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To whom does the surcharge apply?

•

Schedule K-1-P Lines 53a and 53b on Schedule 4255, Step 4,

Line 15, and

The surcharge is imposed on any taxpayer who incurs a federal

•

Schedule K-1-P Line 53c on Schedule 4255 Step 5, Line 20.

income tax liability on the income realized on a “transaction subject to

Line 54 —

If the partnership or S corporation made income tax

the surcharge,” including individuals and other taxpayers who are not

payments on your behalf, include the amount on your

themselves the “organization registrant” that engaged in the transaction.

•

Form IL-1040, Step 9, Line 28,

A partner or shareholder who incurs a federal income tax liability on

income from a transaction subject to surcharge passed through from a

•

Form IL-1041, Step 7, Line 54c,

partnership or S corporation will incur a surcharge.

•

Form IL-1065, Step 9, Line 61c,

Although a unitary business group filing combined Illinois

•

Form IL-1120-ST, Step 9, Line 60c,

returns is treated as a single taxpayer and its members are jointly and

•

Form IL-1120, Step 8, Line 60d, or

severally liable for any surcharge imposed on the group, the group itself is

•

Form IL-990-T Step 6, Line 28d.

not an organization registrant and transactions of any member that is not

itself an organization registrant are not subject to the surcharge.

Individuals, trusts, estates, partnerships, and

corporations (including S corporations) only - Pass-through

How do I use the amount reported on Line 55?

withholding payments made on your behalf and reported to you on

The amount reported on Line 55 identifies your share of any federal

Schedule K-1-P, Line 54, are based on items of business income and

income attributable to transactions subject to the surcharge. The

certain items of nonbusiness income only. If you had Illinois income

partnership and S corporation listed in Step 1 should have also provided

from other sources and the payments made on your behalf do not

you with a breakdown itemizing any amount reported on Line 55.

cover your liability, you must file a return to report the tax on all of

your Illinois income and claim a credit for pass-through withholding

Use this information when completing the “Compassionate Use of

payments made on your behalf.

Medical Cannabis Pilot Program Act Surcharge Worksheet” found in

the instructions for the return you are filing. Line 55 identifies federal

Line 55 —

This is your share of federal income attributable to

income attributable to transactions subject to the surcharge that

transactions subject to the Compassionate Use of Medical Cannabis

should not be included when you complete Line 2 of the worksheet.

Pilot Program Act surcharge. Use this information when calculating the

surcharge on your return.

The amount on Line 55 identifies federal income attributable to

transactions subject to the surcharge, not federal income tax liability for

See the instructions below and the instructions for the return you are filing

the taxable year attributable to the transactions subject to the surcharge.

for more information.

Exclude this income before figuring the federal income tax amount on

Definitions related to the surcharge —

Line 2 of the worksheet.

Organization registrant means a corporation, partnership, trust, limited

For more information, see Illinois Income Tax Regulations,

liability company (LLC), or other organization that holds either a medical

Section 100.2060.

cannabis cultivation center registration issued by the Illinois Department

of Agriculture or a medical cannabis dispensary registration issued by the

Illinois Department of Financial and Professional Regulation.

Transactions subject to the surcharge means sales and exchanges of

•

capital assets;

•

depreciable business property;

•

real property used in the trade or business; and

•

Section 197 intangibles

of an organization registrant.

What is the surcharge?

For each taxable year beginning or ending during the Compassionate

Use of Medical Cannabis Pilot Program, a surcharge is imposed on

all taxpayers on income arising from the transactions subject to the

surcharge of an organization registrant under the Compassionate Use of

Medical Cannabis Pilot Program Act.

The amount of the surcharge is equal to the amount of federal income

tax liability for the taxable year attributable to the transactions subject to

the surcharge.

Schedule K-1-P(2) (R-12/17)

Page 10 of 10

Instructions For Schedule K-1-P(2) - Partner'S And Shareholder'S - Illinois Department Of Revenue Page 10

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