IL HB5544

Amends Section 405 of the Illinois Income Tax Act to add new provisions governing net loss carryover deductions for trusts and estates.

When a trust or estate terminates and has excess net loss carryover deductions beyond its taxable income for the final year, non-individual beneficiaries receive an allocable portion of that excess deduction in their taxable year when the trust or estate ends.

Deductions passed to beneficiaries are treated as carryover deductions under Section 207 but may only be carried forward for the remaining years available to the trust or estate, minus years already used.

The carryforward period begins in the taxable year the beneficiary first receives the deduction, which counts as the initial carryforward year for the beneficiary.

Applies to trusts and estates terminating after December 31, 2013, and is exempt from Section 250 limitations of the Illinois Income Tax Act.