Full Text of HB4646 98th General Assembly
HB4646 98TH GENERAL ASSEMBLY |
| | 98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014 HB4646 Introduced , by Rep. Marcus C. Evans, Jr. SYNOPSIS AS INTRODUCED: |
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35 ILCS 5/305 | from Ch. 120, par. 3-305 |
35 ILCS 5/307 | from Ch. 120, par. 3-307 |
35 ILCS 5/308 | from Ch. 120, par. 3-308 |
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Amends the Illinois Income Tax Act. Contains provisions concerning the apportionment to nonresidents of gains or losses on partnerships, trusts, or stock in Subchapter S corporations upon the sale, exchange, abandonment, liquidation, or other disposition of the interest in the partnership, trust, or stock.
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| | A BILL FOR |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Income Tax Act is amended by | 5 | | changing Sections 305, 307, and 308 as follows:
| 6 | | (35 ILCS 5/305) (from Ch. 120, par. 3-305)
| 7 | | Sec. 305. Allocation of Partnership Income by partnerships | 8 | | and
partners other than residents. | 9 | | (a) Allocation of partnership business income by partners | 10 | | other
than residents. The respective shares of partners other | 11 | | than
residents in so much of the business income of the | 12 | | partnership as is
allocated or apportioned to this State in the | 13 | | possession of the partnership
shall be taken into account by | 14 | | such partners pro rata in accordance with
their respective | 15 | | distributive shares of such partnership income for the
| 16 | | partnership's taxable year and allocated to this State.
| 17 | | (b) Allocation of partnership nonbusiness income by | 18 | | partners other
than residents. The respective shares of | 19 | | partners other than
residents in the items of partnership | 20 | | income and deduction not taken
into account in computing the | 21 | | business income of a partnership shall be
taken into account by | 22 | | such partners pro rata in accordance with their
respective | 23 | | distributive shares of such partnership income for the
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| 1 | | partnership's taxable year, and allocated as if such items had | 2 | | been
paid, incurred or accrued directly to such partners in | 3 | | their separate
capacities.
| 4 | | (c) Allocation or apportionment of base income by | 5 | | partnership.
Base income of a partnership shall be allocated or | 6 | | apportioned to
this State pursuant to Article 3, in the same | 7 | | manner as it is allocated
or apportioned for any other | 8 | | nonresident.
| 9 | | (c-5) Taxable income of an investment partnership, as | 10 | | defined in Section 1501(a)(11.5) of this Act, that is | 11 | | distributable to a nonresident partner shall be treated as | 12 | | nonbusiness income and shall be allocated to the partner's | 13 | | state of residence (in the case of an individual) or commercial | 14 | | domicile (in the case of any other person). However, any income | 15 | | distributable to a nonresident partner shall be treated as | 16 | | business income and apportioned as if such income had been | 17 | | received directly by the partner if the partner has made an | 18 | | election under Section 1501(a)(1) of this Act to treat all | 19 | | income as business income or if such income is from investment | 20 | | activity: | 21 | | (1) that is directly or integrally related to any other | 22 | | business activity conducted in this State by the | 23 | | nonresident partner (or any member of that partner's | 24 | | unitary business group); | 25 | | (2) that serves an operational function to any other | 26 | | business activity of the nonresident partner (or any member |
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| 1 | | of that partner's unitary business group) in this State; or | 2 | | (3) where assets of the investment partnership were | 3 | | acquired with working capital from a trade or business | 4 | | activity conducted in this State in which the nonresident | 5 | | partner (or any member of that partner's unitary business | 6 | | group) owns an interest. | 7 | | (c-10) Gain or loss on partnership interest. The amount of | 8 | | gain or loss realized by a nonresident partner upon the sale, | 9 | | exchange, abandonment, liquidation, or other disposition of an | 10 | | interest in a partnership (other than an investment | 11 | | partnership) included in net income of that partner shall be | 12 | | the total gain or loss multiplied by the apportionment factor | 13 | | of the partnership determined under Section 304 of this Act for | 14 | | the taxable year of the partnership in which the sale, | 15 | | exchange, abandonment, liquidation or other disposition | 16 | | occurs. | 17 | | (d) Cross reference. For allocation of partnership income | 18 | | or
deductions by residents, see Section 301(a).
| 19 | | (Source: P.A. 93-840, eff. 7-30-04.)
| 20 | | (35 ILCS 5/307) (from Ch. 120, par. 3-307)
| 21 | | Sec. 307. Allocation of income by estate or trust | 22 | | beneficiaries other than residents. (a) Allocation of business | 23 | | income by beneficiaries other than
residents. To the extent the | 24 | | business income of an estate or trust
allocated or apportioned | 25 | | to this State in the possession of
the estate or trust
is |
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| 1 | | deemed to have been paid, credited or distributed by the estate | 2 | | or trust
under Section 306, the respective shares of | 3 | | beneficiaries of the estate
or trust, other than residents, in | 4 | | such business income shall be taken into
account by such | 5 | | beneficiaries in proportion to their respective shares of
the | 6 | | distributable net income of the estate or trust for its taxable | 7 | | year
and allocated to this State.
| 8 | | (b) Allocation of nonbusiness income by beneficiaries | 9 | | other than
residents. To the extent items of estate or trust | 10 | | income and deduction
not taken into account in computing the | 11 | | business income of an estate or
trust are deemed to have been | 12 | | paid, credited or distributed by the estate
or trust under | 13 | | Section 306, the respective shares of beneficiaries of the
| 14 | | estate or trust, other than residents, in such items shall be | 15 | | taken into
account by such beneficiaries in proportion to their | 16 | | respective shares of
the distributable net income of the estate | 17 | | or trust for its taxable year,
and allocated as if such items | 18 | | had been paid, incurred or accrued directly
to such | 19 | | beneficiaries in their separate capacities.
| 20 | | (c) Accumulation and capital gain distributions. In the | 21 | | event that,
in any taxable year of a trust, the trust makes an | 22 | | accumulation
distribution or a capital gain distribution (both | 23 | | as defined in Section 665
of the Internal Revenue Code), the | 24 | | total of the amounts which are
included in the income of each | 25 | | beneficiary of such trust, other than a
resident, under | 26 | | Sections 668 and 669 of the Internal Revenue Code shall
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| 1 | | allocated to this State to the extent that the items of income | 2 | | included
in such distribution were allocated or apportioned to | 3 | | this State in the
hands of the trust.
| 4 | | (c-5) Gain or loss on interest in trust. The amount of gain | 5 | | or loss realized by a nonresident beneficiary upon the sale,
| 6 | | exchange, abandonment, liquidation or other disposition of an | 7 | | interest in a trust included in net income of that beneficiary | 8 | | shall be the total gain or loss multiplied by the apportionment | 9 | | factor of the trust determined under Section 304 of this Act | 10 | | for the taxable year of the trust in which the sale, exchange, | 11 | | abandonment, liquidation or other disposition occurs. | 12 | | (d) Cross references. (1) For allocation of amounts | 13 | | received by
nonresidents from certain employee trusts, see | 14 | | Section 301 (b) (2).
| 15 | | (2) For allocation of estate or trust income or deductions | 16 | | by residents,
see Section 301 (a).
| 17 | | (Source: P.A. 84-550.)
| 18 | | (35 ILCS 5/308) (from Ch. 120, par. 3-308)
| 19 | | Sec. 308.
Allocation of Subchapter S Corporation Income by | 20 | | Subchapter
S Corporations and Shareholders Other Than | 21 | | Residents. (a) Allocation of
Subchapter S corporation business | 22 | | income by shareholders other than residents.
The respective | 23 | | shares of shareholders other than residents in so much of
the | 24 | | business income of the Subchapter S corporation as is allocated | 25 | | or
apportioned to this State in the hands of the Subchapter S |
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| 1 | | corporation
shall be taken into account by such shareholder pro | 2 | | rata in accordance with
the requirements of Section 1366 of the | 3 | | Internal Revenue Code for the
Subchapter S corporation's | 4 | | taxable year and allocated to this State.
| 5 | | (b) Allocation of Subchapter S corporation nonbusiness | 6 | | income by
shareholders other than residents. The respective | 7 | | share of shareholders
other than residents in the items of | 8 | | Subchapter S corporation income and
deduction not taken into | 9 | | account in computing the business income of the
Subchapter S | 10 | | corporation shall be taken into account by such shareholders
| 11 | | pro rata in accordance with the requirements of Section 1366 of | 12 | | the
Internal Revenue Code for the corporation's taxable year, | 13 | | and allocated as
if such items had been paid, incurred or | 14 | | accrued directly to such
shareholders in their separate | 15 | | capacities.
| 16 | | (c) Allocation or apportionment of base income by the | 17 | | Subchapter S
corporation. Base income of a Subchapter S | 18 | | corporation shall be allocated
or apportioned to this State | 19 | | pursuant to this Article 3 in the same manner
as it is | 20 | | allocated or apportioned for any other nonresident.
| 21 | | (c-5) Gain or loss on stock in a Subchapter S corporation. | 22 | | The amount of gain or loss realized by a nonresident | 23 | | shareholder upon the sale, exchange, abandonment, liquidation | 24 | | or other disposition of stock in a Subchapter S corporation | 25 | | included in net income of that shareholder shall be the total | 26 | | gain or loss multiplied by the apportionment factor of the |
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| 1 | | Subchapter S corporation determined under Section 304 of this | 2 | | Act for the taxable year of the Subchapter S corporation in | 3 | | which the sale, exchange, abandonment, liquidation or other | 4 | | disposition occurs. | 5 | | (d) This Section shall not apply to any corporation for | 6 | | which there is
in effect a federal election to opt out of the | 7 | | provisions of the Subchapter
S Revision Act of 1982 and have | 8 | | applied instead the prior federal Subchapter
S rules as in | 9 | | effect on July 1, 1982.
| 10 | | (Source: P.A. 83-1352.)
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