Bill Text: IL HB3086 | 2015-2016 | 99th General Assembly | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Amends the Illinois Income Tax Act. Provides that the voting power or value of the beneficial interest or shares of a real estate investment trust does not include any voting power or value of beneficial interest or shares in a real estate investment trust held directly or indirectly in a segregated asset account by a life insurance company for the benefit of persons who are immune or exempt from taxation under subtitle A of the Internal Revenue Code.
Spectrum: Bipartisan Bill
Status: (Passed) 2015-07-31 - Public Act . . . . . . . . . 99-0213 [HB3086 Detail]
Download: Illinois-2015-HB3086-Engrossed.html
Bill Title: Amends the Illinois Income Tax Act. Provides that the voting power or value of the beneficial interest or shares of a real estate investment trust does not include any voting power or value of beneficial interest or shares in a real estate investment trust held directly or indirectly in a segregated asset account by a life insurance company for the benefit of persons who are immune or exempt from taxation under subtitle A of the Internal Revenue Code.
Spectrum: Bipartisan Bill
Status: (Passed) 2015-07-31 - Public Act . . . . . . . . . 99-0213 [HB3086 Detail]
Download: Illinois-2015-HB3086-Engrossed.html
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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Income Tax Act is amended by | ||||||
5 | changing Section 1501 as follows:
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6 | (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
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7 | Sec. 1501. Definitions.
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8 | (a) In general. When used in this Act, where not
otherwise | ||||||
9 | distinctly expressed or manifestly incompatible with the | ||||||
10 | intent
thereof:
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11 | (1) Business income. The term "business income" means | ||||||
12 | all income that may be treated as apportionable business | ||||||
13 | income under the Constitution of the United States. | ||||||
14 | Business income is net of the deductions allocable thereto. | ||||||
15 | Such term does not include compensation
or the deductions | ||||||
16 | allocable thereto.
For each taxable year beginning on or | ||||||
17 | after January 1, 2003, a taxpayer may
elect to treat all | ||||||
18 | income other than compensation as business income. This
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19 | election shall be made in accordance with rules adopted by | ||||||
20 | the Department and,
once made, shall be irrevocable.
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21 | (1.5) Captive real estate investment trust:
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22 | (A) The term "captive real estate investment | ||||||
23 | trust" means a corporation, trust, or association:
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1 | (i) that is considered a real estate | ||||||
2 | investment trust for the taxable year under | ||||||
3 | Section 856 of the Internal Revenue Code;
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4 | (ii) the certificates of beneficial interest | ||||||
5 | or shares of which are not regularly traded on an | ||||||
6 | established securities market; and | ||||||
7 | (iii) of which more than 50% of the voting | ||||||
8 | power or value of the beneficial interest or | ||||||
9 | shares, at any time during the last half of the | ||||||
10 | taxable year, is owned or controlled, directly, | ||||||
11 | indirectly, or constructively, by a single | ||||||
12 | corporation. | ||||||
13 | (B) The term "captive real estate investment | ||||||
14 | trust" does not include: | ||||||
15 | (i) a real estate investment trust of which | ||||||
16 | more than 50% of the voting power or value of the | ||||||
17 | beneficial interest or shares is owned or | ||||||
18 | controlled, directly, indirectly, or | ||||||
19 | constructively, by: | ||||||
20 | (a) a real estate investment trust, other | ||||||
21 | than a captive real estate investment trust; | ||||||
22 | (b) a person who is exempt from taxation | ||||||
23 | under Section 501 of the Internal Revenue Code, | ||||||
24 | and who is not required to treat income | ||||||
25 | received from the real estate investment trust | ||||||
26 | as unrelated business taxable income under |
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1 | Section 512 of the Internal Revenue Code; | ||||||
2 | (c) a listed Australian property trust, if | ||||||
3 | no more than 50% of the voting power or value | ||||||
4 | of the beneficial interest or shares of that | ||||||
5 | trust, at any time during the last half of the | ||||||
6 | taxable year, is owned or controlled, directly | ||||||
7 | or indirectly, by a single person; | ||||||
8 | (d) an entity organized as a trust, | ||||||
9 | provided a listed Australian property trust | ||||||
10 | described in subparagraph (c) owns or | ||||||
11 | controls, directly or indirectly, or | ||||||
12 | constructively, 75% or more of the voting power | ||||||
13 | or value of the beneficial interests or shares | ||||||
14 | of such entity; or | ||||||
15 | (e) an entity that is organized outside of | ||||||
16 | the laws of the United States and that | ||||||
17 | satisfies all of the following criteria: | ||||||
18 | (1) at least 75% of the entity's total | ||||||
19 | asset value at the close of its taxable | ||||||
20 | year is represented by real estate assets | ||||||
21 | (as defined in Section 856(c)(5)(B) of the | ||||||
22 | Internal Revenue Code, thereby including | ||||||
23 | shares or certificates of beneficial | ||||||
24 | interest in any real estate investment | ||||||
25 | trust), cash and cash equivalents, and | ||||||
26 | U.S. Government securities; |
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1 | (2) the entity is not subject to tax on | ||||||
2 | amounts that are distributed to its | ||||||
3 | beneficial owners or is exempt from | ||||||
4 | entity-level taxation; | ||||||
5 | (3) the entity distributes at least | ||||||
6 | 85% of its taxable income (as computed in | ||||||
7 | the jurisdiction in which it is organized) | ||||||
8 | to the holders of its shares or | ||||||
9 | certificates of beneficial interest on an | ||||||
10 | annual basis; | ||||||
11 | (4) either (i) the shares or | ||||||
12 | beneficial interests of the entity are | ||||||
13 | regularly traded on an established | ||||||
14 | securities market or (ii) not more than 10% | ||||||
15 | of the voting power or value in the entity | ||||||
16 | is held, directly, indirectly, or | ||||||
17 | constructively, by a single entity or | ||||||
18 | individual; and | ||||||
19 | (5) the entity is organized in a | ||||||
20 | country that has entered into a tax treaty | ||||||
21 | with the United States; or | ||||||
22 | (ii) during its first taxable year for which it | ||||||
23 | elects to be treated as a real estate investment | ||||||
24 | trust under Section 856(c)(1) of the Internal | ||||||
25 | Revenue Code, a real estate investment trust the | ||||||
26 | certificates of beneficial interest or shares of |
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1 | which are not regularly traded on an established | ||||||
2 | securities market, but only if the certificates of | ||||||
3 | beneficial interest or shares of the real estate | ||||||
4 | investment trust are regularly traded on an | ||||||
5 | established securities market prior to the earlier | ||||||
6 | of the due date (including extensions) for filing | ||||||
7 | its return under this Act for that first taxable | ||||||
8 | year or the date it actually files that return. | ||||||
9 | (C) For the purposes of this subsection (1.5), the | ||||||
10 | constructive ownership rules prescribed under Section | ||||||
11 | 318(a) of the Internal Revenue Code, as modified by | ||||||
12 | Section 856(d)(5) of the Internal Revenue Code, apply | ||||||
13 | in determining the ownership of stock, assets, or net | ||||||
14 | profits of any person.
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15 | (D) For the purposes of this item (1.5), for | ||||||
16 | taxable years ending on or after August 16, 2007, the | ||||||
17 | voting power or value of the beneficial interest or | ||||||
18 | shares of a real estate investment trust does not | ||||||
19 | include any voting power or value of beneficial | ||||||
20 | interest or shares in a real estate investment trust | ||||||
21 | held directly or indirectly in a segregated asset | ||||||
22 | account by a life insurance company (as described in | ||||||
23 | Section 817 of the Internal Revenue Code) to the extent | ||||||
24 | such voting power or value is for the benefit of | ||||||
25 | entities or persons who are either immune from taxation | ||||||
26 | or exempt from taxation under subtitle A of the |
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1 | Internal Revenue Code.
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2 | (2) Commercial domicile. The term "commercial | ||||||
3 | domicile" means the
principal
place from which the trade or | ||||||
4 | business of the taxpayer is directed or managed.
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5 | (3) Compensation. The term "compensation" means wages, | ||||||
6 | salaries,
commissions
and any other form of remuneration | ||||||
7 | paid to employees for personal services.
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8 | (4) Corporation. The term "corporation" includes | ||||||
9 | associations, joint-stock
companies, insurance companies | ||||||
10 | and cooperatives. Any entity, including a
limited | ||||||
11 | liability company formed under the Illinois Limited | ||||||
12 | Liability Company
Act, shall be treated as a corporation if | ||||||
13 | it is so classified for federal
income tax purposes.
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14 | (5) Department. The term "Department" means the | ||||||
15 | Department of Revenue of
this State.
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16 | (6) Director. The term "Director" means the Director of | ||||||
17 | Revenue of this
State.
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18 | (7) Fiduciary. The term "fiduciary" means a guardian, | ||||||
19 | trustee, executor,
administrator, receiver, or any person | ||||||
20 | acting in any fiduciary capacity for any
person.
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21 | (8) Financial organization.
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22 | (A) The term "financial organization" means
any
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23 | bank, bank holding company, trust company, savings | ||||||
24 | bank, industrial bank,
land bank, safe deposit | ||||||
25 | company, private banker, savings and loan association,
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26 | building and loan association, credit union, currency |
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1 | exchange, cooperative
bank, small loan company, sales | ||||||
2 | finance company, investment company, or any
person | ||||||
3 | which is owned by a bank or bank holding company. For | ||||||
4 | the purpose of
this Section a "person" will include | ||||||
5 | only those persons which a bank holding
company may | ||||||
6 | acquire and hold an interest in, directly or | ||||||
7 | indirectly, under the
provisions of the Bank Holding | ||||||
8 | Company Act of 1956 (12 U.S.C. 1841, et seq.),
except | ||||||
9 | where interests in any person must be disposed of | ||||||
10 | within certain
required time limits under the Bank | ||||||
11 | Holding Company Act of 1956.
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12 | (B) For purposes of subparagraph (A) of this | ||||||
13 | paragraph, the term
"bank" includes (i) any entity that | ||||||
14 | is regulated by the Comptroller of the
Currency under | ||||||
15 | the National Bank Act, or by the Federal Reserve Board, | ||||||
16 | or by
the
Federal Deposit Insurance Corporation and | ||||||
17 | (ii) any federally or State chartered
bank
operating as | ||||||
18 | a credit card bank.
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19 | (C) For purposes of subparagraph (A) of this | ||||||
20 | paragraph, the term
"sales finance company" has the | ||||||
21 | meaning provided in the following item (i) or
(ii):
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22 | (i) A person primarily engaged in one or more | ||||||
23 | of the following
businesses: the business of | ||||||
24 | purchasing customer receivables, the business
of | ||||||
25 | making loans upon the security of customer | ||||||
26 | receivables, the
business of making loans for the |
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1 | express purpose of funding purchases of
tangible | ||||||
2 | personal property or services by the borrower, or | ||||||
3 | the business of
finance leasing. For purposes of | ||||||
4 | this item (i), "customer receivable"
means:
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5 | (a) a retail installment contract or | ||||||
6 | retail charge agreement within
the
meaning
of | ||||||
7 | the Sales Finance Agency Act, the Retail | ||||||
8 | Installment Sales Act, or the
Motor Vehicle | ||||||
9 | Retail Installment Sales Act;
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10 | (b) an installment, charge, credit, or | ||||||
11 | similar contract or agreement
arising from
the | ||||||
12 | sale of tangible personal property or services | ||||||
13 | in a transaction involving
a deferred payment | ||||||
14 | price payable in one or more installments | ||||||
15 | subsequent
to the sale; or
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16 | (c) the outstanding balance of a contract | ||||||
17 | or agreement described in
provisions
(a) or (b) | ||||||
18 | of this item (i).
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19 | A customer receivable need not provide for | ||||||
20 | payment of interest on
deferred
payments. A sales | ||||||
21 | finance company may purchase a customer receivable | ||||||
22 | from, or
make a loan secured by a customer | ||||||
23 | receivable to, the seller in the original
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24 | transaction or to a person who purchased the | ||||||
25 | customer receivable directly or
indirectly from | ||||||
26 | that seller.
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1 | (ii) A corporation meeting each of the | ||||||
2 | following criteria:
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3 | (a) the corporation must be a member of an | ||||||
4 | "affiliated group" within
the
meaning of | ||||||
5 | Section 1504(a) of the Internal Revenue Code, | ||||||
6 | determined
without regard to Section 1504(b) | ||||||
7 | of the Internal Revenue Code;
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8 | (b) more than 50% of the gross income of | ||||||
9 | the corporation for the
taxable
year
must be | ||||||
10 | interest income derived from qualifying loans. | ||||||
11 | A "qualifying
loan" is a loan made to a member | ||||||
12 | of the corporation's affiliated group that
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13 | originates customer receivables (within the | ||||||
14 | meaning of item (i)) or to whom
customer | ||||||
15 | receivables originated by a member of the | ||||||
16 | affiliated group have been
transferred, to
the | ||||||
17 | extent the average outstanding balance of | ||||||
18 | loans from that corporation
to members of its | ||||||
19 | affiliated group during the taxable year do not | ||||||
20 | exceed
the limitation amount for that | ||||||
21 | corporation. The "limitation amount" for a
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22 | corporation is the average outstanding | ||||||
23 | balances during the taxable year of
customer | ||||||
24 | receivables (within the meaning of item (i)) | ||||||
25 | originated by
all members of the affiliated | ||||||
26 | group.
If the average outstanding balances of |
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1 | the
loans made by a corporation to members of | ||||||
2 | its affiliated group exceed the
limitation | ||||||
3 | amount, the interest income of that | ||||||
4 | corporation from qualifying
loans shall be | ||||||
5 | equal to its interest income from loans to | ||||||
6 | members of its
affiliated groups times a | ||||||
7 | fraction equal to the limitation amount | ||||||
8 | divided by
the average outstanding balances of | ||||||
9 | the loans made by that corporation to
members | ||||||
10 | of its affiliated group;
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11 | (c) the total of all shareholder's equity | ||||||
12 | (including, without
limitation,
paid-in
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13 | capital on common and preferred stock and | ||||||
14 | retained earnings) of the
corporation plus the | ||||||
15 | total of all of its loans, advances, and other
| ||||||
16 | obligations payable or owed to members of its | ||||||
17 | affiliated group may not
exceed 20% of the | ||||||
18 | total assets of the corporation at any time | ||||||
19 | during the tax
year; and
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20 | (d) more than 50% of all interest-bearing | ||||||
21 | obligations of the
affiliated group payable to | ||||||
22 | persons outside the group determined in | ||||||
23 | accordance
with generally accepted accounting | ||||||
24 | principles must be obligations of the
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25 | corporation.
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26 | This amendatory Act of the 91st General Assembly is |
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1 | declaratory of
existing
law.
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2 | (D) Subparagraphs
(B) and (C) of this paragraph are | ||||||
3 | declaratory of
existing law and apply retroactively, | ||||||
4 | for all tax years beginning on or before
December 31, | ||||||
5 | 1996,
to all original returns, to all amended returns | ||||||
6 | filed no later than 30
days after the effective date of | ||||||
7 | this amendatory Act of 1996, and to all
notices issued | ||||||
8 | on or before the effective date of this amendatory Act | ||||||
9 | of 1996
under subsection (a) of Section 903, subsection | ||||||
10 | (a) of Section 904,
subsection (e) of Section 909, or | ||||||
11 | Section 912.
A taxpayer that is a "financial | ||||||
12 | organization" that engages in any transaction
with an | ||||||
13 | affiliate shall be a "financial organization" for all | ||||||
14 | purposes of this
Act.
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15 | (E) For all tax years beginning on or
before | ||||||
16 | December 31, 1996, a taxpayer that falls within the | ||||||
17 | definition
of a
"financial organization" under | ||||||
18 | subparagraphs (B) or (C) of this paragraph, but
who | ||||||
19 | does
not fall within the definition of a "financial | ||||||
20 | organization" under the Proposed
Regulations issued by | ||||||
21 | the Department of Revenue on July 19, 1996, may
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22 | irrevocably elect to apply the Proposed Regulations | ||||||
23 | for all of those years as
though the Proposed | ||||||
24 | Regulations had been lawfully promulgated, adopted, | ||||||
25 | and in
effect for all of those years. For purposes of | ||||||
26 | applying subparagraphs (B) or
(C) of
this
paragraph to |
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1 | all of those years, the election allowed by this | ||||||
2 | subparagraph
applies only to the taxpayer making the | ||||||
3 | election and to those members of the
taxpayer's unitary | ||||||
4 | business group who are ordinarily required to | ||||||
5 | apportion
business income under the same subsection of | ||||||
6 | Section 304 of this Act as the
taxpayer making the | ||||||
7 | election. No election allowed by this subparagraph | ||||||
8 | shall
be made under a claim
filed under subsection (d) | ||||||
9 | of Section 909 more than 30 days after the
effective | ||||||
10 | date of this amendatory Act of 1996.
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11 | (F) Finance Leases. For purposes of this | ||||||
12 | subsection, a finance lease
shall be treated as a loan | ||||||
13 | or other extension of credit, rather than as a
lease,
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14 | regardless of how the transaction is characterized for | ||||||
15 | any other purpose,
including the purposes of any | ||||||
16 | regulatory agency to which the lessor is subject.
A | ||||||
17 | finance lease is any transaction in the form of a lease | ||||||
18 | in which the lessee
is treated as the owner of the | ||||||
19 | leased asset entitled to any deduction for
| ||||||
20 | depreciation allowed under Section 167 of the Internal | ||||||
21 | Revenue Code.
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22 | (9) Fiscal year. The term "fiscal year" means an | ||||||
23 | accounting period of
12 months ending on the last day of | ||||||
24 | any month other than December.
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25 | (9.5) Fixed place of business. The term "fixed place of | ||||||
26 | business" has the same meaning as that term is given in |
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1 | Section 864 of the Internal Revenue Code and the related | ||||||
2 | Treasury regulations.
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3 | (10) Includes and including. The terms "includes" and | ||||||
4 | "including" when
used in a definition contained in this Act | ||||||
5 | shall not be deemed to exclude
other things otherwise | ||||||
6 | within the meaning of the term defined.
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7 | (11) Internal Revenue Code. The term "Internal Revenue | ||||||
8 | Code" means the
United States Internal Revenue Code of 1954 | ||||||
9 | or any successor law or laws
relating to federal income | ||||||
10 | taxes in effect for the taxable year.
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11 | (11.5) Investment partnership. | ||||||
12 | (A) The term "investment partnership" means any | ||||||
13 | entity that is treated as a partnership for federal | ||||||
14 | income tax purposes that meets the following | ||||||
15 | requirements: | ||||||
16 | (i) no less than 90% of the partnership's cost | ||||||
17 | of its total assets consists of qualifying | ||||||
18 | investment securities, deposits at banks or other | ||||||
19 | financial institutions, and office space and | ||||||
20 | equipment reasonably necessary to carry on its | ||||||
21 | activities as an investment partnership; | ||||||
22 | (ii) no less than 90% of its gross income | ||||||
23 | consists of interest, dividends, and gains from | ||||||
24 | the sale or exchange of qualifying investment | ||||||
25 | securities; and
| ||||||
26 | (iii) the partnership is not a dealer in |
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| |||||||
1 | qualifying investment securities. | ||||||
2 | (B) For purposes of this paragraph (11.5), the term | ||||||
3 | "qualifying investment securities" includes all of the | ||||||
4 | following:
| ||||||
5 | (i) common stock, including preferred or debt | ||||||
6 | securities convertible into common stock, and | ||||||
7 | preferred stock; | ||||||
8 | (ii) bonds, debentures, and other debt | ||||||
9 | securities; | ||||||
10 | (iii) foreign and domestic currency deposits | ||||||
11 | secured by federal, state, or local governmental | ||||||
12 | agencies; | ||||||
13 | (iv) mortgage or asset-backed securities | ||||||
14 | secured by federal, state, or local governmental | ||||||
15 | agencies; | ||||||
16 | (v) repurchase agreements and loan | ||||||
17 | participations; | ||||||
18 | (vi) foreign currency exchange contracts and | ||||||
19 | forward and futures contracts on foreign | ||||||
20 | currencies; | ||||||
21 | (vii) stock and bond index securities and | ||||||
22 | futures contracts and other similar financial | ||||||
23 | securities and futures contracts on those | ||||||
24 | securities;
| ||||||
25 | (viii) options for the purchase or sale of any | ||||||
26 | of the securities, currencies, contracts, or |
| |||||||
| |||||||
1 | financial instruments described in items (i) to | ||||||
2 | (vii), inclusive;
| ||||||
3 | (ix) regulated futures contracts;
| ||||||
4 | (x) commodities (not described in Section | ||||||
5 | 1221(a)(1) of the Internal Revenue Code) or | ||||||
6 | futures, forwards, and options with respect to | ||||||
7 | such commodities, provided, however, that any item | ||||||
8 | of a physical commodity to which title is actually | ||||||
9 | acquired in the partnership's capacity as a dealer | ||||||
10 | in such commodity shall not be a qualifying | ||||||
11 | investment security;
| ||||||
12 | (xi) derivatives; and
| ||||||
13 | (xii) a partnership interest in another | ||||||
14 | partnership that is an investment partnership.
| ||||||
15 | (12) Mathematical error. The term "mathematical error" | ||||||
16 | includes the
following types of errors, omissions, or | ||||||
17 | defects in a return filed by a
taxpayer which prevents | ||||||
18 | acceptance of the return as filed for processing:
| ||||||
19 | (A) arithmetic errors or incorrect computations on | ||||||
20 | the return or
supporting schedules;
| ||||||
21 | (B) entries on the wrong lines;
| ||||||
22 | (C) omission of required supporting forms or | ||||||
23 | schedules or the omission
of the information in whole | ||||||
24 | or in part called for thereon; and
| ||||||
25 | (D) an attempt to claim, exclude, deduct, or | ||||||
26 | improperly report, in a
manner
directly contrary to the |
| |||||||
| |||||||
1 | provisions of the Act and regulations thereunder
any | ||||||
2 | item of income, exemption, deduction, or credit.
| ||||||
3 | (13) Nonbusiness income. The term "nonbusiness income" | ||||||
4 | means all income
other than business income or | ||||||
5 | compensation.
| ||||||
6 | (14) Nonresident. The term "nonresident" means a | ||||||
7 | person who is not a
resident.
| ||||||
8 | (15) Paid, incurred and accrued. The terms "paid", | ||||||
9 | "incurred" and
"accrued"
shall be construed according to | ||||||
10 | the method of accounting upon the basis
of which the | ||||||
11 | person's base income is computed under this Act.
| ||||||
12 | (16) Partnership and partner. The term "partnership" | ||||||
13 | includes a syndicate,
group, pool, joint venture or other | ||||||
14 | unincorporated organization, through
or by means of which | ||||||
15 | any business, financial operation, or venture is carried
| ||||||
16 | on, and which is not, within the meaning of this Act, a | ||||||
17 | trust or estate
or a corporation; and the term "partner" | ||||||
18 | includes a member in such syndicate,
group, pool, joint | ||||||
19 | venture or organization.
| ||||||
20 | The term "partnership" includes any entity, including | ||||||
21 | a limited
liability company formed under the Illinois
| ||||||
22 | Limited Liability Company Act, classified as a partnership | ||||||
23 | for federal income tax purposes.
| ||||||
24 | The term "partnership" does not include a syndicate, | ||||||
25 | group, pool,
joint venture, or other unincorporated | ||||||
26 | organization established for the
sole purpose of playing |
| |||||||
| |||||||
1 | the Illinois State Lottery.
| ||||||
2 | (17) Part-year resident. The term "part-year resident" | ||||||
3 | means an individual
who became a resident during the | ||||||
4 | taxable year or ceased to be a resident
during the taxable | ||||||
5 | year. Under Section 1501(a)(20)(A)(i) residence
commences | ||||||
6 | with presence in this State for other than a temporary or | ||||||
7 | transitory
purpose and ceases with absence from this State | ||||||
8 | for other than a temporary or
transitory purpose. Under | ||||||
9 | Section 1501(a)(20)(A)(ii) residence commences
with the | ||||||
10 | establishment of domicile in this State and ceases with the
| ||||||
11 | establishment of domicile in another State.
| ||||||
12 | (18) Person. The term "person" shall be construed to | ||||||
13 | mean and include
an individual, a trust, estate, | ||||||
14 | partnership, association, firm, company,
corporation, | ||||||
15 | limited liability company, or fiduciary. For purposes of | ||||||
16 | Section
1301 and 1302 of this Act, a "person" means (i) an | ||||||
17 | individual, (ii) a
corporation, (iii) an officer, agent, or | ||||||
18 | employee of a
corporation, (iv) a member, agent or employee | ||||||
19 | of a partnership, or (v)
a member,
manager, employee, | ||||||
20 | officer, director, or agent of a limited liability company
| ||||||
21 | who in such capacity commits an offense specified in | ||||||
22 | Section 1301 and 1302.
| ||||||
23 | (18A) Records. The term "records" includes all data | ||||||
24 | maintained by the
taxpayer, whether on paper, microfilm, | ||||||
25 | microfiche, or any type of
machine-sensible data | ||||||
26 | compilation.
|
| |||||||
| |||||||
1 | (19) Regulations. The term "regulations" includes | ||||||
2 | rules promulgated and
forms prescribed by the Department.
| ||||||
3 | (20) Resident. The term "resident" means:
| ||||||
4 | (A) an individual (i) who is
in this State for | ||||||
5 | other than a temporary or transitory purpose during the
| ||||||
6 | taxable year; or (ii) who is domiciled in this State | ||||||
7 | but is absent from
the State for a temporary or | ||||||
8 | transitory purpose during the taxable year;
| ||||||
9 | (B) The estate of a decedent who at his or her | ||||||
10 | death was domiciled in
this
State;
| ||||||
11 | (C) A trust created by a will of a decedent who at | ||||||
12 | his death was
domiciled
in this State; and
| ||||||
13 | (D) An irrevocable trust, the grantor of which was | ||||||
14 | domiciled in this
State
at the time such trust became | ||||||
15 | irrevocable. For purpose of this subparagraph,
a trust | ||||||
16 | shall be considered irrevocable to the extent that the | ||||||
17 | grantor is
not treated as the owner thereof under | ||||||
18 | Sections 671 through 678 of the Internal
Revenue Code.
| ||||||
19 | (21) Sales. The term "sales" means all gross receipts | ||||||
20 | of the taxpayer
not allocated under Sections 301, 302 and | ||||||
21 | 303.
| ||||||
22 | (22) State. The term "state" when applied to a | ||||||
23 | jurisdiction other than
this State means any state of the | ||||||
24 | United States, the District of Columbia,
the Commonwealth | ||||||
25 | of Puerto Rico, any Territory or Possession of the United
| ||||||
26 | States, and any foreign country, or any political |
| |||||||
| |||||||
1 | subdivision of any of the
foregoing. For purposes of the | ||||||
2 | foreign tax credit under Section 601, the
term "state" | ||||||
3 | means any state of the United States, the District of | ||||||
4 | Columbia,
the Commonwealth of Puerto Rico, and any | ||||||
5 | territory or possession of the
United States, or any | ||||||
6 | political subdivision of any of the foregoing,
effective | ||||||
7 | for tax years ending on or after December 31, 1989.
| ||||||
8 | (23) Taxable year. The term "taxable year" means the | ||||||
9 | calendar year, or
the fiscal year ending during such | ||||||
10 | calendar year, upon the basis of which
the base income is | ||||||
11 | computed under this Act. "Taxable year" means, in the
case | ||||||
12 | of a return made for a fractional part of a year under the | ||||||
13 | provisions
of this Act, the period for which such return is | ||||||
14 | made.
| ||||||
15 | (24) Taxpayer. The term "taxpayer" means any person | ||||||
16 | subject to the tax
imposed by this Act.
| ||||||
17 | (25) International banking facility. The term | ||||||
18 | international banking
facility shall have the same meaning | ||||||
19 | as is set forth in the Illinois Banking
Act or as is set | ||||||
20 | forth in the laws of the United States or regulations of
| ||||||
21 | the Board of Governors of the Federal Reserve System.
| ||||||
22 | (26) Income Tax Return Preparer.
| ||||||
23 | (A) The term "income tax return preparer"
means any | ||||||
24 | person who prepares for compensation, or who employs | ||||||
25 | one or more
persons to prepare for compensation, any | ||||||
26 | return of tax imposed by this Act
or any claim for |
| |||||||
| |||||||
1 | refund of tax imposed by this Act. The preparation of a
| ||||||
2 | substantial portion of a return or claim for refund | ||||||
3 | shall be treated as
the preparation of that return or | ||||||
4 | claim for refund.
| ||||||
5 | (B) A person is not an income tax return preparer | ||||||
6 | if all he or she does
is
| ||||||
7 | (i) furnish typing, reproducing, or other | ||||||
8 | mechanical assistance;
| ||||||
9 | (ii) prepare returns or claims for refunds for | ||||||
10 | the employer by whom he
or she is regularly and | ||||||
11 | continuously employed;
| ||||||
12 | (iii) prepare as a fiduciary returns or claims | ||||||
13 | for refunds for any
person; or
| ||||||
14 | (iv) prepare claims for refunds for a taxpayer | ||||||
15 | in response to any
notice
of deficiency issued to | ||||||
16 | that taxpayer or in response to any waiver of
| ||||||
17 | restriction after the commencement of an audit of | ||||||
18 | that taxpayer or of another
taxpayer if a | ||||||
19 | determination in the audit of the other taxpayer | ||||||
20 | directly or
indirectly affects the tax liability | ||||||
21 | of the taxpayer whose claims he or she is
| ||||||
22 | preparing.
| ||||||
23 | (27) Unitary business group. | ||||||
24 | (A) The term "unitary business group" means
a group | ||||||
25 | of persons related through common ownership whose | ||||||
26 | business activities
are integrated with, dependent |
| |||||||
| |||||||
1 | upon and contribute to each other. The group
will not | ||||||
2 | include those members whose business activity outside | ||||||
3 | the United
States is 80% or more of any such member's | ||||||
4 | total business activity; for
purposes of this | ||||||
5 | paragraph and clause (a)(3)(B)(ii) of Section 304,
| ||||||
6 | business
activity within the United States shall be | ||||||
7 | measured by means of the factors
ordinarily applicable | ||||||
8 | under subsections (a), (b), (c), (d), or (h)
of Section
| ||||||
9 | 304 except that, in the case of members ordinarily | ||||||
10 | required to apportion
business income by means of the 3 | ||||||
11 | factor formula of property, payroll and sales
| ||||||
12 | specified in subsection (a) of Section 304, including | ||||||
13 | the
formula as weighted in subsection (h) of Section | ||||||
14 | 304, such members shall
not use the sales factor in the | ||||||
15 | computation and the results of the property
and payroll | ||||||
16 | factor computations of subsection (a) of Section 304 | ||||||
17 | shall be
divided by 2 (by one if either
the property or | ||||||
18 | payroll factor has a denominator of zero). The | ||||||
19 | computation
required by the preceding sentence shall, | ||||||
20 | in each case, involve the division of
the member's | ||||||
21 | property, payroll, or revenue miles in the United | ||||||
22 | States,
insurance premiums on property or risk in the | ||||||
23 | United States, or financial
organization business | ||||||
24 | income from sources within the United States, as the
| ||||||
25 | case may be, by the respective worldwide figures for | ||||||
26 | such items. Common
ownership in the case of |
| |||||||
| |||||||
1 | corporations is the direct or indirect control or
| ||||||
2 | ownership of more than 50% of the outstanding voting | ||||||
3 | stock of the persons
carrying on unitary business | ||||||
4 | activity. Unitary business activity can
ordinarily be | ||||||
5 | illustrated where the activities of the members are: | ||||||
6 | (1) in the
same general line (such as manufacturing, | ||||||
7 | wholesaling, retailing of tangible
personal property, | ||||||
8 | insurance, transportation or finance); or (2) are | ||||||
9 | steps in a
vertically structured enterprise or process | ||||||
10 | (such as the steps involved in the
production of | ||||||
11 | natural resources, which might include exploration, | ||||||
12 | mining,
refining, and marketing); and, in either | ||||||
13 | instance, the members are functionally
integrated | ||||||
14 | through the exercise of strong centralized management | ||||||
15 | (where, for
example, authority over such matters as | ||||||
16 | purchasing, financing, tax compliance,
product line, | ||||||
17 | personnel, marketing and capital investment is not | ||||||
18 | left to each
member).
| ||||||
19 | (B) In no event, shall any
unitary business group | ||||||
20 | include members
which are ordinarily required to | ||||||
21 | apportion business income under different
subsections | ||||||
22 | of Section 304 except that for tax years ending on or | ||||||
23 | after
December 31, 1987 this prohibition shall not | ||||||
24 | apply to a holding company that would otherwise be a | ||||||
25 | member of a unitary business group with taxpayers that | ||||||
26 | apportion business income under any of subsections |
| |||||||
| |||||||
1 | (b), (c), (c-1), or (d) of Section 304. If a unitary | ||||||
2 | business
group would, but for the preceding sentence, | ||||||
3 | include members that are
ordinarily required to | ||||||
4 | apportion business income under different subsections | ||||||
5 | of
Section 304, then for each subsection of Section 304 | ||||||
6 | for which there are two or
more members, there shall be | ||||||
7 | a separate unitary business group composed of such
| ||||||
8 | members. For purposes of the preceding two sentences, a | ||||||
9 | member is "ordinarily
required to apportion business | ||||||
10 | income" under a particular subsection of Section
304 if | ||||||
11 | it would be required to use the apportionment method | ||||||
12 | prescribed by such
subsection except for the fact that | ||||||
13 | it derives business income solely from
Illinois. As | ||||||
14 | used in this paragraph, the phrase "United States" | ||||||
15 | means only the 50 states and the District of Columbia, | ||||||
16 | but does not include any territory or possession of the | ||||||
17 | United States or any area over which the United States | ||||||
18 | has asserted jurisdiction or claimed exclusive rights | ||||||
19 | with respect to the exploration for or exploitation of | ||||||
20 | natural resources.
| ||||||
21 | (C) Holding companies. | ||||||
22 | (i) For purposes of this subparagraph, a | ||||||
23 | "holding company" is a corporation (other than a | ||||||
24 | corporation that is a financial organization under | ||||||
25 | paragraph (8) of this subsection (a) of Section | ||||||
26 | 1501 because it is a bank holding company under the |
| |||||||
| |||||||
1 | provisions of the Bank Holding Company Act of 1956 | ||||||
2 | (12 U.S.C. 1841, et seq.) or because it is owned by | ||||||
3 | a bank or a bank holding company) that owns a | ||||||
4 | controlling interest in one or more other | ||||||
5 | taxpayers ("controlled taxpayers"); that, during | ||||||
6 | the period that includes the taxable year and the 2 | ||||||
7 | immediately preceding taxable years or, if the | ||||||
8 | corporation was formed during the current or | ||||||
9 | immediately preceding taxable year, the taxable | ||||||
10 | years in which the corporation has been in | ||||||
11 | existence, derived substantially all its gross | ||||||
12 | income from dividends, interest, rents, royalties, | ||||||
13 | fees or other charges received from controlled | ||||||
14 | taxpayers for the provision of services, and gains | ||||||
15 | on the sale or other disposition of interests in | ||||||
16 | controlled taxpayers or in property leased or | ||||||
17 | licensed to controlled taxpayers or used by the | ||||||
18 | taxpayer in providing services to controlled | ||||||
19 | taxpayers; and that incurs no substantial expenses | ||||||
20 | other than expenses (including interest and other | ||||||
21 | costs of borrowing) incurred in connection with | ||||||
22 | the acquisition and holding of interests in | ||||||
23 | controlled taxpayers and in the provision of | ||||||
24 | services to controlled taxpayers or in the leasing | ||||||
25 | or licensing of property to controlled taxpayers. | ||||||
26 | (ii) The income of a holding company which is a |
| |||||||
| |||||||
1 | member of more than one unitary business group | ||||||
2 | shall be included in each unitary business group of | ||||||
3 | which it is a member on a pro rata basis, by | ||||||
4 | including in each unitary business group that | ||||||
5 | portion of the base income of the holding company | ||||||
6 | that bears the same proportion to the total base | ||||||
7 | income of the holding company as the gross receipts | ||||||
8 | of the unitary business group bears to the combined | ||||||
9 | gross receipts of all unitary business groups (in | ||||||
10 | both cases without regard to the holding company) | ||||||
11 | or on any other reasonable basis, consistently | ||||||
12 | applied. | ||||||
13 | (iii) A holding company shall apportion its | ||||||
14 | business income under the subsection of Section | ||||||
15 | 304 used by the other members of its unitary | ||||||
16 | business group. The apportionment factors of a | ||||||
17 | holding company which would be a member of more | ||||||
18 | than one unitary business group shall be included | ||||||
19 | with the apportionment factors of each unitary | ||||||
20 | business group of which it is a member on a pro | ||||||
21 | rata basis using the same method used in clause | ||||||
22 | (ii). | ||||||
23 | (iv) The provisions of this subparagraph (C) | ||||||
24 | are intended to clarify existing law. | ||||||
25 | (D) If including the base income and factors of a | ||||||
26 | holding company in more than one unitary business group |
| |||||||
| |||||||
1 | under subparagraph (C) does not fairly reflect the | ||||||
2 | degree of integration between the holding company and | ||||||
3 | one or more of the unitary business groups, the | ||||||
4 | dependence of the holding company and one or more of | ||||||
5 | the unitary business groups upon each other, or the | ||||||
6 | contributions between the holding company and one or | ||||||
7 | more of the unitary business groups, the holding | ||||||
8 | company may petition the Director, under the | ||||||
9 | procedures provided under Section 304(f), for | ||||||
10 | permission to include all base income and factors of | ||||||
11 | the holding company only with members of a unitary | ||||||
12 | business group apportioning their business income | ||||||
13 | under one subsection of subsections (a), (b), (c), or | ||||||
14 | (d) of Section 304. If the petition is granted, the | ||||||
15 | holding company shall be included in a unitary business | ||||||
16 | group only with persons apportioning their business | ||||||
17 | income under the selected subsection of Section 304 | ||||||
18 | until the Director grants a petition of the holding | ||||||
19 | company either to be included in more than one unitary | ||||||
20 | business group under subparagraph (C) or to include its | ||||||
21 | base income and factors only with members of a unitary | ||||||
22 | business group apportioning their business income | ||||||
23 | under a different subsection of Section 304. | ||||||
24 | (E) If the unitary business group members' | ||||||
25 | accounting periods differ,
the common parent's | ||||||
26 | accounting period or, if there is no common parent, the
|
| |||||||
| |||||||
1 | accounting period of the member that is expected to | ||||||
2 | have, on a recurring basis,
the greatest Illinois | ||||||
3 | income tax liability must be used to determine whether | ||||||
4 | to
use the apportionment method provided in subsection | ||||||
5 | (a) or subsection (h) of
Section 304. The
prohibition | ||||||
6 | against membership in a unitary business group for | ||||||
7 | taxpayers
ordinarily required to apportion income | ||||||
8 | under different subsections of Section
304 does not | ||||||
9 | apply to taxpayers required to apportion income under | ||||||
10 | subsection
(a) and subsection (h) of Section
304. The | ||||||
11 | provisions of this amendatory Act of 1998 apply to tax
| ||||||
12 | years ending on or after December 31, 1998.
| ||||||
13 | (28) Subchapter S corporation. The term "Subchapter S | ||||||
14 | corporation"
means a corporation for which there is in | ||||||
15 | effect an election under Section
1362 of the Internal | ||||||
16 | Revenue Code, or for which there is a federal election
to | ||||||
17 | opt out of the provisions of the Subchapter S Revision Act | ||||||
18 | of 1982 and
have applied instead the prior federal | ||||||
19 | Subchapter S rules as in effect on July
1, 1982.
| ||||||
20 | (30) Foreign person. The term "foreign person" means | ||||||
21 | any person who is a nonresident alien individual and any | ||||||
22 | nonindividual entity, regardless of where created or | ||||||
23 | organized, whose business activity outside the United | ||||||
24 | States is 80% or more of the entity's total business | ||||||
25 | activity.
|
| |||||||
| |||||||
1 | (b) Other definitions.
| ||||||
2 | (1) Words denoting number, gender, and so forth,
when | ||||||
3 | used in this Act, where not otherwise distinctly expressed | ||||||
4 | or manifestly
incompatible with the intent thereof:
| ||||||
5 | (A) Words importing the singular include and apply | ||||||
6 | to several persons,
parties or things;
| ||||||
7 | (B) Words importing the plural include the | ||||||
8 | singular; and
| ||||||
9 | (C) Words importing the masculine gender include | ||||||
10 | the feminine as well.
| ||||||
11 | (2) "Company" or "association" as including successors | ||||||
12 | and assigns. The
word "company" or "association", when used | ||||||
13 | in reference to a corporation,
shall be deemed to embrace | ||||||
14 | the words "successors and assigns of such company
or | ||||||
15 | association", and in like manner as if these last-named | ||||||
16 | words, or words
of similar import, were expressed.
| ||||||
17 | (3) Other terms. Any term used in any Section of this | ||||||
18 | Act with respect
to the application of, or in connection | ||||||
19 | with, the provisions of any other
Section of this Act shall | ||||||
20 | have the same meaning as in such other Section.
| ||||||
21 | (Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11; | ||||||
22 | 97-636, eff. 6-1-12 .)
| ||||||
23 | Section 99. Effective date. This Act takes effect upon | ||||||
24 | becoming law.
|