100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB2852

 

Introduced , by Rep. Randy E. Frese

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/224 new

    Amends the Illinois Income Tax Act. Creates a credit for each taxpayer who is an agricultural asset owner who leases that agricultural asset to a beginning farmer. Provides that, if the lease is on a cash basis, the tax credit shall be shall be 7% of the gross amount paid to the taxpayer during the taxable year under the agreement, and if the lease is on a commodity share basis, the credit shall be equal to 17% of the amount paid to the taxpayer from crops or animals sold under the agreement in which the payment is exclusively made from the sale of crops or animals. Provides for an increased credit if the beginning farmer is a veteran. Effective immediately.


LRB100 10313 HLH 20502 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2852LRB100 10313 HLH 20502 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 adding
5Section 224 as follows:
 
6    (35 ILCS 5/224 new)
7    Sec. 224. Agricultural assets transfer tax credit.
8    (a) Notwithstanding any other provision of law, each
9taxpayer who is an agricultural asset owner who leases that
10agricultural asset to a beginning farmer is eligible for a
11credit under this Section. The tax credit is allowed only for
12agricultural assets that are subject to an agricultural assets
13transfer agreement approved by the Illinois Finance Authority.
14The agreement shall provide for the lease of agricultural
15assets located in the State, including any improvements, and
16may provide for the rental of agricultural equipment.
17    (b) For an agreement that includes a lease on a cash basis,
18the tax credit shall be shall be 7% of the gross amount paid to
19the taxpayer during the taxable year under the agreement,
20except that, if the beginning farmer is a veteran, the taxpayer
21may claim 8% of the gross amount paid to the taxpayer under the
22agreement for the first year that the tax credit is allowed.
23    For an agreement that includes a lease on a commodity share

 

 

HB2852- 2 -LRB100 10313 HLH 20502 b

1basis, the taxpayer may claim a tax credit equal to 17% of the
2amount paid to the taxpayer from crops or animals sold under
3the agreement in which the payment is exclusively made from the
4sale of crops or animals, except that, if the beginning farmer
5is a veteran, the taxpayer may claim 18% of the amount paid to
6the taxpayer from crops or animals sold under the agreement for
7the first tax year that the taxpayer is allowed the tax credit
8under the agreement.
9    (c) For partners, shareholders of subchapter S
10corporations, and owners of limited liability companies, if the
11liability company is treated as a partnership for purposes of
12federal and State income taxation, there shall be allowed a
13credit under this subsection to be determined in accordance
14with the determination of income and distributive share of
15income under Sections 702 and 704 and subchapter S of the
16Internal Revenue Code.
17    (d) In no event shall a credit under this Section reduce
18the taxpayer's liability to less than zero. If the amount of
19the credit exceeds the tax liability for the year, the excess
20may be carried forward and applied to the tax liability of the
215 taxable years following the excess credit year. The tax
22credit shall be applied to the earliest year for which there is
23a tax liability. If there are credits for more than one year
24that are available to offset a liability, the earlier credit
25shall be applied first.
26    (e) For the purposes of this Section:

 

 

HB2852- 3 -LRB100 10313 HLH 20502 b

1    "Agricultural asset" means land, depreciable machinery or
2equipment, breeding livestock, or buildings located in this
3State and used for production agriculture, but does not include
4the lease of a primary residence.
5    "Beginning farmer" means a person engaged in production
6agriculture who meets the following qualifications:
7        (1) the person is a resident of Illinois; in the case
8    of a partnership, corporation, or limited liability
9    company, each partner, shareholder, or member must be a
10    resident of Illinois;
11        (2) the person has a net worth of less than $703,844 at
12    the time of the agreement; in the case of a partnership,
13    corporation, or limited liability company, the net worth of
14    each partner, shareholder, or member must be less than
15    $703,844;
16        (3) the person must submit a letter with the agreement
17    at the time of approval by the Illinois Finance Authority
18    documenting their education, training, and experience in
19    farming;
20        (4) the person must have adequate working capital, farm
21    equipment, machinery, and livestock, as determined by the
22    Illinois Finance Authority;
23        (5) the person must perform the duties required to farm
24    the asset according to the terms of the lease; and
25        (6) the person must assume the financial risk
26    associated with operating the agricultural asset according

 

 

HB2852- 4 -LRB100 10313 HLH 20502 b

1    to the terms of the lease.
2    (f) This Section is exempt from the provisions of Section
3250.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.