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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 | adding Section 234 as follows:
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| 6 | (35 ILCS 5/234 new) | |||||||||||||||||||
| 7 | Sec. 234. Agricultural assets; beginning farmer. | |||||||||||||||||||
| 8 | (a) For taxable years beginning on or after January 1, | |||||||||||||||||||
| 9 | 2024, an owner of an agricultural asset may take
a credit | |||||||||||||||||||
| 10 | against the tax imposed under subsections (a) and (b) of | |||||||||||||||||||
| 11 | Section 201 for the sale or
rental of the agricultural asset to | |||||||||||||||||||
| 12 | a beginning farmer in the
amount approved by the Department of | |||||||||||||||||||
| 13 | Agriculture. The amount of the credit shall be equal to: | |||||||||||||||||||
| 14 | (1) 5% of the lesser of the sale price or the
fair | |||||||||||||||||||
| 15 | market value of the agricultural asset, up to a maximum
of | |||||||||||||||||||
| 16 | $32,000; or | |||||||||||||||||||
| 17 | (2) 10% of the gross rental income in each of
the | |||||||||||||||||||
| 18 | first, second, and third years of a rental agreement, up
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| 19 | to a maximum of $7,000 per year. | |||||||||||||||||||
| 20 | (b) The owner of the agricultural asset must apply to the | |||||||||||||||||||
| 21 | Department of Agriculture for approval of the tax credit under | |||||||||||||||||||
| 22 | this Section. The application must: | |||||||||||||||||||
| 23 | (1) identify the beginning farmer to whom the assets | |||||||||||||||||||
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| 1 | are sold or rented; | ||||||
| 2 | (2) specify whether the beginning farmer is a brother, | ||||||
| 3 | sister, ancestor, or lineal descendant of the taxpayer; | ||||||
| 4 | and | ||||||
| 5 | (3) contain any other information deemed necessary by | ||||||
| 6 | the Department of Agriculture. | ||||||
| 7 | The Department of Agriculture may not approve more than | ||||||
| 8 | $5,000,000 in credits under this Section in any one taxable | ||||||
| 9 | year. | ||||||
| 10 | (c) In no event shall a credit under this Section reduce | ||||||
| 11 | the taxpayer's liability to less than zero. If the amount of | ||||||
| 12 | the credit exceeds the tax liability for the year, the excess | ||||||
| 13 | may be carried forward and applied to the tax liability of the | ||||||
| 14 | 5 taxable years following the excess credit year. The tax | ||||||
| 15 | credit shall be applied to the earliest year for which there is | ||||||
| 16 | a tax liability. If there are credits for more than one year | ||||||
| 17 | that are available to offset a liability, the earlier credit | ||||||
| 18 | shall be applied first. | ||||||
| 19 | (d) For partners, shareholders of Subchapter S | ||||||
| 20 | corporations, and owners of limited liability companies, if | ||||||
| 21 | the liability company is treated as a partnership for the | ||||||
| 22 | purposes of federal and State income taxation, there shall be | ||||||
| 23 | allowed a credit under this Section to be determined in | ||||||
| 24 | accordance with the determination of income and distributive | ||||||
| 25 | share of income under Sections 702 and 704 and Subchapter S of | ||||||
| 26 | the Internal Revenue Code. | ||||||
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| 1 | (e) As used in this Section: | ||||||
| 2 | "Agricultural asset" means agricultural land, livestock,
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| 3 | facilities, buildings and machinery used for farming. | ||||||
| 4 | "Beginning farmer" means a person who: | ||||||
| 5 | (1) has demonstrated experience in agriculture or a | ||||||
| 6 | related field or has transferable skills, as determined by | ||||||
| 7 | the Department of Agriculture; | ||||||
| 8 | (2) has not received income from agricultural | ||||||
| 9 | production for more than the 10 most recent taxable years; | ||||||
| 10 | (3) intends to engage in agricultural production | ||||||
| 11 | within the State and to provide the majority of the labor | ||||||
| 12 | and management involved in the agricultural production; | ||||||
| 13 | (4) has obtained certification from the Department of | ||||||
| 14 | Agriculture as a beginning farmer; | ||||||
| 15 | (5) is not, and whose spouse is not, a partner, | ||||||
| 16 | member, shareholder, or trustee of the owner of the | ||||||
| 17 | agricultural asset; and | ||||||
| 18 | (6) is not a brother, sister, ancestor, or lineal | ||||||
| 19 | descendant of the owner of the agricultural asset. | ||||||
| 20 | "Farming" means the active use, management, and operation | ||||||
| 21 | of real
and personal property for agricultural production. | ||||||
| 22 | "Owner of an agricultural asset" means an individual, | ||||||
| 23 | trust or
pass-through entity that is the owner in fee simple of | ||||||
| 24 | agricultural
land or has legal title to any other agricultural | ||||||
| 25 | asset. The
term does not include an equipment dealer, | ||||||
| 26 | livestock dealer, or
comparable entity that is engaged in the | ||||||
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| 1 | business of selling
agricultural assets for profit and that is | ||||||
| 2 | not engaged in
farming as its primary business activity. | ||||||
| 3 | (f) This Section is exempt from the provisions of Section | ||||||
| 4 | 250.
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| 5 | Section 99. Effective date. This Act takes effect upon | ||||||
| 6 | becoming law.
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