Income/Franchise Tax - Illinois: New law revises previous budget bill's replacement taxation of partnership income
H.B. 2239, signed by gov. 12/16/09. New law addresses provisions included in the State's previously enacted 2010 Budget Implementation Act (Public Act 96-0045), concerning the computation of the Illinois replacement tax for partnerships. Under that Public Act 96-0045, only guaranteed payments paid to partners for personal services rendered were considered deductible for Illinois replacement tax purposes. Now, effective immediately, new law restores the previous deduction allowed for personal services income of a partnership or "a reasonable allowance for compensation paid or accrued for services rendered by partners to the partnership, whichever is greater." Public Act 96-0045 had specified that this deduction was available only for taxable years ending before December 31, 2009; now, the deduction applies to all tax years.
