HB2852 100TH GENERAL ASSEMBLY

LRB100 10313 HLH 20502 b

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.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by adding Section 224 as follows:

(35 ILCS 5/224 new)

Sec. 224. Agricultural assets transfer tax credit.

(a) Notwithstanding any other provision of law, each taxpayer who is an agricultural asset owner who leases that agricultural asset to a beginning farmer is eligible for a credit under this Section. The tax credit is allowed only for agricultural assets that are subject to an agricultural assets transfer agreement approved by the Illinois Finance Authority. The agreement shall provide for the lease of agricultural assets located in the State, including any improvements, and may provide for the rental of agricultural equipment.

(b) For an agreement that includes a lease 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, except that, if the beginning farmer is a veteran, the taxpayer may claim 8% of the gross amount paid to the taxpayer under the agreement for the first year that the tax credit is allowed.

For an agreement that includes a lease on a commodity share basis, the taxpayer may claim a tax credit 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, except that, if the beginning farmer is a veteran, the taxpayer may claim 18% of the amount paid to the taxpayer from crops or animals sold under the agreement for the first tax year that the taxpayer is allowed the tax credit under the agreement.

(c) For partners, shareholders of subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this subsection to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and subchapter S of the Internal Revenue Code.

(d) In no event shall a credit under this Section reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The tax credit shall be applied to the earliest year for which there is a tax liability. If there are credits for more than one year that are available to offset a liability, the earlier credit shall be applied first.

(e) For the purposes of this Section:

"Agricultural asset" means land, depreciable machinery or equipment, breeding livestock, or buildings located in this State and used for production agriculture, but does not include the lease of a primary residence.

"Beginning farmer" means a person engaged in production agriculture who meets the following qualifications:

(1) the person is a resident of Illinois; in the case of a partnership, corporation, or limited liability company, each partner, shareholder, or member must be a resident of Illinois;

(2) the person has a net worth of less than $703,844 at the time of the agreement; in the case of a partnership, corporation, or limited liability company, the net worth of each partner, shareholder, or member must be less than $703,844;

(3) the person must submit a letter with the agreement at the time of approval by the Illinois Finance Authority documenting their education, training, and experience in farming;

(4) the person must have adequate working capital, farm equipment, machinery, and livestock, as determined by the Illinois Finance Authority;

(5) the person must perform the duties required to farm the asset according to the terms of the lease; and

(6) the person must assume the financial risk associated with operating the agricultural asset according to the terms of the lease.

(f) This Section is exempt from the provisions of Section 250.

Section 99. Effective date. This Act takes effect upon becoming law.