SB 2115 — PROP TX-EXEMPT HARBOR

SB2115 EngrossedEnrolled LRB096 09480 HLH 19637 b AN ACT concerning revenue.

The PropertyIllinois Estate and Generation-Skipping Transfer Tax CodeAct is amended by changing Section 15-1852 as follows:

(35 ILCS 200/15-185)405/2) Sec.(from Ch.

15-185.120, par.

Exemption405A-2) forSec. leaseback property and qualified leased property.

(a)2. Notwithstanding anything in this Code to the contrary, all property owned by a municipality with a population of over 500,000 inhabitants, or a unit of local government whose jurisdiction includes territory located in whole or in part within a municipality with a population of over 500,000 inhabitants, shall remain exempt from taxation and any leasehold interest in that property shall not be subject to taxation under Section 9-195 if the property is directly or indirectly leased, sold, or otherwise transferred to another entity whose property is not exempt and immediately thereafter is the subject of a leaseback or other agreement that directly or indirectly gives the municipality or unit of local government (i) a right to use, control, and possess the property or (ii) a right to require the other entity, or the other entity's designee or assignee, to use the property in the SB2115 Engrossed - 2 - LRB096 09480 HLH 19637 b performance of services for the municipality or unit of local government.

PropertyDefinitions. shall no longer be exempt under this subsection as of the date when the right of the municipality or unit of local government to use, control, and possess the property or to require the performance of services is terminated and the municipality or unit of local government no longer has any option to purchase or otherwise reacquire the interest in the property which was transferred by the municipality or unit of local government.

(b)"Federal Notwithstandingestate anythingtax" inmeans thisthe Codetax due to the contrary,United allStates property owned by a municipality with arespect populationto of over 500,000 inhabitants, or a unittaxable oftransfer local government whose jurisdiction includes territory located in whole or in part within a municipality with a population of over 500,000 inhabitants, shall remain exempt from taxation and any leasehold interest in that property is not subject to taxation under SectionChapter 9-19511 if the property, including dedicated public property, is used by a municipality or other unit of local government for the purposeInternal ofRevenue anCode. airport or a harbor or parking or for waste disposal or processing and is leased for continued use for the same purpose to another entity whose property is not exempt.

For"Federal thegeneration-skipping purposestransfer oftax" thismeans subsectionthe (b),tax "airport"due doesto notthe includeUnited anyStates airportwith property,respect asto defineda taxable transfer under SectionChapter 1013 of the O'HareInternal ModernizationRevenue Act.Code.

Any"Federal transactionreturn" describedmeans underthe thisfederal subsectionestate musttax bereturn SB2115with Engrossedrespect -to 3the -federal LRB096estate 09480tax HLHand 19637means bthe undertakenfederal ingeneration-skipping accordancetransfer tax return with allrespect appropriateto the federal lawsgeneration-skipping andtransfer regulations.tax.

(c)"Federal Fortransfer purposestax" of this Section, "municipality" means a municipality as defined in Section 1-1-2 of the Illinoisfederal Municipalestate Code,tax andor "unit of local government" means a unit of local government as defined in Article VII, Section 1 of the Constitutionfederal ofgeneration-skipping thetransfer Statetax. of Illinois.

The"Illinois provisionsestate oftax" thismeans Sectionthe supersedetax anddue controlto overthis anyState conflictingwith provisionsrespect ofto thisa Code.taxable transfer.

"Illinois generation-skipping transfer tax" means the tax due to this State with respect to a taxable transfer that gives SB2115 Enrolled - 2 - LRB096 09480 HLH 19637 b rise to a federal generation-skipping transfer tax.

"Illinois transfer tax" means the Illinois estate tax or the Illinois generation-skipping transfer tax.

"Internal Revenue Code" means, unless otherwise provided, the Internal Revenue Code of 1986, as amended from time to time.

"Non-resident trust" means a trust that is not a resident of this State for purposes of the Illinois Income Tax Act, as amended from time to time.

"Person" means and includes any individual, trust, estate, partnership, association, company or corporation.

"Qualified heir" means a qualified heir as defined in Section 2032A(e)(1) of the Internal Revenue Code.

"Resident trust" means a trust that is a resident of this State for purposes of the Illinois Income Tax Act, as amended from time to time.

"State" means any state, territory or possession of the United States and the District of Columbia.

"State tax credit" means:

(a) For persons dying on or after January 1, 2003 and through December 31, 2005, an amount equal to the full credit calculable under Section 2011 or Section 2604 of the Internal Revenue Code as the credit would have been computed and allowed under the Internal Revenue Code as in effect on December 31, 2001, without the reduction in the State Death Tax Credit as provided in Section 2011(b)(2) or the termination of the State SB2115 Enrolled - 3 - LRB096 09480 HLH 19637 b Death Tax Credit as provided in Section 2011(f) as enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001, but recognizing the increased applicable exclusion amount through December 31, 2005.

(b) For persons dying after December 31, 2005 and on or before December 31, 2009, an amount equal to the full credit calculable under Section 2011 or 2604 of the Internal Revenue Code as the credit would have been computed and allowed under the Internal Revenue Code as in effect on December 31, 2001, without the reduction in the State Death Tax Credit as provided in Section 2011(b)(2) or the termination of the State Death Tax Credit as provided in Section 2011(f) as enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001, but recognizing the exclusion amount of only $2,000,000 , and with reduction to the adjusted taxable estate for any qualified terminable interest property election as defined in subsection (b-1) of this Section.

(b-1) The person required to file the Illinois return may elect on a timely filed Illinois return a marital deduction for qualified terminable interest property under Section 2056(b)(7) of the Internal Revenue Code for purposes of the Illinois estate tax that is separate and independent of any qualified terminable interest property election for federal estate tax purposes.

For purposes of the Illinois estate tax, the inclusion of property in the gross estate of a surviving spouse is the same as under Section 2044 of the Internal SB2115 Enrolled - 4 - LRB096 09480 HLH 19637 b Revenue Code.

In the case of any trust for which a State or federal qualified terminable interest property election is made, the trustee may not retain non-income producing assets for more than a reasonable amount of time without the consent of the surviving spouse.

(c) For persons dying after December 31, 2009, the credit for state tax allowable under Section 2011 or Section 2604 of the Internal Revenue Code.

"Taxable transfer" means an event that gives rise to a state tax credit, including any credit as a result of the imposition of an additional tax under Section 2032A(c) of the Internal Revenue Code.

"Transferee" means a transferee within the meaning of Section 2603(a)(1) and Section 6901(h) of the Internal Revenue Code.

"Transferred property" means:

(1) With respect to a taxable transfer occurring at the death of an individual, the deceased individual's gross estate as defined in Section 2031 of the Internal Revenue Code.

(2) With respect to a taxable transfer occurring as a result of a taxable termination as defined in Section 2612(a) of the Internal Revenue Code, the taxable amount determined under Section 2622(a) of the Internal Revenue Code.

SB2115 Enrolled - 5 - LRB096 09480 HLH 19637 b (3) With respect to a taxable transfer occurring as a result of a taxable distribution as defined in Section 2612(b) of the Internal Revenue Code, the taxable amount determined under Section 2621(a) of the Internal Revenue Code.

(4) With respect to an event which causes the imposition of an additional estate tax under Section 2032A(c) of the Internal Revenue Code, the qualified real property that was disposed of or which ceased to be used for the qualified use, within the meaning of Section 2032A(c)(1) of the Internal Revenue Code.

"Trust" includes a trust as defined in Section 2652(b)(1) of the Internal Revenue Code.

93-19,93-30, eff.

6-20-03;6-20-03.) Section 99.

94-750, eff.

5-9-06.) Section 99.