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Zunamon v. Zehnder

Case Date: 09/16/1999
Court: 1st District Appellate
Docket No: 1-98-1459

Zunamon v. Zehnder, No. 1-98-1459

1st District, September 16, 1999

FOURTH DIVISION

SIMON ZUNAMON, as Trustee of Oregon Trusts Nos. 1-208 and Washington Trusts Nos. 1-16, MARSHALL E. EISENBERG, as Trustee of A.N.P. Trusts Nos. 1-42 and R.A. Trusts Nos. 1-25, and CHARLES EVANS GERBER, as Trustee of F.L.P.Trusts Nos. 10-17 and 19-21,

Plaintiffs-Appellants,

v.

KENNETH E. ZEHNDER, Director of the Illinois Department of Revenue, and the ILLINOIS DEPARTMENT OF REVENUE,

Defendants-Appellees.

 Appeal from the Circuit Court of Cook County.

No. 96 L 51389

The Honorable John A. Ward, Judge, Presiding.

JUSTICE HOURIHANE delivered the opinion of the court:

Plaintiffs, the trustees of certain taxpayer trusts, appeal an order of the circuit court affirming a decision of the Illinois Department of Revenue (Department), which determined that the trusts are not entitled to a foreign tax credit under section 601(b)(3) of the Illinois Income Tax Act (Act) (Ill. Rev. Stat. 1987, ch. 120, par. 1-101 et seq.) against their Illinois income tax liability for tax years prior to 1988, or against their replacement tax liability.

We reverse in part and affirm in part.

BACKGROUND

The underlying facts are undisputed. Each trust is a "resident" of Illinois for purposes of the Act. See Ill. Rev. Stat. 1987, ch. 120, par. 15-1501(a)(20). Only tax years ending on or before December 31, 1987 are in issue. For each such year in which the trusts earned income from a state other than Illinois, i.e., from a "source state", they paid income tax to the source state on the income earned there.

On their federal income tax returns, the trusts each took a section 164 deduction for income taxes paid to a source state. See 26 U.S.C.A.