Illinois 2023-2024 Regular Session

Illinois Senate Bill SB0163 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0163 Introduced 1/31/2023, by Sen. Donald P. DeWitte SYNOPSIS AS INTRODUCED: 35 ILCS 5/201 Amends the Illinois Income Tax Act. Increases the research and development credit by providing that the increase in research and development activities shall be based on an increase over 50% of the average of the qualifying expenditures for each year in the base period (instead of 100% of the average of the qualifying expenditures for each year in the base period). Provides that the research and development credit applies on a permanent basis. Effective immediately. LRB103 25037 HLH 51371 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0163 Introduced 1/31/2023, by Sen. Donald P. DeWitte SYNOPSIS AS INTRODUCED: 35 ILCS 5/201 35 ILCS 5/201 Amends the Illinois Income Tax Act. Increases the research and development credit by providing that the increase in research and development activities shall be based on an increase over 50% of the average of the qualifying expenditures for each year in the base period (instead of 100% of the average of the qualifying expenditures for each year in the base period). Provides that the research and development credit applies on a permanent basis. Effective immediately. LRB103 25037 HLH 51371 b LRB103 25037 HLH 51371 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0163 Introduced 1/31/2023, by Sen. Donald P. DeWitte SYNOPSIS AS INTRODUCED:
3	3	35 ILCS 5/201 35 ILCS 5/201
4	4	35 ILCS 5/201
5	5	Amends the Illinois Income Tax Act. Increases the research and development credit by providing that the increase in research and development activities shall be based on an increase over 50% of the average of the qualifying expenditures for each year in the base period (instead of 100% of the average of the qualifying expenditures for each year in the base period). Provides that the research and development credit applies on a permanent basis. Effective immediately.
6	6	LRB103 25037 HLH 51371 b LRB103 25037 HLH 51371 b
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8	8	A BILL FOR
9	9	SB0163LRB103 25037 HLH 51371 b SB0163 LRB103 25037 HLH 51371 b
10	10	SB0163 LRB103 25037 HLH 51371 b
11	11	1 AN ACT concerning revenue.
12	12	2 Be it enacted by the People of the State of Illinois,
13	13	3 represented in the General Assembly:
14	14	4 Section 5. The Illinois Income Tax Act is amended by
15	15	5 changing Section 201 as follows:
16	16	6 (35 ILCS 5/201)
17	17	7 Sec. 201. Tax imposed.
18	18	8 (a) In general. A tax measured by net income is hereby
19	19	9 imposed on every individual, corporation, trust and estate for
20	20	10 each taxable year ending after July 31, 1969 on the privilege
21	21	11 of earning or receiving income in or as a resident of this
22	22	12 State. Such tax shall be in addition to all other occupation or
23	23	13 privilege taxes imposed by this State or by any municipal
24	24	14 corporation or political subdivision thereof.
25	25	15 (b) Rates. The tax imposed by subsection (a) of this
26	26	16 Section shall be determined as follows, except as adjusted by
27	27	17 subsection (d-1):
28	28	18 (1) In the case of an individual, trust or estate, for
29	29	19 taxable years ending prior to July 1, 1989, an amount
30	30	20 equal to 2 1/2% of the taxpayer's net income for the
31	31	21 taxable year.
32	32	22 (2) In the case of an individual, trust or estate, for
33	33	23 taxable years beginning prior to July 1, 1989 and ending
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37	37	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB0163 Introduced 1/31/2023, by Sen. Donald P. DeWitte SYNOPSIS AS INTRODUCED:
38	38	35 ILCS 5/201 35 ILCS 5/201
39	39	35 ILCS 5/201
40	40	Amends the Illinois Income Tax Act. Increases the research and development credit by providing that the increase in research and development activities shall be based on an increase over 50% of the average of the qualifying expenditures for each year in the base period (instead of 100% of the average of the qualifying expenditures for each year in the base period). Provides that the research and development credit applies on a permanent basis. Effective immediately.
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43	43	A BILL FOR
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68	68	1 after June 30, 1989, an amount equal to the sum of (i) 2
69	69	2 1/2% of the taxpayer's net income for the period prior to
70	70	3 July 1, 1989, as calculated under Section 202.3, and (ii)
71	71	4 3% of the taxpayer's net income for the period after June
72	72	5 30, 1989, as calculated under Section 202.3.
73	73	6 (3) In the case of an individual, trust or estate, for
74	74	7 taxable years beginning after June 30, 1989, and ending
75	75	8 prior to January 1, 2011, an amount equal to 3% of the
76	76	9 taxpayer's net income for the taxable year.
77	77	10 (4) In the case of an individual, trust, or estate,
78	78	11 for taxable years beginning prior to January 1, 2011, and
79	79	12 ending after December 31, 2010, an amount equal to the sum
80	80	13 of (i) 3% of the taxpayer's net income for the period prior
81	81	14 to January 1, 2011, as calculated under Section 202.5, and
82	82	15 (ii) 5% of the taxpayer's net income for the period after
83	83	16 December 31, 2010, as calculated under Section 202.5.
84	84	17 (5) In the case of an individual, trust, or estate,
85	85	18 for taxable years beginning on or after January 1, 2011,
86	86	19 and ending prior to January 1, 2015, an amount equal to 5%
87	87	20 of the taxpayer's net income for the taxable year.
88	88	21 (5.1) In the case of an individual, trust, or estate,
89	89	22 for taxable years beginning prior to January 1, 2015, and
90	90	23 ending after December 31, 2014, an amount equal to the sum
91	91	24 of (i) 5% of the taxpayer's net income for the period prior
92	92	25 to January 1, 2015, as calculated under Section 202.5, and
93	93	26 (ii) 3.75% of the taxpayer's net income for the period
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104	104	1 after December 31, 2014, as calculated under Section
105	105	2 202.5.
106	106	3 (5.2) In the case of an individual, trust, or estate,
107	107	4 for taxable years beginning on or after January 1, 2015,
108	108	5 and ending prior to July 1, 2017, an amount equal to 3.75%
109	109	6 of the taxpayer's net income for the taxable year.
110	110	7 (5.3) In the case of an individual, trust, or estate,
111	111	8 for taxable years beginning prior to July 1, 2017, and
112	112	9 ending after June 30, 2017, an amount equal to the sum of
113	113	10 (i) 3.75% of the taxpayer's net income for the period
114	114	11 prior to July 1, 2017, as calculated under Section 202.5,
115	115	12 and (ii) 4.95% of the taxpayer's net income for the period
116	116	13 after June 30, 2017, as calculated under Section 202.5.
117	117	14 (5.4) In the case of an individual, trust, or estate,
118	118	15 for taxable years beginning on or after July 1, 2017, an
119	119	16 amount equal to 4.95% of the taxpayer's net income for the
120	120	17 taxable year.
121	121	18 (6) In the case of a corporation, for taxable years
122	122	19 ending prior to July 1, 1989, an amount equal to 4% of the
123	123	20 taxpayer's net income for the taxable year.
124	124	21 (7) In the case of a corporation, for taxable years
125	125	22 beginning prior to July 1, 1989 and ending after June 30,
126	126	23 1989, an amount equal to the sum of (i) 4% of the
127	127	24 taxpayer's net income for the period prior to July 1,
128	128	25 1989, as calculated under Section 202.3, and (ii) 4.8% of
129	129	26 the taxpayer's net income for the period after June 30,
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140	140	1 1989, as calculated under Section 202.3.
141	141	2 (8) In the case of a corporation, for taxable years
142	142	3 beginning after June 30, 1989, and ending prior to January
143	143	4 1, 2011, an amount equal to 4.8% of the taxpayer's net
144	144	5 income for the taxable year.
145	145	6 (9) In the case of a corporation, for taxable years
146	146	7 beginning prior to January 1, 2011, and ending after
147	147	8 December 31, 2010, an amount equal to the sum of (i) 4.8%
148	148	9 of the taxpayer's net income for the period prior to
149	149	10 January 1, 2011, as calculated under Section 202.5, and
150	150	11 (ii) 7% of the taxpayer's net income for the period after
151	151	12 December 31, 2010, as calculated under Section 202.5.
152	152	13 (10) In the case of a corporation, for taxable years
153	153	14 beginning on or after January 1, 2011, and ending prior to
154	154	15 January 1, 2015, an amount equal to 7% of the taxpayer's
155	155	16 net income for the taxable year.
156	156	17 (11) In the case of a corporation, for taxable years
157	157	18 beginning prior to January 1, 2015, and ending after
158	158	19 December 31, 2014, an amount equal to the sum of (i) 7% of
159	159	20 the taxpayer's net income for the period prior to January
160	160	21 1, 2015, as calculated under Section 202.5, and (ii) 5.25%
161	161	22 of the taxpayer's net income for the period after December
162	162	23 31, 2014, as calculated under Section 202.5.
163	163	24 (12) In the case of a corporation, for taxable years
164	164	25 beginning on or after January 1, 2015, and ending prior to
165	165	26 July 1, 2017, an amount equal to 5.25% of the taxpayer's
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176	176	1 net income for the taxable year.
177	177	2 (13) In the case of a corporation, for taxable years
178	178	3 beginning prior to July 1, 2017, and ending after June 30,
179	179	4 2017, an amount equal to the sum of (i) 5.25% of the
180	180	5 taxpayer's net income for the period prior to July 1,
181	181	6 2017, as calculated under Section 202.5, and (ii) 7% of
182	182	7 the taxpayer's net income for the period after June 30,
183	183	8 2017, as calculated under Section 202.5.
184	184	9 (14) In the case of a corporation, for taxable years
185	185	10 beginning on or after July 1, 2017, an amount equal to 7%
186	186	11 of the taxpayer's net income for the taxable year.
187	187	12 The rates under this subsection (b) are subject to the
188	188	13 provisions of Section 201.5.
189	189	14 (b-5) Surcharge; sale or exchange of assets, properties,
190	190	15 and intangibles of organization gaming licensees. For each of
191	191	16 taxable years 2019 through 2027, a surcharge is imposed on all
192	192	17 taxpayers on income arising from the sale or exchange of
193	193	18 capital assets, depreciable business property, real property
194	194	19 used in the trade or business, and Section 197 intangibles (i)
195	195	20 of an organization licensee under the Illinois Horse Racing
196	196	21 Act of 1975 and (ii) of an organization gaming licensee under
197	197	22 the Illinois Gambling Act. The amount of the surcharge is
198	198	23 equal to the amount of federal income tax liability for the
199	199	24 taxable year attributable to those sales and exchanges. The
200	200	25 surcharge imposed shall not apply if:
201	201	26 (1) the organization gaming license, organization
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212	212	1 license, or racetrack property is transferred as a result
213	213	2 of any of the following:
214	214	3 (A) bankruptcy, a receivership, or a debt
215	215	4 adjustment initiated by or against the initial
216	216	5 licensee or the substantial owners of the initial
217	217	6 licensee;
218	218	7 (B) cancellation, revocation, or termination of
219	219	8 any such license by the Illinois Gaming Board or the
220	220	9 Illinois Racing Board;
221	221	10 (C) a determination by the Illinois Gaming Board
222	222	11 that transfer of the license is in the best interests
223	223	12 of Illinois gaming;
224	224	13 (D) the death of an owner of the equity interest in
225	225	14 a licensee;
226	226	15 (E) the acquisition of a controlling interest in
227	227	16 the stock or substantially all of the assets of a
228	228	17 publicly traded company;
229	229	18 (F) a transfer by a parent company to a wholly
230	230	19 owned subsidiary; or
231	231	20 (G) the transfer or sale to or by one person to
232	232	21 another person where both persons were initial owners
233	233	22 of the license when the license was issued; or
234	234	23 (2) the controlling interest in the organization
235	235	24 gaming license, organization license, or racetrack
236	236	25 property is transferred in a transaction to lineal
237	237	26 descendants in which no gain or loss is recognized or as a
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248	248	1 result of a transaction in accordance with Section 351 of
249	249	2 the Internal Revenue Code in which no gain or loss is
250	250	3 recognized; or
251	251	4 (3) live horse racing was not conducted in 2010 at a
252	252	5 racetrack located within 3 miles of the Mississippi River
253	253	6 under a license issued pursuant to the Illinois Horse
254	254	7 Racing Act of 1975.
255	255	8 The transfer of an organization gaming license,
256	256	9 organization license, or racetrack property by a person other
257	257	10 than the initial licensee to receive the organization gaming
258	258	11 license is not subject to a surcharge. The Department shall
259	259	12 adopt rules necessary to implement and administer this
260	260	13 subsection.
261	261	14 (c) Personal Property Tax Replacement Income Tax.
262	262	15 Beginning on July 1, 1979 and thereafter, in addition to such
263	263	16 income tax, there is also hereby imposed the Personal Property
264	264	17 Tax Replacement Income Tax measured by net income on every
265	265	18 corporation (including Subchapter S corporations), partnership
266	266	19 and trust, for each taxable year ending after June 30, 1979.
267	267	20 Such taxes are imposed on the privilege of earning or
268	268	21 receiving income in or as a resident of this State. The
269	269	22 Personal Property Tax Replacement Income Tax shall be in
270	270	23 addition to the income tax imposed by subsections (a) and (b)
271	271	24 of this Section and in addition to all other occupation or
272	272	25 privilege taxes imposed by this State or by any municipal
273	273	26 corporation or political subdivision thereof.
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284	284	1 (d) Additional Personal Property Tax Replacement Income
285	285	2 Tax Rates. The personal property tax replacement income tax
286	286	3 imposed by this subsection and subsection (c) of this Section
287	287	4 in the case of a corporation, other than a Subchapter S
288	288	5 corporation and except as adjusted by subsection (d-1), shall
289	289	6 be an additional amount equal to 2.85% of such taxpayer's net
290	290	7 income for the taxable year, except that beginning on January
291	291	8 1, 1981, and thereafter, the rate of 2.85% specified in this
292	292	9 subsection shall be reduced to 2.5%, and in the case of a
293	293	10 partnership, trust or a Subchapter S corporation shall be an
294	294	11 additional amount equal to 1.5% of such taxpayer's net income
295	295	12 for the taxable year.
296	296	13 (d-1) Rate reduction for certain foreign insurers. In the
297	297	14 case of a foreign insurer, as defined by Section 35A-5 of the
298	298	15 Illinois Insurance Code, whose state or country of domicile
299	299	16 imposes on insurers domiciled in Illinois a retaliatory tax
300	300	17 (excluding any insurer whose premiums from reinsurance assumed
301	301	18 are 50% or more of its total insurance premiums as determined
302	302	19 under paragraph (2) of subsection (b) of Section 304, except
303	303	20 that for purposes of this determination premiums from
304	304	21 reinsurance do not include premiums from inter-affiliate
305	305	22 reinsurance arrangements), beginning with taxable years ending
306	306	23 on or after December 31, 1999, the sum of the rates of tax
307	307	24 imposed by subsections (b) and (d) shall be reduced (but not
308	308	25 increased) to the rate at which the total amount of tax imposed
309	309	26 under this Act, net of all credits allowed under this Act,
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320	320	1 shall equal (i) the total amount of tax that would be imposed
321	321	2 on the foreign insurer's net income allocable to Illinois for
322	322	3 the taxable year by such foreign insurer's state or country of
323	323	4 domicile if that net income were subject to all income taxes
324	324	5 and taxes measured by net income imposed by such foreign
325	325	6 insurer's state or country of domicile, net of all credits
326	326	7 allowed or (ii) a rate of zero if no such tax is imposed on
327	327	8 such income by the foreign insurer's state of domicile. For
328	328	9 the purposes of this subsection (d-1), an inter-affiliate
329	329	10 includes a mutual insurer under common management.
330	330	11 (1) For the purposes of subsection (d-1), in no event
331	331	12 shall the sum of the rates of tax imposed by subsections
332	332	13 (b) and (d) be reduced below the rate at which the sum of:
333	333	14 (A) the total amount of tax imposed on such
334	334	15 foreign insurer under this Act for a taxable year, net
335	335	16 of all credits allowed under this Act, plus
336	336	17 (B) the privilege tax imposed by Section 409 of
337	337	18 the Illinois Insurance Code, the fire insurance
338	338	19 company tax imposed by Section 12 of the Fire
339	339	20 Investigation Act, and the fire department taxes
340	340	21 imposed under Section 11-10-1 of the Illinois
341	341	22 Municipal Code,
342	342	23 equals 1.25% for taxable years ending prior to December
343	343	24 31, 2003, or 1.75% for taxable years ending on or after
344	344	25 December 31, 2003, of the net taxable premiums written for
345	345	26 the taxable year, as described by subsection (1) of
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356	356	1 Section 409 of the Illinois Insurance Code. This paragraph
357	357	2 will in no event increase the rates imposed under
358	358	3 subsections (b) and (d).
359	359	4 (2) Any reduction in the rates of tax imposed by this
360	360	5 subsection shall be applied first against the rates
361	361	6 imposed by subsection (b) and only after the tax imposed
362	362	7 by subsection (a) net of all credits allowed under this
363	363	8 Section other than the credit allowed under subsection (i)
364	364	9 has been reduced to zero, against the rates imposed by
365	365	10 subsection (d).
366	366	11 This subsection (d-1) is exempt from the provisions of
367	367	12 Section 250.
368	368	13 (e) Investment credit. A taxpayer shall be allowed a
369	369	14 credit against the Personal Property Tax Replacement Income
370	370	15 Tax for investment in qualified property.
371	371	16 (1) A taxpayer shall be allowed a credit equal to .5%
372	372	17 of the basis of qualified property placed in service
373	373	18 during the taxable year, provided such property is placed
374	374	19 in service on or after July 1, 1984. There shall be allowed
375	375	20 an additional credit equal to .5% of the basis of
376	376	21 qualified property placed in service during the taxable
377	377	22 year, provided such property is placed in service on or
378	378	23 after July 1, 1986, and the taxpayer's base employment
379	379	24 within Illinois has increased by 1% or more over the
380	380	25 preceding year as determined by the taxpayer's employment
381	381	26 records filed with the Illinois Department of Employment
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392	392	1 Security. Taxpayers who are new to Illinois shall be
393	393	2 deemed to have met the 1% growth in base employment for the
394	394	3 first year in which they file employment records with the
395	395	4 Illinois Department of Employment Security. The provisions
396	396	5 added to this Section by Public Act 85-1200 (and restored
397	397	6 by Public Act 87-895) shall be construed as declaratory of
398	398	7 existing law and not as a new enactment. If, in any year,
399	399	8 the increase in base employment within Illinois over the
400	400	9 preceding year is less than 1%, the additional credit
401	401	10 shall be limited to that percentage times a fraction, the
402	402	11 numerator of which is .5% and the denominator of which is
403	403	12 1%, but shall not exceed .5%. The investment credit shall
404	404	13 not be allowed to the extent that it would reduce a
405	405	14 taxpayer's liability in any tax year below zero, nor may
406	406	15 any credit for qualified property be allowed for any year
407	407	16 other than the year in which the property was placed in
408	408	17 service in Illinois. For tax years ending on or after
409	409	18 December 31, 1987, and on or before December 31, 1988, the
410	410	19 credit shall be allowed for the tax year in which the
411	411	20 property is placed in service, or, if the amount of the
412	412	21 credit exceeds the tax liability for that year, whether it
413	413	22 exceeds the original liability or the liability as later
414	414	23 amended, such excess may be carried forward and applied to
415	415	24 the tax liability of the 5 taxable years following the
416	416	25 excess credit years if the taxpayer (i) makes investments
417	417	26 which cause the creation of a minimum of 2,000 full-time
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428	428	1 equivalent jobs in Illinois, (ii) is located in an
429	429	2 enterprise zone established pursuant to the Illinois
430	430	3 Enterprise Zone Act and (iii) is certified by the
431	431	4 Department of Commerce and Community Affairs (now
432	432	5 Department of Commerce and Economic Opportunity) as
433	433	6 complying with the requirements specified in clause (i)
434	434	7 and (ii) by July 1, 1986. The Department of Commerce and
435	435	8 Community Affairs (now Department of Commerce and Economic
436	436	9 Opportunity) shall notify the Department of Revenue of all
437	437	10 such certifications immediately. For tax years ending
438	438	11 after December 31, 1988, the credit shall be allowed for
439	439	12 the tax year in which the property is placed in service,
440	440	13 or, if the amount of the credit exceeds the tax liability
441	441	14 for that year, whether it exceeds the original liability
442	442	15 or the liability as later amended, such excess may be
443	443	16 carried forward and applied to the tax liability of the 5
444	444	17 taxable years following the excess credit years. The
445	445	18 credit shall be applied to the earliest year for which
446	446	19 there is a liability. If there is credit from more than one
447	447	20 tax year that is available to offset a liability, earlier
448	448	21 credit shall be applied first.
449	449	22 (2) The term "qualified property" means property
450	450	23 which:
451	451	24 (A) is tangible, whether new or used, including
452	452	25 buildings and structural components of buildings and
453	453	26 signs that are real property, but not including land
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464	464	1 or improvements to real property that are not a
465	465	2 structural component of a building such as
466	466	3 landscaping, sewer lines, local access roads, fencing,
467	467	4 parking lots, and other appurtenances;
468	468	5 (B) is depreciable pursuant to Section 167 of the
469	469	6 Internal Revenue Code, except that "3-year property"
470	470	7 as defined in Section 168(c)(2)(A) of that Code is not
471	471	8 eligible for the credit provided by this subsection
472	472	9 (e);
473	473	10 (C) is acquired by purchase as defined in Section
474	474	11 179(d) of the Internal Revenue Code;
475	475	12 (D) is used in Illinois by a taxpayer who is
476	476	13 primarily engaged in manufacturing, or in mining coal
477	477	14 or fluorite, or in retailing, or was placed in service
478	478	15 on or after July 1, 2006 in a River Edge Redevelopment
479	479	16 Zone established pursuant to the River Edge
480	480	17 Redevelopment Zone Act; and
481	481	18 (E) has not previously been used in Illinois in
482	482	19 such a manner and by such a person as would qualify for
483	483	20 the credit provided by this subsection (e) or
484	484	21 subsection (f).
485	485	22 (3) For purposes of this subsection (e),
486	486	23 "manufacturing" means the material staging and production
487	487	24 of tangible personal property by procedures commonly
488	488	25 regarded as manufacturing, processing, fabrication, or
489	489	26 assembling which changes some existing material into new
490	490
491	491
492	492
493	493
494	494
495	495	SB0163 - 13 - LRB103 25037 HLH 51371 b
496	496
497	497
498	498	SB0163- 14 -LRB103 25037 HLH 51371 b SB0163 - 14 - LRB103 25037 HLH 51371 b
499	499	SB0163 - 14 - LRB103 25037 HLH 51371 b
500	500	1 shapes, new qualities, or new combinations. For purposes
501	501	2 of this subsection (e) the term "mining" shall have the
502	502	3 same meaning as the term "mining" in Section 613(c) of the
503	503	4 Internal Revenue Code. For purposes of this subsection
504	504	5 (e), the term "retailing" means the sale of tangible
505	505	6 personal property for use or consumption and not for
506	506	7 resale, or services rendered in conjunction with the sale
507	507	8 of tangible personal property for use or consumption and
508	508	9 not for resale. For purposes of this subsection (e),
509	509	10 "tangible personal property" has the same meaning as when
510	510	11 that term is used in the Retailers' Occupation Tax Act,
511	511	12 and, for taxable years ending after December 31, 2008,
512	512	13 does not include the generation, transmission, or
513	513	14 distribution of electricity.
514	514	15 (4) The basis of qualified property shall be the basis
515	515	16 used to compute the depreciation deduction for federal
516	516	17 income tax purposes.
517	517	18 (5) If the basis of the property for federal income
518	518	19 tax depreciation purposes is increased after it has been
519	519	20 placed in service in Illinois by the taxpayer, the amount
520	520	21 of such increase shall be deemed property placed in
521	521	22 service on the date of such increase in basis.
522	522	23 (6) The term "placed in service" shall have the same
523	523	24 meaning as under Section 46 of the Internal Revenue Code.
524	524	25 (7) If during any taxable year, any property ceases to
525	525	26 be qualified property in the hands of the taxpayer within
526	526
527	527
528	528
529	529
530	530
531	531	SB0163 - 14 - LRB103 25037 HLH 51371 b
532	532
533	533
534	534	SB0163- 15 -LRB103 25037 HLH 51371 b SB0163 - 15 - LRB103 25037 HLH 51371 b
535	535	SB0163 - 15 - LRB103 25037 HLH 51371 b
536	536	1 48 months after being placed in service, or the situs of
537	537	2 any qualified property is moved outside Illinois within 48
538	538	3 months after being placed in service, the Personal
539	539	4 Property Tax Replacement Income Tax for such taxable year
540	540	5 shall be increased. Such increase shall be determined by
541	541	6 (i) recomputing the investment credit which would have
542	542	7 been allowed for the year in which credit for such
543	543	8 property was originally allowed by eliminating such
544	544	9 property from such computation and, (ii) subtracting such
545	545	10 recomputed credit from the amount of credit previously
546	546	11 allowed. For the purposes of this paragraph (7), a
547	547	12 reduction of the basis of qualified property resulting
548	548	13 from a redetermination of the purchase price shall be
549	549	14 deemed a disposition of qualified property to the extent
550	550	15 of such reduction.
551	551	16 (8) Unless the investment credit is extended by law,
552	552	17 the basis of qualified property shall not include costs
553	553	18 incurred after December 31, 2018, except for costs
554	554	19 incurred pursuant to a binding contract entered into on or
555	555	20 before December 31, 2018.
556	556	21 (9) Each taxable year ending before December 31, 2000,
557	557	22 a partnership may elect to pass through to its partners
558	558	23 the credits to which the partnership is entitled under
559	559	24 this subsection (e) for the taxable year. A partner may
560	560	25 use the credit allocated to him or her under this
561	561	26 paragraph only against the tax imposed in subsections (c)
562	562
563	563
564	564
565	565
566	566
567	567	SB0163 - 15 - LRB103 25037 HLH 51371 b
568	568
569	569
570	570	SB0163- 16 -LRB103 25037 HLH 51371 b SB0163 - 16 - LRB103 25037 HLH 51371 b
571	571	SB0163 - 16 - LRB103 25037 HLH 51371 b
572	572	1 and (d) of this Section. If the partnership makes that
573	573	2 election, those credits shall be allocated among the
574	574	3 partners in the partnership in accordance with the rules
575	575	4 set forth in Section 704(b) of the Internal Revenue Code,
576	576	5 and the rules promulgated under that Section, and the
577	577	6 allocated amount of the credits shall be allowed to the
578	578	7 partners for that taxable year. The partnership shall make
579	579	8 this election on its Personal Property Tax Replacement
580	580	9 Income Tax return for that taxable year. The election to
581	581	10 pass through the credits shall be irrevocable.
582	582	11 For taxable years ending on or after December 31,
583	583	12 2000, a partner that qualifies its partnership for a
584	584	13 subtraction under subparagraph (I) of paragraph (2) of
585	585	14 subsection (d) of Section 203 or a shareholder that
586	586	15 qualifies a Subchapter S corporation for a subtraction
587	587	16 under subparagraph (S) of paragraph (2) of subsection (b)
588	588	17 of Section 203 shall be allowed a credit under this
589	589	18 subsection (e) equal to its share of the credit earned
590	590	19 under this subsection (e) during the taxable year by the
591	591	20 partnership or Subchapter S corporation, determined in
592	592	21 accordance with the determination of income and
593	593	22 distributive share of income under Sections 702 and 704
594	594	23 and Subchapter S of the Internal Revenue Code. This
595	595	24 paragraph is exempt from the provisions of Section 250.
596	596	25 (f) Investment credit; Enterprise Zone; River Edge
597	597	26 Redevelopment Zone.
598	598
599	599
600	600
601	601
602	602
603	603	SB0163 - 16 - LRB103 25037 HLH 51371 b
604	604
605	605
606	606	SB0163- 17 -LRB103 25037 HLH 51371 b SB0163 - 17 - LRB103 25037 HLH 51371 b
607	607	SB0163 - 17 - LRB103 25037 HLH 51371 b
608	608	1 (1) A taxpayer shall be allowed a credit against the
609	609	2 tax imposed by subsections (a) and (b) of this Section for
610	610	3 investment in qualified property which is placed in
611	611	4 service in an Enterprise Zone created pursuant to the
612	612	5 Illinois Enterprise Zone Act or, for property placed in
613	613	6 service on or after July 1, 2006, a River Edge
614	614	7 Redevelopment Zone established pursuant to the River Edge
615	615	8 Redevelopment Zone Act. For partners, shareholders of
616	616	9 Subchapter S corporations, and owners of limited liability
617	617	10 companies, if the liability company is treated as a
618	618	11 partnership for purposes of federal and State income
619	619	12 taxation, there shall be allowed a credit under this
620	620	13 subsection (f) to be determined in accordance with the
621	621	14 determination of income and distributive share of income
622	622	15 under Sections 702 and 704 and Subchapter S of the
623	623	16 Internal Revenue Code. The credit shall be .5% of the
624	624	17 basis for such property. The credit shall be available
625	625	18 only in the taxable year in which the property is placed in
626	626	19 service in the Enterprise Zone or River Edge Redevelopment
627	627	20 Zone and shall not be allowed to the extent that it would
628	628	21 reduce a taxpayer's liability for the tax imposed by
629	629	22 subsections (a) and (b) of this Section to below zero. For
630	630	23 tax years ending on or after December 31, 1985, the credit
631	631	24 shall be allowed for the tax year in which the property is
632	632	25 placed in service, or, if the amount of the credit exceeds
633	633	26 the tax liability for that year, whether it exceeds the
634	634
635	635
636	636
637	637
638	638
639	639	SB0163 - 17 - LRB103 25037 HLH 51371 b
640	640
641	641
642	642	SB0163- 18 -LRB103 25037 HLH 51371 b SB0163 - 18 - LRB103 25037 HLH 51371 b
643	643	SB0163 - 18 - LRB103 25037 HLH 51371 b
644	644	1 original liability or the liability as later amended, such
645	645	2 excess may be carried forward and applied to the tax
646	646	3 liability of the 5 taxable years following the excess
647	647	4 credit year. The credit shall be applied to the earliest
648	648	5 year for which there is a liability. If there is credit
649	649	6 from more than one tax year that is available to offset a
650	650	7 liability, the credit accruing first in time shall be
651	651	8 applied first.
652	652	9 (2) The term qualified property means property which:
653	653	10 (A) is tangible, whether new or used, including
654	654	11 buildings and structural components of buildings;
655	655	12 (B) is depreciable pursuant to Section 167 of the
656	656	13 Internal Revenue Code, except that "3-year property"
657	657	14 as defined in Section 168(c)(2)(A) of that Code is not
658	658	15 eligible for the credit provided by this subsection
659	659	16 (f);
660	660	17 (C) is acquired by purchase as defined in Section
661	661	18 179(d) of the Internal Revenue Code;
662	662	19 (D) is used in the Enterprise Zone or River Edge
663	663	20 Redevelopment Zone by the taxpayer; and
664	664	21 (E) has not been previously used in Illinois in
665	665	22 such a manner and by such a person as would qualify for
666	666	23 the credit provided by this subsection (f) or
667	667	24 subsection (e).
668	668	25 (3) The basis of qualified property shall be the basis
669	669	26 used to compute the depreciation deduction for federal
670	670
671	671
672	672
673	673
674	674
675	675	SB0163 - 18 - LRB103 25037 HLH 51371 b
676	676
677	677
678	678	SB0163- 19 -LRB103 25037 HLH 51371 b SB0163 - 19 - LRB103 25037 HLH 51371 b
679	679	SB0163 - 19 - LRB103 25037 HLH 51371 b
680	680	1 income tax purposes.
681	681	2 (4) If the basis of the property for federal income
682	682	3 tax depreciation purposes is increased after it has been
683	683	4 placed in service in the Enterprise Zone or River Edge
684	684	5 Redevelopment Zone by the taxpayer, the amount of such
685	685	6 increase shall be deemed property placed in service on the
686	686	7 date of such increase in basis.
687	687	8 (5) The term "placed in service" shall have the same
688	688	9 meaning as under Section 46 of the Internal Revenue Code.
689	689	10 (6) If during any taxable year, any property ceases to
690	690	11 be qualified property in the hands of the taxpayer within
691	691	12 48 months after being placed in service, or the situs of
692	692	13 any qualified property is moved outside the Enterprise
693	693	14 Zone or River Edge Redevelopment Zone within 48 months
694	694	15 after being placed in service, the tax imposed under
695	695	16 subsections (a) and (b) of this Section for such taxable
696	696	17 year shall be increased. Such increase shall be determined
697	697	18 by (i) recomputing the investment credit which would have
698	698	19 been allowed for the year in which credit for such
699	699	20 property was originally allowed by eliminating such
700	700	21 property from such computation, and (ii) subtracting such
701	701	22 recomputed credit from the amount of credit previously
702	702	23 allowed. For the purposes of this paragraph (6), a
703	703	24 reduction of the basis of qualified property resulting
704	704	25 from a redetermination of the purchase price shall be
705	705	26 deemed a disposition of qualified property to the extent
706	706
707	707
708	708
709	709
710	710
711	711	SB0163 - 19 - LRB103 25037 HLH 51371 b
712	712
713	713
714	714	SB0163- 20 -LRB103 25037 HLH 51371 b SB0163 - 20 - LRB103 25037 HLH 51371 b
715	715	SB0163 - 20 - LRB103 25037 HLH 51371 b
716	716	1 of such reduction.
717	717	2 (7) There shall be allowed an additional credit equal
718	718	3 to 0.5% of the basis of qualified property placed in
719	719	4 service during the taxable year in a River Edge
720	720	5 Redevelopment Zone, provided such property is placed in
721	721	6 service on or after July 1, 2006, and the taxpayer's base
722	722	7 employment within Illinois has increased by 1% or more
723	723	8 over the preceding year as determined by the taxpayer's
724	724	9 employment records filed with the Illinois Department of
725	725	10 Employment Security. Taxpayers who are new to Illinois
726	726	11 shall be deemed to have met the 1% growth in base
727	727	12 employment for the first year in which they file
728	728	13 employment records with the Illinois Department of
729	729	14 Employment Security. If, in any year, the increase in base
730	730	15 employment within Illinois over the preceding year is less
731	731	16 than 1%, the additional credit shall be limited to that
732	732	17 percentage times a fraction, the numerator of which is
733	733	18 0.5% and the denominator of which is 1%, but shall not
734	734	19 exceed 0.5%.
735	735	20 (8) For taxable years beginning on or after January 1,
736	736	21 2021, there shall be allowed an Enterprise Zone
737	737	22 construction jobs credit against the taxes imposed under
738	738	23 subsections (a) and (b) of this Section as provided in
739	739	24 Section 13 of the Illinois Enterprise Zone Act.
740	740	25 The credit or credits may not reduce the taxpayer's
741	741	26 liability to less than zero. If the amount of the credit or
742	742
743	743
744	744
745	745
746	746
747	747	SB0163 - 20 - LRB103 25037 HLH 51371 b
748	748
749	749
750	750	SB0163- 21 -LRB103 25037 HLH 51371 b SB0163 - 21 - LRB103 25037 HLH 51371 b
751	751	SB0163 - 21 - LRB103 25037 HLH 51371 b
752	752	1 credits exceeds the taxpayer's liability, the excess may
753	753	2 be carried forward and applied against the taxpayer's
754	754	3 liability in succeeding calendar years in the same manner
755	755	4 provided under paragraph (4) of Section 211 of this Act.
756	756	5 The credit or credits shall be applied to the earliest
757	757	6 year for which there is a tax liability. If there are
758	758	7 credits from more than one taxable year that are available
759	759	8 to offset a liability, the earlier credit shall be applied
760	760	9 first.
761	761	10 For partners, shareholders of Subchapter S
762	762	11 corporations, and owners of limited liability companies,
763	763	12 if the liability company is treated as a partnership for
764	764	13 the purposes of federal and State income taxation, there
765	765	14 shall be allowed a credit under this Section to be
766	766	15 determined in accordance with the determination of income
767	767	16 and distributive share of income under Sections 702 and
768	768	17 704 and Subchapter S of the Internal Revenue Code.
769	769	18 The total aggregate amount of credits awarded under
770	770	19 the Blue Collar Jobs Act (Article 20 of Public Act 101-9)
771	771	20 shall not exceed $20,000,000 in any State fiscal year.
772	772	21 This paragraph (8) is exempt from the provisions of
773	773	22 Section 250.
774	774	23 (g) (Blank).
775	775	24 (h) Investment credit; High Impact Business.
776	776	25 (1) Subject to subsections (b) and (b-5) of Section
777	777	26 5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
778	778
779	779
780	780
781	781
782	782
783	783	SB0163 - 21 - LRB103 25037 HLH 51371 b
784	784
785	785
786	786	SB0163- 22 -LRB103 25037 HLH 51371 b SB0163 - 22 - LRB103 25037 HLH 51371 b
787	787	SB0163 - 22 - LRB103 25037 HLH 51371 b
788	788	1 be allowed a credit against the tax imposed by subsections
789	789	2 (a) and (b) of this Section for investment in qualified
790	790	3 property which is placed in service by a Department of
791	791	4 Commerce and Economic Opportunity designated High Impact
792	792	5 Business. The credit shall be .5% of the basis for such
793	793	6 property. The credit shall not be available (i) until the
794	794	7 minimum investments in qualified property set forth in
795	795	8 subdivision (a)(3)(A) of Section 5.5 of the Illinois
796	796	9 Enterprise Zone Act have been satisfied or (ii) until the
797	797	10 time authorized in subsection (b-5) of the Illinois
798	798	11 Enterprise Zone Act for entities designated as High Impact
799	799	12 Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
800	800	13 (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
801	801	14 Act, and shall not be allowed to the extent that it would
802	802	15 reduce a taxpayer's liability for the tax imposed by
803	803	16 subsections (a) and (b) of this Section to below zero. The
804	804	17 credit applicable to such investments shall be taken in
805	805	18 the taxable year in which such investments have been
806	806	19 completed. The credit for additional investments beyond
807	807	20 the minimum investment by a designated high impact
808	808	21 business authorized under subdivision (a)(3)(A) of Section
809	809	22 5.5 of the Illinois Enterprise Zone Act shall be available
810	810	23 only in the taxable year in which the property is placed in
811	811	24 service and shall not be allowed to the extent that it
812	812	25 would reduce a taxpayer's liability for the tax imposed by
813	813	26 subsections (a) and (b) of this Section to below zero. For
814	814
815	815
816	816
817	817
818	818
819	819	SB0163 - 22 - LRB103 25037 HLH 51371 b
820	820
821	821
822	822	SB0163- 23 -LRB103 25037 HLH 51371 b SB0163 - 23 - LRB103 25037 HLH 51371 b
823	823	SB0163 - 23 - LRB103 25037 HLH 51371 b
824	824	1 tax years ending on or after December 31, 1987, the credit
825	825	2 shall be allowed for the tax year in which the property is
826	826	3 placed in service, or, if the amount of the credit exceeds
827	827	4 the tax liability for that year, whether it exceeds the
828	828	5 original liability or the liability as later amended, such
829	829	6 excess may be carried forward and applied to the tax
830	830	7 liability of the 5 taxable years following the excess
831	831	8 credit year. The credit shall be applied to the earliest
832	832	9 year for which there is a liability. If there is credit
833	833	10 from more than one tax year that is available to offset a
834	834	11 liability, the credit accruing first in time shall be
835	835	12 applied first.
836	836	13 Changes made in this subdivision (h)(1) by Public Act
837	837	14 88-670 restore changes made by Public Act 85-1182 and
838	838	15 reflect existing law.
839	839	16 (2) The term qualified property means property which:
840	840	17 (A) is tangible, whether new or used, including
841	841	18 buildings and structural components of buildings;
842	842	19 (B) is depreciable pursuant to Section 167 of the
843	843	20 Internal Revenue Code, except that "3-year property"
844	844	21 as defined in Section 168(c)(2)(A) of that Code is not
845	845	22 eligible for the credit provided by this subsection
846	846	23 (h);
847	847	24 (C) is acquired by purchase as defined in Section
848	848	25 179(d) of the Internal Revenue Code; and
849	849	26 (D) is not eligible for the Enterprise Zone
850	850
851	851
852	852
853	853
854	854
855	855	SB0163 - 23 - LRB103 25037 HLH 51371 b
856	856
857	857
858	858	SB0163- 24 -LRB103 25037 HLH 51371 b SB0163 - 24 - LRB103 25037 HLH 51371 b
859	859	SB0163 - 24 - LRB103 25037 HLH 51371 b
860	860	1 Investment Credit provided by subsection (f) of this
861	861	2 Section.
862	862	3 (3) The basis of qualified property shall be the basis
863	863	4 used to compute the depreciation deduction for federal
864	864	5 income tax purposes.
865	865	6 (4) If the basis of the property for federal income
866	866	7 tax depreciation purposes is increased after it has been
867	867	8 placed in service in a federally designated Foreign Trade
868	868	9 Zone or Sub-Zone located in Illinois by the taxpayer, the
869	869	10 amount of such increase shall be deemed property placed in
870	870	11 service on the date of such increase in basis.
871	871	12 (5) The term "placed in service" shall have the same
872	872	13 meaning as under Section 46 of the Internal Revenue Code.
873	873	14 (6) If during any taxable year ending on or before
874	874	15 December 31, 1996, any property ceases to be qualified
875	875	16 property in the hands of the taxpayer within 48 months
876	876	17 after being placed in service, or the situs of any
877	877	18 qualified property is moved outside Illinois within 48
878	878	19 months after being placed in service, the tax imposed
879	879	20 under subsections (a) and (b) of this Section for such
880	880	21 taxable year shall be increased. Such increase shall be
881	881	22 determined by (i) recomputing the investment credit which
882	882	23 would have been allowed for the year in which credit for
883	883	24 such property was originally allowed by eliminating such
884	884	25 property from such computation, and (ii) subtracting such
885	885	26 recomputed credit from the amount of credit previously
886	886
887	887
888	888
889	889
890	890
891	891	SB0163 - 24 - LRB103 25037 HLH 51371 b
892	892
893	893
894	894	SB0163- 25 -LRB103 25037 HLH 51371 b SB0163 - 25 - LRB103 25037 HLH 51371 b
895	895	SB0163 - 25 - LRB103 25037 HLH 51371 b
896	896	1 allowed. For the purposes of this paragraph (6), a
897	897	2 reduction of the basis of qualified property resulting
898	898	3 from a redetermination of the purchase price shall be
899	899	4 deemed a disposition of qualified property to the extent
900	900	5 of such reduction.
901	901	6 (7) Beginning with tax years ending after December 31,
902	902	7 1996, if a taxpayer qualifies for the credit under this
903	903	8 subsection (h) and thereby is granted a tax abatement and
904	904	9 the taxpayer relocates its entire facility in violation of
905	905	10 the explicit terms and length of the contract under
906	906	11 Section 18-183 of the Property Tax Code, the tax imposed
907	907	12 under subsections (a) and (b) of this Section shall be
908	908	13 increased for the taxable year in which the taxpayer
909	909	14 relocated its facility by an amount equal to the amount of
910	910	15 credit received by the taxpayer under this subsection (h).
911	911	16 (h-5) High Impact Business construction jobs credit. For
912	912	17 taxable years beginning on or after January 1, 2021, there
913	913	18 shall also be allowed a High Impact Business construction jobs
914	914	19 credit against the tax imposed under subsections (a) and (b)
915	915	20 of this Section as provided in subsections (i) and (j) of
916	916	21 Section 5.5 of the Illinois Enterprise Zone Act.
917	917	22 The credit or credits may not reduce the taxpayer's
918	918	23 liability to less than zero. If the amount of the credit or
919	919	24 credits exceeds the taxpayer's liability, the excess may be
920	920	25 carried forward and applied against the taxpayer's liability
921	921	26 in succeeding calendar years in the manner provided under
922	922
923	923
924	924
925	925
926	926
927	927	SB0163 - 25 - LRB103 25037 HLH 51371 b
928	928
929	929
930	930	SB0163- 26 -LRB103 25037 HLH 51371 b SB0163 - 26 - LRB103 25037 HLH 51371 b
931	931	SB0163 - 26 - LRB103 25037 HLH 51371 b
932	932	1 paragraph (4) of Section 211 of this Act. The credit or credits
933	933	2 shall be applied to the earliest year for which there is a tax
934	934	3 liability. If there are credits from more than one taxable
935	935	4 year that are available to offset a liability, the earlier
936	936	5 credit shall be applied first.
937	937	6 For partners, shareholders of Subchapter S corporations,
938	938	7 and owners of limited liability companies, if the liability
939	939	8 company is treated as a partnership for the purposes of
940	940	9 federal and State income taxation, there shall be allowed a
941	941	10 credit under this Section to be determined in accordance with
942	942	11 the determination of income and distributive share of income
943	943	12 under Sections 702 and 704 and Subchapter S of the Internal
944	944	13 Revenue Code.
945	945	14 The total aggregate amount of credits awarded under the
946	946	15 Blue Collar Jobs Act (Article 20 of Public Act 101-9) shall not
947	947	16 exceed $20,000,000 in any State fiscal year.
948	948	17 This subsection (h-5) is exempt from the provisions of
949	949	18 Section 250.
950	950	19 (i) Credit for Personal Property Tax Replacement Income
951	951	20 Tax. For tax years ending prior to December 31, 2003, a credit
952	952	21 shall be allowed against the tax imposed by subsections (a)
953	953	22 and (b) of this Section for the tax imposed by subsections (c)
954	954	23 and (d) of this Section. This credit shall be computed by
955	955	24 multiplying the tax imposed by subsections (c) and (d) of this
956	956	25 Section by a fraction, the numerator of which is base income
957	957	26 allocable to Illinois and the denominator of which is Illinois
958	958
959	959
960	960
961	961
962	962
963	963	SB0163 - 26 - LRB103 25037 HLH 51371 b
964	964
965	965
966	966	SB0163- 27 -LRB103 25037 HLH 51371 b SB0163 - 27 - LRB103 25037 HLH 51371 b
967	967	SB0163 - 27 - LRB103 25037 HLH 51371 b
968	968	1 base income, and further multiplying the product by the tax
969	969	2 rate imposed by subsections (a) and (b) of this Section.
970	970	3 Any credit earned on or after December 31, 1986 under this
971	971	4 subsection which is unused in the year the credit is computed
972	972	5 because it exceeds the tax liability imposed by subsections
973	973	6 (a) and (b) for that year (whether it exceeds the original
974	974	7 liability or the liability as later amended) may be carried
975	975	8 forward and applied to the tax liability imposed by
976	976	9 subsections (a) and (b) of the 5 taxable years following the
977	977	10 excess credit year, provided that no credit may be carried
978	978	11 forward to any year ending on or after December 31, 2003. This
979	979	12 credit shall be applied first to the earliest year for which
980	980	13 there is a liability. If there is a credit under this
981	981	14 subsection from more than one tax year that is available to
982	982	15 offset a liability the earliest credit arising under this
983	983	16 subsection shall be applied first.
984	984	17 If, during any taxable year ending on or after December
985	985	18 31, 1986, the tax imposed by subsections (c) and (d) of this
986	986	19 Section for which a taxpayer has claimed a credit under this
987	987	20 subsection (i) is reduced, the amount of credit for such tax
988	988	21 shall also be reduced. Such reduction shall be determined by
989	989	22 recomputing the credit to take into account the reduced tax
990	990	23 imposed by subsections (c) and (d). If any portion of the
991	991	24 reduced amount of credit has been carried to a different
992	992	25 taxable year, an amended return shall be filed for such
993	993	26 taxable year to reduce the amount of credit claimed.
994	994
995	995
996	996
997	997
998	998
999	999	SB0163 - 27 - LRB103 25037 HLH 51371 b
1000	1000
1001	1001
1002	1002	SB0163- 28 -LRB103 25037 HLH 51371 b SB0163 - 28 - LRB103 25037 HLH 51371 b
1003	1003	SB0163 - 28 - LRB103 25037 HLH 51371 b
1004	1004	1 (j) Training expense credit. Beginning with tax years
1005	1005	2 ending on or after December 31, 1986 and prior to December 31,
1006	1006	3 2003, a taxpayer shall be allowed a credit against the tax
1007	1007	4 imposed by subsections (a) and (b) under this Section for all
1008	1008	5 amounts paid or accrued, on behalf of all persons employed by
1009	1009	6 the taxpayer in Illinois or Illinois residents employed
1010	1010	7 outside of Illinois by a taxpayer, for educational or
1011	1011	8 vocational training in semi-technical or technical fields or
1012	1012	9 semi-skilled or skilled fields, which were deducted from gross
1013	1013	10 income in the computation of taxable income. The credit
1014	1014	11 against the tax imposed by subsections (a) and (b) shall be
1015	1015	12 1.6% of such training expenses. For partners, shareholders of
1016	1016	13 subchapter S corporations, and owners of limited liability
1017	1017	14 companies, if the liability company is treated as a
1018	1018	15 partnership for purposes of federal and State income taxation,
1019	1019	16 there shall be allowed a credit under this subsection (j) to be
1020	1020	17 determined in accordance with the determination of income and
1021	1021	18 distributive share of income under Sections 702 and 704 and
1022	1022	19 subchapter S of the Internal Revenue Code.
1023	1023	20 Any credit allowed under this subsection which is unused
1024	1024	21 in the year the credit is earned may be carried forward to each
1025	1025	22 of the 5 taxable years following the year for which the credit
1026	1026	23 is first computed until it is used. This credit shall be
1027	1027	24 applied first to the earliest year for which there is a
1028	1028	25 liability. If there is a credit under this subsection from
1029	1029	26 more than one tax year that is available to offset a liability,
1030	1030
1031	1031
1032	1032
1033	1033
1034	1034
1035	1035	SB0163 - 28 - LRB103 25037 HLH 51371 b
1036	1036
1037	1037
1038	1038	SB0163- 29 -LRB103 25037 HLH 51371 b SB0163 - 29 - LRB103 25037 HLH 51371 b
1039	1039	SB0163 - 29 - LRB103 25037 HLH 51371 b
1040	1040	1 the earliest credit arising under this subsection shall be
1041	1041	2 applied first. No carryforward credit may be claimed in any
1042	1042	3 tax year ending on or after December 31, 2003.
1043	1043	4 (k) Research and development credit. For tax years ending
1044	1044	5 after July 1, 1990 and prior to December 31, 2003, and
1045	1045	6 beginning again for tax years ending on or after December 31,
1046	1046	7 2004, and ending prior to January 1, 2027, a taxpayer shall be
1047	1047	8 allowed a credit against the tax imposed by subsections (a)
1048	1048	9 and (b) of this Section for increasing research activities in
1049	1049	10 this State. The credit allowed against the tax imposed by
1050	1050	11 subsections (a) and (b) shall be equal to 6 1/2% of the
1051	1051	12 qualifying expenditures for increasing research activities in
1052	1052	13 this State. For partners, shareholders of subchapter S
1053	1053	14 corporations, and owners of limited liability companies, if
1054	1054	15 the liability company is treated as a partnership for purposes
1055	1055	16 of federal and State income taxation, there shall be allowed a
1056	1056	17 credit under this subsection to be determined in accordance
1057	1057	18 with the determination of income and distributive share of
1058	1058	19 income under Sections 702 and 704 and subchapter S of the
1059	1059	20 Internal Revenue Code.
1060	1060	21 As used in this subsection: For purposes of this
1061	1061	22 subsection
1062	1062	23 "Base period" means the 3 taxable years immediately
1063	1063	24 preceding the taxable year for which the determination is
1064	1064	25 being made.
1065	1065	26 "Qualifying , "qualifying expenditures" means the
1066	1066
1067	1067
1068	1068
1069	1069
1070	1070
1071	1071	SB0163 - 29 - LRB103 25037 HLH 51371 b
1072	1072
1073	1073
1074	1074	SB0163- 30 -LRB103 25037 HLH 51371 b SB0163 - 30 - LRB103 25037 HLH 51371 b
1075	1075	SB0163 - 30 - LRB103 25037 HLH 51371 b
1076	1076	1 qualifying expenditures as defined for the federal credit
1077	1077	2 for increasing research activities that which would be
1078	1078	3 allowable under Section 41 of the Internal Revenue Code
1079	1079	4 and that which are conducted in this State.
1080	1080	5 "Qualifying , "qualifying expenditures for increasing
1081	1081	6 research activities in this State" means the excess of
1082	1082	7 qualifying expenditures for the taxable year in which
1083	1083	8 incurred over qualifying expenditures for the base period.
1084	1084	9 "Qualifying , "qualifying expenditures for the base
1085	1085	10 period" means: (1) for taxable years ending prior to
1086	1086	11 December 31, 2023, the average of the qualifying
1087	1087	12 expenditures for each year in the base period; and (2) for
1088	1088	13 taxable years ending on or after December 31, 2023, 50% of
1089	1089	14 the average of the qualifying expenditures for each year
1090	1090	15 in the base period.
1091	1091	16 , and "base period" means the 3 taxable years immediately
1092	1092	17 preceding the taxable year for which the determination is
1093	1093	18 being made.
1094	1094	19 Any credit in excess of the tax liability for the taxable
1095	1095	20 year may be carried forward. A taxpayer may elect to have the
1096	1096	21 unused credit shown on its final completed return carried over
1097	1097	22 as a credit against the tax liability for the following 5
1098	1098	23 taxable years or until it has been fully used, whichever
1099	1099	24 occurs first; provided that no credit earned in a tax year
1100	1100	25 ending prior to December 31, 2003 may be carried forward to any
1101	1101	26 year ending on or after December 31, 2003.
1102	1102
1103	1103
1104	1104
1105	1105
1106	1106
1107	1107	SB0163 - 30 - LRB103 25037 HLH 51371 b
1108	1108
1109	1109
1110	1110	SB0163- 31 -LRB103 25037 HLH 51371 b SB0163 - 31 - LRB103 25037 HLH 51371 b
1111	1111	SB0163 - 31 - LRB103 25037 HLH 51371 b
1112	1112	1 If an unused credit is carried forward to a given year from
1113	1113	2 2 or more earlier years, that credit arising in the earliest
1114	1114	3 year will be applied first against the tax liability for the
1115	1115	4 given year. If a tax liability for the given year still
1116	1116	5 remains, the credit from the next earliest year will then be
1117	1117	6 applied, and so on, until all credits have been used or no tax
1118	1118	7 liability for the given year remains. Any remaining unused
1119	1119	8 credit or credits then will be carried forward to the next
1120	1120	9 following year in which a tax liability is incurred, except
1121	1121	10 that no credit can be carried forward to a year which is more
1122	1122	11 than 5 years after the year in which the expense for which the
1123	1123	12 credit is given was incurred.
1124	1124	13 No inference shall be drawn from Public Act 91-644 in
1125	1125	14 construing this Section for taxable years beginning before
1126	1126	15 January 1, 1999.
1127	1127	16 It is the intent of the General Assembly that the research
1128	1128	17 and development credit under this subsection (k) shall apply
1129	1129	18 continuously for all tax years ending on or after December 31,
1130	1130	19 2004 and ending prior to January 1, 2027, including, but not
1131	1131	20 limited to, the period beginning on January 1, 2016 and ending
1132	1132	21 on July 6, 2017 (the effective date of Public Act 100-22). All
1133	1133	22 actions taken in reliance on the continuation of the credit
1134	1134	23 under this subsection (k) by any taxpayer are hereby
1135	1135	24 validated.
1136	1136	25 This subsection (k) is exempt from the provisions of
1137	1137	26 Section 250.
1138	1138
1139	1139
1140	1140
1141	1141
1142	1142
1143	1143	SB0163 - 31 - LRB103 25037 HLH 51371 b
1144	1144
1145	1145
1146	1146	SB0163- 32 -LRB103 25037 HLH 51371 b SB0163 - 32 - LRB103 25037 HLH 51371 b
1147	1147	SB0163 - 32 - LRB103 25037 HLH 51371 b
1148	1148	1 (l) Environmental Remediation Tax Credit.
1149	1149	2 (i) For tax years ending after December 31, 1997 and
1150	1150	3 on or before December 31, 2001, a taxpayer shall be
1151	1151	4 allowed a credit against the tax imposed by subsections
1152	1152	5 (a) and (b) of this Section for certain amounts paid for
1153	1153	6 unreimbursed eligible remediation costs, as specified in
1154	1154	7 this subsection. For purposes of this Section,
1155	1155	8 "unreimbursed eligible remediation costs" means costs
1156	1156	9 approved by the Illinois Environmental Protection Agency
1157	1157	10 ("Agency") under Section 58.14 of the Environmental
1158	1158	11 Protection Act that were paid in performing environmental
1159	1159	12 remediation at a site for which a No Further Remediation
1160	1160	13 Letter was issued by the Agency and recorded under Section
1161	1161	14 58.10 of the Environmental Protection Act. The credit must
1162	1162	15 be claimed for the taxable year in which Agency approval
1163	1163	16 of the eligible remediation costs is granted. The credit
1164	1164	17 is not available to any taxpayer if the taxpayer or any
1165	1165	18 related party caused or contributed to, in any material
1166	1166	19 respect, a release of regulated substances on, in, or
1167	1167	20 under the site that was identified and addressed by the
1168	1168	21 remedial action pursuant to the Site Remediation Program
1169	1169	22 of the Environmental Protection Act. After the Pollution
1170	1170	23 Control Board rules are adopted pursuant to the Illinois
1171	1171	24 Administrative Procedure Act for the administration and
1172	1172	25 enforcement of Section 58.9 of the Environmental
1173	1173	26 Protection Act, determinations as to credit availability
1174	1174
1175	1175
1176	1176
1177	1177
1178	1178
1179	1179	SB0163 - 32 - LRB103 25037 HLH 51371 b
1180	1180
1181	1181
1182	1182	SB0163- 33 -LRB103 25037 HLH 51371 b SB0163 - 33 - LRB103 25037 HLH 51371 b
1183	1183	SB0163 - 33 - LRB103 25037 HLH 51371 b
1184	1184	1 for purposes of this Section shall be made consistent with
1185	1185	2 those rules. For purposes of this Section, "taxpayer"
1186	1186	3 includes a person whose tax attributes the taxpayer has
1187	1187	4 succeeded to under Section 381 of the Internal Revenue
1188	1188	5 Code and "related party" includes the persons disallowed a
1189	1189	6 deduction for losses by paragraphs (b), (c), and (f)(1) of
1190	1190	7 Section 267 of the Internal Revenue Code by virtue of
1191	1191	8 being a related taxpayer, as well as any of its partners.
1192	1192	9 The credit allowed against the tax imposed by subsections
1193	1193	10 (a) and (b) shall be equal to 25% of the unreimbursed
1194	1194	11 eligible remediation costs in excess of $100,000 per site,
1195	1195	12 except that the $100,000 threshold shall not apply to any
1196	1196	13 site contained in an enterprise zone as determined by the
1197	1197	14 Department of Commerce and Community Affairs (now
1198	1198	15 Department of Commerce and Economic Opportunity). The
1199	1199	16 total credit allowed shall not exceed $40,000 per year
1200	1200	17 with a maximum total of $150,000 per site. For partners
1201	1201	18 and shareholders of subchapter S corporations, there shall
1202	1202	19 be allowed a credit under this subsection to be determined
1203	1203	20 in accordance with the determination of income and
1204	1204	21 distributive share of income under Sections 702 and 704
1205	1205	22 and subchapter S of the Internal Revenue Code.
1206	1206	23 (ii) A credit allowed under this subsection that is
1207	1207	24 unused in the year the credit is earned may be carried
1208	1208	25 forward to each of the 5 taxable years following the year
1209	1209	26 for which the credit is first earned until it is used. The
1210	1210
1211	1211
1212	1212
1213	1213
1214	1214
1215	1215	SB0163 - 33 - LRB103 25037 HLH 51371 b
1216	1216
1217	1217
1218	1218	SB0163- 34 -LRB103 25037 HLH 51371 b SB0163 - 34 - LRB103 25037 HLH 51371 b
1219	1219	SB0163 - 34 - LRB103 25037 HLH 51371 b
1220	1220	1 term "unused credit" does not include any amounts of
1221	1221	2 unreimbursed eligible remediation costs in excess of the
1222	1222	3 maximum credit per site authorized under paragraph (i).
1223	1223	4 This credit shall be applied first to the earliest year
1224	1224	5 for which there is a liability. If there is a credit under
1225	1225	6 this subsection from more than one tax year that is
1226	1226	7 available to offset a liability, the earliest credit
1227	1227	8 arising under this subsection shall be applied first. A
1228	1228	9 credit allowed under this subsection may be sold to a
1229	1229	10 buyer as part of a sale of all or part of the remediation
1230	1230	11 site for which the credit was granted. The purchaser of a
1231	1231	12 remediation site and the tax credit shall succeed to the
1232	1232	13 unused credit and remaining carry-forward period of the
1233	1233	14 seller. To perfect the transfer, the assignor shall record
1234	1234	15 the transfer in the chain of title for the site and provide
1235	1235	16 written notice to the Director of the Illinois Department
1236	1236	17 of Revenue of the assignor's intent to sell the
1237	1237	18 remediation site and the amount of the tax credit to be
1238	1238	19 transferred as a portion of the sale. In no event may a
1239	1239	20 credit be transferred to any taxpayer if the taxpayer or a
1240	1240	21 related party would not be eligible under the provisions
1241	1241	22 of subsection (i).
1242	1242	23 (iii) For purposes of this Section, the term "site"
1243	1243	24 shall have the same meaning as under Section 58.2 of the
1244	1244	25 Environmental Protection Act.
1245	1245	26 (m) Education expense credit. Beginning with tax years
1246	1246
1247	1247
1248	1248
1249	1249
1250	1250
1251	1251	SB0163 - 34 - LRB103 25037 HLH 51371 b
1252	1252
1253	1253
1254	1254	SB0163- 35 -LRB103 25037 HLH 51371 b SB0163 - 35 - LRB103 25037 HLH 51371 b
1255	1255	SB0163 - 35 - LRB103 25037 HLH 51371 b
1256	1256	1 ending after December 31, 1999, a taxpayer who is the
1257	1257	2 custodian of one or more qualifying pupils shall be allowed a
1258	1258	3 credit against the tax imposed by subsections (a) and (b) of
1259	1259	4 this Section for qualified education expenses incurred on
1260	1260	5 behalf of the qualifying pupils. The credit shall be equal to
1261	1261	6 25% of qualified education expenses, but in no event may the
1262	1262	7 total credit under this subsection claimed by a family that is
1263	1263	8 the custodian of qualifying pupils exceed (i) $500 for tax
1264	1264	9 years ending prior to December 31, 2017, and (ii) $750 for tax
1265	1265	10 years ending on or after December 31, 2017. In no event shall a
1266	1266	11 credit under this subsection reduce the taxpayer's liability
1267	1267	12 under this Act to less than zero. Notwithstanding any other
1268	1268	13 provision of law, for taxable years beginning on or after
1269	1269	14 January 1, 2017, no taxpayer may claim a credit under this
1270	1270	15 subsection (m) if the taxpayer's adjusted gross income for the
1271	1271	16 taxable year exceeds (i) $500,000, in the case of spouses
1272	1272	17 filing a joint federal tax return or (ii) $250,000, in the case
1273	1273	18 of all other taxpayers. This subsection is exempt from the
1274	1274	19 provisions of Section 250 of this Act.
1275	1275	20 For purposes of this subsection:
1276	1276	21 "Qualifying pupils" means individuals who (i) are
1277	1277	22 residents of the State of Illinois, (ii) are under the age of
1278	1278	23 21 at the close of the school year for which a credit is
1279	1279	24 sought, and (iii) during the school year for which a credit is
1280	1280	25 sought were full-time pupils enrolled in a kindergarten
1281	1281	26 through twelfth grade education program at any school, as
1282	1282
1283	1283
1284	1284
1285	1285
1286	1286
1287	1287	SB0163 - 35 - LRB103 25037 HLH 51371 b
1288	1288
1289	1289
1290	1290	SB0163- 36 -LRB103 25037 HLH 51371 b SB0163 - 36 - LRB103 25037 HLH 51371 b
1291	1291	SB0163 - 36 - LRB103 25037 HLH 51371 b
1292	1292	1 defined in this subsection.
1293	1293	2 "Qualified education expense" means the amount incurred on
1294	1294	3 behalf of a qualifying pupil in excess of $250 for tuition,
1295	1295	4 book fees, and lab fees at the school in which the pupil is
1296	1296	5 enrolled during the regular school year.
1297	1297	6 "School" means any public or nonpublic elementary or
1298	1298	7 secondary school in Illinois that is in compliance with Title
1299	1299	8 VI of the Civil Rights Act of 1964 and attendance at which
1300	1300	9 satisfies the requirements of Section 26-1 of the School Code,
1301	1301	10 except that nothing shall be construed to require a child to
1302	1302	11 attend any particular public or nonpublic school to qualify
1303	1303	12 for the credit under this Section.
1304	1304	13 "Custodian" means, with respect to qualifying pupils, an
1305	1305	14 Illinois resident who is a parent, the parents, a legal
1306	1306	15 guardian, or the legal guardians of the qualifying pupils.
1307	1307	16 (n) River Edge Redevelopment Zone site remediation tax
1308	1308	17 credit.
1309	1309	18 (i) For tax years ending on or after December 31,
1310	1310	19 2006, a taxpayer shall be allowed a credit against the tax
1311	1311	20 imposed by subsections (a) and (b) of this Section for
1312	1312	21 certain amounts paid for unreimbursed eligible remediation
1313	1313	22 costs, as specified in this subsection. For purposes of
1314	1314	23 this Section, "unreimbursed eligible remediation costs"
1315	1315	24 means costs approved by the Illinois Environmental
1316	1316	25 Protection Agency ("Agency") under Section 58.14a of the
1317	1317	26 Environmental Protection Act that were paid in performing
1318	1318
1319	1319
1320	1320
1321	1321
1322	1322
1323	1323	SB0163 - 36 - LRB103 25037 HLH 51371 b
1324	1324
1325	1325
1326	1326	SB0163- 37 -LRB103 25037 HLH 51371 b SB0163 - 37 - LRB103 25037 HLH 51371 b
1327	1327	SB0163 - 37 - LRB103 25037 HLH 51371 b
1328	1328	1 environmental remediation at a site within a River Edge
1329	1329	2 Redevelopment Zone for which a No Further Remediation
1330	1330	3 Letter was issued by the Agency and recorded under Section
1331	1331	4 58.10 of the Environmental Protection Act. The credit must
1332	1332	5 be claimed for the taxable year in which Agency approval
1333	1333	6 of the eligible remediation costs is granted. The credit
1334	1334	7 is not available to any taxpayer if the taxpayer or any
1335	1335	8 related party caused or contributed to, in any material
1336	1336	9 respect, a release of regulated substances on, in, or
1337	1337	10 under the site that was identified and addressed by the
1338	1338	11 remedial action pursuant to the Site Remediation Program
1339	1339	12 of the Environmental Protection Act. Determinations as to
1340	1340	13 credit availability for purposes of this Section shall be
1341	1341	14 made consistent with rules adopted by the Pollution
1342	1342	15 Control Board pursuant to the Illinois Administrative
1343	1343	16 Procedure Act for the administration and enforcement of
1344	1344	17 Section 58.9 of the Environmental Protection Act. For
1345	1345	18 purposes of this Section, "taxpayer" includes a person
1346	1346	19 whose tax attributes the taxpayer has succeeded to under
1347	1347	20 Section 381 of the Internal Revenue Code and "related
1348	1348	21 party" includes the persons disallowed a deduction for
1349	1349	22 losses by paragraphs (b), (c), and (f)(1) of Section 267
1350	1350	23 of the Internal Revenue Code by virtue of being a related
1351	1351	24 taxpayer, as well as any of its partners. The credit
1352	1352	25 allowed against the tax imposed by subsections (a) and (b)
1353	1353	26 shall be equal to 25% of the unreimbursed eligible
1354	1354
1355	1355
1356	1356
1357	1357
1358	1358
1359	1359	SB0163 - 37 - LRB103 25037 HLH 51371 b
1360	1360
1361	1361
1362	1362	SB0163- 38 -LRB103 25037 HLH 51371 b SB0163 - 38 - LRB103 25037 HLH 51371 b
1363	1363	SB0163 - 38 - LRB103 25037 HLH 51371 b
1364	1364	1 remediation costs in excess of $100,000 per site.
1365	1365	2 (ii) A credit allowed under this subsection that is
1366	1366	3 unused in the year the credit is earned may be carried
1367	1367	4 forward to each of the 5 taxable years following the year
1368	1368	5 for which the credit is first earned until it is used. This
1369	1369	6 credit shall be applied first to the earliest year for
1370	1370	7 which there is a liability. If there is a credit under this
1371	1371	8 subsection from more than one tax year that is available
1372	1372	9 to offset a liability, the earliest credit arising under
1373	1373	10 this subsection shall be applied first. A credit allowed
1374	1374	11 under this subsection may be sold to a buyer as part of a
1375	1375	12 sale of all or part of the remediation site for which the
1376	1376	13 credit was granted. The purchaser of a remediation site
1377	1377	14 and the tax credit shall succeed to the unused credit and
1378	1378	15 remaining carry-forward period of the seller. To perfect
1379	1379	16 the transfer, the assignor shall record the transfer in
1380	1380	17 the chain of title for the site and provide written notice
1381	1381	18 to the Director of the Illinois Department of Revenue of
1382	1382	19 the assignor's intent to sell the remediation site and the
1383	1383	20 amount of the tax credit to be transferred as a portion of
1384	1384	21 the sale. In no event may a credit be transferred to any
1385	1385	22 taxpayer if the taxpayer or a related party would not be
1386	1386	23 eligible under the provisions of subsection (i).
1387	1387	24 (iii) For purposes of this Section, the term "site"
1388	1388	25 shall have the same meaning as under Section 58.2 of the
1389	1389	26 Environmental Protection Act.
1390	1390
1391	1391
1392	1392
1393	1393
1394	1394
1395	1395	SB0163 - 38 - LRB103 25037 HLH 51371 b
1396	1396
1397	1397
1398	1398	SB0163- 39 -LRB103 25037 HLH 51371 b SB0163 - 39 - LRB103 25037 HLH 51371 b
1399	1399	SB0163 - 39 - LRB103 25037 HLH 51371 b
1400	1400	1 (o) For each of taxable years during the Compassionate Use
1401	1401	2 of Medical Cannabis Program, a surcharge is imposed on all
1402	1402	3 taxpayers on income arising from the sale or exchange of
1403	1403	4 capital assets, depreciable business property, real property
1404	1404	5 used in the trade or business, and Section 197 intangibles of
1405	1405	6 an organization registrant under the Compassionate Use of
1406	1406	7 Medical Cannabis Program Act. The amount of the surcharge is
1407	1407	8 equal to the amount of federal income tax liability for the
1408	1408	9 taxable year attributable to those sales and exchanges. The
1409	1409	10 surcharge imposed does not apply if:
1410	1410	11 (1) the medical cannabis cultivation center
1411	1411	12 registration, medical cannabis dispensary registration, or
1412	1412	13 the property of a registration is transferred as a result
1413	1413	14 of any of the following:
1414	1414	15 (A) bankruptcy, a receivership, or a debt
1415	1415	16 adjustment initiated by or against the initial
1416	1416	17 registration or the substantial owners of the initial
1417	1417	18 registration;
1418	1418	19 (B) cancellation, revocation, or termination of
1419	1419	20 any registration by the Illinois Department of Public
1420	1420	21 Health;
1421	1421	22 (C) a determination by the Illinois Department of
1422	1422	23 Public Health that transfer of the registration is in
1423	1423	24 the best interests of Illinois qualifying patients as
1424	1424	25 defined by the Compassionate Use of Medical Cannabis
1425	1425	26 Program Act;
1426	1426
1427	1427
1428	1428
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1430	1430
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1432	1432
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1436	1436	1 (D) the death of an owner of the equity interest in
1437	1437	2 a registrant;
1438	1438	3 (E) the acquisition of a controlling interest in
1439	1439	4 the stock or substantially all of the assets of a
1440	1440	5 publicly traded company;
1441	1441	6 (F) a transfer by a parent company to a wholly
1442	1442	7 owned subsidiary; or
1443	1443	8 (G) the transfer or sale to or by one person to
1444	1444	9 another person where both persons were initial owners
1445	1445	10 of the registration when the registration was issued;
1446	1446	11 or
1447	1447	12 (2) the cannabis cultivation center registration,
1448	1448	13 medical cannabis dispensary registration, or the
1449	1449	14 controlling interest in a registrant's property is
1450	1450	15 transferred in a transaction to lineal descendants in
1451	1451	16 which no gain or loss is recognized or as a result of a
1452	1452	17 transaction in accordance with Section 351 of the Internal
1453	1453	18 Revenue Code in which no gain or loss is recognized.
1454	1454	19 (p) Pass-through entity tax.
1455	1455	20 (1) For taxable years ending on or after December 31,
1456	1456	21 2021 and beginning prior to January 1, 2026, a partnership
1457	1457	22 (other than a publicly traded partnership under Section
1458	1458	23 7704 of the Internal Revenue Code) or Subchapter S
1459	1459	24 corporation may elect to apply the provisions of this
1460	1460	25 subsection. A separate election shall be made for each
1461	1461	26 taxable year. Such election shall be made at such time,
1462	1462
1463	1463
1464	1464
1465	1465
1466	1466
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1468	1468
1469	1469
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1471	1471	SB0163 - 41 - LRB103 25037 HLH 51371 b
1472	1472	1 and in such form and manner as prescribed by the
1473	1473	2 Department, and, once made, is irrevocable.
1474	1474	3 (2) Entity-level tax. A partnership or Subchapter S
1475	1475	4 corporation electing to apply the provisions of this
1476	1476	5 subsection shall be subject to a tax for the privilege of
1477	1477	6 earning or receiving income in this State in an amount
1478	1478	7 equal to 4.95% of the taxpayer's net income for the
1479	1479	8 taxable year.
1480	1480	9 (3) Net income defined.
1481	1481	10 (A) In general. For purposes of paragraph (2), the
1482	1482	11 term net income has the same meaning as defined in
1483	1483	12 Section 202 of this Act, except that the following
1484	1484	13 provisions shall not apply:
1485	1485	14 (i) the standard exemption allowed under
1486	1486	15 Section 204;
1487	1487	16 (ii) the deduction for net losses allowed
1488	1488	17 under Section 207;
1489	1489	18 (iii) in the case of an S corporation, the
1490	1490	19 modification under Section 203(b)(2)(S); and
1491	1491	20 (iv) in the case of a partnership, the
1492	1492	21 modifications under Section 203(d)(2)(H) and
1493	1493	22 Section 203(d)(2)(I).
1494	1494	23 (B) Special rule for tiered partnerships. If a
1495	1495	24 taxpayer making the election under paragraph (1) is a
1496	1496	25 partner of another taxpayer making the election under
1497	1497	26 paragraph (1), net income shall be computed as
1498	1498
1499	1499
1500	1500
1501	1501
1502	1502
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1504	1504
1505	1505
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1507	1507	SB0163 - 42 - LRB103 25037 HLH 51371 b
1508	1508	1 provided in subparagraph (A), except that the taxpayer
1509	1509	2 shall subtract its distributive share of the net
1510	1510	3 income of the electing partnership (including its
1511	1511	4 distributive share of the net income of the electing
1512	1512	5 partnership derived as a distributive share from
1513	1513	6 electing partnerships in which it is a partner).
1514	1514	7 (4) Credit for entity level tax. Each partner or
1515	1515	8 shareholder of a taxpayer making the election under this
1516	1516	9 Section shall be allowed a credit against the tax imposed
1517	1517	10 under subsections (a) and (b) of Section 201 of this Act
1518	1518	11 for the taxable year of the partnership or Subchapter S
1519	1519	12 corporation for which an election is in effect ending
1520	1520	13 within or with the taxable year of the partner or
1521	1521	14 shareholder in an amount equal to 4.95% times the partner
1522	1522	15 or shareholder's distributive share of the net income of
1523	1523	16 the electing partnership or Subchapter S corporation, but
1524	1524	17 not to exceed the partner's or shareholder's share of the
1525	1525	18 tax imposed under paragraph (1) which is actually paid by
1526	1526	19 the partnership or Subchapter S corporation. If the
1527	1527	20 taxpayer is a partnership or Subchapter S corporation that
1528	1528	21 is itself a partner of a partnership making the election
1529	1529	22 under paragraph (1), the credit under this paragraph shall
1530	1530	23 be allowed to the taxpayer's partners or shareholders (or
1531	1531	24 if the partner is a partnership or Subchapter S
1532	1532	25 corporation then its partners or shareholders) in
1533	1533	26 accordance with the determination of income and
1534	1534
1535	1535
1536	1536
1537	1537
1538	1538
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1540	1540
1541	1541
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1543	1543	SB0163 - 43 - LRB103 25037 HLH 51371 b
1544	1544	1 distributive share of income under Sections 702 and 704
1545	1545	2 and Subchapter S of the Internal Revenue Code. If the
1546	1546	3 amount of the credit allowed under this paragraph exceeds
1547	1547	4 the partner's or shareholder's liability for tax imposed
1548	1548	5 under subsections (a) and (b) of Section 201 of this Act
1549	1549	6 for the taxable year, such excess shall be treated as an
1550	1550	7 overpayment for purposes of Section 909 of this Act.
1551	1551	8 (5) Nonresidents. A nonresident individual who is a
1552	1552	9 partner or shareholder of a partnership or Subchapter S
1553	1553	10 corporation for a taxable year for which an election is in
1554	1554	11 effect under paragraph (1) shall not be required to file
1555	1555	12 an income tax return under this Act for such taxable year
1556	1556	13 if the only source of net income of the individual (or the
1557	1557	14 individual and the individual's spouse in the case of a
1558	1558	15 joint return) is from an entity making the election under
1559	1559	16 paragraph (1) and the credit allowed to the partner or
1560	1560	17 shareholder under paragraph (4) equals or exceeds the
1561	1561	18 individual's liability for the tax imposed under
1562	1562	19 subsections (a) and (b) of Section 201 of this Act for the
1563	1563	20 taxable year.
1564	1564	21 (6) Liability for tax. Except as provided in this
1565	1565	22 paragraph, a partnership or Subchapter S making the
1566	1566	23 election under paragraph (1) is liable for the
1567	1567	24 entity-level tax imposed under paragraph (2). If the
1568	1568	25 electing partnership or corporation fails to pay the full
1569	1569	26 amount of tax deemed assessed under paragraph (2), the
1570	1570
1571	1571
1572	1572
1573	1573
1574	1574
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1576	1576
1577	1577
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1579	1579	SB0163 - 44 - LRB103 25037 HLH 51371 b
1580	1580	1 partners or shareholders shall be liable to pay the tax
1581	1581	2 assessed (including penalties and interest). Each partner
1582	1582	3 or shareholder shall be liable for the unpaid assessment
1583	1583	4 based on the ratio of the partner's or shareholder's share
1584	1584	5 of the net income of the partnership over the total net
1585	1585	6 income of the partnership. If the partnership or
1586	1586	7 Subchapter S corporation fails to pay the tax assessed
1587	1587	8 (including penalties and interest) and thereafter an
1588	1588	9 amount of such tax is paid by the partners or
1589	1589	10 shareholders, such amount shall not be collected from the
1590	1590	11 partnership or corporation.
1591	1591	12 (7) Foreign tax. For purposes of the credit allowed
1592	1592	13 under Section 601(b)(3) of this Act, tax paid by a
1593	1593	14 partnership or Subchapter S corporation to another state
1594	1594	15 which, as determined by the Department, is substantially
1595	1595	16 similar to the tax imposed under this subsection, shall be
1596	1596	17 considered tax paid by the partner or shareholder to the
1597	1597	18 extent that the partner's or shareholder's share of the
1598	1598	19 income of the partnership or Subchapter S corporation
1599	1599	20 allocated and apportioned to such other state bears to the
1600	1600	21 total income of the partnership or Subchapter S
1601	1601	22 corporation allocated or apportioned to such other state.
1602	1602	23 (8) Suspension of withholding. The provisions of
1603	1603	24 Section 709.5 of this Act shall not apply to a partnership
1604	1604	25 or Subchapter S corporation for the taxable year for which
1605	1605	26 an election under paragraph (1) is in effect.
1606	1606
1607	1607
1608	1608
1609	1609
1610	1610
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1612	1612
1613	1613
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1615	1615	SB0163 - 45 - LRB103 25037 HLH 51371 b
1616	1616	1 (9) Requirement to pay estimated tax. For each taxable
1617	1617	2 year for which an election under paragraph (1) is in
1618	1618	3 effect, a partnership or Subchapter S corporation is
1619	1619	4 required to pay estimated tax for such taxable year under
1620	1620	5 Sections 803 and 804 of this Act if the amount payable as
1621	1621	6 estimated tax can reasonably be expected to exceed $500.
1622	1622	7 (10) The provisions of this subsection shall apply
1623	1623	8 only with respect to taxable years for which the
1624	1624	9 limitation on individual deductions applies under Section
1625	1625	10 164(b)(6) of the Internal Revenue Code.
1626	1626	11 (Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
1627	1627	12 101-207, eff. 8-2-19; 101-363, eff. 8-9-19; 102-558, eff.
1628	1628	13 8-20-21; 102-658, eff. 8-27-21.)
1629	1629	14 Section 99. Effective date. This Act takes effect upon
1630	1630	15 becoming law.
1631	1631
1632	1632
1633	1633
1634	1634
1635	1635
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