99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB0267

 

Introduced , by Rep. Natalie A. Manley

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/405

    Amends the Illinois Income Tax Act. Provides that each beneficiary, other than an individual, of a trust or estate shall be allowed a deduction in the taxable year in which the final taxable year of the trust or estate ends. Provides that the deduction shall be treated as a carryover deduction. Contains provisions concerning the number of years in which the beneficiary may carry forward the deduction.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 405 as follows:
 
6    (35 ILCS 5/405)
7    Sec. 405. Carryovers in certain transactions acquisitions.
8    (a) In the case of the acquisition of assets of a
9corporation by another corporation described in Section 381(a)
10of the Internal Revenue Code, the acquiring corporation shall
11succeed to and take into account, as of the close of the day of
12distribution or transfer, all Article 2 credits and net losses
13under Section 207 of the corporation from which the assets were
14acquired.
15    (b) In the case of the acquisition of assets of a
16partnership by another partnership in a transaction in which
17the acquiring partnership is considered to be a continuation of
18the partnership from which the assets were acquired under the
19provisions of Section 708 of the Internal Revenue Code and any
20regulations promulgated under that Section, the acquiring
21partnership shall succeed to and take into account, as of the
22close of the day of distribution or transfer, all Article 2
23credits and net losses under Section 207 of the partnership

 

 

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1from which the assets were acquired.
2    (b-5) No limitation under Section 382 of the Internal
3Revenue Code or the separate return limitation year regulations
4promulgated under Section 1502 of the Internal Revenue Code
5shall apply to the carryover of any Article 2 credit or net
6loss allowable under Section 207.
7    (c) The provisions of Public Act 91-541 this amendatory Act
8of the 91st General Assembly shall apply to all acquisitions
9occurring in taxable years ending on or after December 31,
101986; provided that if a taxpayer's Illinois income tax
11liability for any taxable year, as assessed under Section 903
12prior to January 1, 1999, was computed without taking into
13account all of the Article 2 credits and net losses under
14Section 207 as allowed by this Section:
15        (1) no refund shall be payable to the taxpayer for that
16    taxable year as the result of allowing any portion of the
17    Article 2 credits or net losses under Section 207 that were
18    not taken into account in computing the tax assessed prior
19    to January 1, 1999;
20        (2) any deficiency which has not been paid may be
21    reduced (but not below zero) by the allowance of some or
22    all of the Article 2 credits or net losses under Section
23    207 that were not taken into account in computing the tax
24    assessed prior to January 1, 1999; and
25        (3) in the case of any Article 2 credit or net loss
26    under Section 207 that, pursuant to this subsection (c),

 

 

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1    could not be taken into account either in computing the tax
2    assessed prior to January 1, 1999 for a taxable year or in
3    reducing a deficiency for that taxable year under paragraph
4    (2) of subsection (c), the allowance of such credit or loss
5    in any other taxable year shall not be denied on the
6    grounds that such credit or loss should properly have been
7    claimed in that taxable year under subsection (a) or (b).
8    (d) On the termination of a trust or estate that is
9entitled to a net loss carryover deduction under Section 207 of
10this Act for its final taxable year that is in excess of its
11taxable income (before the carryover deduction) for that
12taxable year, each beneficiary (other than an individual) of
13the trust or estate shall be allowed a deduction in its taxable
14year in which the final taxable year of the trust or estate
15ends, equal to the portion of that excess carryover deduction
16allocable to that beneficiary under the principles of Section
17642(h) of the Internal Revenue Code. The deduction allowed
18under this subsection (d) shall be treated as a carryover
19deduction of the beneficiary under Section 207 of this Act as
20if incurred by the beneficiary, except that the deduction may
21be carried forward by the beneficiary only for the maximum
22number of taxable years for which the trust or estate would
23have been allowed to carry the loss forward under Section 207
24of this Act, minus the number of taxable years (including the
25year of termination) to which the trust or estate had carried
26the deduction, with the taxable year in which the beneficiary

 

 

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1is first allowed a deduction under this paragraph counting as a
2carryforward year of the beneficiary. This subsection (d) shall
3apply to trusts or estates terminating after December 31, 2015,
4and is exempt from the provisions of Section 250 of this Act.
5(Source: P.A. 91-541, eff. 8-13-99; 91-913, eff. 1-1-01.)