Full Text of SB2531 102nd General Assembly
SB2531eng 102ND GENERAL ASSEMBLY |
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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 Section 201 as follows:
| 6 | | (35 ILCS 5/201)
| 7 | | (Text of Section without the changes made by P.A. 101-8, | 8 | | which did not take effect (see Section 99 of P.A. 101-8)) | 9 | | Sec. 201. Tax imposed. | 10 | | (a) In general. A tax measured by net income is hereby | 11 | | imposed on every
individual, corporation, trust and estate for | 12 | | each taxable year ending
after July 31, 1969 on the privilege | 13 | | of earning or receiving income in or
as a resident of this | 14 | | State. Such tax shall be in addition to all other
occupation or | 15 | | privilege taxes imposed by this State or by any municipal
| 16 | | corporation or political subdivision thereof. | 17 | | (b) Rates. The tax imposed by subsection (a) of this | 18 | | Section shall be
determined as follows, except as adjusted by | 19 | | subsection (d-1): | 20 | | (1) In the case of an individual, trust or estate, for | 21 | | taxable years
ending prior to July 1, 1989, an amount | 22 | | equal to 2 1/2% of the taxpayer's
net income for the | 23 | | taxable year. |
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| 1 | | (2) In the case of an individual, trust or estate, for | 2 | | taxable years
beginning prior to July 1, 1989 and ending | 3 | | after June 30, 1989, an amount
equal to the sum of (i) 2 | 4 | | 1/2% of the taxpayer's net income for the period
prior to | 5 | | July 1, 1989, as calculated under Section 202.3, and (ii) | 6 | | 3% of the
taxpayer's net income for the period after June | 7 | | 30, 1989, as calculated
under Section 202.3. | 8 | | (3) In the case of an individual, trust or estate, for | 9 | | taxable years
beginning after June 30, 1989, and ending | 10 | | prior to January 1, 2011, an amount equal to 3% of the | 11 | | taxpayer's net
income for the taxable year. | 12 | | (4) In the case of an individual, trust, or estate, | 13 | | for taxable years beginning prior to January 1, 2011, and | 14 | | ending after December 31, 2010, an amount equal to the sum | 15 | | of (i) 3% of the taxpayer's net income for the period prior | 16 | | to January 1, 2011, as calculated under Section 202.5, and | 17 | | (ii) 5% of the taxpayer's net income for the period after | 18 | | December 31, 2010, as calculated under Section 202.5. | 19 | | (5) In the case of an individual, trust, or estate, | 20 | | for taxable years beginning on or after January 1, 2011, | 21 | | and ending prior to January 1, 2015, an amount equal to 5% | 22 | | of the taxpayer's net income for the taxable year. | 23 | | (5.1) In the case of an individual, trust, or estate, | 24 | | for taxable years beginning prior to January 1, 2015, and | 25 | | ending after December 31, 2014, an amount equal to the sum | 26 | | of (i) 5% of the taxpayer's net income for the period prior |
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| 1 | | to January 1, 2015, as calculated under Section 202.5, and | 2 | | (ii) 3.75% of the taxpayer's net income for the period | 3 | | after December 31, 2014, as calculated under Section | 4 | | 202.5. | 5 | | (5.2) In the case of an individual, trust, or estate, | 6 | | for taxable years beginning on or after January 1, 2015, | 7 | | and ending prior to July 1, 2017, an amount equal to 3.75% | 8 | | of the taxpayer's net income for the taxable year. | 9 | | (5.3) In the case of an individual, trust, or estate, | 10 | | for taxable years beginning prior to July 1, 2017, and | 11 | | ending after June 30, 2017, an amount equal to the sum of | 12 | | (i) 3.75% of the taxpayer's net income for the period | 13 | | prior to July 1, 2017, as calculated under Section 202.5, | 14 | | and (ii) 4.95% of the taxpayer's net income for the period | 15 | | after June 30, 2017, as calculated under Section 202.5. | 16 | | (5.4) In the case of an individual, trust, or estate, | 17 | | for taxable years beginning on or after July 1, 2017, an | 18 | | amount equal to 4.95% of the taxpayer's net income for the | 19 | | taxable year. | 20 | | (6) In the case of a corporation, for taxable years
| 21 | | ending prior to July 1, 1989, an amount equal to 4% of the
| 22 | | taxpayer's net income for the taxable year. | 23 | | (7) In the case of a corporation, for taxable years | 24 | | beginning prior to
July 1, 1989 and ending after June 30, | 25 | | 1989, an amount equal to the sum of
(i) 4% of the | 26 | | taxpayer's net income for the period prior to July 1, |
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| 1 | | 1989,
as calculated under Section 202.3, and (ii) 4.8% of | 2 | | the taxpayer's net
income for the period after June 30, | 3 | | 1989, as calculated under Section
202.3. | 4 | | (8) In the case of a corporation, for taxable years | 5 | | beginning after
June 30, 1989, and ending prior to January | 6 | | 1, 2011, an amount equal to 4.8% of the taxpayer's net | 7 | | income for the
taxable year. | 8 | | (9) In the case of a corporation, for taxable years | 9 | | beginning prior to January 1, 2011, and ending after | 10 | | December 31, 2010, an amount equal to the sum of (i) 4.8% | 11 | | of the taxpayer's net income for the period prior to | 12 | | January 1, 2011, as calculated under Section 202.5, and | 13 | | (ii) 7% of the taxpayer's net income for the period after | 14 | | December 31, 2010, as calculated under Section 202.5. | 15 | | (10) In the case of a corporation, for taxable years | 16 | | beginning on or after January 1, 2011, and ending prior to | 17 | | January 1, 2015, an amount equal to 7% of the taxpayer's | 18 | | net income for the taxable year. | 19 | | (11) In the case of a corporation, for taxable years | 20 | | beginning prior to January 1, 2015, and ending after | 21 | | December 31, 2014, an amount equal to the sum of (i) 7% of | 22 | | the taxpayer's net income for the period prior to January | 23 | | 1, 2015, as calculated under Section 202.5, and (ii) 5.25% | 24 | | of the taxpayer's net income for the period after December | 25 | | 31, 2014, as calculated under Section 202.5. | 26 | | (12) In the case of a corporation, for taxable years |
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| 1 | | beginning on or after January 1, 2015, and ending prior to | 2 | | July 1, 2017, an amount equal to 5.25% of the taxpayer's | 3 | | net income for the taxable year. | 4 | | (13) In the case of a corporation, for taxable years | 5 | | beginning prior to July 1, 2017, and ending after June 30, | 6 | | 2017, an amount equal to the sum of (i) 5.25% of the | 7 | | taxpayer's net income for the period prior to July 1, | 8 | | 2017, as calculated under Section 202.5, and (ii) 7% of | 9 | | the taxpayer's net income for the period after June 30, | 10 | | 2017, as calculated under Section 202.5. | 11 | | (14) In the case of a corporation, for taxable years | 12 | | beginning on or after July 1, 2017, an amount equal to 7% | 13 | | of the taxpayer's net income for the taxable year. | 14 | | The rates under this subsection (b) are subject to the | 15 | | provisions of Section 201.5. | 16 | | (b-5) Surcharge; sale or exchange of assets, properties, | 17 | | and intangibles of organization gaming licensees. For each of | 18 | | taxable years 2019 through 2027, a surcharge is imposed on all | 19 | | taxpayers on income arising from the sale or exchange of | 20 | | capital assets, depreciable business property, real property | 21 | | used in the trade or business, and Section 197 intangibles (i) | 22 | | of an organization licensee under the Illinois Horse Racing | 23 | | Act of 1975 and (ii) of an organization gaming licensee under | 24 | | the Illinois Gambling Act. The amount of the surcharge is | 25 | | equal to the amount of federal income tax liability for the | 26 | | taxable year attributable to those sales and exchanges. The |
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| 1 | | surcharge imposed shall not apply if: | 2 | | (1) the organization gaming license, organization | 3 | | license, or racetrack property is transferred as a result | 4 | | of any of the following: | 5 | | (A) bankruptcy, a receivership, or a debt | 6 | | adjustment initiated by or against the initial | 7 | | licensee or the substantial owners of the initial | 8 | | licensee; | 9 | | (B) cancellation, revocation, or termination of | 10 | | any such license by the Illinois Gaming Board or the | 11 | | Illinois Racing Board; | 12 | | (C) a determination by the Illinois Gaming Board | 13 | | that transfer of the license is in the best interests | 14 | | of Illinois gaming; | 15 | | (D) the death of an owner of the equity interest in | 16 | | a licensee; | 17 | | (E) the acquisition of a controlling interest in | 18 | | the stock or substantially all of the assets of a | 19 | | publicly traded company; | 20 | | (F) a transfer by a parent company to a wholly | 21 | | owned subsidiary; or | 22 | | (G) the transfer or sale to or by one person to | 23 | | another person where both persons were initial owners | 24 | | of the license when the license was issued; or | 25 | | (2) the controlling interest in the organization | 26 | | gaming license, organization license, or racetrack |
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| 1 | | property is transferred in a transaction to lineal | 2 | | descendants in which no gain or loss is recognized or as a | 3 | | result of a transaction in accordance with Section 351 of | 4 | | the Internal Revenue Code in which no gain or loss is | 5 | | recognized; or | 6 | | (3) live horse racing was not conducted in 2010 at a | 7 | | racetrack located within 3 miles of the Mississippi River | 8 | | under a license issued pursuant to the Illinois Horse | 9 | | Racing Act of 1975. | 10 | | The transfer of an organization gaming license, | 11 | | organization license, or racetrack property by a person other | 12 | | than the initial licensee to receive the organization gaming | 13 | | license is not subject to a surcharge. The Department shall | 14 | | adopt rules necessary to implement and administer this | 15 | | subsection. | 16 | | (c) Personal Property Tax Replacement Income Tax.
| 17 | | Beginning on July 1, 1979 and thereafter, in addition to such | 18 | | income
tax, there is also hereby imposed the Personal Property | 19 | | Tax Replacement
Income Tax measured by net income on every | 20 | | corporation (including Subchapter
S corporations), partnership | 21 | | and trust, for each taxable year ending after
June 30, 1979. | 22 | | Such taxes are imposed on the privilege of earning or
| 23 | | receiving income in or as a resident of this State. The | 24 | | Personal Property
Tax Replacement Income Tax shall be in | 25 | | addition to the income tax imposed
by subsections (a) and (b) | 26 | | of this Section and in addition to all other
occupation or |
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| 1 | | privilege taxes imposed by this State or by any municipal
| 2 | | corporation or political subdivision thereof. | 3 | | (d) Additional Personal Property Tax Replacement Income | 4 | | Tax Rates.
The personal property tax replacement income tax | 5 | | imposed by this subsection
and subsection (c) of this Section | 6 | | in the case of a corporation, other
than a Subchapter S | 7 | | corporation and except as adjusted by subsection (d-1),
shall | 8 | | be an additional amount equal to
2.85% of such taxpayer's net | 9 | | income for the taxable year, except that
beginning on January | 10 | | 1, 1981, and thereafter, the rate of 2.85% specified
in this | 11 | | subsection shall be reduced to 2.5%, and in the case of a
| 12 | | partnership, trust or a Subchapter S corporation shall be an | 13 | | additional
amount equal to 1.5% of such taxpayer's net income | 14 | | for the taxable year. | 15 | | (d-1) Rate reduction for certain foreign insurers. In the | 16 | | case of a
foreign insurer, as defined by Section 35A-5 of the | 17 | | Illinois Insurance Code,
whose state or country of domicile | 18 | | imposes on insurers domiciled in Illinois
a retaliatory tax | 19 | | (excluding any insurer
whose premiums from reinsurance assumed | 20 | | are 50% or more of its total insurance
premiums as determined | 21 | | under paragraph (2) of subsection (b) of Section 304,
except | 22 | | that for purposes of this determination premiums from | 23 | | reinsurance do
not include premiums from inter-affiliate | 24 | | reinsurance arrangements),
beginning with taxable years ending | 25 | | on or after December 31, 1999,
the sum of
the rates of tax | 26 | | imposed by subsections (b) and (d) shall be reduced (but not
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| 1 | | increased) to the rate at which the total amount of tax imposed | 2 | | under this Act,
net of all credits allowed under this Act, | 3 | | shall equal (i) the total amount of
tax that would be imposed | 4 | | on the foreign insurer's net income allocable to
Illinois for | 5 | | the taxable year by such foreign insurer's state or country of
| 6 | | domicile if that net income were subject to all income taxes | 7 | | and taxes
measured by net income imposed by such foreign | 8 | | insurer's state or country of
domicile, net of all credits | 9 | | allowed or (ii) a rate of zero if no such tax is
imposed on | 10 | | such income by the foreign insurer's state of domicile.
For | 11 | | the purposes of this subsection (d-1), an inter-affiliate | 12 | | includes a
mutual insurer under common management. | 13 | | (1) For the purposes of subsection (d-1), in no event | 14 | | shall the sum of the
rates of tax imposed by subsections | 15 | | (b) and (d) be reduced below the rate at
which the sum of: | 16 | | (A) the total amount of tax imposed on such | 17 | | foreign insurer under
this Act for a taxable year, net | 18 | | of all credits allowed under this Act, plus | 19 | | (B) the privilege tax imposed by Section 409 of | 20 | | the Illinois Insurance
Code, the fire insurance | 21 | | company tax imposed by Section 12 of the Fire
| 22 | | Investigation Act, and the fire department taxes | 23 | | imposed under Section 11-10-1
of the Illinois | 24 | | Municipal Code, | 25 | | equals 1.25% for taxable years ending prior to December | 26 | | 31, 2003, or
1.75% for taxable years ending on or after |
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| 1 | | December 31, 2003, of the net
taxable premiums written for | 2 | | the taxable year,
as described by subsection (1) of | 3 | | Section 409 of the Illinois Insurance Code.
This paragraph | 4 | | will in no event increase the rates imposed under | 5 | | subsections
(b) and (d). | 6 | | (2) Any reduction in the rates of tax imposed by this | 7 | | subsection shall be
applied first against the rates | 8 | | imposed by subsection (b) and only after the
tax imposed | 9 | | by subsection (a) net of all credits allowed under this | 10 | | Section
other than the credit allowed under subsection (i) | 11 | | has been reduced to zero,
against the rates imposed by | 12 | | subsection (d). | 13 | | This subsection (d-1) is exempt from the provisions of | 14 | | Section 250. | 15 | | (e) Investment credit. A taxpayer shall be allowed a | 16 | | credit
against the Personal Property Tax Replacement Income | 17 | | Tax for
investment in qualified property. | 18 | | (1) A taxpayer shall be allowed a credit equal to .5% | 19 | | of
the basis of qualified property placed in service | 20 | | during the taxable year,
provided such property is placed | 21 | | in service on or after
July 1, 1984. There shall be allowed | 22 | | an additional credit equal
to .5% of the basis of | 23 | | qualified property placed in service during the
taxable | 24 | | year, provided such property is placed in service on or
| 25 | | after July 1, 1986, and the taxpayer's base employment
| 26 | | within Illinois has increased by 1% or more over the |
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| 1 | | preceding year as
determined by the taxpayer's employment | 2 | | records filed with the
Illinois Department of Employment | 3 | | Security. Taxpayers who are new to
Illinois shall be | 4 | | deemed to have met the 1% growth in base employment for
the | 5 | | first year in which they file employment records with the | 6 | | Illinois
Department of Employment Security. The provisions | 7 | | added to this Section by
Public Act 85-1200 (and restored | 8 | | by Public Act 87-895) shall be
construed as declaratory of | 9 | | existing law and not as a new enactment. If,
in any year, | 10 | | the increase in base employment within Illinois over the
| 11 | | preceding year is less than 1%, the additional credit | 12 | | shall be limited to that
percentage times a fraction, the | 13 | | numerator of which is .5% and the denominator
of which is | 14 | | 1%, but shall not exceed .5%. The investment credit shall | 15 | | not be
allowed to the extent that it would reduce a | 16 | | taxpayer's liability in any tax
year below zero, nor may | 17 | | any credit for qualified property be allowed for any
year | 18 | | other than the year in which the property was placed in | 19 | | service in
Illinois. For tax years ending on or after | 20 | | December 31, 1987, and on or
before December 31, 1988, the | 21 | | credit shall be allowed for the tax year in
which the | 22 | | property is placed in service, or, if the amount of the | 23 | | credit
exceeds the tax liability for that year, whether it | 24 | | exceeds the original
liability or the liability as later | 25 | | amended, such excess may be carried
forward and applied to | 26 | | the tax liability of the 5 taxable years following
the |
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| 1 | | excess credit years if the taxpayer (i) makes investments | 2 | | which cause
the creation of a minimum of 2,000 full-time | 3 | | equivalent jobs in Illinois,
(ii) is located in an | 4 | | enterprise zone established pursuant to the Illinois
| 5 | | Enterprise Zone Act and (iii) is certified by the | 6 | | Department of Commerce
and Community Affairs (now | 7 | | Department of Commerce and Economic Opportunity) as | 8 | | complying with the requirements specified in
clause (i) | 9 | | and (ii) by July 1, 1986. The Department of Commerce and
| 10 | | Community Affairs (now Department of Commerce and Economic | 11 | | Opportunity) shall notify the Department of Revenue of all | 12 | | such
certifications immediately. For tax years ending | 13 | | after December 31, 1988,
the credit shall be allowed for | 14 | | the tax year in which the property is
placed in service, | 15 | | or, if the amount of the credit exceeds the tax
liability | 16 | | for that year, whether it exceeds the original liability | 17 | | or the
liability as later amended, such excess may be | 18 | | carried forward and applied
to the tax liability of the 5 | 19 | | taxable years following the excess credit
years. The | 20 | | credit shall be applied to the earliest year for which | 21 | | there is
a liability. If there is credit from more than one | 22 | | tax year that is
available to offset a liability, earlier | 23 | | credit shall be applied first. | 24 | | (2) The term "qualified property" means property | 25 | | which: | 26 | | (A) is tangible, whether new or used, including |
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| 1 | | buildings and structural
components of buildings and | 2 | | signs that are real property, but not including
land | 3 | | or improvements to real property that are not a | 4 | | structural component of a
building such as | 5 | | landscaping, sewer lines, local access roads, fencing, | 6 | | parking
lots, and other appurtenances; | 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 | | (e); | 12 | | (C) is acquired by purchase as defined in Section | 13 | | 179(d) of
the Internal Revenue Code; | 14 | | (D) is used in Illinois by a taxpayer who is | 15 | | primarily engaged in
manufacturing, or in mining coal | 16 | | or fluorite, or in retailing, or was placed in service | 17 | | on or after July 1, 2006 in a River Edge Redevelopment | 18 | | Zone established pursuant to the River Edge | 19 | | Redevelopment Zone Act; and | 20 | | (E) has not previously been used in Illinois in | 21 | | such a manner and by
such a person as would qualify for | 22 | | the credit provided by this subsection
(e) or | 23 | | subsection (f). | 24 | | (3) For purposes of this subsection (e), | 25 | | "manufacturing" means
the material staging and production | 26 | | of tangible personal property by
procedures commonly |
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| 1 | | regarded as manufacturing, processing, fabrication, or
| 2 | | assembling which changes some existing material into new | 3 | | shapes, new
qualities, or new combinations. For purposes | 4 | | of this subsection
(e) the term "mining" shall have the | 5 | | same meaning as the term "mining" in
Section 613(c) of the | 6 | | Internal Revenue Code. For purposes of this subsection
| 7 | | (e), the term "retailing" means the sale of tangible | 8 | | personal property for use or consumption and not for | 9 | | resale, or
services rendered in conjunction with the sale | 10 | | of tangible personal property for use or consumption and | 11 | | not for resale. For purposes of this subsection (e), | 12 | | "tangible personal property" has the same meaning as when | 13 | | that term is used in the Retailers' Occupation Tax Act, | 14 | | and, for taxable years ending after December 31, 2008, | 15 | | does not include the generation, transmission, or | 16 | | distribution of electricity. | 17 | | (4) The basis of qualified property shall be the basis
| 18 | | used to compute the depreciation deduction for federal | 19 | | income tax purposes. | 20 | | (5) If the basis of the property for federal income | 21 | | tax depreciation
purposes is increased after it has been | 22 | | placed in service in Illinois by
the taxpayer, the amount | 23 | | of such increase shall be deemed property placed
in | 24 | | service on the date of such increase in basis. | 25 | | (6) The term "placed in service" shall have the same
| 26 | | meaning as under Section 46 of the Internal Revenue Code. |
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| 1 | | (7) If during any taxable year, any property ceases to
| 2 | | be qualified property in the hands of the taxpayer within | 3 | | 48 months after
being placed in service, or the situs of | 4 | | any qualified property is
moved outside Illinois within 48 | 5 | | months after being placed in service, the
Personal | 6 | | Property Tax Replacement Income Tax for such taxable year | 7 | | shall be
increased. Such increase shall be determined by | 8 | | (i) recomputing the
investment credit which would have | 9 | | been allowed for the year in which
credit for such | 10 | | property was originally allowed by eliminating such
| 11 | | property from such computation and, (ii) subtracting such | 12 | | recomputed credit
from the amount of credit previously | 13 | | allowed. For the purposes of this
paragraph (7), a | 14 | | reduction of the basis of qualified property resulting
| 15 | | from a redetermination of the purchase price shall be | 16 | | deemed a disposition
of qualified property to the extent | 17 | | of such reduction. | 18 | | (8) Unless the investment credit is extended by law, | 19 | | the
basis of qualified property shall not include costs | 20 | | incurred after
December 31, 2018, except for costs | 21 | | incurred pursuant to a binding
contract entered into on or | 22 | | before December 31, 2018. | 23 | | (9) Each taxable year ending before December 31, 2000, | 24 | | a partnership may
elect to pass through to its
partners | 25 | | the credits to which the partnership is entitled under | 26 | | this subsection
(e) for the taxable year. A partner may |
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| 1 | | use the credit allocated to him or her
under this | 2 | | paragraph only against the tax imposed in subsections (c) | 3 | | and (d) of
this Section. If the partnership makes that | 4 | | election, those credits shall be
allocated among the | 5 | | partners in the partnership in accordance with the rules
| 6 | | set forth in Section 704(b) of the Internal Revenue Code, | 7 | | and the rules
promulgated under that Section, and the | 8 | | allocated amount of the credits shall
be allowed to the | 9 | | partners for that taxable year. The partnership shall make
| 10 | | this election on its Personal Property Tax Replacement | 11 | | Income Tax return for
that taxable year. The election to | 12 | | pass through the credits shall be
irrevocable. | 13 | | For taxable years ending on or after December 31, | 14 | | 2000, a
partner that qualifies its
partnership for a | 15 | | subtraction under subparagraph (I) of paragraph (2) of
| 16 | | subsection (d) of Section 203 or a shareholder that | 17 | | qualifies a Subchapter S
corporation for a subtraction | 18 | | under subparagraph (S) of paragraph (2) of
subsection (b) | 19 | | of Section 203 shall be allowed a credit under this | 20 | | subsection
(e) equal to its share of the credit earned | 21 | | under this subsection (e) during
the taxable year by the | 22 | | partnership or Subchapter S corporation, determined in
| 23 | | accordance with the determination of income and | 24 | | distributive share of
income under Sections 702 and 704 | 25 | | and Subchapter S of the Internal Revenue
Code. This | 26 | | paragraph is exempt from the provisions of Section 250. |
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| 1 | | (f) Investment credit; Enterprise Zone; River Edge | 2 | | Redevelopment Zone. | 3 | | (1) A taxpayer shall be allowed a credit against the | 4 | | tax imposed
by subsections (a) and (b) of this Section for | 5 | | investment in qualified
property which is placed in | 6 | | service in an Enterprise Zone created
pursuant to the | 7 | | Illinois Enterprise Zone Act or, for property placed in | 8 | | service on or after July 1, 2006, a River Edge | 9 | | Redevelopment Zone established pursuant to the River Edge | 10 | | Redevelopment Zone Act. For partners, shareholders
of | 11 | | Subchapter S corporations, and owners of limited liability | 12 | | companies,
if the liability company is treated as a | 13 | | partnership for purposes of
federal and State income | 14 | | taxation, there shall be allowed a credit under
this | 15 | | subsection (f) to be determined in accordance with the | 16 | | determination
of income and distributive share of income | 17 | | under Sections 702 and 704 and
Subchapter S of the | 18 | | Internal Revenue Code. The credit shall be .5% of the
| 19 | | basis for such property. The credit shall be available | 20 | | only in the taxable
year in which the property is placed in | 21 | | service in the Enterprise Zone or River Edge Redevelopment | 22 | | Zone and
shall not be allowed to the extent that it would | 23 | | reduce a taxpayer's
liability for the tax imposed by | 24 | | subsections (a) and (b) of this Section to
below zero. For | 25 | | tax years ending on or after December 31, 1985, the credit
| 26 | | shall be allowed for the tax year in which the property is |
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| 1 | | placed in
service, or, if the amount of the credit exceeds | 2 | | the tax liability for that
year, whether it exceeds the | 3 | | original liability or the liability as later
amended, such | 4 | | excess may be carried forward and applied to the tax
| 5 | | liability of the 5 taxable years following the excess | 6 | | credit year.
The credit shall be applied to the earliest | 7 | | year for which there is a
liability. If there is credit | 8 | | from more than one tax year that is available
to offset a | 9 | | liability, the credit accruing first in time shall be | 10 | | 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). |
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| 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 | 5 | | tax depreciation
purposes is increased after it has been | 6 | | placed 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 | 16 | | Zone or River Edge Redevelopment Zone within 48 months | 17 | | after being placed in service, the tax
imposed under | 18 | | subsections (a) and (b) of this Section for such taxable | 19 | | year
shall be increased. Such increase shall be determined | 20 | | by (i) recomputing
the investment credit which would have | 21 | | been allowed for the year in which
credit for such | 22 | | property was originally allowed by eliminating such
| 23 | | property from such computation, and (ii) subtracting such | 24 | | recomputed credit
from the amount of credit previously | 25 | | allowed. For the purposes of this
paragraph (6), a | 26 | | reduction of the basis of qualified property resulting
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| 1 | | from a redetermination of the purchase price shall be | 2 | | deemed a disposition
of qualified property to the extent | 3 | | of such reduction. | 4 | | (7) There shall be allowed an additional credit equal | 5 | | to 0.5% of the basis of qualified property placed in | 6 | | service during the taxable year in a River Edge | 7 | | Redevelopment Zone, provided such property is placed in | 8 | | service on or after July 1, 2006, and the taxpayer's base | 9 | | employment within Illinois has increased by 1% or more | 10 | | over the preceding year as determined by the taxpayer's | 11 | | employment records filed with the Illinois Department of | 12 | | Employment Security. Taxpayers who are new to Illinois | 13 | | shall be deemed to have met the 1% growth in base | 14 | | employment for the first year in which they file | 15 | | employment records with the Illinois Department of | 16 | | Employment Security. If, in any year, the increase in base | 17 | | employment within Illinois over the preceding year is less | 18 | | than 1%, the additional credit shall be limited to that | 19 | | percentage times a fraction, the numerator of which is | 20 | | 0.5% and the denominator of which is 1%, but shall not | 21 | | exceed 0.5%.
| 22 | | (8) For taxable years beginning on or after January 1, | 23 | | 2021, there shall be allowed an Enterprise Zone | 24 | | construction jobs credit against the taxes imposed under | 25 | | subsections (a) and (b) of this Section as provided in | 26 | | Section 13 of the Illinois Enterprise Zone Act. |
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| 1 | | The credit or credits may not reduce the taxpayer's | 2 | | liability to less than zero. If the amount of the credit or | 3 | | credits exceeds the taxpayer's liability, the excess may | 4 | | be carried forward and applied against the taxpayer's | 5 | | liability in succeeding calendar years in the same manner | 6 | | provided under paragraph (4) of Section 211 of this Act. | 7 | | The credit or credits shall be applied to the earliest | 8 | | year for which there is a tax liability. If there are | 9 | | credits from more than one taxable year that are available | 10 | | to offset a liability, the earlier credit shall be applied | 11 | | first. | 12 | | For partners, shareholders of Subchapter S | 13 | | corporations, and owners of limited liability companies, | 14 | | if the liability company is treated as a partnership for | 15 | | the purposes of federal and State income taxation, there | 16 | | shall be allowed a credit under this Section to be | 17 | | determined in accordance with the determination of income | 18 | | and distributive share of income under Sections 702 and | 19 | | 704 and Subchapter S of the Internal Revenue Code. | 20 | | The total aggregate amount of credits awarded under | 21 | | the Blue Collar Jobs Act (Article 20 of Public Act 101-9 | 22 | | this amendatory Act of the 101st General Assembly ) shall | 23 | | not exceed $20,000,000 in any State fiscal year . | 24 | | This paragraph (8) is exempt from the provisions of | 25 | | Section 250. | 26 | | (g) (Blank). |
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| 1 | | (h) Investment credit; High Impact Business. | 2 | | (1) Subject to subsections (b) and (b-5) of Section
| 3 | | 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall | 4 | | be allowed a credit
against the tax imposed by subsections | 5 | | (a) and (b) of this Section for
investment in qualified
| 6 | | property which is placed in service by a Department of | 7 | | Commerce and Economic Opportunity
designated High Impact | 8 | | Business. The credit shall be .5% of the basis
for such | 9 | | property. The credit shall not be available (i) until the | 10 | | minimum
investments in qualified property set forth in | 11 | | subdivision (a)(3)(A) of
Section 5.5 of the Illinois
| 12 | | Enterprise Zone Act have been satisfied
or (ii) until the | 13 | | time authorized in subsection (b-5) of the Illinois
| 14 | | Enterprise Zone Act for entities designated as High Impact | 15 | | Businesses under
subdivisions (a)(3)(B), (a)(3)(C), and | 16 | | (a)(3)(D) of Section 5.5 of the Illinois
Enterprise Zone | 17 | | Act, and shall not be allowed to the extent that it would
| 18 | | reduce a taxpayer's liability for the tax imposed by | 19 | | subsections (a) and (b) of
this Section to below zero. The | 20 | | credit applicable to such investments shall be
taken in | 21 | | the taxable year in which such investments have been | 22 | | completed. The
credit for additional investments beyond | 23 | | the minimum investment by a designated
high impact | 24 | | business authorized under subdivision (a)(3)(A) of Section | 25 | | 5.5 of
the Illinois Enterprise Zone Act shall be available | 26 | | only in the taxable year in
which the property is placed in |
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| 1 | | service and shall not be allowed to the extent
that it | 2 | | would reduce a taxpayer's liability for the tax imposed by | 3 | | subsections
(a) and (b) of this Section to below zero.
For | 4 | | tax years ending on or after December 31, 1987, the credit | 5 | | shall be
allowed for the tax year in which the property is | 6 | | placed in service, or, if
the amount of the credit exceeds | 7 | | the tax liability for that year, whether
it exceeds the | 8 | | original liability or the liability as later amended, such
| 9 | | excess may be carried forward and applied to the tax | 10 | | liability of the 5
taxable years following the excess | 11 | | credit year. The credit shall be
applied to the earliest | 12 | | year for which there is a liability. If there is
credit | 13 | | from more than one tax year that is available to offset a | 14 | | liability,
the credit accruing first in time shall be | 15 | | applied first. | 16 | | Changes made in this subdivision (h)(1) by Public Act | 17 | | 88-670
restore changes made by Public Act 85-1182 and | 18 | | reflect existing law. | 19 | | (2) The term qualified property means property which: | 20 | | (A) is tangible, whether new or used, including | 21 | | buildings and
structural components of buildings; | 22 | | (B) is depreciable pursuant to Section 167 of the | 23 | | Internal Revenue
Code, except that "3-year property" | 24 | | as defined in Section 168(c)(2)(A) of
that Code is not | 25 | | eligible for the credit provided by this subsection | 26 | | (h); |
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| 1 | | (C) is acquired by purchase as defined in Section | 2 | | 179(d) of the
Internal Revenue Code; and | 3 | | (D) is not eligible for the Enterprise Zone | 4 | | Investment Credit provided
by subsection (f) of this | 5 | | Section. | 6 | | (3) The basis of qualified property shall be the basis | 7 | | used to compute
the depreciation deduction for federal | 8 | | income tax purposes. | 9 | | (4) If the basis of the property for federal income | 10 | | tax depreciation
purposes is increased after it has been | 11 | | placed in service in a federally
designated Foreign Trade | 12 | | Zone or Sub-Zone located in Illinois by the taxpayer,
the | 13 | | amount of such increase shall be deemed property placed in | 14 | | service on
the date of such increase in basis. | 15 | | (5) The term "placed in service" shall have the same | 16 | | meaning as under
Section 46 of the Internal Revenue Code. | 17 | | (6) If during any taxable year ending on or before | 18 | | December 31, 1996,
any property ceases to be qualified
| 19 | | property in the hands of the taxpayer within 48 months | 20 | | after being placed
in service, or the situs of any | 21 | | qualified property is moved outside
Illinois within 48 | 22 | | months after being placed in service, the tax imposed
| 23 | | under subsections (a) and (b) of this Section for such | 24 | | taxable year shall
be increased. Such increase shall be | 25 | | determined by (i) recomputing the
investment credit which | 26 | | would have been allowed for the year in which
credit for |
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| 1 | | such property was originally allowed by eliminating such
| 2 | | property from such computation, and (ii) subtracting such | 3 | | recomputed credit
from the amount of credit previously | 4 | | allowed. For the purposes of this
paragraph (6), a | 5 | | reduction of the basis of qualified property resulting
| 6 | | from a redetermination of the purchase price shall be | 7 | | deemed a disposition
of qualified property to the extent | 8 | | of such reduction. | 9 | | (7) Beginning with tax years ending after December 31, | 10 | | 1996, if a
taxpayer qualifies for the credit under this | 11 | | subsection (h) and thereby is
granted a tax abatement and | 12 | | the taxpayer relocates its entire facility in
violation of | 13 | | the explicit terms and length of the contract under | 14 | | Section
18-183 of the Property Tax Code, the tax imposed | 15 | | under subsections
(a) and (b) of this Section shall be | 16 | | increased for the taxable year
in which the taxpayer | 17 | | relocated its facility by an amount equal to the
amount of | 18 | | credit received by the taxpayer under this subsection (h). | 19 | | (h-5) High Impact Business construction constructions jobs | 20 | | credit. For taxable years beginning on or after January 1, | 21 | | 2021, there shall also be allowed a High Impact Business | 22 | | construction jobs credit against the tax imposed under | 23 | | subsections (a) and (b) of this Section as provided in | 24 | | subsections (i) and (j) of Section 5.5 of the Illinois | 25 | | Enterprise Zone Act. | 26 | | The credit or credits may not reduce the taxpayer's |
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| 1 | | liability to less than zero. If the amount of the credit or | 2 | | credits exceeds the taxpayer's liability, the excess may be | 3 | | carried forward and applied against the taxpayer's liability | 4 | | in succeeding calendar years in the manner provided under | 5 | | paragraph (4) of Section 211 of this Act. The credit or credits | 6 | | shall be applied to the earliest year for which there is a tax | 7 | | liability. If there are credits from more than one taxable | 8 | | year that are available to offset a liability, the earlier | 9 | | credit shall be applied first. | 10 | | For partners, shareholders of Subchapter S corporations, | 11 | | and owners of limited liability companies, if the liability | 12 | | company is treated as a partnership for the purposes of | 13 | | federal and State income taxation, there shall be allowed a | 14 | | credit under this Section to be determined in accordance with | 15 | | the determination of income and distributive share of income | 16 | | under Sections 702 and 704 and Subchapter S of the Internal | 17 | | Revenue Code. | 18 | | The total aggregate amount of credits awarded under the | 19 | | Blue Collar Jobs Act (Article 20 of Public Act 101-9 this | 20 | | amendatory Act of the 101st General Assembly ) shall not exceed | 21 | | $20,000,000 in any State fiscal year . | 22 | | This subsection (h-5) is exempt from the provisions of | 23 | | Section 250. | 24 | | (i) Credit for Personal Property Tax Replacement Income | 25 | | Tax.
For tax years ending prior to December 31, 2003, a credit | 26 | | shall be allowed
against the tax imposed by
subsections (a) |
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| 1 | | and (b) of this Section for the tax imposed by subsections (c)
| 2 | | and (d) of this Section. This credit shall be computed by | 3 | | multiplying the tax
imposed by subsections (c) and (d) of this | 4 | | Section by a fraction, the numerator
of which is base income | 5 | | allocable to Illinois and the denominator of which is
Illinois | 6 | | base income, and further multiplying the product by the tax | 7 | | rate
imposed by subsections (a) and (b) of this Section. | 8 | | Any credit earned on or after December 31, 1986 under
this | 9 | | subsection which is unused in the year
the credit is computed | 10 | | because it exceeds the tax liability imposed by
subsections | 11 | | (a) and (b) for that year (whether it exceeds the original
| 12 | | liability or the liability as later amended) may be carried | 13 | | forward and
applied to the tax liability imposed by | 14 | | subsections (a) and (b) of the 5
taxable years following the | 15 | | excess credit year, provided that no credit may
be carried | 16 | | forward to any year ending on or
after December 31, 2003. This | 17 | | credit shall be
applied first to the earliest year for which | 18 | | there is a liability. If
there is a credit under this | 19 | | subsection from more than one tax year that is
available to | 20 | | offset a liability the earliest credit arising under this
| 21 | | subsection shall be applied first. | 22 | | If, during any taxable year ending on or after December | 23 | | 31, 1986, the
tax imposed by subsections (c) and (d) of this | 24 | | Section for which a taxpayer
has claimed a credit under this | 25 | | subsection (i) is reduced, the amount of
credit for such tax | 26 | | shall also be reduced. Such reduction shall be
determined by |
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| 1 | | recomputing the credit to take into account the reduced tax
| 2 | | imposed by subsections (c) and (d). If any portion of the
| 3 | | reduced amount of credit has been carried to a different | 4 | | taxable year, an
amended return shall be filed for such | 5 | | taxable year to reduce the amount of
credit claimed. | 6 | | (j) Training expense credit. Beginning with tax years | 7 | | ending on or
after December 31, 1986 and prior to December 31, | 8 | | 2003, a taxpayer shall be
allowed a credit against the
tax | 9 | | imposed by subsections (a) and (b) under this Section
for all | 10 | | amounts paid or accrued, on behalf of all persons
employed by | 11 | | the taxpayer in Illinois or Illinois residents employed
| 12 | | outside of Illinois by a taxpayer, for educational or | 13 | | vocational training in
semi-technical or technical fields or | 14 | | semi-skilled or skilled fields, which
were deducted from gross | 15 | | income in the computation of taxable income. The
credit | 16 | | against the tax imposed by subsections (a) and (b) shall be | 17 | | 1.6% of
such training expenses. For partners, shareholders of | 18 | | subchapter S
corporations, and owners of limited liability | 19 | | companies, if the liability
company is treated as a | 20 | | partnership for purposes of federal and State income
taxation, | 21 | | there shall be allowed a credit under this subsection (j) to be
| 22 | | determined in accordance with the determination of income and | 23 | | distributive
share of income under Sections 702 and 704 and | 24 | | subchapter S of the Internal
Revenue Code. | 25 | | Any credit allowed under this subsection which is unused | 26 | | in the year
the credit is earned may be carried forward to each |
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| 1 | | of the 5 taxable
years following the year for which the credit | 2 | | is first computed until it is
used. This credit shall be | 3 | | applied first to the earliest year for which
there is a | 4 | | liability. If there is a credit under this subsection from | 5 | | more
than one tax year that is available to offset a liability , | 6 | | the earliest
credit arising under this subsection shall be | 7 | | applied first. No carryforward
credit may be claimed in any | 8 | | tax year ending on or after
December 31, 2003. | 9 | | (k) Research and development credit. For tax years ending | 10 | | after July 1, 1990 and prior to
December 31, 2003, and | 11 | | beginning again for tax years ending on or after December 31, | 12 | | 2004, and ending prior to January 1, 2027, a taxpayer shall be
| 13 | | allowed a credit against the tax imposed by subsections (a) | 14 | | and (b) of this
Section for increasing research activities in | 15 | | this State. The credit
allowed against the tax imposed by | 16 | | subsections (a) and (b) shall be equal
to 6 1/2% of the | 17 | | qualifying expenditures for increasing research activities
in | 18 | | this State. For partners, shareholders of subchapter S | 19 | | corporations, and
owners of limited liability companies, if | 20 | | the liability company is treated as a
partnership for purposes | 21 | | of federal and State income taxation, there shall be
allowed a | 22 | | credit under this subsection to be determined in accordance | 23 | | with the
determination of income and distributive share of | 24 | | income under Sections 702 and
704 and subchapter S of the | 25 | | Internal Revenue Code. | 26 | | For purposes of this subsection, "qualifying expenditures" |
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| 1 | | means the
qualifying expenditures as defined for the federal | 2 | | credit for increasing
research activities which would be | 3 | | allowable under Section 41 of the
Internal Revenue Code and | 4 | | which are conducted in this State, "qualifying
expenditures | 5 | | for increasing research activities in this State" means the
| 6 | | excess of qualifying expenditures for the taxable year in | 7 | | which incurred
over qualifying expenditures for the base | 8 | | period, "qualifying expenditures
for the base period" means | 9 | | the average of the qualifying expenditures for
each year in | 10 | | the base period, and "base period" means the 3 taxable years
| 11 | | immediately preceding the taxable year for which the | 12 | | determination is
being made. | 13 | | Any credit in excess of the tax liability for the taxable | 14 | | year
may be carried forward. A taxpayer may elect to have the
| 15 | | unused credit shown on its final completed return carried over | 16 | | as a credit
against the tax liability for the following 5 | 17 | | taxable years or until it has
been fully used, whichever | 18 | | occurs first; provided that no credit earned in a tax year | 19 | | ending prior to December 31, 2003 may be carried forward to any | 20 | | year ending on or after December 31, 2003. | 21 | | If an unused credit is carried forward to a given year from | 22 | | 2 or more
earlier years, that credit arising in the earliest | 23 | | year will be applied
first against the tax liability for the | 24 | | given year. If a tax liability for
the given year still | 25 | | remains, the credit from the next earliest year will
then be | 26 | | applied, and so on, until all credits have been used or no tax
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| 1 | | liability for the given year remains. Any remaining unused | 2 | | credit or
credits then will be carried forward to the next | 3 | | following year in which a
tax liability is incurred, except | 4 | | that no credit can be carried forward to
a year which is more | 5 | | than 5 years after the year in which the expense for
which the | 6 | | credit is given was incurred. | 7 | | No inference shall be drawn from Public Act 91-644 this | 8 | | amendatory Act of the 91st General
Assembly in construing this | 9 | | Section for taxable years beginning before January
1, 1999. | 10 | | It is the intent of the General Assembly that the research | 11 | | and development credit under this subsection (k) shall apply | 12 | | continuously for all tax years ending on or after December 31, | 13 | | 2004 and ending prior to January 1, 2027, including, but not | 14 | | limited to, the period beginning on January 1, 2016 and ending | 15 | | on July 6, 2017 ( the effective date of Public Act 100-22) this | 16 | | amendatory Act of the 100th General Assembly . All actions | 17 | | taken in reliance on the continuation of the credit under this | 18 | | subsection (k) by any taxpayer are hereby validated. | 19 | | (l) Environmental Remediation Tax Credit. | 20 | | (i) For tax years ending after December 31, 1997 and | 21 | | on or before
December 31, 2001, a taxpayer shall be | 22 | | allowed a credit against the tax
imposed by subsections | 23 | | (a) and (b) of this Section for certain amounts paid
for | 24 | | unreimbursed eligible remediation costs, as specified in | 25 | | this subsection.
For purposes of this Section, | 26 | | "unreimbursed eligible remediation costs" means
costs |
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| 1 | | approved by the Illinois Environmental Protection Agency | 2 | | ("Agency") under
Section 58.14 of the Environmental | 3 | | Protection Act that were paid in performing
environmental | 4 | | remediation at a site for which a No Further Remediation | 5 | | Letter
was issued by the Agency and recorded under Section | 6 | | 58.10 of the Environmental
Protection Act. The credit must | 7 | | be claimed for the taxable year in which
Agency approval | 8 | | of the eligible remediation costs is granted. The credit | 9 | | is
not available to any taxpayer if the taxpayer or any | 10 | | related party caused or
contributed to, in any material | 11 | | respect, a release of regulated substances on,
in, or | 12 | | under the site that was identified and addressed by the | 13 | | remedial
action pursuant to the Site Remediation Program | 14 | | of the Environmental Protection
Act. After the Pollution | 15 | | Control Board rules are adopted pursuant to the
Illinois | 16 | | Administrative Procedure Act for the administration and | 17 | | enforcement of
Section 58.9 of the Environmental | 18 | | Protection Act, determinations as to credit
availability | 19 | | for purposes of this Section shall be made consistent with | 20 | | those
rules. For purposes of this Section, "taxpayer" | 21 | | includes a person whose tax
attributes the taxpayer has | 22 | | succeeded to under Section 381 of the Internal
Revenue | 23 | | Code and "related party" includes the persons disallowed a | 24 | | deduction
for losses by paragraphs (b), (c), and (f)(1) of | 25 | | Section 267 of the Internal
Revenue Code by virtue of | 26 | | being a related taxpayer, as well as any of its
partners. |
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| 1 | | The credit allowed against the tax imposed by subsections | 2 | | (a) and
(b) shall be equal to 25% of the unreimbursed | 3 | | eligible remediation costs in
excess of $100,000 per site, | 4 | | except that the $100,000 threshold shall not apply
to any | 5 | | site contained in an enterprise zone as determined by the | 6 | | Department of
Commerce and Community Affairs (now | 7 | | Department of Commerce and Economic Opportunity). The | 8 | | total credit allowed shall not exceed
$40,000 per year | 9 | | with a maximum total of $150,000 per site. For partners | 10 | | and
shareholders of subchapter S corporations, there shall | 11 | | be allowed a credit
under this subsection to be determined | 12 | | in accordance with the determination of
income and | 13 | | distributive share of income under Sections 702 and 704 | 14 | | and
subchapter S of the Internal Revenue Code. | 15 | | (ii) A credit allowed under this subsection that is | 16 | | unused in the year
the credit is earned may be carried | 17 | | forward to each of the 5 taxable years
following the year | 18 | | for which the credit is first earned until it is used.
The | 19 | | term "unused credit" does not include any amounts of | 20 | | unreimbursed eligible
remediation costs in excess of the | 21 | | maximum credit per site authorized under
paragraph (i). | 22 | | This credit shall be applied first to the earliest year
| 23 | | for which there is a liability. If there is a credit under | 24 | | this subsection
from more than one tax year that is | 25 | | available to offset a liability, the
earliest credit | 26 | | arising under this subsection shall be applied first. A
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| 1 | | credit allowed under this subsection may be sold to a | 2 | | buyer as part of a sale
of all or part of the remediation | 3 | | site for which the credit was granted. The
purchaser of a | 4 | | remediation site and the tax credit shall succeed to the | 5 | | unused
credit and remaining carry-forward period of the | 6 | | seller. To perfect the
transfer, the assignor shall record | 7 | | the transfer in the chain of title for the
site and provide | 8 | | written notice to the Director of the Illinois Department | 9 | | of
Revenue of the assignor's intent to sell the | 10 | | remediation site and the amount of
the tax credit to be | 11 | | transferred as a portion of the sale. In no event may a
| 12 | | credit be transferred to any taxpayer if the taxpayer or a | 13 | | related party would
not be eligible under the provisions | 14 | | of subsection (i). | 15 | | (iii) For purposes of this Section, the term "site" | 16 | | shall have the same
meaning as under Section 58.2 of the | 17 | | Environmental Protection Act. | 18 | | (m) Education expense credit. Beginning with tax years | 19 | | ending after
December 31, 1999, a taxpayer who
is the | 20 | | custodian of one or more qualifying pupils shall be allowed a | 21 | | credit
against the tax imposed by subsections (a) and (b) of | 22 | | this Section for
qualified education expenses incurred on | 23 | | behalf of the qualifying pupils.
The credit shall be equal to | 24 | | 25% of qualified education expenses, but in no
event may the | 25 | | total credit under this subsection claimed by a
family that is | 26 | | the
custodian of qualifying pupils exceed (i) $500 for tax |
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| 1 | | years ending prior to December 31, 2017, and (ii) $750 for tax | 2 | | years ending on or after December 31, 2017. In no event shall a | 3 | | credit under
this subsection reduce the taxpayer's liability | 4 | | under this Act to less than
zero. Notwithstanding any other | 5 | | provision of law, for taxable years beginning on or after | 6 | | January 1, 2017, no taxpayer may claim a credit under this | 7 | | subsection (m) if the taxpayer's adjusted gross income for the | 8 | | taxable year exceeds (i) $500,000, in the case of spouses | 9 | | filing a joint federal tax return or (ii) $250,000, in the case | 10 | | of all other taxpayers. This subsection is exempt from the | 11 | | provisions of Section 250 of this
Act. | 12 | | For purposes of this subsection: | 13 | | "Qualifying pupils" means individuals who (i) are | 14 | | residents of the State of
Illinois, (ii) are under the age of | 15 | | 21 at the close of the school year for
which a credit is | 16 | | sought, and (iii) during the school year for which a credit
is | 17 | | sought were full-time pupils enrolled in a kindergarten | 18 | | through twelfth
grade education program at any school, as | 19 | | defined in this subsection. | 20 | | "Qualified education expense" means the amount incurred
on | 21 | | behalf of a qualifying pupil in excess of $250 for tuition, | 22 | | book fees, and
lab fees at the school in which the pupil is | 23 | | enrolled during the regular school
year. | 24 | | "School" means any public or nonpublic elementary or | 25 | | secondary school in
Illinois that is in compliance with Title | 26 | | VI of the Civil Rights Act of 1964
and attendance at which |
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| 1 | | satisfies the requirements of Section 26-1 of the
School Code, | 2 | | except that nothing shall be construed to require a child to
| 3 | | attend any particular public or nonpublic school to qualify | 4 | | for the credit
under this Section. | 5 | | "Custodian" means, with respect to qualifying pupils, an | 6 | | Illinois resident
who is a parent, the parents, a legal | 7 | | guardian, or the legal guardians of the
qualifying pupils. | 8 | | (n) River Edge Redevelopment Zone site remediation tax | 9 | | credit.
| 10 | | (i) For tax years ending on or after December 31, | 11 | | 2006, a taxpayer shall be allowed a credit against the tax | 12 | | imposed by subsections (a) and (b) of this Section for | 13 | | certain amounts paid for unreimbursed eligible remediation | 14 | | costs, as specified in this subsection. For purposes of | 15 | | this Section, "unreimbursed eligible remediation costs" | 16 | | means costs approved by the Illinois Environmental | 17 | | Protection Agency ("Agency") under Section 58.14a of the | 18 | | Environmental Protection Act that were paid in performing | 19 | | environmental remediation at a site within a River Edge | 20 | | Redevelopment Zone for which a No Further Remediation | 21 | | Letter was issued by the Agency and recorded under Section | 22 | | 58.10 of the Environmental Protection Act. The credit must | 23 | | be claimed for the taxable year in which Agency approval | 24 | | of the eligible remediation costs is granted. The credit | 25 | | is not available to any taxpayer if the taxpayer or any | 26 | | related party caused or contributed to, in any material |
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| 1 | | respect, a release of regulated substances on, in, or | 2 | | under the site that was identified and addressed by the | 3 | | remedial action pursuant to the Site Remediation Program | 4 | | of the Environmental Protection Act. Determinations as to | 5 | | credit availability for purposes of this Section shall be | 6 | | made consistent with rules adopted by the Pollution | 7 | | Control Board pursuant to the Illinois Administrative | 8 | | Procedure Act for the administration and enforcement of | 9 | | Section 58.9 of the Environmental Protection Act. For | 10 | | purposes of this Section, "taxpayer" includes a person | 11 | | whose tax attributes the taxpayer has succeeded to under | 12 | | Section 381 of the Internal Revenue Code and "related | 13 | | party" includes the persons disallowed a deduction for | 14 | | losses by paragraphs (b), (c), and (f)(1) of Section 267 | 15 | | of the Internal Revenue Code by virtue of being a related | 16 | | taxpayer, as well as any of its partners. The credit | 17 | | allowed against the tax imposed by subsections (a) and (b) | 18 | | shall be equal to 25% of the unreimbursed eligible | 19 | | remediation costs in excess of $100,000 per site. | 20 | | (ii) A credit allowed under this subsection that is | 21 | | unused in the year the credit is earned may be carried | 22 | | forward to each of the 5 taxable years following the year | 23 | | for which the credit is first earned until it is used. This | 24 | | credit shall be applied first to the earliest year for | 25 | | which there is a liability. If there is a credit under this | 26 | | subsection from more than one tax year that is available |
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| 1 | | to offset a liability, the earliest credit arising under | 2 | | this subsection shall be applied first. A credit allowed | 3 | | under this subsection may be sold to a buyer as part of a | 4 | | sale of all or part of the remediation site for which the | 5 | | credit was granted. The purchaser of a remediation site | 6 | | and the tax credit shall succeed to the unused credit and | 7 | | remaining carry-forward period of the seller. To perfect | 8 | | the transfer, the assignor shall record the transfer in | 9 | | the chain of title for the site and provide written notice | 10 | | to the Director of the Illinois Department of Revenue of | 11 | | the assignor's intent to sell the remediation site and the | 12 | | amount of the tax credit to be transferred as a portion of | 13 | | the sale. In no event may a credit be transferred to any | 14 | | taxpayer if the taxpayer or a related party would not be | 15 | | eligible under the provisions of subsection (i). | 16 | | (iii) For purposes of this Section, the term "site" | 17 | | shall have the same meaning as under Section 58.2 of the | 18 | | Environmental Protection Act. | 19 | | (o) For each of taxable years during the Compassionate Use | 20 | | of Medical Cannabis Program, a surcharge is imposed on all | 21 | | taxpayers on income arising from the sale or exchange of | 22 | | capital assets, depreciable business property, real property | 23 | | used in the trade or business, and Section 197 intangibles of | 24 | | an organization registrant under the Compassionate Use of | 25 | | Medical Cannabis Program Act. The amount of the surcharge is | 26 | | equal to the amount of federal income tax liability for the |
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| 1 | | taxable year attributable to those sales and exchanges. The | 2 | | surcharge imposed does not apply if: | 3 | | (1) the medical cannabis cultivation center | 4 | | registration, medical cannabis dispensary registration, or | 5 | | the property of a registration is transferred as a result | 6 | | of any of the following: | 7 | | (A) bankruptcy, a receivership, or a debt | 8 | | adjustment initiated by or against the initial | 9 | | registration or the substantial owners of the initial | 10 | | registration; | 11 | | (B) cancellation, revocation, or termination of | 12 | | any registration by the Illinois Department of Public | 13 | | Health; | 14 | | (C) a determination by the Illinois Department of | 15 | | Public Health that transfer of the registration is in | 16 | | the best interests of Illinois qualifying patients as | 17 | | defined by the Compassionate Use of Medical Cannabis | 18 | | Program Act; | 19 | | (D) the death of an owner of the equity interest in | 20 | | a registrant; | 21 | | (E) the acquisition of a controlling interest in | 22 | | the stock or substantially all of the assets of a | 23 | | publicly traded company; | 24 | | (F) a transfer by a parent company to a wholly | 25 | | owned subsidiary; or | 26 | | (G) the transfer or sale to or by one person to |
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| 1 | | another person where both persons were initial owners | 2 | | of the registration when the registration was issued; | 3 | | or | 4 | | (2) the cannabis cultivation center registration, | 5 | | medical cannabis dispensary registration, or the | 6 | | controlling interest in a registrant's property is | 7 | | transferred in a transaction to lineal descendants in | 8 | | which no gain or loss is recognized or as a result of a | 9 | | transaction in accordance with Section 351 of the Internal | 10 | | Revenue Code in which no gain or loss is recognized. | 11 | | (p) Pass-through entity tax. | 12 | | (1) For taxable years ending on or after December 31, | 13 | | 2021 and beginning prior to January 1, 2026, a partnership | 14 | | (other than a publicly traded partnership under Section | 15 | | 7704 of the Internal Revenue Code) or Subchapter S | 16 | | corporation may elect to apply the provisions of this | 17 | | subsection. A separate election shall be made for each | 18 | | taxable year. Such election shall be made at such time, | 19 | | and in such form and manner as prescribed by the | 20 | | Department, and, once made, is irrevocable. | 21 | | (2) Entity-level tax. A partnership or Subchapter S | 22 | | corporation electing to apply the provisions of this | 23 | | subsection shall be subject to a tax for the privilege of | 24 | | earning or receiving income in this State in an amount | 25 | | equal to 4.95% of the taxpayer's net income for the | 26 | | taxable year. |
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| 1 | | (3) Net income defined. | 2 | | (A) In general. For purposes of paragraph (2), the | 3 | | term net income has the same meaning as defined in | 4 | | Section 202 of this Act, except that the following | 5 | | provisions shall not apply: | 6 | | (i) the standard exemption allowed under | 7 | | Section 204; | 8 | | (ii) the deduction for net losses allowed | 9 | | under Section 207; | 10 | | (iii) in the case of an S corporation, the | 11 | | modification under Section 203(b)(2)(S); and | 12 | | (iv) in the case of a partnership, the | 13 | | modifications under Section 203(d)(2)(H) and | 14 | | Section 203(d)(2)(I). | 15 | | (B) Special rule for tiered partnerships. If a | 16 | | taxpayer making the election under paragraph (1) is a | 17 | | partner of another taxpayer making the election under | 18 | | paragraph (1), net income shall be computed as | 19 | | provided in subparagraph (A), except that the taxpayer | 20 | | shall subtract its distributive share of the net | 21 | | income of the electing partnership (including its | 22 | | distributive share of the net income of the electing | 23 | | partnership derived as a distributive share from | 24 | | electing partnerships in which it is a partner). | 25 | | (4) Credit for entity level tax. Each partner or | 26 | | shareholder of a taxpayer making the election under this |
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| 1 | | Section shall be allowed a credit against the tax imposed | 2 | | under subsections (a) and (b) of Section 201 of this Act | 3 | | for the taxable year of the partnership or Subchapter S | 4 | | corporation for which an election is in effect ending | 5 | | within or with the taxable year of the partner or | 6 | | shareholder in an amount equal to 4.95% times the partner | 7 | | or shareholder's distributive share of the net income of | 8 | | the electing partnership or Subchapter S corporation, but | 9 | | not to exceed the partner's or shareholder's share of the | 10 | | tax imposed under paragraph (1) which is actually paid by | 11 | | the partnership or Subchapter S corporation. If the | 12 | | taxpayer is a partnership or Subchapter S corporation that | 13 | | is itself a partner of a partnership making the election | 14 | | under paragraph (1), the credit under this paragraph shall | 15 | | be allowed to the taxpayer's partners or shareholders (or | 16 | | if the partner is a partnership or Subchapter S | 17 | | corporation then its partners or shareholders) in | 18 | | accordance with the determination of income and | 19 | | distributive share of income under Sections 702 and 704 | 20 | | and Subchapter S of the Internal Revenue Code. If the | 21 | | amount of the credit allowed under this paragraph exceeds | 22 | | the partner's or shareholder's liability for tax imposed | 23 | | under subsections (a) and (b) of Section 201 of this Act | 24 | | for the taxable year, such excess shall be treated as an | 25 | | overpayment for purposes of Section 909 of this Act. | 26 | | (5) Nonresidents. A nonresident individual who is a |
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| 1 | | partner or shareholder of a partnership or Subchapter S | 2 | | corporation for a taxable year for which an election is in | 3 | | effect under paragraph (1) shall not be required to file | 4 | | an income tax return under this Act for such taxable year | 5 | | if the only source of net income of the individual (or the | 6 | | individual and the individual's spouse in the case of a | 7 | | joint return) is from an entity making the election under | 8 | | paragraph (1) and the credit allowed to the partner or | 9 | | shareholder under paragraph (4) equals or exceeds the | 10 | | individual's liability for the tax imposed under | 11 | | subsections (a) and (b) of Section 201 of this Act for the | 12 | | taxable year. | 13 | | (6) Liability for tax. Except as provided in this | 14 | | paragraph, a partnership or Subchapter S making the | 15 | | election under paragraph (1) is liable for the | 16 | | entity-level tax imposed under paragraph (2). If the | 17 | | electing partnership or corporation fails to pay the full | 18 | | amount of tax deemed assessed under paragraph (2), the | 19 | | partners or shareholders shall be liable to pay the tax | 20 | | assessed (including penalties and interest). Each partner | 21 | | or shareholder shall be liable for the unpaid assessment | 22 | | based on the ratio of the partner's or shareholder's share | 23 | | of the net income of the partnership over the total net | 24 | | income of the partnership. If the partnership or | 25 | | Subchapter S corporation fails to pay the tax assessed | 26 | | (including penalties and interest) and thereafter an |
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| 1 | | amount of such tax is paid by the partners or | 2 | | shareholders, such amount shall not be collected from the | 3 | | partnership or corporation. | 4 | | (7) Foreign tax. For purposes of the credit allowed | 5 | | under Section 601(b)(3) of this Act, tax paid by a | 6 | | partnership or Subchapter S corporation to another state | 7 | | which, as determined by the Department, is substantially | 8 | | similar to the tax imposed under this subsection, shall be | 9 | | considered tax paid by the partner or shareholder to the | 10 | | extent that the partner's or shareholder's share of the | 11 | | income of the partnership or Subchapter S corporation | 12 | | allocated and apportioned to such other state bears to the | 13 | | total income of the partnership or Subchapter S | 14 | | corporation allocated or apportioned to such other state. | 15 | | (8) Suspension of withholding. The provisions of | 16 | | Section 709.5 of this Act shall not apply to a partnership | 17 | | or Subchapter S corporation for the taxable year for which | 18 | | an election under paragraph (1) is in effect. | 19 | | (9) Requirement to pay estimated tax. For each taxable | 20 | | year for which an election under paragraph (1) is in | 21 | | effect, a partnership or Subchapter S corporation is | 22 | | required to pay estimated tax for such taxable year under | 23 | | Sections 803 and 804 of this Act if the amount payable as | 24 | | estimated tax can reasonably be expected to exceed $500. | 25 | | (Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19; 101-31, | 26 | | eff. 6-28-19; 101-207, eff. 8-2-19; 101-363, eff. 8-9-19; |
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| 1 | | revised 11-18-20.) | 2 | | (Text of Section with the changes made by P.A. 101-8, | 3 | | which did not take effect (see Section 99 of P.A. 101-8))
| 4 | | Sec. 201. Tax imposed. | 5 | | (a) In general. A tax measured by net income is hereby | 6 | | imposed on every
individual, corporation, trust and estate for | 7 | | each taxable year ending
after July 31, 1969 on the privilege | 8 | | of earning or receiving income in or
as a resident of this | 9 | | State. Such tax shall be in addition to all other
occupation or | 10 | | privilege taxes imposed by this State or by any municipal
| 11 | | corporation or political subdivision thereof. | 12 | | (b) Rates. The tax imposed by subsection (a) of this | 13 | | Section shall be
determined as follows, except as adjusted by | 14 | | subsection (d-1): | 15 | | (1) In the case of an individual, trust or estate, for | 16 | | taxable years
ending prior to July 1, 1989, an amount | 17 | | equal to 2 1/2% of the taxpayer's
net income for the | 18 | | taxable year. | 19 | | (2) In the case of an individual, trust or estate, for | 20 | | taxable years
beginning prior to July 1, 1989 and ending | 21 | | after June 30, 1989, an amount
equal to the sum of (i) 2 | 22 | | 1/2% of the taxpayer's net income for the period
prior to | 23 | | July 1, 1989, as calculated under Section 202.3, and (ii) | 24 | | 3% of the
taxpayer's net income for the period after June | 25 | | 30, 1989, as calculated
under Section 202.3. |
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| 1 | | (3) In the case of an individual, trust or estate, for | 2 | | taxable years
beginning after June 30, 1989, and ending | 3 | | prior to January 1, 2011, an amount equal to 3% of the | 4 | | taxpayer's net
income for the taxable year. | 5 | | (4) In the case of an individual, trust, or estate, | 6 | | for taxable years beginning prior to January 1, 2011, and | 7 | | ending after December 31, 2010, an amount equal to the sum | 8 | | of (i) 3% of the taxpayer's net income for the period prior | 9 | | to January 1, 2011, as calculated under Section 202.5, and | 10 | | (ii) 5% of the taxpayer's net income for the period after | 11 | | December 31, 2010, as calculated under Section 202.5. | 12 | | (5) In the case of an individual, trust, or estate, | 13 | | for taxable years beginning on or after January 1, 2011, | 14 | | and ending prior to January 1, 2015, an amount equal to 5% | 15 | | of the taxpayer's net income for the taxable year. | 16 | | (5.1) In the case of an individual, trust, or estate, | 17 | | for taxable years beginning prior to January 1, 2015, and | 18 | | ending after December 31, 2014, an amount equal to the sum | 19 | | of (i) 5% of the taxpayer's net income for the period prior | 20 | | to January 1, 2015, as calculated under Section 202.5, and | 21 | | (ii) 3.75% of the taxpayer's net income for the period | 22 | | after December 31, 2014, as calculated under Section | 23 | | 202.5. | 24 | | (5.2) In the case of an individual, trust, or estate, | 25 | | for taxable years beginning on or after January 1, 2015, | 26 | | and ending prior to July 1, 2017, an amount equal to 3.75% |
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| 1 | | of the taxpayer's net income for the taxable year. | 2 | | (5.3) In the case of an individual, trust, or estate, | 3 | | for taxable years beginning prior to July 1, 2017, and | 4 | | ending after June 30, 2017, an amount equal to the sum of | 5 | | (i) 3.75% of the taxpayer's net income for the period | 6 | | prior to July 1, 2017, as calculated under Section 202.5, | 7 | | and (ii) 4.95% of the taxpayer's net income for the period | 8 | | after June 30, 2017, as calculated under Section 202.5. | 9 | | (5.4) In the case of an individual, trust, or estate, | 10 | | for taxable years beginning on or after July 1, 2017 and | 11 | | beginning prior to January 1, 2021 , an amount equal to | 12 | | 4.95% of the taxpayer's net income for the taxable year. | 13 | | (5.5) In the case of an individual, trust, or estate, | 14 | | for taxable years beginning on or after January 1, 2021, | 15 | | an amount calculated under the rate structure set forth in | 16 | | Section 201.1. | 17 | | (6) In the case of a corporation, for taxable years
| 18 | | ending prior to July 1, 1989, an amount equal to 4% of the
| 19 | | taxpayer's net income for the taxable year. | 20 | | (7) In the case of a corporation, for taxable years | 21 | | beginning prior to
July 1, 1989 and ending after June 30, | 22 | | 1989, an amount equal to the sum of
(i) 4% of the | 23 | | taxpayer's net income for the period prior to July 1, | 24 | | 1989,
as calculated under Section 202.3, and (ii) 4.8% of | 25 | | the taxpayer's net
income for the period after June 30, | 26 | | 1989, as calculated under Section
202.3. |
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| 1 | | (8) In the case of a corporation, for taxable years | 2 | | beginning after
June 30, 1989, and ending prior to January | 3 | | 1, 2011, an amount equal to 4.8% of the taxpayer's net | 4 | | income for the
taxable year. | 5 | | (9) In the case of a corporation, for taxable years | 6 | | beginning prior to January 1, 2011, and ending after | 7 | | December 31, 2010, an amount equal to the sum of (i) 4.8% | 8 | | of the taxpayer's net income for the period prior to | 9 | | January 1, 2011, as calculated under Section 202.5, and | 10 | | (ii) 7% of the taxpayer's net income for the period after | 11 | | December 31, 2010, as calculated under Section 202.5. | 12 | | (10) In the case of a corporation, for taxable years | 13 | | beginning on or after January 1, 2011, and ending prior to | 14 | | January 1, 2015, an amount equal to 7% of the taxpayer's | 15 | | net income for the taxable year. | 16 | | (11) In the case of a corporation, for taxable years | 17 | | beginning prior to January 1, 2015, and ending after | 18 | | December 31, 2014, an amount equal to the sum of (i) 7% of | 19 | | the taxpayer's net income for the period prior to January | 20 | | 1, 2015, as calculated under Section 202.5, and (ii) 5.25% | 21 | | of the taxpayer's net income for the period after December | 22 | | 31, 2014, as calculated under Section 202.5. | 23 | | (12) In the case of a corporation, for taxable years | 24 | | beginning on or after January 1, 2015, and ending prior to | 25 | | July 1, 2017, an amount equal to 5.25% of the taxpayer's | 26 | | net income for the taxable year. |
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| 1 | | (13) In the case of a corporation, for taxable years | 2 | | beginning prior to July 1, 2017, and ending after June 30, | 3 | | 2017, an amount equal to the sum of (i) 5.25% of the | 4 | | taxpayer's net income for the period prior to July 1, | 5 | | 2017, as calculated under Section 202.5, and (ii) 7% of | 6 | | the taxpayer's net income for the period after June 30, | 7 | | 2017, as calculated under Section 202.5. | 8 | | (14) In the case of a corporation, for taxable years | 9 | | beginning on or after July 1, 2017 and beginning prior to | 10 | | January 1, 2021 , an amount equal to 7% of the taxpayer's | 11 | | net income for the taxable year. | 12 | | (15) In the case of a corporation, for taxable years | 13 | | beginning on or after January 1, 2021, an amount equal to | 14 | | 7.99% of the taxpayer's net income for the taxable year. | 15 | | The rates under this subsection (b) are subject to the | 16 | | provisions of Section 201.5. | 17 | | (b-5) Surcharge; sale or exchange of assets, properties, | 18 | | and intangibles of organization gaming licensees. For each of | 19 | | taxable years 2019 through 2027, a surcharge is imposed on all | 20 | | taxpayers on income arising from the sale or exchange of | 21 | | capital assets, depreciable business property, real property | 22 | | used in the trade or business, and Section 197 intangibles (i) | 23 | | of an organization licensee under the Illinois Horse Racing | 24 | | Act of 1975 and (ii) of an organization gaming licensee under | 25 | | the Illinois Gambling Act. The amount of the surcharge is | 26 | | equal to the amount of federal income tax liability for the |
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| 1 | | taxable year attributable to those sales and exchanges. The | 2 | | surcharge imposed shall not apply if: | 3 | | (1) the organization gaming license, organization | 4 | | license, or racetrack property is transferred as a result | 5 | | of any of the following: | 6 | | (A) bankruptcy, a receivership, or a debt | 7 | | adjustment initiated by or against the initial | 8 | | licensee or the substantial owners of the initial | 9 | | licensee; | 10 | | (B) cancellation, revocation, or termination of | 11 | | any such license by the Illinois Gaming Board or the | 12 | | Illinois Racing Board; | 13 | | (C) a determination by the Illinois Gaming Board | 14 | | that transfer of the license is in the best interests | 15 | | of Illinois gaming; | 16 | | (D) the death of an owner of the equity interest in | 17 | | a licensee; | 18 | | (E) the acquisition of a controlling interest in | 19 | | the stock or substantially all of the assets of a | 20 | | publicly traded company; | 21 | | (F) a transfer by a parent company to a wholly | 22 | | owned subsidiary; or | 23 | | (G) the transfer or sale to or by one person to | 24 | | another person where both persons were initial owners | 25 | | of the license when the license was issued; or | 26 | | (2) the controlling interest in the organization |
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| 1 | | gaming license, organization license, or racetrack | 2 | | property is transferred in a transaction to lineal | 3 | | descendants in which no gain or loss is recognized or as a | 4 | | result of a transaction in accordance with Section 351 of | 5 | | the Internal Revenue Code in which no gain or loss is | 6 | | recognized; or | 7 | | (3) live horse racing was not conducted in 2010 at a | 8 | | racetrack located within 3 miles of the Mississippi River | 9 | | under a license issued pursuant to the Illinois Horse | 10 | | Racing Act of 1975. | 11 | | The transfer of an organization gaming license, | 12 | | organization license, or racetrack property by a person other | 13 | | than the initial licensee to receive the organization gaming | 14 | | license is not subject to a surcharge. The Department shall | 15 | | adopt rules necessary to implement and administer this | 16 | | subsection. | 17 | | (c) Personal Property Tax Replacement Income Tax.
| 18 | | Beginning on July 1, 1979 and thereafter, in addition to such | 19 | | income
tax, there is also hereby imposed the Personal Property | 20 | | Tax Replacement
Income Tax measured by net income on every | 21 | | corporation (including Subchapter
S corporations), partnership | 22 | | and trust, for each taxable year ending after
June 30, 1979. | 23 | | Such taxes are imposed on the privilege of earning or
| 24 | | receiving income in or as a resident of this State. The | 25 | | Personal Property
Tax Replacement Income Tax shall be in | 26 | | addition to the income tax imposed
by subsections (a) and (b) |
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| 1 | | of this Section and in addition to all other
occupation or | 2 | | privilege taxes imposed by this State or by any municipal
| 3 | | corporation or political subdivision thereof. | 4 | | (d) Additional Personal Property Tax Replacement Income | 5 | | Tax Rates.
The personal property tax replacement income tax | 6 | | imposed by this subsection
and subsection (c) of this Section | 7 | | in the case of a corporation, other
than a Subchapter S | 8 | | corporation and except as adjusted by subsection (d-1),
shall | 9 | | be an additional amount equal to
2.85% of such taxpayer's net | 10 | | income for the taxable year, except that
beginning on January | 11 | | 1, 1981, and thereafter, the rate of 2.85% specified
in this | 12 | | subsection shall be reduced to 2.5%, and in the case of a
| 13 | | partnership, trust or a Subchapter S corporation shall be an | 14 | | additional
amount equal to 1.5% of such taxpayer's net income | 15 | | for the taxable year. | 16 | | (d-1) Rate reduction for certain foreign insurers. In the | 17 | | case of a
foreign insurer, as defined by Section 35A-5 of the | 18 | | Illinois Insurance Code,
whose state or country of domicile | 19 | | imposes on insurers domiciled in Illinois
a retaliatory tax | 20 | | (excluding any insurer
whose premiums from reinsurance assumed | 21 | | are 50% or more of its total insurance
premiums as determined | 22 | | under paragraph (2) of subsection (b) of Section 304,
except | 23 | | that for purposes of this determination premiums from | 24 | | reinsurance do
not include premiums from inter-affiliate | 25 | | reinsurance arrangements),
beginning with taxable years ending | 26 | | on or after December 31, 1999,
the sum of
the rates of tax |
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| 1 | | imposed by subsections (b) and (d) shall be reduced (but not
| 2 | | increased) to the rate at which the total amount of tax imposed | 3 | | under this Act,
net of all credits allowed under this Act, | 4 | | shall equal (i) the total amount of
tax that would be imposed | 5 | | on the foreign insurer's net income allocable to
Illinois for | 6 | | the taxable year by such foreign insurer's state or country of
| 7 | | domicile if that net income were subject to all income taxes | 8 | | and taxes
measured by net income imposed by such foreign | 9 | | insurer's state or country of
domicile, net of all credits | 10 | | allowed or (ii) a rate of zero if no such tax is
imposed on | 11 | | such income by the foreign insurer's state of domicile.
For | 12 | | the purposes of this subsection (d-1), an inter-affiliate | 13 | | includes a
mutual insurer under common management. | 14 | | (1) For the purposes of subsection (d-1), in no event | 15 | | shall the sum of the
rates of tax imposed by subsections | 16 | | (b) and (d) be reduced below the rate at
which the sum of: | 17 | | (A) the total amount of tax imposed on such | 18 | | foreign insurer under
this Act for a taxable year, net | 19 | | of all credits allowed under this Act, plus | 20 | | (B) the privilege tax imposed by Section 409 of | 21 | | the Illinois Insurance
Code, the fire insurance | 22 | | company tax imposed by Section 12 of the Fire
| 23 | | Investigation Act, and the fire department taxes | 24 | | imposed under Section 11-10-1
of the Illinois | 25 | | Municipal Code, | 26 | | equals 1.25% for taxable years ending prior to December |
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| 1 | | 31, 2003, or
1.75% for taxable years ending on or after | 2 | | December 31, 2003, of the net
taxable premiums written for | 3 | | the taxable year,
as described by subsection (1) of | 4 | | Section 409 of the Illinois Insurance Code.
This paragraph | 5 | | will in no event increase the rates imposed under | 6 | | subsections
(b) and (d). | 7 | | (2) Any reduction in the rates of tax imposed by this | 8 | | subsection shall be
applied first against the rates | 9 | | imposed by subsection (b) and only after the
tax imposed | 10 | | by subsection (a) net of all credits allowed under this | 11 | | Section
other than the credit allowed under subsection (i) | 12 | | has been reduced to zero,
against the rates imposed by | 13 | | subsection (d). | 14 | | This subsection (d-1) is exempt from the provisions of | 15 | | Section 250. | 16 | | (e) Investment credit. A taxpayer shall be allowed a | 17 | | credit
against the Personal Property Tax Replacement Income | 18 | | Tax for
investment in qualified property. | 19 | | (1) A taxpayer shall be allowed a credit equal to .5% | 20 | | of
the basis of qualified property placed in service | 21 | | during the taxable year,
provided such property is placed | 22 | | in service on or after
July 1, 1984. There shall be allowed | 23 | | an additional credit equal
to .5% of the basis of | 24 | | qualified property placed in service during the
taxable | 25 | | year, provided such property is placed in service on or
| 26 | | after July 1, 1986, and the taxpayer's base employment
|
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| 1 | | within Illinois has increased by 1% or more over the | 2 | | preceding year as
determined by the taxpayer's employment | 3 | | records filed with the
Illinois Department of Employment | 4 | | Security. Taxpayers who are new to
Illinois shall be | 5 | | deemed to have met the 1% growth in base employment for
the | 6 | | first year in which they file employment records with the | 7 | | Illinois
Department of Employment Security. The provisions | 8 | | added to this Section by
Public Act 85-1200 (and restored | 9 | | by Public Act 87-895) shall be
construed as declaratory of | 10 | | existing law and not as a new enactment. If,
in any year, | 11 | | the increase in base employment within Illinois over the
| 12 | | preceding year is less than 1%, the additional credit | 13 | | shall be limited to that
percentage times a fraction, the | 14 | | numerator of which is .5% and the denominator
of which is | 15 | | 1%, but shall not exceed .5%. The investment credit shall | 16 | | not be
allowed to the extent that it would reduce a | 17 | | taxpayer's liability in any tax
year below zero, nor may | 18 | | any credit for qualified property be allowed for any
year | 19 | | other than the year in which the property was placed in | 20 | | service in
Illinois. For tax years ending on or after | 21 | | December 31, 1987, and on or
before December 31, 1988, the | 22 | | credit shall be allowed for the tax year in
which the | 23 | | property is placed in service, or, if the amount of the | 24 | | credit
exceeds the tax liability for that year, whether it | 25 | | exceeds the original
liability or the liability as later | 26 | | amended, such excess may be carried
forward and applied to |
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| 1 | | the tax liability of the 5 taxable years following
the | 2 | | excess credit years if the taxpayer (i) makes investments | 3 | | which cause
the creation of a minimum of 2,000 full-time | 4 | | equivalent jobs in Illinois,
(ii) is located in an | 5 | | enterprise zone established pursuant to the Illinois
| 6 | | Enterprise Zone Act and (iii) is certified by the | 7 | | Department of Commerce
and Community Affairs (now | 8 | | Department of Commerce and Economic Opportunity) as | 9 | | complying with the requirements specified in
clause (i) | 10 | | and (ii) by July 1, 1986. The Department of Commerce and
| 11 | | Community Affairs (now Department of Commerce and Economic | 12 | | Opportunity) shall notify the Department of Revenue of all | 13 | | such
certifications immediately. For tax years ending | 14 | | after December 31, 1988,
the credit shall be allowed for | 15 | | the tax year in which the property is
placed in service, | 16 | | or, if the amount of the credit exceeds the tax
liability | 17 | | for that year, whether it exceeds the original liability | 18 | | or the
liability as later amended, such excess may be | 19 | | carried forward and applied
to the tax liability of the 5 | 20 | | taxable years following the excess credit
years. 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, earlier | 24 | | credit shall be applied first. | 25 | | (2) The term "qualified property" means property | 26 | | which: |
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| 1 | | (A) is tangible, whether new or used, including | 2 | | buildings and structural
components of buildings and | 3 | | signs that are real property, but not including
land | 4 | | or improvements to real property that are not a | 5 | | structural component of a
building such as | 6 | | landscaping, sewer lines, local access roads, fencing, | 7 | | parking
lots, and other appurtenances; | 8 | | (B) is depreciable pursuant to Section 167 of the | 9 | | Internal Revenue Code,
except that "3-year property" | 10 | | as defined in Section 168(c)(2)(A) of that
Code is not | 11 | | eligible for the credit provided by this subsection | 12 | | (e); | 13 | | (C) is acquired by purchase as defined in Section | 14 | | 179(d) of
the Internal Revenue Code; | 15 | | (D) is used in Illinois by a taxpayer who is | 16 | | primarily engaged in
manufacturing, or in mining coal | 17 | | or fluorite, or in retailing, or was placed in service | 18 | | on or after July 1, 2006 in a River Edge Redevelopment | 19 | | Zone established pursuant to the River Edge | 20 | | Redevelopment Zone Act; and | 21 | | (E) has not previously been used in Illinois in | 22 | | such a manner and by
such a person as would qualify for | 23 | | the credit provided by this subsection
(e) or | 24 | | subsection (f). | 25 | | (3) For purposes of this subsection (e), | 26 | | "manufacturing" means
the material staging and production |
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| 1 | | of tangible personal property by
procedures commonly | 2 | | regarded as manufacturing, processing, fabrication, or
| 3 | | assembling which changes some existing material into new | 4 | | shapes, new
qualities, or new combinations. For purposes | 5 | | of this subsection
(e) the term "mining" shall have the | 6 | | same meaning as the term "mining" in
Section 613(c) of the | 7 | | Internal Revenue Code. For purposes of this subsection
| 8 | | (e), the term "retailing" means the sale of tangible | 9 | | personal property for use or consumption and not for | 10 | | resale, or
services rendered in conjunction with the sale | 11 | | of tangible personal property for use or consumption and | 12 | | not for resale. For purposes of this subsection (e), | 13 | | "tangible personal property" has the same meaning as when | 14 | | that term is used in the Retailers' Occupation Tax Act, | 15 | | and, for taxable years ending after December 31, 2008, | 16 | | does not include the generation, transmission, or | 17 | | distribution of electricity. | 18 | | (4) The basis of qualified property shall be the basis
| 19 | | used to compute the depreciation deduction for federal | 20 | | income tax purposes. | 21 | | (5) If the basis of the property for federal income | 22 | | tax depreciation
purposes is increased after it has been | 23 | | placed in service in Illinois by
the taxpayer, the amount | 24 | | of such increase shall be deemed property placed
in | 25 | | service on the date of such increase in basis. | 26 | | (6) 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 | | (7) If during any taxable year, any property ceases to
| 3 | | be qualified property in the hands of the taxpayer within | 4 | | 48 months after
being placed in service, or the situs of | 5 | | any qualified property is
moved outside Illinois within 48 | 6 | | months after being placed in service, the
Personal | 7 | | Property Tax Replacement Income Tax for such taxable year | 8 | | shall be
increased. Such increase shall be determined by | 9 | | (i) recomputing the
investment credit which would have | 10 | | been allowed for the year in which
credit for such | 11 | | property was originally allowed by eliminating such
| 12 | | property from such computation and, (ii) subtracting such | 13 | | recomputed credit
from the amount of credit previously | 14 | | allowed. For the purposes of this
paragraph (7), a | 15 | | reduction of the basis of qualified property resulting
| 16 | | from a redetermination of the purchase price shall be | 17 | | deemed a disposition
of qualified property to the extent | 18 | | 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, 2018, except for costs | 22 | | incurred pursuant to a binding
contract entered into on or | 23 | | before December 31, 2018. | 24 | | (9) Each taxable year ending before December 31, 2000, | 25 | | a partnership may
elect to pass through to its
partners | 26 | | the credits to which the partnership is entitled under |
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| 1 | | this subsection
(e) for the taxable year. A partner may | 2 | | use the credit allocated to him or her
under this | 3 | | paragraph only against the tax imposed in subsections (c) | 4 | | and (d) of
this Section. If the partnership makes that | 5 | | election, those credits shall be
allocated among the | 6 | | partners in the partnership in accordance with the rules
| 7 | | set forth in Section 704(b) of the Internal Revenue Code, | 8 | | and the rules
promulgated under that Section, and the | 9 | | allocated amount of the credits shall
be allowed to the | 10 | | partners for that taxable year. The partnership shall make
| 11 | | this election on its Personal Property Tax Replacement | 12 | | Income Tax return for
that taxable year. The election to | 13 | | pass through the credits shall be
irrevocable. | 14 | | For taxable years ending on or after December 31, | 15 | | 2000, a
partner that qualifies its
partnership for a | 16 | | subtraction under subparagraph (I) of paragraph (2) of
| 17 | | subsection (d) of Section 203 or a shareholder that | 18 | | qualifies a Subchapter S
corporation for a subtraction | 19 | | under subparagraph (S) of paragraph (2) of
subsection (b) | 20 | | of Section 203 shall be allowed a credit under this | 21 | | subsection
(e) equal to its share of the credit earned | 22 | | under this subsection (e) during
the taxable year by the | 23 | | partnership or Subchapter S corporation, determined in
| 24 | | accordance with the determination of income and | 25 | | distributive share of
income under Sections 702 and 704 | 26 | | and Subchapter S of the Internal Revenue
Code. This |
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| 1 | | paragraph is exempt from the provisions of Section 250. | 2 | | (f) Investment credit; Enterprise Zone; River Edge | 3 | | Redevelopment 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 | 7 | | service in an Enterprise Zone created
pursuant to the | 8 | | Illinois Enterprise Zone Act or, for property placed in | 9 | | service on or after July 1, 2006, a River Edge | 10 | | Redevelopment Zone established pursuant to the River Edge | 11 | | Redevelopment Zone Act. For partners, shareholders
of | 12 | | Subchapter S corporations, and owners of limited liability | 13 | | companies,
if the liability company is treated as a | 14 | | partnership for purposes of
federal and State income | 15 | | taxation, there shall be allowed a credit under
this | 16 | | subsection (f) to be determined in accordance with the | 17 | | determination
of income and distributive share of income | 18 | | under Sections 702 and 704 and
Subchapter S of the | 19 | | Internal Revenue Code. The credit shall be .5% of the
| 20 | | basis for such property. The credit shall be available | 21 | | only in the taxable
year in which the property is placed in | 22 | | service in the Enterprise Zone or River Edge Redevelopment | 23 | | Zone and
shall not be allowed to the extent that it would | 24 | | reduce a taxpayer's
liability for the tax imposed by | 25 | | subsections (a) and (b) of this Section to
below zero. For | 26 | | tax years ending on or after December 31, 1985, the credit
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| 1 | | shall be allowed for the tax year in which the property is | 2 | | placed in
service, or, if the amount of the credit exceeds | 3 | | the tax liability for that
year, whether it exceeds the | 4 | | original liability or the liability as later
amended, such | 5 | | excess may be carried forward and applied to the tax
| 6 | | liability of the 5 taxable years following the excess | 7 | | credit year.
The credit shall be applied to the earliest | 8 | | year for which there is a
liability. If there is credit | 9 | | from more than one tax year that is available
to offset a | 10 | | liability, the credit accruing first in time shall be | 11 | | applied
first. | 12 | | (2) The term qualified property means property which: | 13 | | (A) is tangible, whether new or used, including | 14 | | buildings and
structural components of buildings; | 15 | | (B) is depreciable pursuant to Section 167 of the | 16 | | Internal Revenue
Code, except that "3-year property" | 17 | | as defined in Section 168(c)(2)(A) of
that Code is not | 18 | | eligible for the credit provided by this subsection | 19 | | (f); | 20 | | (C) is acquired by purchase as defined in Section | 21 | | 179(d) of
the Internal Revenue Code; | 22 | | (D) is used in the Enterprise Zone or River Edge | 23 | | Redevelopment Zone by the taxpayer; and | 24 | | (E) has not been previously used in Illinois in | 25 | | such a manner and by
such a person as would qualify for | 26 | | the credit provided by this subsection
(f) or |
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| 1 | | subsection (e). | 2 | | (3) The basis of qualified property shall be the basis | 3 | | used to compute
the depreciation deduction for federal | 4 | | income tax purposes. | 5 | | (4) If the basis of the property for federal income | 6 | | tax depreciation
purposes is increased after it has been | 7 | | placed in service in the Enterprise
Zone or River Edge | 8 | | Redevelopment Zone by the taxpayer, the amount of such | 9 | | increase shall be deemed property
placed in service on the | 10 | | date of such increase in basis. | 11 | | (5) The term "placed in service" shall have the same | 12 | | meaning as under
Section 46 of the Internal Revenue Code. | 13 | | (6) If during any taxable year, any property ceases to | 14 | | be qualified
property in the hands of the taxpayer within | 15 | | 48 months after being placed
in service, or the situs of | 16 | | any qualified property is moved outside the
Enterprise | 17 | | Zone or River Edge Redevelopment Zone within 48 months | 18 | | after being placed in service, the tax
imposed under | 19 | | subsections (a) and (b) of this Section for such taxable | 20 | | year
shall be increased. Such increase shall be determined | 21 | | by (i) recomputing
the investment credit which would have | 22 | | been allowed for the year in which
credit for such | 23 | | property was originally allowed by eliminating such
| 24 | | property from such computation, and (ii) subtracting such | 25 | | recomputed credit
from the amount of credit previously | 26 | | allowed. For the purposes of this
paragraph (6), a |
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| 1 | | reduction of the basis of qualified property resulting
| 2 | | from a redetermination of the purchase price shall be | 3 | | deemed a disposition
of qualified property to the extent | 4 | | 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 | 11 | | over 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 | 16 | | employment records with the Illinois Department of | 17 | | Employment Security. If, in any year, the increase in base | 18 | | employment within Illinois over the preceding year is less | 19 | | than 1%, the additional credit shall be limited to that | 20 | | percentage times a fraction, the numerator of which is | 21 | | 0.5% and the denominator of which is 1%, but shall not | 22 | | exceed 0.5%.
| 23 | | (8) For taxable years beginning on or after January 1, | 24 | | 2021, there shall be allowed an Enterprise Zone | 25 | | construction jobs credit against the taxes imposed under | 26 | | subsections (a) and (b) of this Section as provided in |
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| 1 | | Section 13 of the Illinois Enterprise Zone Act. | 2 | | The credit or credits may not reduce the taxpayer's | 3 | | liability to less than zero. If the amount of the credit or | 4 | | credits exceeds the taxpayer's liability, the excess may | 5 | | be carried forward and applied against the taxpayer's | 6 | | liability in succeeding calendar years in the same manner | 7 | | provided under paragraph (4) of Section 211 of this Act. | 8 | | The credit or credits shall be applied to the earliest | 9 | | year for which there is a tax liability. If there are | 10 | | credits from more than one taxable year that are available | 11 | | to offset a liability, the earlier credit shall be applied | 12 | | first. | 13 | | 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 | | the purposes of federal and State income taxation, there | 17 | | shall be allowed a credit under this Section to be | 18 | | determined in accordance with the determination of income | 19 | | and distributive share of income under Sections 702 and | 20 | | 704 and Subchapter S of the Internal Revenue Code. | 21 | | The total aggregate amount of credits awarded under | 22 | | the Blue Collar Jobs Act (Article 20 of Public Act 101-9 | 23 | | this amendatory Act of the 101st General Assembly ) shall | 24 | | not exceed $20,000,000 in any State fiscal year . | 25 | | This paragraph (8) is exempt from the provisions of | 26 | | Section 250. |
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| 1 | | (g) (Blank). | 2 | | (h) Investment credit; High Impact Business. | 3 | | (1) Subject to subsections (b) and (b-5) of Section
| 4 | | 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall | 5 | | be allowed a credit
against the tax imposed by subsections | 6 | | (a) and (b) of this Section for
investment in qualified
| 7 | | property which is placed in service by a Department of | 8 | | Commerce and Economic Opportunity
designated High Impact | 9 | | Business. The credit shall be .5% of the basis
for such | 10 | | property. The credit shall not be available (i) until the | 11 | | minimum
investments in qualified property set forth in | 12 | | subdivision (a)(3)(A) of
Section 5.5 of the Illinois
| 13 | | Enterprise Zone Act have been satisfied
or (ii) until the | 14 | | time authorized in subsection (b-5) of the Illinois
| 15 | | Enterprise Zone Act for entities designated as High Impact | 16 | | Businesses under
subdivisions (a)(3)(B), (a)(3)(C), and | 17 | | (a)(3)(D) of Section 5.5 of the Illinois
Enterprise Zone | 18 | | Act, and shall not be allowed to the extent that it would
| 19 | | reduce a taxpayer's liability for the tax imposed by | 20 | | subsections (a) and (b) of
this Section to below zero. The | 21 | | credit applicable to such investments shall be
taken in | 22 | | the taxable year in which such investments have been | 23 | | completed. The
credit for additional investments beyond | 24 | | the minimum investment by a designated
high impact | 25 | | business authorized under subdivision (a)(3)(A) of Section | 26 | | 5.5 of
the Illinois Enterprise Zone Act shall be available |
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| 1 | | only in the taxable year in
which the property is placed in | 2 | | service and shall not be allowed to the extent
that it | 3 | | would reduce a taxpayer's liability for the tax imposed by | 4 | | subsections
(a) and (b) of this Section to below zero.
For | 5 | | tax years ending on or after December 31, 1987, the credit | 6 | | shall be
allowed for the tax year in which the property is | 7 | | placed in service, or, if
the amount of the credit exceeds | 8 | | the tax liability for that year, whether
it exceeds the | 9 | | original liability or the liability as later amended, such
| 10 | | excess may be carried forward and applied to the tax | 11 | | liability of the 5
taxable years following the excess | 12 | | credit year. The credit shall be
applied to the earliest | 13 | | year for which there is a liability. If there is
credit | 14 | | from more than one tax year that is available to offset a | 15 | | liability,
the credit accruing first in time shall be | 16 | | applied first. | 17 | | Changes made in this subdivision (h)(1) by Public Act | 18 | | 88-670
restore changes made by Public Act 85-1182 and | 19 | | reflect existing law. | 20 | | (2) The term qualified property means property which: | 21 | | (A) is tangible, whether new or used, including | 22 | | buildings and
structural components of buildings; | 23 | | (B) is depreciable pursuant to Section 167 of the | 24 | | Internal Revenue
Code, except that "3-year property" | 25 | | as defined in Section 168(c)(2)(A) of
that Code is not | 26 | | eligible for the credit provided by this subsection |
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| 1 | | (h); | 2 | | (C) is acquired by purchase as defined in Section | 3 | | 179(d) of the
Internal Revenue Code; and | 4 | | (D) is not eligible for the Enterprise Zone | 5 | | Investment Credit provided
by subsection (f) of this | 6 | | Section. | 7 | | (3) The basis of qualified property shall be the basis | 8 | | used to compute
the depreciation deduction for federal | 9 | | income tax purposes. | 10 | | (4) If the basis of the property for federal income | 11 | | tax depreciation
purposes is increased after it has been | 12 | | placed in service in a federally
designated Foreign Trade | 13 | | Zone or Sub-Zone located in Illinois by the taxpayer,
the | 14 | | amount of such increase shall be deemed property placed in | 15 | | service on
the date of such increase in basis. | 16 | | (5) The term "placed in service" shall have the same | 17 | | meaning as under
Section 46 of the Internal Revenue Code. | 18 | | (6) If during any taxable year ending on or before | 19 | | December 31, 1996,
any property ceases to be qualified
| 20 | | property in the hands of the taxpayer within 48 months | 21 | | after being placed
in service, or the situs of any | 22 | | qualified property is moved outside
Illinois within 48 | 23 | | months after being placed in service, the tax imposed
| 24 | | under subsections (a) and (b) of this Section for such | 25 | | taxable year shall
be increased. Such increase shall be | 26 | | determined by (i) recomputing the
investment credit which |
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| 1 | | would have been allowed for the year in which
credit for | 2 | | such property was originally allowed by eliminating such
| 3 | | property from such computation, and (ii) subtracting such | 4 | | recomputed credit
from the amount of credit previously | 5 | | allowed. For the purposes of this
paragraph (6), a | 6 | | reduction of the basis of qualified property resulting
| 7 | | from a redetermination of the purchase price shall be | 8 | | deemed a disposition
of qualified property to the extent | 9 | | of such reduction. | 10 | | (7) Beginning with tax years ending after December 31, | 11 | | 1996, if a
taxpayer qualifies for the credit under this | 12 | | subsection (h) and thereby is
granted a tax abatement and | 13 | | the taxpayer relocates its entire facility in
violation of | 14 | | the explicit terms and length of the contract under | 15 | | Section
18-183 of the Property Tax Code, the tax imposed | 16 | | under subsections
(a) and (b) of this Section shall be | 17 | | increased for the taxable year
in which the taxpayer | 18 | | relocated its facility by an amount equal to the
amount of | 19 | | credit received by the taxpayer under this subsection (h). | 20 | | (h-5) High Impact Business construction constructions jobs | 21 | | credit. For taxable years beginning on or after January 1, | 22 | | 2021, there shall also be allowed a High Impact Business | 23 | | construction jobs credit against the tax imposed under | 24 | | subsections (a) and (b) of this Section as provided in | 25 | | subsections (i) and (j) of Section 5.5 of the Illinois | 26 | | Enterprise Zone Act. |
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| 1 | | The credit or credits may not reduce the taxpayer's | 2 | | liability to less than zero. If the amount of the credit or | 3 | | credits exceeds the taxpayer's liability, the excess may be | 4 | | carried forward and applied against the taxpayer's liability | 5 | | in succeeding calendar years in the manner provided under | 6 | | paragraph (4) of Section 211 of this Act. The credit or credits | 7 | | shall be applied to the earliest year for which there is a tax | 8 | | liability. If there are credits from more than one taxable | 9 | | year that are available to offset a liability, the earlier | 10 | | credit shall be applied first. | 11 | | For partners, shareholders of Subchapter S corporations, | 12 | | and owners of limited liability companies, if the liability | 13 | | company is treated as a partnership for the purposes of | 14 | | federal and State income taxation, there shall be allowed a | 15 | | credit under this Section to be determined in accordance with | 16 | | the determination of income and distributive share of income | 17 | | under Sections 702 and 704 and Subchapter S of the Internal | 18 | | Revenue Code. | 19 | | The total aggregate amount of credits awarded under the | 20 | | Blue Collar Jobs Act (Article 20 of Public Act 101-9 this | 21 | | amendatory Act of the 101st General Assembly ) shall not exceed | 22 | | $20,000,000 in any State fiscal year . | 23 | | This subsection (h-5) is exempt from the provisions of | 24 | | Section 250. | 25 | | (i) Credit for Personal Property Tax Replacement Income | 26 | | Tax.
For tax years ending prior to December 31, 2003, a credit |
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| 1 | | shall be allowed
against the tax imposed by
subsections (a) | 2 | | and (b) of this Section for the tax imposed by subsections (c)
| 3 | | and (d) of this Section. This credit shall be computed by | 4 | | multiplying the tax
imposed by subsections (c) and (d) of this | 5 | | Section by a fraction, the numerator
of which is base income | 6 | | allocable to Illinois and the denominator of which is
Illinois | 7 | | base income, and further multiplying the product by the tax | 8 | | rate
imposed by subsections (a) and (b) of this Section. | 9 | | Any credit earned on or after December 31, 1986 under
this | 10 | | subsection which is unused in the year
the credit is computed | 11 | | because it exceeds the tax liability imposed by
subsections | 12 | | (a) and (b) for that year (whether it exceeds the original
| 13 | | liability or the liability as later amended) may be carried | 14 | | forward and
applied to the tax liability imposed by | 15 | | subsections (a) and (b) of the 5
taxable years following the | 16 | | excess credit year, provided that no credit may
be carried | 17 | | forward to any year ending on or
after December 31, 2003. This | 18 | | credit shall be
applied first to the earliest year for which | 19 | | there is a liability. If
there is a credit under this | 20 | | subsection from more than one tax year that is
available to | 21 | | offset a liability the earliest credit arising under this
| 22 | | subsection shall be applied first. | 23 | | If, during any taxable year ending on or after December | 24 | | 31, 1986, the
tax imposed by subsections (c) and (d) of this | 25 | | Section for which a taxpayer
has claimed a credit under this | 26 | | subsection (i) is reduced, the amount of
credit for such tax |
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| 1 | | shall also be reduced. Such reduction shall be
determined by | 2 | | recomputing the credit to take into account the reduced tax
| 3 | | imposed by subsections (c) and (d). If any portion of the
| 4 | | reduced amount of credit has been carried to a different | 5 | | taxable year, an
amended return shall be filed for such | 6 | | taxable year to reduce the amount of
credit claimed. | 7 | | (j) Training expense credit. Beginning with tax years | 8 | | ending on or
after December 31, 1986 and prior to December 31, | 9 | | 2003, a taxpayer shall be
allowed a credit against the
tax | 10 | | imposed by subsections (a) and (b) under this Section
for all | 11 | | amounts paid or accrued, on behalf of all persons
employed by | 12 | | the taxpayer in Illinois or Illinois residents employed
| 13 | | outside of Illinois by a taxpayer, for educational or | 14 | | vocational training in
semi-technical or technical fields or | 15 | | semi-skilled or skilled fields, which
were deducted from gross | 16 | | income in the computation of taxable income. The
credit | 17 | | against the tax imposed by subsections (a) and (b) shall be | 18 | | 1.6% of
such training expenses. For partners, shareholders of | 19 | | subchapter S
corporations, and owners of limited liability | 20 | | companies, if the liability
company is treated as a | 21 | | partnership for purposes of federal and State income
taxation, | 22 | | there shall be allowed a credit under this subsection (j) to be
| 23 | | determined in accordance with the determination of income and | 24 | | distributive
share of income under Sections 702 and 704 and | 25 | | subchapter S of the Internal
Revenue Code. | 26 | | Any credit allowed under this subsection which is unused |
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| 1 | | in the year
the credit is earned may be carried forward to each | 2 | | of the 5 taxable
years following the year for which the credit | 3 | | is first computed until it is
used. This credit shall be | 4 | | applied first to the earliest year for which
there is a | 5 | | liability. If there is a credit under this subsection from | 6 | | more
than one tax year that is available to offset a liability , | 7 | | the earliest
credit arising under this subsection shall be | 8 | | applied first. No carryforward
credit may be claimed in any | 9 | | tax year ending on or after
December 31, 2003. | 10 | | (k) Research and development credit. For tax years ending | 11 | | after July 1, 1990 and prior to
December 31, 2003, and | 12 | | beginning again for tax years ending on or after December 31, | 13 | | 2004, and ending prior to January 1, 2027, a taxpayer shall be
| 14 | | allowed a credit against the tax imposed by subsections (a) | 15 | | and (b) of this
Section for increasing research activities in | 16 | | this State. The credit
allowed against the tax imposed by | 17 | | subsections (a) and (b) shall be equal
to 6 1/2% of the | 18 | | qualifying expenditures for increasing research activities
in | 19 | | this State. For partners, shareholders of subchapter S | 20 | | corporations, and
owners of limited liability companies, if | 21 | | the liability company is treated as a
partnership for purposes | 22 | | of federal and State income taxation, there shall be
allowed a | 23 | | credit under this subsection to be determined in accordance | 24 | | with the
determination of income and distributive share of | 25 | | income under Sections 702 and
704 and subchapter S of the | 26 | | Internal Revenue Code. |
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| 1 | | For purposes of this subsection, "qualifying expenditures" | 2 | | means the
qualifying expenditures as defined for the federal | 3 | | credit for increasing
research activities which would be | 4 | | allowable under Section 41 of the
Internal Revenue Code and | 5 | | which are conducted in this State, "qualifying
expenditures | 6 | | for increasing research activities in this State" means the
| 7 | | excess of qualifying expenditures for the taxable year in | 8 | | which incurred
over qualifying expenditures for the base | 9 | | period, "qualifying expenditures
for the base period" means | 10 | | the average of the qualifying expenditures for
each year in | 11 | | the base period, and "base period" means the 3 taxable years
| 12 | | immediately preceding the taxable year for which the | 13 | | determination is
being made. | 14 | | Any credit in excess of the tax liability for the taxable | 15 | | year
may be carried forward. A taxpayer may elect to have the
| 16 | | unused credit shown on its final completed return carried over | 17 | | as a credit
against the tax liability for the following 5 | 18 | | taxable years or until it has
been fully used, whichever | 19 | | occurs first; provided that no credit earned in a tax year | 20 | | ending prior to December 31, 2003 may be carried forward to any | 21 | | year ending on or after December 31, 2003. | 22 | | If an unused credit is carried forward to a given year from | 23 | | 2 or more
earlier years, that credit arising in the earliest | 24 | | year will be applied
first against the tax liability for the | 25 | | given year. If a tax liability for
the given year still | 26 | | remains, the credit from the next earliest year will
then be |
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| 1 | | applied, and so on, until all credits have been used or no tax
| 2 | | liability for the given year remains. Any remaining unused | 3 | | credit or
credits then will be carried forward to the next | 4 | | following year in which a
tax liability is incurred, except | 5 | | that no credit can be carried forward to
a year which is more | 6 | | than 5 years after the year in which the expense for
which the | 7 | | credit is given was incurred. | 8 | | No inference shall be drawn from Public Act 91-644 this | 9 | | amendatory Act of the 91st General
Assembly in construing this | 10 | | Section for taxable years beginning before January
1, 1999. | 11 | | It is the intent of the General Assembly that the research | 12 | | and development credit under this subsection (k) shall apply | 13 | | continuously for all tax years ending on or after December 31, | 14 | | 2004 and ending prior to January 1, 2027, including, but not | 15 | | limited to, the period beginning on January 1, 2016 and ending | 16 | | on July 6, 2017 ( the effective date of Public Act 100-22) this | 17 | | amendatory Act of the 100th General Assembly . All actions | 18 | | taken in reliance on the continuation of the credit under this | 19 | | subsection (k) by any taxpayer are hereby validated. | 20 | | (l) Environmental Remediation Tax Credit. | 21 | | (i) For tax years ending after December 31, 1997 and | 22 | | on or before
December 31, 2001, a taxpayer shall be | 23 | | allowed a credit against the tax
imposed by subsections | 24 | | (a) and (b) of this Section for certain amounts paid
for | 25 | | unreimbursed eligible remediation costs, as specified in | 26 | | this subsection.
For purposes of this Section, |
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| 1 | | "unreimbursed eligible remediation costs" means
costs | 2 | | approved by the Illinois Environmental Protection Agency | 3 | | ("Agency") under
Section 58.14 of the Environmental | 4 | | Protection Act that were paid in performing
environmental | 5 | | remediation at a site for which a No Further Remediation | 6 | | Letter
was issued by the Agency and recorded under Section | 7 | | 58.10 of the Environmental
Protection Act. The credit must | 8 | | be claimed for the taxable year in which
Agency approval | 9 | | of the eligible remediation costs is granted. The credit | 10 | | is
not available to any taxpayer if the taxpayer or any | 11 | | related party caused or
contributed to, in any material | 12 | | respect, a release of regulated substances on,
in, or | 13 | | under the site that was identified and addressed by the | 14 | | remedial
action pursuant to the Site Remediation Program | 15 | | of the Environmental Protection
Act. After the Pollution | 16 | | Control Board rules are adopted pursuant to the
Illinois | 17 | | Administrative Procedure Act for the administration and | 18 | | enforcement of
Section 58.9 of the Environmental | 19 | | Protection Act, determinations as to credit
availability | 20 | | for purposes of this Section shall be made consistent with | 21 | | those
rules. For purposes of this Section, "taxpayer" | 22 | | includes a person whose tax
attributes the taxpayer has | 23 | | succeeded to under Section 381 of the Internal
Revenue | 24 | | Code and "related party" includes the persons disallowed a | 25 | | deduction
for losses by paragraphs (b), (c), and (f)(1) of | 26 | | Section 267 of the Internal
Revenue Code by virtue of |
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| 1 | | being a related taxpayer, as well as any of its
partners. | 2 | | The credit allowed against the tax imposed by subsections | 3 | | (a) and
(b) shall be equal to 25% of the unreimbursed | 4 | | eligible remediation costs in
excess of $100,000 per site, | 5 | | except that the $100,000 threshold shall not apply
to any | 6 | | site contained in an enterprise zone as determined by the | 7 | | Department of
Commerce and Community Affairs (now | 8 | | Department of Commerce and Economic Opportunity). The | 9 | | total credit allowed shall not exceed
$40,000 per year | 10 | | with a maximum total of $150,000 per site. For partners | 11 | | and
shareholders of subchapter S corporations, there shall | 12 | | be allowed a credit
under this subsection to be determined | 13 | | in accordance with the determination of
income and | 14 | | distributive share of income under Sections 702 and 704 | 15 | | and
subchapter S of the Internal Revenue Code. | 16 | | (ii) A credit allowed under this subsection that is | 17 | | unused in the year
the credit is earned may be carried | 18 | | forward to each of the 5 taxable years
following the year | 19 | | for which the credit is first earned until it is used.
The | 20 | | term "unused credit" does not include any amounts of | 21 | | unreimbursed eligible
remediation costs in excess of the | 22 | | maximum credit per site authorized under
paragraph (i). | 23 | | This credit shall be applied first to the earliest year
| 24 | | for which there is a liability. If there is a credit under | 25 | | this subsection
from more than one tax year that is | 26 | | available to offset a liability, the
earliest credit |
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| 1 | | arising under this subsection shall be applied first. A
| 2 | | credit allowed under this subsection may be sold to a | 3 | | buyer as part of a sale
of all or part of the remediation | 4 | | site for which the credit was granted. The
purchaser of a | 5 | | remediation site and the tax credit shall succeed to the | 6 | | unused
credit and remaining carry-forward period of the | 7 | | seller. To perfect the
transfer, the assignor shall record | 8 | | the transfer in the chain of title for the
site and provide | 9 | | written notice to the Director of the Illinois Department | 10 | | of
Revenue of the assignor's intent to sell the | 11 | | remediation site and the amount of
the tax credit to be | 12 | | transferred as a portion of the sale. In no event may a
| 13 | | credit be transferred to any taxpayer if the taxpayer or a | 14 | | related party would
not be eligible under the provisions | 15 | | of subsection (i). | 16 | | (iii) For purposes of this Section, the term "site" | 17 | | shall have the same
meaning as under Section 58.2 of the | 18 | | Environmental Protection Act. | 19 | | (m) Education expense credit. Beginning with tax years | 20 | | ending after
December 31, 1999, a taxpayer who
is the | 21 | | custodian of one or more qualifying pupils shall be allowed a | 22 | | credit
against the tax imposed by subsections (a) and (b) of | 23 | | this Section for
qualified education expenses incurred on | 24 | | behalf of the qualifying pupils.
The credit shall be equal to | 25 | | 25% of qualified education expenses, but in no
event may the | 26 | | total credit under this subsection claimed by a
family that is |
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| 1 | | the
custodian of qualifying pupils exceed (i) $500 for tax | 2 | | years ending prior to December 31, 2017, and (ii) $750 for tax | 3 | | years ending on or after December 31, 2017. In no event shall a | 4 | | credit under
this subsection reduce the taxpayer's liability | 5 | | under this Act to less than
zero. Notwithstanding any other | 6 | | provision of law, for taxable years beginning on or after | 7 | | January 1, 2017, no taxpayer may claim a credit under this | 8 | | subsection (m) if the taxpayer's adjusted gross income for the | 9 | | taxable year exceeds (i) $500,000, in the case of spouses | 10 | | filing a joint federal tax return or (ii) $250,000, in the case | 11 | | of all other taxpayers. This subsection is exempt from the | 12 | | provisions of Section 250 of this
Act. | 13 | | For purposes of this subsection: | 14 | | "Qualifying pupils" means individuals who (i) are | 15 | | residents of the State of
Illinois, (ii) are under the age of | 16 | | 21 at the close of the school year for
which a credit is | 17 | | sought, and (iii) during the school year for which a credit
is | 18 | | sought were full-time pupils enrolled in a kindergarten | 19 | | through twelfth
grade education program at any school, as | 20 | | defined in this subsection. | 21 | | "Qualified education expense" means the amount incurred
on | 22 | | behalf of a qualifying pupil in excess of $250 for tuition, | 23 | | book fees, and
lab fees at the school in which the pupil is | 24 | | enrolled during the regular school
year. | 25 | | "School" means any public or nonpublic elementary or | 26 | | secondary school in
Illinois that is in compliance with Title |
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| 1 | | VI of the Civil Rights Act of 1964
and attendance at which | 2 | | satisfies the requirements of Section 26-1 of the
School Code, | 3 | | except that nothing shall be construed to require a child to
| 4 | | attend any particular public or nonpublic school to qualify | 5 | | for the credit
under this Section. | 6 | | "Custodian" means, with respect to qualifying pupils, an | 7 | | Illinois resident
who is a parent, the parents, a legal | 8 | | guardian, or the legal guardians of the
qualifying pupils. | 9 | | (n) River Edge Redevelopment Zone site remediation tax | 10 | | credit.
| 11 | | (i) For tax years ending on or after December 31, | 12 | | 2006, a taxpayer shall be allowed a credit against the tax | 13 | | imposed by subsections (a) and (b) of this Section for | 14 | | certain amounts paid for unreimbursed eligible remediation | 15 | | costs, as specified in this subsection. For purposes of | 16 | | this Section, "unreimbursed eligible remediation costs" | 17 | | means costs approved by the Illinois Environmental | 18 | | Protection Agency ("Agency") under Section 58.14a of the | 19 | | Environmental Protection Act that were paid in performing | 20 | | environmental remediation at a site within a River Edge | 21 | | Redevelopment Zone for which a No Further Remediation | 22 | | Letter was issued by the Agency and recorded under Section | 23 | | 58.10 of the Environmental Protection Act. The credit must | 24 | | be claimed for the taxable year in which Agency approval | 25 | | of the eligible remediation costs is granted. The credit | 26 | | is not available to any taxpayer if the taxpayer or any |
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| 1 | | related party caused or contributed to, in any material | 2 | | respect, a release of regulated substances on, in, or | 3 | | under the site that was identified and addressed by the | 4 | | remedial action pursuant to the Site Remediation Program | 5 | | of the Environmental Protection Act. Determinations as to | 6 | | credit availability for purposes of this Section shall be | 7 | | made consistent with rules adopted by the Pollution | 8 | | Control Board pursuant to the Illinois Administrative | 9 | | Procedure Act for the administration and enforcement of | 10 | | Section 58.9 of the Environmental Protection Act. For | 11 | | purposes of this Section, "taxpayer" includes a person | 12 | | whose tax attributes the taxpayer has succeeded to under | 13 | | Section 381 of the Internal Revenue Code and "related | 14 | | party" includes the persons disallowed a deduction for | 15 | | losses by paragraphs (b), (c), and (f)(1) of Section 267 | 16 | | of the Internal Revenue Code by virtue of being a related | 17 | | taxpayer, as well as any of its partners. The credit | 18 | | allowed against the tax imposed by subsections (a) and (b) | 19 | | shall be equal to 25% of the unreimbursed eligible | 20 | | remediation costs in excess of $100,000 per site. | 21 | | (ii) A credit allowed under this subsection that is | 22 | | unused in the year the credit is earned may be carried | 23 | | forward to each of the 5 taxable years following the year | 24 | | for which the credit is first earned until it is used. This | 25 | | credit shall be applied first to the earliest year for | 26 | | which there is a liability. If there is a credit under this |
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| 1 | | subsection from more than one tax year that is available | 2 | | to offset a liability, the earliest credit arising under | 3 | | this subsection shall be applied first. A credit allowed | 4 | | under this subsection may be sold to a buyer as part of a | 5 | | sale of all or part of the remediation site for which the | 6 | | credit was granted. The purchaser of a remediation site | 7 | | and the tax credit shall succeed to the unused credit and | 8 | | remaining carry-forward period of the seller. To perfect | 9 | | the transfer, the assignor shall record the transfer in | 10 | | the chain of title for the site and provide written notice | 11 | | to the Director of the Illinois Department of Revenue of | 12 | | the assignor's intent to sell the remediation site and the | 13 | | amount of the tax credit to be transferred as a portion of | 14 | | the sale. In no event may a credit be transferred to any | 15 | | taxpayer if the taxpayer or a related party would not be | 16 | | eligible under the provisions of subsection (i). | 17 | | (iii) For purposes of this Section, the term "site" | 18 | | shall have the same meaning as under Section 58.2 of the | 19 | | Environmental Protection Act. | 20 | | (o) For each of taxable years during the Compassionate Use | 21 | | of Medical Cannabis Program, a surcharge is imposed on all | 22 | | taxpayers on income arising from the sale or exchange of | 23 | | capital assets, depreciable business property, real property | 24 | | used in the trade or business, and Section 197 intangibles of | 25 | | an organization registrant under the Compassionate Use of | 26 | | Medical Cannabis Program Act. The amount of the surcharge is |
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| 1 | | equal to the amount of federal income tax liability for the | 2 | | taxable year attributable to those sales and exchanges. The | 3 | | surcharge imposed does not apply if: | 4 | | (1) the medical cannabis cultivation center | 5 | | registration, medical cannabis dispensary registration, or | 6 | | the property of a registration is transferred as a result | 7 | | of any of the following: | 8 | | (A) bankruptcy, a receivership, or a debt | 9 | | adjustment initiated by or against the initial | 10 | | registration or the substantial owners of the initial | 11 | | registration; | 12 | | (B) cancellation, revocation, or termination of | 13 | | any registration by the Illinois Department of Public | 14 | | Health; | 15 | | (C) a determination by the Illinois Department of | 16 | | Public Health that transfer of the registration is in | 17 | | the best interests of Illinois qualifying patients as | 18 | | defined by the Compassionate Use of Medical Cannabis | 19 | | Program Act; | 20 | | (D) the death of an owner of the equity interest in | 21 | | a registrant; | 22 | | (E) the acquisition of a controlling interest in | 23 | | the stock or substantially all of the assets of a | 24 | | publicly traded company; | 25 | | (F) a transfer by a parent company to a wholly | 26 | | owned subsidiary; or |
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| 1 | | (G) the transfer or sale to or by one person to | 2 | | another person where both persons were initial owners | 3 | | of the registration when the registration was issued; | 4 | | or | 5 | | (2) the cannabis cultivation center registration, | 6 | | medical cannabis dispensary registration, or the | 7 | | controlling interest in a registrant's property is | 8 | | transferred in a transaction to lineal descendants in | 9 | | which no gain or loss is recognized or as a result of a | 10 | | transaction in accordance with Section 351 of the Internal | 11 | | Revenue Code in which no gain or loss is recognized. | 12 | | (p) Pass-through entity tax. | 13 | | (1) For taxable years ending on or after December 31, | 14 | | 2021 and beginning prior to January 1, 2026, a partnership | 15 | | (other than a publicly traded partnership under Section | 16 | | 7704 of the Internal Revenue Code) or Subchapter S | 17 | | corporation may elect to apply the provisions of this | 18 | | subsection. A separate election shall be made for each | 19 | | taxable year. Such election shall be made at such time, | 20 | | and in such form and manner as prescribed by the | 21 | | Department, and, once made, is irrevocable. | 22 | | (2) Entity-level tax. A partnership or Subchapter S | 23 | | corporation electing to apply the provisions of this | 24 | | subsection shall be subject to a tax for the privilege of | 25 | | earning or receiving income in this State in an amount | 26 | | equal to 4.95% of the taxpayer's net income for the |
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| 1 | | taxable year. | 2 | | (3) Net income defined. | 3 | | (A) In general. For purposes of paragraph (2), the | 4 | | term net income has the same meaning as defined in | 5 | | Section 202 of this Act, except that the following | 6 | | provisions shall not apply: | 7 | | (i) the standard exemption allowed under | 8 | | Section 204; | 9 | | (ii) the deduction for net losses allowed | 10 | | under Section 207; | 11 | | (iii) in the case of an S corporation, the | 12 | | modification under Section 203(b)(2)(S); and | 13 | | (iv) in the case of a partnership, the | 14 | | modifications under Section 203(d)(2)(H) and | 15 | | Section 203(d)(2)(I). | 16 | | (B) Special rule for tiered partnerships. If a | 17 | | taxpayer making the election under paragraph (1) is a | 18 | | partner of another taxpayer making the election under | 19 | | paragraph (1), net income shall be computed as | 20 | | provided in subparagraph (A), except that the taxpayer | 21 | | shall subtract its distributive share of the net | 22 | | income of the electing partnership (including its | 23 | | distributive share of the net income of the electing | 24 | | partnership derived as a distributive share from | 25 | | electing partnerships in which it is a partner). | 26 | | (4) Credit for entity level tax. Each partner or |
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| 1 | | shareholder of a taxpayer making the election under this | 2 | | Section shall be allowed a credit against the tax imposed | 3 | | under subsections (a) and (b) of Section 201 of this Act | 4 | | for the taxable year of the partnership or Subchapter S | 5 | | corporation for which an election is in effect ending | 6 | | within or with the taxable year of the partner or | 7 | | shareholder in an amount equal to 4.95% times the partner | 8 | | or shareholder's distributive share of the net income of | 9 | | the electing partnership or Subchapter S corporation, but | 10 | | not to exceed the partner's or shareholder's share of the | 11 | | tax imposed under paragraph (1) which is actually paid by | 12 | | the partnership or Subchapter S corporation. If the | 13 | | taxpayer is a partnership or Subchapter S corporation that | 14 | | is itself a partner of a partnership making the election | 15 | | under paragraph (1), the credit under this paragraph shall | 16 | | be allowed to the taxpayer's partners or shareholders (or | 17 | | if the partner is a partnership or Subchapter S | 18 | | corporation then its partners or shareholders) in | 19 | | accordance with the determination of income and | 20 | | distributive share of income under Sections 702 and 704 | 21 | | and Subchapter S of the Internal Revenue Code. If the | 22 | | amount of the credit allowed under this paragraph exceeds | 23 | | the partner's or shareholder's liability for tax imposed | 24 | | under subsections (a) and (b) of Section 201 of this Act | 25 | | for the taxable year, such excess shall be treated as an | 26 | | overpayment for purposes of Section 909 of this Act. |
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| 1 | | (5) Nonresidents. A nonresident individual who is a | 2 | | partner or shareholder of a partnership or Subchapter S | 3 | | corporation for a taxable year for which an election is in | 4 | | effect under paragraph (1) shall not be required to file | 5 | | an income tax return under this Act for such taxable year | 6 | | if the only source of net income of the individual (or the | 7 | | individual and the individual's spouse in the case of a | 8 | | joint return) is from an entity making the election under | 9 | | paragraph (1) and the credit allowed to the partner or | 10 | | shareholder under paragraph (4) equals or exceeds the | 11 | | individual's liability for the tax imposed under | 12 | | subsections (a) and (b) of Section 201 of this Act for the | 13 | | taxable year. | 14 | | (6) Liability for tax. Except as provided in this | 15 | | paragraph, a partnership or Subchapter S making the | 16 | | election under paragraph (1) is liable for the | 17 | | entity-level tax imposed under paragraph (2). If the | 18 | | electing partnership or corporation fails to pay the full | 19 | | amount of tax deemed assessed under paragraph (2), the | 20 | | partners or shareholders shall be liable to pay the tax | 21 | | assessed (including penalties and interest). Each partner | 22 | | or shareholder shall be liable for the unpaid assessment | 23 | | based on the ratio of the partner's or shareholder's share | 24 | | of the net income of the partnership over the total net | 25 | | income of the partnership. If the partnership or | 26 | | Subchapter S corporation fails to pay the tax assessed |
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| 1 | | (including penalties and interest) and thereafter an | 2 | | amount of such tax is paid by the partners or | 3 | | shareholders, such amount shall not be collected from the | 4 | | partnership or corporation. | 5 | | (7) Foreign tax. For purposes of the credit allowed | 6 | | under Section 601(b)(3) of this Act, tax paid by a | 7 | | partnership or Subchapter S corporation to another state | 8 | | which, as determined by the Department, is substantially | 9 | | similar to the tax imposed under this subsection, shall be | 10 | | considered tax paid by the partner or shareholder to the | 11 | | extent that the partner's or shareholder's share of the | 12 | | income of the partnership or Subchapter S corporation | 13 | | allocated and apportioned to such other state bears to the | 14 | | total income of the partnership or Subchapter S | 15 | | corporation allocated or apportioned to such other state. | 16 | | (8) Suspension of withholding. The provisions of | 17 | | Section 709.5 of this Act shall not apply to a partnership | 18 | | or Subchapter S corporation for the taxable year for which | 19 | | an election under paragraph (1) is in effect. | 20 | | (9) Requirement to pay estimated tax. For each taxable | 21 | | year for which an election under paragraph (1) is in | 22 | | effect, a partnership or Subchapter S corporation is | 23 | | required to pay estimated tax for such taxable year under | 24 | | Sections 803 and 804 of this Act if the amount payable as | 25 | | estimated tax can reasonably be expected to exceed $500. | 26 | | (Source: P.A. 100-22, eff. 7-6-17; 101-8, see Section 99 for |
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| 1 | | effective date; 101-9, eff. 6-5-19; 101-31, eff. 6-28-19; | 2 | | 101-207, eff. 8-2-19; 101-363, eff. 8-9-19; revised 11-18-20.)
| 3 | | Section 99. Effective date. This Act takes effect upon | 4 | | becoming law.
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