SB1147 Summary

• Amends the Illinois Income Tax Act to impose a surcharge on income from asset sales by gaming and horse racing licensees for taxable years 2019-2027, equal to the federal income tax liability attributable to those sales and exchanges.

• Creates exemptions to the gaming/racing surcharge for transfers resulting from bankruptcy, license cancellation, death of owner, public company acquisitions, parent-to-subsidiary transfers, transfers between initial co-owners, and family inheritance transfers.

• Establishes a pass-through entity tax allowing partnerships and S-corporations to elect an entity-level tax of 4.95% on net income for taxable years ending 2021-2025, with partners/shareholders receiving a corresponding credit against individual income tax.

• Imposes a similar surcharge on medical cannabis registrants for income from asset sales during the Compassionate Use of Medical Cannabis Program, with comparable exemptions for forced transfers and family succession.

• Allows deductions for distributions to retired partners under the pass-through entity tax election for taxable years ending on or after December 31, 2023.