| ||||
| Public Act 100-0519 | ||||
| ||||
| ||||
AN ACT concerning civil law.
| ||||
Be it enacted by the People of the State of Illinois, | ||||
represented in the General Assembly:
| ||||
Section 5. The Principal and Income Act is amended by | ||||
changing Sections 10 and 15 as follows:
| ||||
(760 ILCS 15/10) (from Ch. 30, par. 510)
| ||||
Sec. 10. Disposition of natural resources.
| ||||
(a) If any part of the principal consists of a right to | ||||
receive
royalties, overriding or limited royalties, working | ||||
interests, production
payments, net profit interests, or other | ||||
interest in minerals, oil, gas or
other natural resources in, | ||||
on or under land, except timber, water, soil,
sod, dirt, peat, | ||||
turf or mosses, the receipts from taking the natural
resources | ||||
from the land shall be allocated as follows:
| ||||
(1) if received as rent on a lease or extension | ||||
payments on a lease, the
receipts are income;
| ||||
(2) if received from a production payment, the receipts | ||||
are income to
the extent of any factor for interest or its | ||||
equivalent provided in the
governing instrument. There | ||||
shall be allocated to principal the fraction
of the balance | ||||
of the receipts which the unrecovered cost of the | ||||
production
payment bears to the balance owed on the | ||||
production payment, exclusive of
any factor for interest or | ||||
its equivalent. The receipts not allocated to
principal are | ||
income;
| ||
(3) except for oil or gas from non-coal formations, if | ||
received as a royalty, overriding or limited royalty, or | ||
bonus,
or from a working, net profit, or any other interest | ||
in minerals, oil, gas,
or other natural resources, receipts | ||
not provided for in the preceding
paragraphs of this | ||
Section shall be apportioned on a yearly basis in
| ||
accordance with this paragraph whether or not any natural | ||
resource was
being taken from the land at the time the | ||
trust was established. The
trustee shall allocate to | ||
principal as an allowance for depletion the
greater of (i) | ||
that portion, if any, of the gross receipts that is allowed
| ||
as a depletion deduction for federal income tax purposes | ||
and (ii) 10% of
the gross receipts, except that that | ||
allocation shall not exceed 50% of the
net receipts | ||
remaining after payment of all expenses, direct and | ||
indirect,
computed without the allowance for depletion. | ||
The trustee shall allocate
the balance of the gross | ||
receipts, after payment therefrom of all expenses,
direct | ||
and indirect, to income; . | ||
(4) with respect only to nontrust estates described in | ||
Section 15 of this Act, for oil or gas from non-coal | ||
formations, proceeds from the sale of such minerals | ||
produced and received as royalty, overriding royalty, | ||
limited royalty, working interest, net profit interest, | ||
time-limited interest or term interest, or lease bonus | ||
shall be deemed income.
| ||
(b) If an item of depletable property of a type specified | ||
in this Section
is held on the effective date of this Act, | ||
receipts from the property shall
be allocated in the manner | ||
used before the effective date of this Act, but
as to all | ||
depletable property acquired after the effective date of this
| ||
Act by an existing or new trust, the method of allocation | ||
provided herein shall be used.
| ||
(c) If any part of the principal consists of timber, water, | ||
soil, sod,
dirt, peat, turf, or mosses, the receipts from those | ||
resources shall be
allocated in accordance with Section 3.
| ||
(Source: P.A. 87-714.)
| ||
(760 ILCS 15/15) (from Ch. 30, par. 515)
| ||
Sec. 15. Non-trust estates.
| ||
(a) The provisions of this Act, as far as applicable, shall | ||
apply to
nontrust estates subject to any agreement of the | ||
parties or any specific
direction by statute or otherwise, and | ||
the references to trusts and
trustees shall be read as applying | ||
to nontrust estates and to legal tenants
(including life | ||
tenants, tenants for terms of years, or any other period of
| ||
tenancy) and remaindermen as the context requires; except that | ||
if either a
legal tenant or a remainderman has incurred a | ||
charge for his benefit
without the consent or agreement of the | ||
other, he shall pay that charge
in full.
| ||
(b) If the costs of an improvement, including special taxes | ||
or
assessments, representing an addition to value of property | ||
forming part of
the principal cannot reasonably be expected to | ||
outlast the legal tenancy,
the costs shall be paid by the legal | ||
tenant. If the improvement can
reasonably be expected to | ||
outlast the legal tenancy, only a portion of the
costs shall be | ||
paid by the legal tenant and the balance by the
remainderman. | ||
The portion payable by the legal tenant shall be that
fraction | ||
of the total found by dividing the present value of the legal
| ||
tenancy by the present value of an estate of the same form as | ||
that of the
legal tenancy but limited to a period corresponding | ||
to the reasonably
expected duration of the improvement. The | ||
computation of present value of
the legal tenancy shall be | ||
computed on the basis of two-thirds of the value
determined by | ||
use of the tables set forth under Section 7520 of the
Internal | ||
Revenue Code of 1986 and the regulations thereunder for the
| ||
calculation of the values of annuities, life estates, and terms | ||
for years,
and no other evidence of duration or expectancy | ||
shall be considered, except
that any legal tenancy or remainder | ||
interest acquired for consideration
based on those tables shall | ||
be computed on the basis of the tables in
effect at the time | ||
acquired. The method of computing the present value of
a legal | ||
tenancy established in this subsection shall apply to all legal
| ||
tenancies and remainders created after January 1, 1992 and to | ||
all legal
tenancies and remainders which were acquired for | ||
consideration if the
amount of the consideration was based on | ||
the tables set forth under Section
2031 or 7520 of the Internal | ||
Revenue Code then in effect.
| ||
(c) If a legal tenant has leased any lands for agricultural | ||
or farming
operations and his legal tenancy terminates on or | ||
after the day any rent
has become due and payable, he or his | ||
representative is entitled to recover
that rent from the | ||
lessee; and if a legal tenancy terminates before the
rent under | ||
the lease is fully paid, the legal tenant or his representative
| ||
is entitled to recover from the lessee:
| ||
(1) that portion of the rent not due which the number | ||
of days from
the beginning of the period for which the rent | ||
is not due to the date of
the termination of the legal | ||
tenancy bears to the total number of days in
the period for | ||
which the rent is unpaid; and
| ||
(2) that portion of the landlord's share of actual | ||
expenses paid
before the termination of the legal tenancy | ||
and not previously recovered by
him, which the number of | ||
days in the lease period on and after the
termination bears | ||
to the total number of days in the lease period. | ||
(d) This Section does not apply to life estates and | ||
remainder interests in oil or gas from non-coal formations, or | ||
royalties or overriding royalties created under leases of such | ||
minerals.
| ||
(Source: P.A. 82-390; 87-714.)
| ||