HB 2134 — INC TAX-TECH

093_HB2134HB2134 Engrossed LRB093 04749 SJM 04805 b AN ACT concerning taxes.

(3) In the case of an individual, trust or estate, for taxable years beginning after June 30, 1989, an amount equal to 3% of the taxpayer's net income for the HB2134 Engrossed -2- LRB093 04749 SJM 04805 b taxable year.

The personal property tax replacement income tax imposed by this subsection and subsection (c) of this Section in the case of a corporation, other than a Subchapter S corporation and except as adjusted by subsection (d-1), shall HB2134 Engrossed -3- LRB093 04749 SJM 04805 b be an additional amount equal to 2.85% of such taxpayer's net income for the taxable year, except that beginning on January 1, 1981, and thereafter, the rate of 2.85% specified in this subsection shall be reduced to 2.5%, and in the case of a partnership, trust or a Subchapter S corporation shall be an additional amount equal to 1.5% of such taxpayer's net income for the taxable year.

(1) For the purposes of subsection (d-1), in no event shall the sum of the rates of tax imposed by HB2134 Engrossed -4- LRB093 04749 SJM 04805 b subsections (b) and (d) be reduced below the rate at which the sum of:

There shall be allowed an additional credit equal to .5% of the basis of qualified property placed in service during the taxable HB2134 Engrossed -5- LRB093 04749 SJM 04805 b year, provided such property is placed in service on or after July 1, 1986, and the taxpayer's base employment within Illinois has increased by 1% or more over the preceding year as determined by the taxpayer's employment records filed with the Illinois Department of Employment Security.

For tax years ending on or after December 31, 1987, and on or before December 31, 1988, the credit shall be allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, whether it exceeds the original liability or the liability as later amended, such excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit years if the taxpayer (i) makes investments which cause the creation of a minimum of 2,000 full-time equivalent jobs in Illinois, (ii) is located in an enterprise zone established pursuant to the Illinois Enterprise Zone Act HB2134 Engrossed -6- LRB093 04749 SJM 04805 b and (iii) is certified by the Department of Commerce and Community Affairs as complying with the requirements specified in clause (i) and (ii) by July 1, 1986.

(D) is used in Illinois by a taxpayer who is HB2134 Engrossed -7- LRB093 04749 SJM 04805 b primarily engaged in manufacturing, or in mining coal or fluorite, or in retailing;

(7) If during any taxable year, any property ceases to be qualified property in the hands of the taxpayer within 48 months after being placed in service, or the situs of any qualified property is moved outside Illinois HB2134 Engrossed -8- LRB093 04749 SJM 04805 b within 48 months after being placed in service, the Personal Property Tax Replacement Income Tax for such taxable year shall be increased.

The election to pass through the HB2134 Engrossed -9- LRB093 04749 SJM 04805 b credits shall be irrevocable.

The credit shall be available only in the taxable year in which the property is placed in service in the Enterprise Zone and shall not be allowed to the extent that it would reduce a taxpayer's liability for the tax imposed by subsections HB2134 Engrossed -10- LRB093 04749 SJM 04805 b (a) and (b) of this Section to below zero.

HB2134 Engrossed -11- LRB093 04749 SJM 04805 b (4) If the basis of the property for federal income tax depreciation purposes is increased after it has been placed in service in the Enterprise Zone by the taxpayer, the amount of such increase shall be deemed property placed in service on the date of such increase in basis.

(1) A taxpayer conducting a trade or business in an enterprise zone or a High Impact Business designated by the Department of Commerce and Community Affairs conducting a trade or business in a federally designated Foreign Trade Zone or Sub-Zone shall be allowed a credit against the tax imposed by subsections (a) and (b) of this Section in the amount of $500 per eligible employee HB2134 Engrossed -12- LRB093 04749 SJM 04805 b hired to work in the zone during the taxable year.

An employee is employed in an enterprise zone or federally designated Foreign Trade Zone or Sub-Zone if his services are rendered HB2134 Engrossed -13- LRB093 04749 SJM 04805 b there or it is the base of operations for the services performed.

The credit shall not be available (i) until the minimum investments in qualified HB2134 Engrossed -14- LRB093 04749 SJM 04805 b property set forth in subdivision (a)(3)(A) of Section 5.5 of the Illinois Enterprise Zone Act have been satisfied or (ii) until the time authorized in subsection (b-5) of the Illinois Enterprise Zone Act for entities designated as High Impact Businesses under subdivisions (a)(3)(B), (a)(3)(C), and (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone Act, and shall not be allowed to the extent that it would reduce a taxpayer's liability for the tax imposed by subsections (a) and (b) of this Section to below zero.

Changes made in this subdivision (h)(1) by Public Act 88-670 restore changes made by Public Act 85-1182 and HB2134 Engrossed -15- LRB093 04749 SJM 04805 b reflect existing law.

(6) If during any taxable year ending on or before December 31, 1996, any property ceases to be qualified property in the hands of the taxpayer within 48 months after being placed in service, or the situs of any qualified property is moved outside Illinois within 48 months after being placed in service, the tax imposed HB2134 Engrossed -16- LRB093 04749 SJM 04805 b under subsections (a) and (b) of this Section for such taxable year shall be increased.

Any credit earned on or after December 31, 1986 under HB2134 Engrossed -17- LRB093 04749 SJM 04805 b this subsection which is unused in the year the credit is computed because it exceeds the tax liability imposed by subsections (a) and (b) for that year (whether it exceeds the original liability or the liability as later amended) may be carried forward and applied to the tax liability imposed by subsections (a) and (b) of the 5 taxable years following the excess credit year.

For partners, shareholders of subchapter S corporations, and owners of limited liability companies, if HB2134 Engrossed -18- LRB093 04749 SJM 04805 b the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this subsection (j) to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and subchapter S of the Internal Revenue Code.

For purposes of this subsection, "qualifying expenditures" means the qualifying expenditures as defined for the federal credit for increasing research activities HB2134 Engrossed -19- LRB093 04749 SJM 04805 b which would be allowable under Section 41 of the Internal Revenue Code and which are conducted in this State, "qualifying expenditures for increasing research activities in this State" means the excess of qualifying expenditures for the taxable year in which incurred over qualifying expenditures for the base period, "qualifying expenditures for the base period" means the average of the qualifying expenditures for each year in the base period, and "base period" means the 3 taxable years immediately preceding the taxable year for which the determination is being made.

No inference shall be drawn from this amendatory Act of the 91st General Assembly in construing this Section for HB2134 Engrossed -20- LRB093 04749 SJM 04805 b taxable years beginning before January 1, 1999.

For purposes of this Section, "taxpayer" includes a person whose tax attributes the taxpayer has succeeded to under Section 381 of the Internal Revenue Code and "related party" includes the persons disallowed a deduction for losses by paragraphs (b), (c), and (f)(1) of Section 267 of the HB2134 Engrossed -21- LRB093 04749 SJM 04805 b Internal Revenue Code by virtue of being a related taxpayer, as well as any of its partners.

To perfect the transfer, the assignor shall record the transfer in the chain of title for the site HB2134 Engrossed -22- LRB093 04749 SJM 04805 b and provide written notice to the Director of the Illinois Department of Revenue of the assignor's intent to sell the remediation site and the amount of the tax credit to be transferred as a portion of the sale.

"Qualified education expense" means the amount incurred on behalf of a qualifying pupil in excess of $250 for tuition, book fees, and lab fees at the school in which the HB2134 Engrossed -23- LRB093 04749 SJM 04805 b pupil is enrolled during the regular school year.