Appeal from the Circuit Court of Cook County; the Hon. Earl
Arkiss, Judge, presiding.
JUSTICE ROMITI DELIVERED THE OPINION OF THE COURT:
Plaintiff-appellant Weyerhaeuser Company appeals from an order of the circuit court of Cook County upholding the determination of defendant-appellee, the Department of Revenue of the State of Illinois, that Weyerhaeuser owed $102,349 in additional income taxes. This additional tax liability resulted from the department's disallowance of a claimed valuation limitation amount of $147,035,792.
In Thorpe v. Mahin (1969), 43 Ill.2d 36, 250 N.E.2d 633, the Illinois Supreme Court upheld the validity of the Illinois Income Tax Act (Ill. Rev. Stat. 1979, ch. 120, par. 1-101 et seq.). In so doing, that court found that the legislature intended an August 1, 1969 (the effective date of the Act), valuation limitation in computing taxable gain on property. The court explained the valuation limitation as follows:
"* * * in computing taxable gain on property acquired prior to August 1, 1969, the basis is date of acquisition value or the August 1, 1969, value, whichever is greater; in computing a deductible loss on property acquired prior to August 1, 1969, the basis is the date of acquisition value or the August 1, 1969, value, whichever is less." (Thorpe v. Mahin (1969), 43 Ill.2d 36, 54, 250 N.E.2d 633, 642.)
The Illinois legislature then expressly adopted this valuation limitation for individuals, trusts, and estates but excluded corporations. (Ill. Rev. Stat. 1973, ch. 120, pars. 2-203(a)(2)(F) and 2-203(c)(2)(F); see pars. 2-203(b) and 2-203(g).) These amendments were made applicable to all taxable years beginning after December 31, 1970.
Pursuant to Federal income tax law Weyerhaeuser has elected to utilize a taxable year which varies from 52 to 53 weeks and ends on the last Sunday in December. (26 U.S.C.A. sec. 441(f)(1978).) The taxable year at issue here began on December 28, 1970, and ended December 26, 1971.
When Weyerhaeuser filed its Illinois income tax return, it took the position that the amended statute eliminating the valuation limitation did not apply since its taxable year began on December 28, 1970, and the statutory amendment applied to taxable years beginning after December 31, 1970. The department disallowed the valuation limitation, finding that the following provisions of the Federal statute dealing with 52-53 week accounting periods were applicable:
"(f) Election of year consisting of 52-53 weeks.
(1) General rule. A taxpayer who, in keeping his books, regularly computes his income on the basis of an annual period which varies from 52 to 53 weeks and ends always on the same day of the week and ends always —
(A) on whatever date such same day of the week last occurs in a calendar month, or
(B) on whatever date such same day of the week falls which is nearest to the last day of a calendar month,
may * * * elect to compute his taxable income for purposes of this subtitle on the basis of ...