount equal to

 

 

HB5828- 38 -LRB097 19361 HLH 64610 b

1    the sum of (i) 5% of the taxpayer's net income for the
2    period prior to January 1, 2012 2015, as calculated under
3    Section 202.5, and (ii) 3% 3.75% of the taxpayer's net
4    income for the period after December 31, 2011 2014, as
5    calculated under Section 202.5.
6        (5.2) In the case of an individual, trust, or estate,
7    for taxable years beginning on or after January 1, 2012
8    2015, and ending prior to January 1, 2025, an amount equal
9    to 3% 3.75% of the taxpayer's net income for the taxable
10    year.
11        (5.3) (Blank) In the case of an individual, trust, or
12    estate, for taxable years beginning prior to January 1,
13    2025, and ending after December 31, 2024, an amount equal
14    to the sum of (i) 3.75% of the taxpayer's net income for
15    the period prior to January 1, 2025, as calculated under
16    Section 202.5, and (ii) 3.25% of the taxpayer's net income
17    for the period after December 31, 2024, as calculated under
18    Section 202.5.
19        (5.4) (Blank) In the case of an individual, trust, or
20    estate, for taxable years beginning on or after January 1,
21    2025, an amount equal to 3.25% of the taxpayer's net income
22    for the taxable year.
23        (6) In the case of a corporation, for taxable years
24    ending prior to July 1, 1989, an amount equal to 4% of the
25    taxpayer's net income for the taxable year.
26        (7) In the case of a corporation, for taxable years

 

 

HB5828- 39 -LRB097 19361 HLH 64610 b

1    beginning prior to July 1, 1989 and ending after June 30,
2    1989, an amount equal to the sum of (i) 4% of the
3    taxpayer's net income for the period prior to July 1, 1989,
4    as calculated under Section 202.3, and (ii) 4.8% of the
5    taxpayer's net income for the period after June 30, 1989,
6    as calculated under Section 202.3.
7        (8) In the case of a corporation, for taxable years
8    beginning after June 30, 1989, and ending prior to January
9    1, 2011, an amount equal to 4.8% of the taxpayer's net
10    income for the taxable year.
11        (9) In the case of a corporation, for taxable years
12    beginning prior to January 1, 2011, and ending after
13    December 31, 2010, an amount equal to the sum of (i) 4.8%
14    of the taxpayer's net income for the period prior to
15    January 1, 2011, as calculated under Section 202.5, and
16    (ii) 7% of the taxpayer's net income for the period after
17    December 31, 2010, as calculated under Section 202.5.
18        (10) In the case of a corporation, for taxable years
19    beginning on or after January 1, 2011, and ending prior to
20    January 1, 2012 2015, an amount equal to 7% of the
21    taxpayer's net income for the taxable year.
22        (11) In the case of a corporation, for taxable years
23    beginning prior to January 1, 2012 2015, and ending after
24    December 31, 2011 2014, an amount equal to the sum of (i)
25    7% of the taxpayer's net income for the period prior to
26    January 1, 2012 2015, as calculated under Section 202.5,

 

 

HB5828- 40 -LRB097 19361 HLH 64610 b

1    and (ii) 4.8% 5.25% of the taxpayer's net income for the
2    period after December 31, 2011 2014, as calculated under
3    Section 202.5.
4        (12) In the case of a corporation, for taxable years
5    beginning on or after January 1, 2012 2015, and ending
6    prior to January 1, 2025, an amount equal to 4.8% 5.25% of
7    the taxpayer's net income for the taxable year.
8        (13) (Blank) In the case of a corporation, for taxable
9    years beginning prior to January 1, 2025, and ending after
10    December 31, 2024, an amount equal to the sum of (i) 5.25%
11    of the taxpayer's net income for the period prior to
12    January 1, 2025, as calculated under Section 202.5, and
13    (ii) 4.8% of the taxpayer's net income for the period after
14    December 31, 2024, as calculated under Section 202.5.
15        (14) (Blank) In the case of a corporation, for taxable
16    years beginning on or after January 1, 2025, an amount
17    equal to 4.8% of the taxpayer's net income for the taxable
18    year.
19    The rates under this subsection (b) are subject to the
20provisions of Section 201.5.
21    (c) Personal Property Tax Replacement Income Tax.
22Beginning on July 1, 1979 and thereafter, in addition to such
23income tax, there is also hereby imposed the Personal Property
24Tax Replacement Income Tax measured by net income on every
25corporation (including Subchapter S corporations), partnership
26and trust, for each taxable year ending after June 30, 1979.

 

 

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1Such taxes are imposed on the privilege of earning or receiving
2income in or as a resident of this State. The Personal Property
3Tax Replacement Income Tax shall be in addition to the income
4tax imposed by subsections (a) and (b) of this Section and in
5addition to all other occupation or privilege taxes imposed by
6this State or by any municipal corporation or political
7subdivision thereof.
8    (d) Additional Personal Property Tax Replacement Income
9Tax Rates. The personal property tax replacement income tax
10imposed by this subsection and subsection (c) of this Section
11in the case of a corporation, other than a Subchapter S
12corporation and except as adjusted by subsection (d-1), shall
13be an additional amount equal to 2.85% of such taxpayer's net
14income for the taxable year, except that beginning on January
151, 1981, and thereafter, the rate of 2.85% specified in this
16subsection shall be reduced to 2.5%, and in the case of a
17partnership, trust or a Subchapter S corporation shall be an
18additional amount equal to 1.5% of such taxpayer's net income
19for the taxable year.
20    (d-1) Rate reduction for certain foreign insurers. In the
21case of a foreign insurer, as defined by Section 35A-5 of the
22Illinois Insurance Code, whose state or country of domicile
23imposes on insurers domiciled in Illinois a retaliatory tax
24(excluding any insurer whose premiums from reinsurance assumed
25are 50% or more of its total insurance premiums as determined
26under paragraph (2) of subsection (b) of Section 304, except

 

 

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1that for purposes of this determination premiums from
2reinsurance do not include premiums from inter-affiliate
3reinsurance arrangements), beginning with taxable years ending
4on or after December 31, 1999, the sum of the rates of tax
5imposed by subsections (b) and (d) shall be reduced (but not
6increased) to the rate at which the total amount of tax imposed
7under this Act, net of all credits allowed under this Act,
8shall equal (i) the total amount of tax that would be imposed
9on the foreign insurer's net income allocable to Illinois for
10the taxable year by such foreign insurer's state or country of
11domicile if that net income were subject to all income taxes
12and taxes measured by net income imposed by such foreign
13insurer's state or country of domicile, net of all credits
14allowed or (ii) a rate of zero if no such tax is imposed on such
15income by the foreign insurer's state of domicile. For the
16purposes of this subsection (d-1), an inter-affiliate includes
17a mutual insurer under common management.
18        (1) For the purposes of subsection (d-1), in no event
19    shall the sum of the rates of tax imposed by subsections
20    (b) and (d) be reduced below the rate at which the sum of:
21            (A) the total amount of tax imposed on such foreign
22        insurer under this Act for a taxable year, net of all
23        credits allowed under this Act, plus
24            (B) the privilege tax imposed by Section 409 of the
25        Illinois Insurance Code, the fire insurance company
26        tax imposed by Section 12 of the Fire Investigation

 

 

HB5828- 43 -LRB097 19361 HLH 64610 b

1        Act, and the fire department taxes imposed under
2        Section 11-10-1 of the Illinois Municipal Code,
3    equals 1.25% for taxable years ending prior to December 31,
4    2003, or 1.75% for taxable years ending on or after
5    December 31, 2003, of the net taxable premiums written for
6    the taxable year, as described by subsection (1) of Section
7    409 of the Illinois Insurance Code. This paragraph will in
8    no event increase the rates imposed under subsections (b)
9    and (d).
10        (2) Any reduction in the rates of tax imposed by this
11    subsection shall be applied first against the rates imposed
12    by subsection (b) and only after the tax imposed by
13    subsection (a) net of all credits allowed under this
14    Section other than the credit allowed under subsection (i)
15    has been reduced to zero, against the rates imposed by
16    subsection (d).
17    This subsection (d-1) is exempt from the provisions of
18Section 250.
19    (e) Investment credit. A taxpayer shall be allowed a credit
20against the Personal Property Tax Replacement Income Tax for
21investment in qualified property.
22        (1) A taxpayer shall be allowed a credit equal to .5%
23    of the basis of qualified property placed in service during
24    the taxable year, provided such property is placed in
25    service on or after July 1, 1984. There shall be allowed an
26    additional credit equal to .5% of the basis of qualified

 

 

HB5828- 44 -LRB097 19361 HLH 64610 b

1    property placed in service during the taxable year,
2    provided such property is placed in service on or after
3    July 1, 1986, and the taxpayer's base employment within
4    Illinois has increased by 1% or more over the preceding
5    year as determined by the taxpayer's employment records
6    filed with the Illinois Department of Employment Security.
7    Taxpayers who are new to Illinois shall be deemed to have
8    met the 1% growth in base employment for the first year in
9    which they file employment records with the Illinois
10    Department of Employment Security. The provisions added to
11    this Section by Public Act 85-1200 (and restored by Public
12    Act 87-895) shall be construed as declaratory of existing
13    law and not as a new enactment. If, in any year, the
14    increase in base employment within Illinois over the
15    preceding year is less than 1%, the additional credit shall
16    be limited to that percentage times a fraction, the
17    numerator of which is .5% and the denominator of which is
18    1%, but shall not exceed .5%. The investment credit shall
19    not be allowed to the extent that it would reduce a
20    taxpayer's liability in any tax year below zero, nor may
21    any credit for qualified property be allowed for any year
22    other than the year in which the property was placed in
23    service in Illinois. For tax years ending on or after
24    December 31, 1987, and on or before December 31, 1988, the
25    credit shall be allowed for the tax year in which the
26    property is placed in service, or, if the amount of the

 

 

HB5828- 45 -LRB097 19361 HLH 64610 b

1    credit exceeds the tax liability for that year, whether it
2    exceeds the original liability or the liability as later
3    amended, such excess may be carried forward and applied to
4    the tax liability of the 5 taxable years following the
5    excess credit years if the taxpayer (i) makes investments
6    which cause the creation of a minimum of 2,000 full-time
7    equivalent jobs in Illinois, (ii) is located in an
8    enterprise zone established pursuant to the Illinois
9    Enterprise Zone Act and (iii) is certified by the
10    Department of Commerce and Community Affairs (now
11    Department of Commerce and Economic Opportunity) as
12    complying with the requirements specified in clause (i) and
13    (ii) by July 1, 1986. The Department of Commerce and
14    Community Affairs (now Department of Commerce and Economic
15    Opportunity) shall notify the Department of Revenue of all
16    such certifications immediately. For tax years ending
17    after December 31, 1988, the credit shall be allowed for
18    the tax year in which the property is placed in service,
19    or, if the amount of the credit exceeds the tax liability
20    for that year, whether it exceeds the original liability or
21    the liability as later amended, such excess may be carried
22    forward and applied to the tax liability of the 5 taxable
23    years following the excess credit years. The credit shall
24    be applied to the earliest year for which there is a
25    liability. If there is credit from more than one tax year
26    that is available to offset a liability, earlier credit

 

 

HB5828- 46 -LRB097 19361 HLH 64610 b

1    shall be applied first.
2        (2) The term "qualified property" means property
3    which:
4            (A) is tangible, whether new or used, including
5        buildings and structural components of buildings and
6        signs that are real property, but not including land or
7        improvements to real property that are not a structural
8        component of a building such as landscaping, sewer
9        lines, local access roads, fencing, parking lots, and
10        other appurtenances;
11            (B) is depreciable pursuant to Section 167 of the
12        Internal Revenue Code, except that "3-year property"
13        as defined in Section 168(c)(2)(A) of that Code is not
14        eligible for the credit provided by this subsection
15        (e);
16            (C) is acquired by purchase as defined in Section
17        179(d) of the Internal Revenue Code;
18            (D) is used in Illinois by a taxpayer who is
19        primarily engaged in manufacturing, or in mining coal
20        or fluorite, or in retailing, or was placed in service
21        on or after July 1, 2006 in a River Edge Redevelopment
22        Zone established pursuant to the River Edge
23        Redevelopment Zone Act; and
24            (E) has not previously been used in Illinois in
25        such a manner and by such a person as would qualify for
26        the credit provided by this subsection (e) or

 

 

HB5828- 47 -LRB097 19361 HLH 64610 b

1        subsection (f).
2        (3) For purposes of this subsection (e),
3    "manufacturing" means the material staging and production
4    of tangible personal property by procedures commonly
5    regarded as manufacturing, processing, fabrication, or
6    assembling which changes some existing material into new
7    shapes, new qualities, or new combinations. For purposes of
8    this subsection (e) the term "mining" shall have the same
9    meaning as the term "mining" in Section 613(c) of the
10    Internal Revenue Code. For purposes of this subsection (e),
11    the term "retailing" means the sale of tangible personal
12    property for use or consumption and not for resale, or
13    services rendered in conjunction with the sale of tangible
14    personal property for use or consumption and not for
15    resale. For purposes of this subsection (e), "tangible
16    personal property" has the same meaning as when that term
17    is used in the Retailers' Occupation Tax Act, and, for
18    taxable years ending after December 31, 2008, does not
19    include the generation, transmission, or distribution of
20    electricity.
21        (4) The basis of qualified property shall be the basis
22    used to compute the depreciation deduction for federal
23    income tax purposes.
24        (5) If the basis of the property for federal income tax
25    depreciation purposes is increased after it has been placed
26    in service in Illinois by the taxpayer, the amount of such

 

 

HB5828- 48 -LRB097 19361 HLH 64610 b

1    increase shall be deemed property placed in service on the
2    date of such increase in basis.
3        (6) The term "placed in service" shall have the same
4    meaning as under Section 46 of the Internal Revenue Code.
5        (7) If during any taxable year, any property ceases to
6    be qualified property in the hands of the taxpayer within
7    48 months after being placed in service, or the situs of
8    any qualified property is moved outside Illinois within 48
9    months after being placed in service, the Personal Property
10    Tax Replacement Income Tax for such taxable year shall be
11    increased. Such increase shall be determined by (i)
12    recomputing the investment credit which would have been
13    allowed for the year in which credit for such property was
14    originally allowed by eliminating such property from such
15    computation and, (ii) subtracting such recomputed credit
16    from the amount of credit previously allowed. For the
17    purposes of this paragraph (7), a reduction of the basis of
18    qualified property resulting from a redetermination of the
19    purchase price shall be deemed a disposition of qualified
20    property to the extent of such reduction.
21        (8) Unless the investment credit is extended by law,
22    the basis of qualified property shall not include costs
23    incurred after December 31, 2018, except for costs incurred
24    pursuant to a binding contract entered into on or before
25    December 31, 2018.
26        (9) Each taxable year ending before December 31, 2000,

 

 

HB5828- 49 -LRB097 19361 HLH 64610 b

1    a partnership may elect to pass through to its partners the
2    credits to which the partnership is entitled under this
3    subsection (e) for the taxable year. A partner may use the
4    credit allocated to him or her under this paragraph only
5    against the tax imposed in subsections (c) and (d) of this
6    Section. If the partnership makes that election, those
7    credits shall be allocated among the partners in the
8    partnership in accordance with the rules set forth in
9    Section 704(b) of the Internal Revenue Code, and the rules
10    promulgated under that Section, and the allocated amount of
11    the credits shall be allowed to the partners for that
12    taxable year. The partnership shall make this election on
13    its Personal Property Tax Replacement Income Tax return for
14    that taxable year. The election to pass through the credits
15    shall be irrevocable.
16        For taxable years ending on or after December 31, 2000,
17    a partner that qualifies its partnership for a subtraction
18    under subparagraph (I) of paragraph (2) of subsection (d)
19    of Section 203 or a shareholder that qualifies a Subchapter
20    S corporation for a subtraction under subparagraph (S) of
21    paragraph (2) of subsection (b) of Section 203 shall be
22    allowed a credit under this subsection (e) equal to its
23    share of the credit earned under this subsection (e) during
24    the taxable year by the partnership or Subchapter S
25    corporation, determined in accordance with the
26    determination of income and distributive share of income

 

 

HB5828- 50 -LRB097 19361 HLH 64610 b

1    under Sections 702 and 704 and Subchapter S of the Internal
2    Revenue Code. This paragraph is exempt from the provisions
3    of Section 250.
4    (f) Investment credit; Enterprise Zone; River Edge
5Redevelopment Zone.
6        (1) A taxpayer shall be allowed a credit against the
7    tax imposed by subsections (a) and (b) of this Section for
8    investment in qualified property which is placed in service
9    in an Enterprise Zone created pursuant to the Illinois
10    Enterprise Zone Act or, for property placed in service on
11    or after July 1, 2006, a River Edge Redevelopment Zone
12    established pursuant to the River Edge Redevelopment Zone
13    Act. For partners, shareholders of Subchapter S
14    corporations, and owners of limited liability companies,
15    if the liability company is treated as a partnership for
16    purposes of federal and State income taxation, there shall
17    be allowed a credit under this subsection (f) to be
18    determined in accordance with the determination of income
19    and distributive share of income under Sections 702 and 704
20    and Subchapter S of the Internal Revenue Code. The credit
21    shall be .5% of the basis for such property. The credit
22    shall be available only in the taxable year in which the
23    property is placed in service in the Enterprise Zone or
24    River Edge Redevelopment Zone and shall not be allowed to
25    the extent that it would reduce a taxpayer's liability for
26    the tax imposed by subsections (a) and (b) of this Section

 

 

HB5828- 51 -LRB097 19361 HLH 64610 b

1    to below zero. For tax years ending on or after December
2    31, 1985, the credit shall be allowed for the tax year in
3    which the property is placed in service, or, if the amount
4    of the credit exceeds the tax liability for that year,
5    whether it exceeds the original liability or the liability
6    as later amended, such excess may be carried forward and
7    applied to the tax liability of the 5 taxable years
8    following the excess credit year. The credit shall be
9    applied to the earliest year for which there is a
10    liability. If there is credit from more than one tax year
11    that is available to offset a liability, the credit
12    accruing first in time shall be applied first.
13        (2) The term qualified property means property which:
14            (A) is tangible, whether new or used, including
15        buildings and structural components of buildings;
16            (B) is depreciable pursuant to Section 167 of the
17        Internal Revenue Code, except that "3-year property"
18        as defined in Section 168(c)(2)(A) of that Code is not
19        eligible for the credit provided by this subsection
20        (f);
21            (C) is acquired by purchase as defined in Section
22        179(d) of the Internal Revenue Code;
23            (D) is used in the Enterprise Zone or River Edge
24        Redevelopment Zone by the taxpayer; and
25            (E) has not been previously used in Illinois in
26        such a manner and by such a person as would qualify for

 

 

HB5828- 52 -LRB097 19361 HLH 64610 b

1        the credit provided by this subsection (f) or
2        subsection (e).
3        (3) The basis of qualified property shall be the basis
4    used to compute the depreciation deduction for federal
5    income tax purposes.
6        (4) If the basis of the property for federal income tax
7    depreciation purposes is increased after it has been placed
8    in service in the Enterprise Zone or River Edge
9    Redevelopment Zone by the taxpayer, the amount of such
10    increase shall be deemed property placed in service on the
11    date of such increase in basis.
12        (5) The term "placed in service" shall have the same
13    meaning as under Section 46 of the Internal Revenue Code.
14        (6) If during any taxable year, any property ceases to
15    be qualified property in the hands of the taxpayer within
16    48 months after being placed in service, or the situs of
17    any qualified property is moved outside the Enterprise Zone
18    or River Edge Redevelopment Zone within 48 months after
19    being placed in service, the tax imposed under subsections
20    (a) and (b) of this Section for such taxable year shall be
21    increased. Such increase shall be determined by (i)
22    recomputing the investment credit which would have been
23    allowed for the year in which credit for such property was
24    originally allowed by eliminating such property from such
25    computation, and (ii) subtracting such recomputed credit
26    from the amount of credit previously allowed. For the

 

 

HB5828- 53 -LRB097 19361 HLH 64610 b

1    purposes of this paragraph (6), a reduction of the basis of
2    qualified property resulting from a redetermination of the
3    purchase price shall be deemed a disposition of qualified
4    property to the extent of such reduction.
5        (7) There shall be allowed an additional credit equal
6    to 0.5% of the basis of qualified property placed in
7    service during the taxable year in a River Edge
8    Redevelopment Zone, provided such property is placed in
9    service on or after July 1, 2006, and the taxpayer's base
10    employment within Illinois has increased by 1% or more over
11    the preceding year as determined by the taxpayer's
12    employment records filed with the Illinois Department of
13    Employment Security. Taxpayers who are new to Illinois
14    shall be deemed to have met the 1% growth in base
15    employment for the first year in which they file employment
16    records with the Illinois Department of Employment
17    Security. If, in any year, the increase in base employment
18    within Illinois over the preceding year is less than 1%,
19    the additional credit shall be limited to that percentage
20    times a fraction, the numerator of which is 0.5% and the
21    denominator of which is 1%, but shall not exceed 0.5%.
22    (g) Jobs Tax Credit; Enterprise Zone, River Edge
23Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
24        (1) A taxpayer conducting a trade or business in an
25    enterprise zone or a High Impact Business designated by the
26    Department of Commerce and Economic Opportunity or for

 

 

HB5828- 54 -LRB097 19361 HLH 64610 b

1    taxable years ending on or after December 31, 2006, in a
2    River Edge Redevelopment Zone conducting a trade or
3    business in a federally designated Foreign Trade Zone or
4    Sub-Zone shall be allowed a credit against the tax imposed
5    by subsections (a) and (b) of this Section in the amount of
6    $500 per eligible employee hired to work in the zone during
7    the taxable year.
8        (2) To qualify for the credit:
9            (A) the taxpayer must hire 5 or more eligible
10        employees to work in an enterprise zone, River Edge
11        Redevelopment Zone, or federally designated Foreign
12        Trade Zone or Sub-Zone during the taxable year;
13            (B) the taxpayer's total employment within the
14        enterprise zone, River Edge Redevelopment Zone, or
15        federally designated Foreign Trade Zone or Sub-Zone
16        must increase by 5 or more full-time employees beyond
17        the total employed in that zone at the end of the
18        previous tax year for which a jobs tax credit under
19        this Section was taken, or beyond the total employed by
20        the taxpayer as of December 31, 1985, whichever is
21        later; and
22            (C) the eligible employees must be employed 180
23        consecutive days in order to be deemed hired for
24        purposes of this subsection.
25        (3) An "eligible employee" means an employee who is:
26            (A) Certified by the Department of Commerce and

 

 

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1        Economic Opportunity as "eligible for services"
2        pursuant to regulations promulgated in accordance with
3        Title II of the Job Training Partnership Act, Training
4        Services for the Disadvantaged or Title III of the Job
5        Training Partnership Act, Employment and Training
6        Assistance for Dislocated Workers Program.
7            (B) Hired after the enterprise zone, River Edge
8        Redevelopment Zone, or federally designated Foreign
9        Trade Zone or Sub-Zone was designated or the trade or
10        business was located in that zone, whichever is later.
11            (C) Employed in the enterprise zone, River Edge
12        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
13        An employee is employed in an enterprise zone or
14        federally designated Foreign Trade Zone or Sub-Zone if
15        his services are rendered there or it is the base of
16        operations for the services performed.
17            (D) A full-time employee working 30 or more hours
18        per week.
19        (4) For tax years ending on or after December 31, 1985
20    and prior to December 31, 1988, the credit shall be allowed
21    for the tax year in which the eligible employees are hired.
22    For tax years ending on or after December 31, 1988, the
23    credit shall be allowed for the tax year immediately
24    following the tax year in which the eligible employees are
25    hired. If the amount of the credit exceeds the tax
26    liability for that year, whether it exceeds the original

 

 

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1    liability or the liability as later amended, such excess
2    may be carried forward and applied to the tax liability of
3    the 5 taxable years following the excess credit year. The
4    credit shall be applied to the earliest year for which
5    there is a liability. If there is credit from more than one
6    tax year that is available to offset a liability, earlier
7    credit shall be applied first.
8        (5) The Department of Revenue shall promulgate such
9    rules and regulations as may be deemed necessary to carry
10    out the purposes of this subsection (g).
11        (6) The credit shall be available for eligible
12    employees hired on or after January 1, 1986.
13    (h) Investment credit; High Impact Business.
14        (1) Subject to subsections (b) and (b-5) of Section 5.5
15    of the Illinois Enterprise Zone Act, a taxpayer shall be
16    allowed a credit against the tax imposed by subsections (a)
17    and (b) of this Section for investment in qualified
18    property which is placed in service by a Department of
19    Commerce and Economic Opportunity designated High Impact
20    Business. The credit shall be .5% of the basis for such
21    property. The credit shall not be available (i) until the
22    minimum investments in qualified property set forth in
23    subdivision (a)(3)(A) of Section 5.5 of the Illinois
24    Enterprise Zone Act have been satisfied or (ii) until the
25    time authorized in subsection (b-5) of the Illinois
26    Enterprise Zone Act for entities designated as High Impact

 

 

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1    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
2    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
3    Act, and shall not be allowed to the extent that it would
4    reduce a taxpayer's liability for the tax imposed by
5    subsections (a) and (b) of this Section to below zero. The
6    credit applicable to such investments shall be taken in the
7    taxable year in which such investments have been completed.
8    The credit for additional investments beyond the minimum
9    investment by a designated high impact business authorized
10    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
11    Enterprise Zone Act shall be available only in the taxable
12    year in which the property is placed in service and shall
13    not be allowed to the extent that it would reduce a
14    taxpayer's liability for the tax imposed by subsections (a)
15    and (b) of this Section to below zero. For tax years ending
16    on or after December 31, 1987, the credit shall be allowed
17    for the tax year in which the property is placed in
18    service, or, if the amount of the credit exceeds the tax
19    liability for that year, whether it exceeds the original
20    liability or the liability as later amended, such excess
21    may be carried forward and applied to the tax liability of
22    the 5 taxable years following the excess credit year. The
23    credit shall be applied to the earliest year for which
24    there is a liability. If there is credit from more than one
25    tax year that is available to offset a liability, the
26    credit accruing first in time shall be applied first.

 

 

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1        Changes made in this subdivision (h)(1) by Public Act
2    88-670 restore changes made by Public Act 85-1182 and
3    reflect existing law.
4        (2) The term qualified property means property which:
5            (A) is tangible, whether new or used, including
6        buildings and structural components of buildings;
7            (B) is depreciable pursuant to Section 167 of the
8        Internal Revenue Code, except that "3-year property"
9        as defined in Section 168(c)(2)(A) of that Code is not
10        eligible for the credit provided by this subsection
11        (h);
12            (C) is acquired by purchase as defined in Section
13        179(d) of the Internal Revenue Code; and
14            (D) is not eligible for the Enterprise Zone
15        Investment Credit provided by subsection (f) of this
16        Section.
17        (3) The basis of qualified property shall be the basis
18    used to compute the depreciation deduction for federal
19    income tax purposes.
20        (4) If the basis of the property for federal income tax
21    depreciation purposes is increased after it has been placed
22    in service in a federally designated Foreign Trade Zone or
23    Sub-Zone located in Illinois by the taxpayer, the amount of
24    such increase shall be deemed property placed in service on
25    the date of such increase in basis.
26        (5) The term "placed in service" shall have the same

 

 

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1    meaning as under Section 46 of the Internal Revenue Code.
2        (6) If during any taxable year ending on or before
3    December 31, 1996, any property ceases to be qualified
4    property in the hands of the taxpayer within 48 months
5    after being placed in service, or the situs of any
6    qualified property is moved outside Illinois within 48
7    months after being placed in service, the tax imposed under
8    subsections (a) and (b) of this Section for such taxable
9    year shall be increased. Such increase shall be determined
10    by (i) recomputing the investment credit which would have
11    been allowed for the year in which credit for such property
12    was originally allowed by eliminating such property from
13    such computation, and (ii) subtracting such recomputed
14    credit from the amount of credit previously allowed. For
15    the purposes of this paragraph (6), a reduction of the
16    basis of qualified property resulting from a
17    redetermination of the purchase price shall be deemed a
18    disposition of qualified property to the extent of such
19    reduction.
20        (7) Beginning with tax years ending after December 31,
21    1996, if a taxpayer qualifies for the credit under this
22    subsection (h) and thereby is granted a tax abatement and
23    the taxpayer relocates its entire facility in violation of
24    the explicit terms and length of the contract under Section
25    18-183 of the Property Tax Code, the tax imposed under
26    subsections (a) and (b) of this Section shall be increased

 

 

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1    for the taxable year in which the taxpayer relocated its
2    facility by an amount equal to the amount of credit
3    received by the taxpayer under this subsection (h).
4    (i) Credit for Personal Property Tax Replacement Income
5Tax. For tax years ending prior to December 31, 2003, a credit
6shall be allowed against the tax imposed by subsections (a) and
7(b) of this Section for the tax imposed by subsections (c) and
8(d) of this Section. This credit shall be computed by
9multiplying the tax imposed by subsections (c) and (d) of this
10Section by a fraction, the numerator of which is base income
11allocable to Illinois and the denominator of which is Illinois
12base income, and further multiplying the product by the tax
13rate imposed by subsections (a) and (b) of this Section.
14    Any credit earned on or after December 31, 1986 under this
15subsection which is unused in the year the credit is computed
16because it exceeds the tax liability imposed by subsections (a)
17and (b) for that year (whether it exceeds the original
18liability or the liability as later amended) may be carried
19forward and applied to the tax liability imposed by subsections
20(a) and (b) of the 5 taxable years following the excess credit
21year, provided that no credit may be carried forward to any
22year ending on or after December 31, 2003. This credit shall be
23applied first to the earliest year for which there is a
24liability. If there is a credit under this subsection from more
25than one tax year that is available to offset a liability the
26earliest credit arising under this subsection shall be applied

 

 

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1first.
2    If, during any taxable year ending on or after December 31,
31986, the tax imposed by subsections (c) and (d) of this
4Section for which a taxpayer has claimed a credit under this
5subsection (i) is reduced, the amount of credit for such tax
6shall also be reduced. Such reduction shall be determined by
7recomputing the credit to take into account the reduced tax
8imposed by subsections (c) and (d). If any portion of the
9reduced amount of credit has been carried to a different
10taxable year, an amended return shall be filed for such taxable
11year to reduce the amount of credit claimed.
12    (j) Training expense credit. Beginning with tax years
13ending on or after December 31, 1986 and prior to December 31,
142003, a taxpayer shall be allowed a credit against the tax
15imposed by subsections (a) and (b) under this Section for all
16amounts paid or accrued, on behalf of all persons employed by
17the taxpayer in Illinois or Illinois residents employed outside
18of Illinois by a taxpayer, for educational or vocational
19training in semi-technical or technical fields or semi-skilled
20or skilled fields, which were deducted from gross income in the
21computation of taxable income. The credit against the tax
22imposed by subsections (a) and (b) shall be 1.6% of such
23training expenses. For partners, shareholders of subchapter S
24corporations, and owners of limited liability companies, if the
25liability company is treated as a partnership for purposes of
26federal and State income taxation, there shall be allowed a

 

 

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1credit under this subsection (j) to be determined in accordance
2with the determination of income and distributive share of
3income under Sections 702 and 704 and subchapter S of the
4Internal Revenue Code.
5    Any credit allowed under this subsection which is unused in
6the year the credit is earned may be carried forward to each of
7the 5 taxable years following the year for which the credit is
8first computed until it is used. This credit shall be applied
9first to the earliest year for which there is a liability. If
10there is a credit under this subsection from more than one tax
11year that is available to offset a liability the earliest
12credit arising under this subsection shall be applied first. No
13carryforward credit may be claimed in any tax year ending on or
14after December 31, 2003.
15    (k) Research and development credit.
16    For tax years ending after July 1, 1990 and prior to
17December 31, 2003, and beginning again for tax years ending on
18or after December 31, 2004, and ending prior to January 1,
192016, a taxpayer shall be allowed a credit against the tax
20imposed by subsections (a) and (b) of this Section for
21increasing research activities in this State. The credit
22allowed against the tax imposed by subsections (a) and (b)
23shall be equal to 6 1/2% of the qualifying expenditures for
24increasing research activities in this State. For partners,
25shareholders of subchapter S corporations, and owners of
26limited liability companies, if the liability company is

 

 

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1treated as a partnership for purposes of federal and State
2income taxation, there shall be allowed a credit under this
3subsection to be determined in accordance with the
4determination of income and distributive share of income under
5Sections 702 and 704 and subchapter S of the Internal Revenue
6Code.
7    For purposes of this subsection, "qualifying expenditures"
8means the qualifying expenditures as defined for the federal
9credit for increasing research activities which would be
10allowable under Section 41 of the Internal Revenue Code and
11which are conducted in this State, "qualifying expenditures for
12increasing research activities in this State" means the excess
13of qualifying expenditures for the taxable year in which
14incurred over qualifying expenditures for the base period,
15"qualifying expenditures for the base period" means the average
16of the qualifying expenditures for each year in the base
17period, and "base period" means the 3 taxable years immediately
18preceding the taxable year for which the determination is being
19made.
20    Any credit in excess of the tax liability for the taxable
21year may be carried forward. A taxpayer may elect to have the
22unused credit shown on its final completed return carried over
23as a credit against the tax liability for the following 5
24taxable years or until it has been fully used, whichever occurs
25first; provided that no credit earned in a tax year ending
26prior to December 31, 2003 may be carried forward to any year

 

 

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1ending on or after December 31, 2003.
2    If an unused credit is carried forward to a given year from
32 or more earlier years, that credit arising in the earliest
4year will be applied first against the tax liability for the
5given year. If a tax liability for the given year still
6remains, the credit from the next earliest year will then be
7applied, and so on, until all credits have been used or no tax
8liability for the given year remains. Any remaining unused
9credit or credits then will be carried forward to the next
10following year in which a tax liability is incurred, except
11that no credit can be carried forward to a year which is more
12than 5 years after the year in which the expense for which the
13credit is given was incurred.
14    No inference shall be drawn from this amendatory Act of the
1591st General Assembly in construing this Section for taxable
16years beginning before January 1, 1999.
17    (l) Environmental Remediation Tax Credit.
18        (i) For tax years ending after December 31, 1997 and on
19    or before December 31, 2001, a taxpayer shall be allowed a
20    credit against the tax imposed by subsections (a) and (b)
21    of this Section for certain amounts paid for unreimbursed
22    eligible remediation costs, as specified in this
23    subsection. For purposes of this Section, "unreimbursed
24    eligible remediation costs" means costs approved by the
25    Illinois Environmental Protection Agency ("Agency") under
26    Section 58.14 of the Environmental Protection Act that were

 

 

HB5828- 65 -LRB097 19361 HLH 64610 b

1    paid in performing environmental remediation at a site for
2    which a No Further Remediation Letter was issued by the
3    Agency and recorded under Section 58.10 of the
4    Environmental Protection Act. The credit must be claimed
5    for the taxable year in which Agency approval of the
6    eligible remediation costs is granted. The credit is not
7    available to any taxpayer if the taxpayer or any related
8    party caused or contributed to, in any material respect, a
9    release of regulated substances on, in, or under the site
10    that was identified and addressed by the remedial action
11    pursuant to the Site Remediation Program of the
12    Environmental Protection Act. After the Pollution Control
13    Board rules are adopted pursuant to the Illinois
14    Administrative Procedure Act for the administration and
15    enforcement of Section 58.9 of the Environmental
16    Protection Act, determinations as to credit availability
17    for purposes of this Section shall be made consistent with
18    those rules. For purposes of this Section, "taxpayer"
19    includes a person whose tax attributes the taxpayer has
20    succeeded to under Section 381 of the Internal Revenue Code
21    and "related party" includes the persons disallowed a
22    deduction for losses by paragraphs (b), (c), and (f)(1) of
23    Section 267 of the Internal Revenue Code by virtue of being
24    a related taxpayer, as well as any of its partners. The
25    credit allowed against the tax imposed by subsections (a)
26    and (b) shall be equal to 25% of the unreimbursed eligible

 

 

HB5828- 66 -LRB097 19361 HLH 64610 b

1    remediation costs in excess of $100,000 per site, except
2    that the $100,000 threshold shall not apply to any site
3    contained in an enterprise zone as determined by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity). The
6    total credit allowed shall not exceed $40,000 per year with
7    a maximum total of $150,000 per site. For partners and
8    shareholders of subchapter S corporations, there shall be
9    allowed a credit under this subsection to be determined in
10    accordance with the determination of income and
11    distributive share of income under Sections 702 and 704 and
12    subchapter S of the Internal Revenue Code.
13        (ii) A credit allowed under this subsection that is
14    unused in the year the credit is earned may be carried
15    forward to each of the 5 taxable years following the year
16    for which the credit is first earned until it is used. The
17    term "unused credit" does not include any amounts of
18    unreimbursed eligible remediation costs in excess of the
19    maximum credit per site authorized under paragraph (i).
20    This credit shall be applied first to the earliest year for
21    which there is a liability. If there is a credit under this
22    subsection from more than one tax year that is available to
23    offset a liability, the earliest credit arising under this
24    subsection shall be applied first. A credit allowed under
25    this subsection may be sold to a buyer as part of a sale of
26    all or part of the remediation site for which the credit

 

 

HB5828- 67 -LRB097 19361 HLH 64610 b

1    was granted. The purchaser of a remediation site and the
2    tax credit shall succeed to the unused credit and remaining
3    carry-forward period of the seller. To perfect the
4    transfer, the assignor shall record the transfer in the
5    chain of title for the site and provide written notice to
6    the Director of the Illinois Department of Revenue of the
7    assignor's intent to sell the remediation site and the
8    amount of the tax credit to be transferred as a portion of
9    the sale. In no event may a credit be transferred to any
10    taxpayer if the taxpayer or a related party would not be
11    eligible under the provisions of subsection (i).
12        (iii) For purposes of this Section, the term "site"
13    shall have the same meaning as under Section 58.2 of the
14    Environmental Protection Act.
15    (m) Education expense credit. Beginning with tax years
16ending after December 31, 1999, a taxpayer who is the custodian
17of one or more qualifying pupils shall be allowed a credit
18against the tax imposed by subsections (a) and (b) of this
19Section for qualified education expenses incurred on behalf of
20the qualifying pupils. The credit shall be equal to 25% of
21qualified education expenses, but in no event may the total
22credit under this subsection claimed by a family that is the
23custodian of qualifying pupils exceed $500. In no event shall a
24credit under this subsection reduce the taxpayer's liability
25under this Act to less than zero. This subsection is exempt
26from the provisions of Section 250 of this Act.

 

 

HB5828- 68 -LRB097 19361 HLH 64610 b

1    For purposes of this subsection:
2    "Qualifying pupils" means individuals who (i) are
3residents of the State of Illinois, (ii) are under the age of
421 at the close of the school year for which a credit is
5sought, and (iii) during the school year for which a credit is
6sought were full-time pupils enrolled in a kindergarten through
7twelfth grade education program at any school, as defined in
8this subsection.
9    "Qualified education expense" means the amount incurred on
10behalf of a qualifying pupil in excess of $250 for tuition,
11book fees, and lab fees at the school in which the pupil is
12enrolled during the regular school year.
13    "School" means any public or nonpublic elementary or
14secondary school in Illinois that is in compliance with Title
15VI of the Civil Rights Act of 1964 and attendance at which
16satisfies the requirements of Section 26-1 of the School Code,
17except that nothing shall be construed to require a child to
18attend any particular public or nonpublic school to qualify for
19the credit under this Section.
20    "Custodian" means, with respect to qualifying pupils, an
21Illinois resident who is a parent, the parents, a legal
22guardian, or the legal guardians of the qualifying pupils.
23    (n) River Edge Redevelopment Zone site remediation tax
24credit.
25        (i) For tax years ending on or after December 31, 2006,
26    a taxpayer shall be allowed a credit against the tax

 

 

HB5828- 69 -LRB097 19361 HLH 64610 b

1    imposed by subsections (a) and (b) of this Section for
2    certain amounts paid for unreimbursed eligible remediation
3    costs, as specified in this subsection. For purposes of
4    this Section, "unreimbursed eligible remediation costs"
5    means costs approved by the Illinois Environmental
6    Protection Agency ("Agency") under Section 58.14a of the
7    Environmental Protection Act that were paid in performing
8    environmental remediation at a site within a River Edge
9    Redevelopment Zone for which a No Further Remediation
10    Letter was issued by the Agency and recorded under Section
11    58.10 of the Environmental Protection Act. The credit must
12    be claimed for the taxable year in which Agency approval of
13    the eligible remediation costs is granted. The credit is
14    not available to any taxpayer if the taxpayer or any
15    related party caused or contributed to, in any material
16    respect, a release of regulated substances on, in, or under
17    the site that was identified and addressed by the remedial
18    action pursuant to the Site Remediation Program of the
19    Environmental Protection Act. Determinations as to credit
20    availability for purposes of this Section shall be made
21    consistent with rules adopted by the Pollution Control
22    Board pursuant to the Illinois Administrative Procedure
23    Act for the administration and enforcement of Section 58.9
24    of the Environmental Protection Act. For purposes of this
25    Section, "taxpayer" includes a person whose tax attributes
26    the taxpayer has succeeded to under Section 381 of the

 

 

HB5828- 70 -LRB097 19361 HLH 64610 b

1    Internal Revenue Code and "related party" includes the
2    persons disallowed a deduction for losses by paragraphs
3    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
4    Code by virtue of being a related taxpayer, as well as any
5    of its partners. The credit allowed against the tax imposed
6    by subsections (a) and (b) shall be equal to 25% of the
7    unreimbursed eligible remediation costs in excess of
8    $100,000 per site.
9        (ii) A credit allowed under this subsection that is
10    unused in the year the credit is earned may be carried
11    forward to each of the 5 taxable years following the year
12    for which the credit is first earned until it is used. This
13    credit shall be applied first to the earliest year for
14    which there is a liability. If there is a credit under this
15    subsection from more than one tax year that is available to
16    offset a liability, the earliest credit arising under this
17    subsection shall be applied first. A credit allowed under
18    this subsection may be sold to a buyer as part of a sale of
19    all or part of the remediation site for which the credit
20    was granted. The purchaser of a remediation site and the
21    tax credit shall succeed to the unused credit and remaining
22    carry-forward period of the seller. To perfect the
23    transfer, the assignor shall record the transfer in the
24    chain of title for the site and provide written notice to
25    the Director of the Illinois Department of Revenue of the
26    assignor's intent to sell the remediation site and the

 

 

HB5828- 71 -LRB097 19361 HLH 64610 b

1    amount of the tax credit to be transferred as a portion of
2    the sale. In no event may a credit be transferred to any
3    taxpayer if the taxpayer or a related party would not be
4    eligible under the provisions of subsection (i).
5        (iii) For purposes of this Section, the term "site"
6    shall have the same meaning as under Section 58.2 of the
7    Environmental Protection Act.
8(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
996-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
101-13-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
 
11    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
12    Sec. 207. Net Losses.
13    (a) If after applying all of the (i) modifications provided
14for in paragraph (2) of Section 203(b), paragraph (2) of
15Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
16allocation and apportionment provisions of Article 3 of this
17Act and subsection (c) of this Section, the taxpayer's net
18income results in a loss;
19        (1) for any taxable year ending prior to December 31,
20    1999, such loss shall be allowed as a carryover or
21    carryback deduction in the manner allowed under Section 172
22    of the Internal Revenue Code;
23        (2) for any taxable year ending on or after December
24    31, 1999 and prior to December 31, 2003, such loss shall be
25    allowed as a carryback to each of the 2 taxable years

 

 

HB5828- 72 -LRB097 19361 HLH 64610 b

1    preceding the taxable year of such loss and shall be a net
2    operating loss carryover to each of the 20 taxable years
3    following the taxable year of such loss; and
4        (3) for any taxable year ending on or after December
5    31, 2003 and prior to December 31, 2012, such loss shall be
6    allowed as a net operating loss carryover to each of the 12
7    taxable years following the taxable year of such loss,
8    except as provided in subsection (d); and .
9        (4) except as provided in subsection (d), for any
10    taxable year ending on or after December 31, 2012, such
11    loss shall be allowed as a carryback to each of the 2
12    taxable years preceding the taxable year of the loss and
13    shall be allowed as a net operating loss carryover to each
14    of the 20 taxable years following the taxable year of the
15    loss.
16    (a-5) Election to relinquish carryback and order of
17application of losses.
18            (A) For losses incurred in tax years ending prior
19        to December 31, 2003, the taxpayer may elect to
20        relinquish the entire carryback period with respect to
21        such loss. Such election shall be made in the form and
22        manner prescribed by the Department and shall be made
23        by the due date (including extensions of time) for
24        filing the taxpayer's return for the taxable year in
25        which such loss is incurred, and such election, once
26        made, shall be irrevocable.

 

 

HB5828- 73 -LRB097 19361 HLH 64610 b

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

 

 

HB5828- 74 -LRB097 19361 HLH 64610 b

1the taxable year ends on or after December 31, 2008) under
2Section 108(a) of the Internal Revenue Code and that would have
3been allocated and apportioned to this State under Article 3 of
4this Act but for that exclusion, and the denominator of which
5is the total amount of discharge of indebtedness income
6excluded from gross income under Section 108(a) of the Internal
7Revenue Code for the taxable year. The reduction required under
8this subsection (c) shall be made after the determination of
9Illinois net income for the taxable year in which the
10indebtedness is discharged.
11    (d) In the case of a corporation (other than a Subchapter S
12corporation), no carryover deduction shall be allowed under
13this Section for any taxable year ending after December 31,
142010 and prior to December 31, 2012, and no carryover deduction
15shall exceed $100,000 for any taxable year ending on or after
16December 31, 2012 and prior to December 31, 2014; provided
17that, for purposes of determining the taxable years to which a
18net loss may be carried under subsection (a) of this Section,
19no taxable year for which a deduction is disallowed under this
20subsection, or for which the deduction would exceed $100,000 if
21not for this subsection, shall be counted.
22    (e) In the case of a residual interest holder in a real
23estate mortgage investment conduit subject to Section 860E of
24the Internal Revenue Code, the net loss in subsection (a) shall
25be equal to:
26        (1) the amount computed under subsection (a), without

 

 

HB5828- 75 -LRB097 19361 HLH 64610 b

1    regard to this subsection (e), or if that amount is
2    positive, zero;
3        (2) minus an amount equal to the amount computed under
4    subsection (a), without regard to this subsection (e),
5    minus the amount that would be computed under subsection
6    (a) if the taxpayer's federal taxable income were computed
7    without regard to Section 860E of the Internal Revenue Code
8    and without regard to this subsection (e).
9    The modification in this subsection (e) is exempt from the
10provisions of Section 250.
11(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
1297-636, eff. 6-1-12.)
 
13    Section 10. The Illinois Estate and Generation-Skipping
14Transfer Tax Act is amended by changing Sections 2 and 3 as
15follows:
 
16    (35 ILCS 405/2)  (from Ch. 120, par. 405A-2)
17    (Text of Section before amendment by P.A. 97-636)
18    Sec. 2. Definitions.
19    "Federal estate tax" means the tax due to the United States
20with respect to a taxable transfer under Chapter 11 of the
21Internal Revenue Code.
22    "Federal generation-skipping transfer tax" means the tax
23due to the United States with respect to a taxable transfer
24under Chapter 13 of the Internal Revenue Code.

 

 

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1    "Federal return" means the federal estate tax return with
2respect to the federal estate tax and means the federal
3generation-skipping transfer tax return with respect to the
4federal generation-skipping transfer tax.
5    "Federal transfer tax" means the federal estate tax or the
6federal generation-skipping transfer tax.
7    "Illinois estate tax" means the tax due to this State with
8respect to a taxable transfer.
9    "Illinois generation-skipping transfer tax" means the tax
10due to this State with respect to a taxable transfer that gives
11rise to a federal generation-skipping transfer tax.
12    "Illinois transfer tax" means the Illinois estate tax or
13the Illinois generation-skipping transfer tax.
14    "Internal Revenue Code" means, unless otherwise provided,
15the Internal Revenue Code of 1986, as amended from time to
16time.
17    "Non-resident trust" means a trust that is not a resident
18of this State for purposes of the Illinois Income Tax Act, as
19amended from time to time.
20    "Person" means and includes any individual, trust, estate,
21partnership, association, company or corporation.
22    "Qualified heir" means a qualified heir as defined in
23Section 2032A(e)(1) of the Internal Revenue Code.
24    "Resident trust" means a trust that is a resident of this
25State for purposes of the Illinois Income Tax Act, as amended
26from time to time.

 

 

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1    "State" means any state, territory or possession of the
2United States and the District of Columbia.
3    "State tax credit" means:
4    (a) For persons dying on or after January 1, 2003 and
5through December 31, 2005, an amount equal to the full credit
6calculable under Section 2011 or Section 2604 of the Internal
7Revenue Code as the credit would have been computed and allowed
8under the Internal Revenue Code as in effect on December 31,
92001, without the reduction in the State Death Tax Credit as
10provided in Section 2011(b)(2) or the termination of the State
11Death Tax Credit as provided in Section 2011(f) as enacted by
12the Economic Growth and Tax Relief Reconciliation Act of 2001,
13but recognizing the increased applicable exclusion amount
14through December 31, 2005.
15    (b) For persons dying after December 31, 2005 and on or
16before December 31, 2009, and for persons dying after December
1731, 2010, an amount equal to the full credit calculable under
18Section 2011 or 2604 of the Internal Revenue Code as the credit
19would have been computed and allowed under the Internal Revenue
20Code as in effect on December 31, 2001, without the reduction
21in the State Death Tax Credit as provided in Section 2011(b)(2)
22or the termination of the State Death Tax Credit as provided in
23Section 2011(f) as enacted by the Economic Growth and Tax
24Relief Reconciliation Act of 2001, but recognizing the
25exclusion amount of only $2,000,000, and with reduction to the
26adjusted taxable estate for any qualified terminable interest

 

 

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1property election as defined in subsection (b-1) of this
2Section.
3    (b-1) The person required to file the Illinois return may
4elect on a timely filed Illinois return a marital deduction for
5qualified terminable interest property under Section
62056(b)(7) of the Internal Revenue Code for purposes of the
7Illinois estate tax that is separate and independent of any
8qualified terminable interest property election for federal
9estate tax purposes. For purposes of the Illinois estate tax,
10the inclusion of property in the gross estate of a surviving
11spouse is the same as under Section 2044 of the Internal
12Revenue Code.
13    In the case of any trust for which a State or federal
14qualified terminable interest property election is made, the
15trustee may not retain non-income producing assets for more
16than a reasonable amount of time without the consent of the
17surviving spouse.
18    "Taxable transfer" means an event that gives rise to a
19state tax credit, including any credit as a result of the
20imposition of an additional tax under Section 2032A(c) of the
21Internal Revenue Code.
22    "Transferee" means a transferee within the meaning of
23Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
24Code.
25    "Transferred property" means:
26        (1) With respect to a taxable transfer occurring at the

 

 

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1    death of an individual, the deceased individual's gross
2    estate as defined in Section 2031 of the Internal Revenue
3    Code.
4        (2) With respect to a taxable transfer occurring as a
5    result of a taxable termination as defined in Section
6    2612(a) of the Internal Revenue Code, the taxable amount
7    determined under Section 2622(a) of the Internal Revenue
8    Code.
9        (3) With respect to a taxable transfer occurring as a
10    result of a taxable distribution as defined in Section
11    2612(b) of the Internal Revenue Code, the taxable amount
12    determined under Section 2621(a) of the Internal Revenue
13    Code.
14        (4) With respect to an event which causes the
15    imposition of an additional estate tax under Section
16    2032A(c) of the Internal Revenue Code, the qualified real
17    property that was disposed of or which ceased to be used
18    for the qualified use, within the meaning of Section
19    2032A(c)(1) of the Internal Revenue Code.
20    "Trust" includes a trust as defined in Section 2652(b)(1)
21of the Internal Revenue Code.
22(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11.)
 
23    (Text of Section after amendment by P.A. 97-636)
24    Sec. 2. Definitions.
25    "Federal estate tax" means the tax due to the United States

 

 

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1with respect to a taxable transfer under Chapter 11 of the
2Internal Revenue Code.
3    "Federal generation-skipping transfer tax" means the tax
4due to the United States with respect to a taxable transfer
5under Chapter 13 of the Internal Revenue Code.
6    "Federal return" means the federal estate tax return with
7respect to the federal estate tax and means the federal
8generation-skipping transfer tax return with respect to the
9federal generation-skipping transfer tax.
10    "Federal transfer tax" means the federal estate tax or the
11federal generation-skipping transfer tax.
12    "Illinois estate tax" means the tax due to this State with
13respect to a taxable transfer.
14    "Illinois generation-skipping transfer tax" means the tax
15due to this State with respect to a taxable transfer that gives
16rise to a federal generation-skipping transfer tax.
17    "Illinois transfer tax" means the Illinois estate tax or
18the Illinois generation-skipping transfer tax.
19    "Internal Revenue Code" means, unless otherwise provided,
20the Internal Revenue Code of 1986, as amended from time to
21time.
22    "Non-resident trust" means a trust that is not a resident
23of this State for purposes of the Illinois Income Tax Act, as
24amended from time to time.
25    "Person" means and includes any individual, trust, estate,
26partnership, association, company or corporation.

 

 

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1    "Qualified heir" means a qualified heir as defined in
2Section 2032A(e)(1) of the Internal Revenue Code.
3    "Resident trust" means a trust that is a resident of this
4State for purposes of the Illinois Income Tax Act, as amended
5from time to time.
6    "State" means any state, territory or possession of the
7United States and the District of Columbia.
8    "State tax credit" means:
9    (a) For persons dying on or after January 1, 2003 and
10through December 31, 2005, an amount equal to the full credit
11calculable under Section 2011 or Section 2604 of the Internal
12Revenue Code as the credit would have been computed and allowed
13under the Internal Revenue Code as in effect on December 31,
142001, without the reduction in the State Death Tax Credit as
15provided in Section 2011(b)(2) or the termination of the State
16Death Tax Credit as provided in Section 2011(f) as enacted by
17the Economic Growth and Tax Relief Reconciliation Act of 2001,
18but recognizing the increased applicable exclusion amount
19through December 31, 2005.
20    (b) For persons dying after December 31, 2005 and on or
21before December 31, 2009, and for persons dying after December
2231, 2010, an amount equal to the full credit calculable under
23Section 2011 or 2604 of the Internal Revenue Code as the credit
24would have been computed and allowed under the Internal Revenue
25Code as in effect on December 31, 2001, without the reduction
26in the State Death Tax Credit as provided in Section 2011(b)(2)

 

 

HB5828- 82 -LRB097 19361 HLH 64610 b

1or the termination of the State Death Tax Credit as provided in
2Section 2011(f) as enacted by the Economic Growth and Tax
3Relief Reconciliation Act of 2001, but recognizing the
4exclusion amount of only (i) $2,000,000 for persons dying prior
5to January 1, 2012, (ii) $3,500,000 for persons dying on or
6after January 1, 2012 and prior to January 1, 2013, and (iii)
7$4,000,000 for persons dying on or after January 1, 2013, and
8with reduction to the adjusted taxable estate for any qualified
9terminable interest property election as defined in subsection
10(b-1) of this Section.
11    (b-1) The person required to file the Illinois return may
12elect on a timely filed Illinois return a marital deduction for
13qualified terminable interest property under Section
142056(b)(7) of the Internal Revenue Code for purposes of the
15Illinois estate tax that is separate and independent of any
16qualified terminable interest property election for federal
17estate tax purposes. For purposes of the Illinois estate tax,
18the inclusion of property in the gross estate of a surviving
19spouse is the same as under Section 2044 of the Internal
20Revenue Code.
21    In the case of any trust for which a State or federal
22qualified terminable interest property election is made, the
23trustee may not retain non-income producing assets for more
24than a reasonable amount of time without the consent of the
25surviving spouse.
26    "Taxable transfer" means an event that gives rise to a

 

 

HB5828- 83 -LRB097 19361 HLH 64610 b

1state tax credit, including any credit as a result of the
2imposition of an additional tax under Section 2032A(c) of the
3Internal Revenue Code.
4    "Transferee" means a transferee within the meaning of
5Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
6Code.
7    "Transferred property" means:
8        (1) With respect to a taxable transfer occurring at the
9    death of an individual, the deceased individual's gross
10    estate as defined in Section 2031 of the Internal Revenue
11    Code.
12        (2) With respect to a taxable transfer occurring as a
13    result of a taxable termination as defined in Section
14    2612(a) of the Internal Revenue Code, the taxable amount
15    determined under Section 2622(a) of the Internal Revenue
16    Code.
17        (3) With respect to a taxable transfer occurring as a
18    result of a taxable distribution as defined in Section
19    2612(b) of the Internal Revenue Code, the taxable amount
20    determined under Section 2621(a) of the Internal Revenue
21    Code.
22        (4) With respect to an event which causes the
23    imposition of an additional estate tax under Section
24    2032A(c) of the Internal Revenue Code, the qualified real
25    property that was disposed of or which ceased to be used
26    for the qualified use, within the meaning of Section

 

 

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1    2032A(c)(1) of the Internal Revenue Code.
2    "Trust" includes a trust as defined in Section 2652(b)(1)
3of the Internal Revenue Code.
4(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
597-636, eff. 6-1-12.)
 
6    (35 ILCS 405/3)  (from Ch. 120, par. 405A-3)
7    Sec. 3. Illinois estate tax.
8    (a) Imposition of Tax. An Illinois estate tax is imposed on
9every taxable transfer involving transferred property having a
10tax situs within the State of Illinois.
11    (b) Amount of tax. On estates of persons dying before
12January 1, 2003, the amount of the Illinois estate tax shall be
13the state tax credit, as defined in Section 2 of this Act, with
14respect to the taxable transfer reduced by the lesser of:
15        (1) the amount of the state tax credit paid to any
16    other state or states; and
17        (2) the amount determined by multiplying the maximum
18    state tax credit allowable with respect to the taxable
19    transfer by the percentage which the gross value of the
20    transferred property not having a tax situs in Illinois
21    bears to the gross value of the total transferred property.
22    (c) On estates of persons dying on or after January 1, 2003
23and before January 1, 2010, the amount of the Illinois estate
24tax shall be the state tax credit, as defined in Section 2 of
25this Act, reduced by the amount determined by multiplying the

 

 

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1state tax credit with respect to the taxable transfer by the
2percentage which the gross value of the transferred property
3not having a tax situs in Illinois bears to the gross value of
4the total transferred property.
5    (d) For persons dying after December 31, 2009, no tax shall
6be imposed under this Act.
7(Source: P.A. 93-30, eff. 6-20-03; 94-419, eff. 8-2-05.)
 
8    Section 95. No acceleration or delay. Where this Act makes
9changes in a statute that is represented in this Act by text
10that is not yet or no longer in effect (for example, a Section
11represented by multiple versions), the use of that text does
12not accelerate or delay the taking effect of (i) the changes
13made by this Act or (ii) provisions derived from any other
14Public Act.