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Public Act 91-0923
SB1690 Enrolled LRB9111451DJcd
AN ACT to amend the Principal and Income Act by changing
Section 14.
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 Section 14 as follows:
(760 ILCS 15/14) (from Ch. 30, par. 514)
Sec. 14. Charges against income and principal.
(a) The following charges shall be made against income:
(1) ordinary expenses, other than compensation as
provided in paragraph (6) of this subsection (a),
incurred by the trustee in connection with the
administration or protection of the trust property,
including regularly recurring taxes assessed against any
portion of the principal, water rates, premiums on
insurance taken upon the interests of the income
beneficiary, remainderman, or trustee, interest paid by
the trustee (except interest on taxes as provided in
paragraphs paragraph (7) and (8) of this subsection and
paragraphs (5), (6), and (7) of subsection (c)), ordinary
repairs and maintenance;
(2) (blank); a reasonable allowance for
depreciation on property which is subject to depreciation
under generally accepted accounting principles, but no
allowance shall be made for depreciation of any property
subject to a trust under an instrument executed before
the effective date of this Act, or for depreciation of
that portion of any real property used by a beneficiary
as a residence; such allowance shall be charged only
against the income from the property subject to
depreciation and shall not accrue from year to year;
(3) one-half of court costs, attorney's fees and
other expenses and fees on any judicial accounting,
unless the court directs otherwise;
(4) court costs, attorney's fees and other expenses
and fees on other judicial proceedings if the matter
primarily concerns the income interest, unless the court
directs otherwise;
(5) special compensation and expenses of or
incurred by the trustee in connection with income;
(6) one-half of the regular compensation of the
trustee, attorney, investment counsel, custodian or
accountant, subject to paragraph (1) of subsection (c);
(7) any tax, including interest and penalties
thereon, levied upon receipts defined as income under
this Act or the trust instrument and payable by the
trustee;.
(8) one-half of the interest on all estate,
inheritance, and generation-skipping transfer taxes
apportioned to the trust and one-half of the interest on
any penalties on those taxes.
(a-5) A reasonable allowance for depreciation on
property that is subject to depreciation under generally
accepted accounting principles may be charged by the trustee,
but no allowance shall be made for depreciation of that
portion of any real property used by a beneficiary as a
residence. Such an allowance shall be charged only against
the income from the property subject to depreciation and
shall not accrue from year to year.
(b) If charges against income are of an unusual amount,
the trustee may by means of reserves or other reasonable
means charge them over a reasonable period of time and
withhold from distribution sufficient sums to regularize
distributions.
(c) The following charges shall be made against
principal:
(1) one-half of the regular compensation of the
trustee, attorney, investment counsel, custodian or
accountant shall be paid out of principal, provided that,
if in the judgment of the trustee, the charging of a part
or all of that portion of such compensation to principal
is impracticable because of the lack of sufficient
principal cash and readily marketable intangible personal
property, or inadvisable because of the nature of the
assets, that part or all of such compensation shall be
paid out of income. The decision of the trustee to pay a
larger portion or all of such compensation out of income
shall be conclusive, and the income of the trust shall
not be entitled to reimbursement from principal at any
subsequent time or times;
(2) special compensation and expenses of or
incurred by the trustee in connection with principal,
trustee's compensation computed on principal as an
acceptance, distribution or termination fee, and, unless
the court directs otherwise, court costs, attorney's fees
and other expenses and fees in judicial proceedings
primarily concerning matters of principal or in any
action to construe the trust or protect it or the
property or assure the title to any trust property;
(3) charges not provided for in subsection (a),
including the cost of investing and reinvesting
principal, the payments on principal of an indebtedness
(including a mortgage amortized by periodic payments of
principal), and expenses for preparation of property for
rental or sale;
(4) extraordinary repairs or expenses incurred in
making a capital improvement to principal, including
special assessments;
(4.5) costs and disbursements related to
environmental matters, including reclamation, assessing
environmental conditions, remedying and removing
environmental contamination, monitoring remedial
activities and the release of substances, preventing
future releases of substances, collecting amounts from
persons liable or potentially liable for the costs of
those activities, penalties imposed under environmental
laws or regulations and other payments made to comply
with those laws or regulations, statutory or common law
claims by third parties, and defending claims based on
environmental matters;
(5) any tax, including interest and penalties
thereon, levied upon profit, gain, or other receipts
allocated to principal notwithstanding denomination of
the tax as an income tax by the taxing authority;
(6) any tax, including interest and penalties
thereon, levied upon amounts not actually received by the
trustee before the date the tax is payable, including
extensions, notwithstanding the denomination of the tax
as an income tax by the taxing authority, except that if,
in the judgment of the trustee, the charging against
principal of part or all of the tax is impracticable
because of a lack of sufficient principal cash and
readily marketable intangible personal property or
inadvisable because of the nature of the assets that part
or all of the tax shall be charged against income. The
decision of the trustee to charge part or all of the tax
against income shall be conclusive, and the income of the
trust shall not be entitled to reimbursement from
principal at any subsequent time or times. If any part
or all of the amount on which tax was previously paid and
charged against principal is later received by the
trustee and if the receipt is otherwise credited to
income, then when the amount is received the portion of
the tax previously paid and charged against principal
attributable to the amount so received shall be deducted
from the amount and credited to principal;
(7) all if an estate, inheritance, and or
generation-skipping transfer taxes and any penalties on
the taxes apportioned to the trust and one-half of the
interest on those taxes and penalties tax is levied in
respect of a trust in which both an income beneficiary
and a remainderman have an interest, any amount
apportioned to the trust, including interest and
penalties, even though the income beneficiary also has
rights in the principal, except that interest on any
portion of the tax deferred under a provision of the
statute imposing the tax shall be charged against income;
(8) a net loss in any fiscal or calendar year from
the operation of a business or an agricultural or farming
operation, to be repaid from income as available in the
succeeding year or years;
(9) monies paid for the purchase of options.
(Source: P.A. 82-390; 87-714.)
Section 99. Effective date. This Act takes effect upon
becoming law.
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