Illinois: Partnerships Obtain Relief from Negative Legislation!
The Governor of Illinois signed legislation (HB 2239) yesterday repealing the impact of the 2010 Budget Implementation Act (SB 1912 and Public Act 96-0045).SB 1912 would have most likely resulted in partnerships paying more tax. For tax years ending on or after December 31, 2009, partnerships would have only been allowed to deduct guaranteed payments for services rendered by partners, and would not have been allowed to deduct "reasonable compensation."
HB 2239 states, for tax years ending on or after December 31, 2009, partnerships are permitted to subtract the greater of (1) income of the partnership that constitutes personal service income as defined in IRC Sec. 1348(b)(1) or (2) a reasonable allowance for compensation paid or accrued for services rendered by the partners to the partnership.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at email@example.com.
Because state and local taxes are deceptively simple and endlessly complicated.