SECTIONS 17201-17299.9

17201.  (a) Part VI of Subchapter B of Chapter 1 of Subtitle A ofthe Internal Revenue Code, relating to itemized deductions forindividuals and corporations, shall apply, except as otherwiseprovided. (b) Part VII of Subchapter B of Chapter 1 of Subtitle A of theInternal Revenue Code, relating to additional itemized deductions forindividuals, shall apply, except as otherwise provided. (c) Part IX of Subchapter B of Chapter 1 of Subtitle A of theInternal Revenue Code, relating to items not deductible, shall apply,except as otherwise provided.17201.4.  Section 179B of the Internal Revenue Code, relating todeductions for capital costs incurred in complying with EnvironmentalProtection Agency sulfur regulations, shall not apply.17201.5.  Section 181 of the Internal Revenue Code, relating totreatment of certain qualified film and television productions, shallnot apply.17201.6.  Section 199 of the Internal Revenue Code, relating toincome attributable to domestic production activities, shall notapply.17202.  There shall be allowed to an employer as an ordinary andnecessary expense paid or incurred during the taxable year incarrying on any trade or business (as provided in Section 162(a) ofthe Internal Revenue Code), the expenses involved in carrying out aparking cash-out program, as defined by subdivision (f) of Section65088.1 of the Government Code.17203.  For purposes of applying limitations on the deductionsdescribed in this section, any reference to "compensation" or "earnedincome" shall be a reference to the amount required to be used forpurposes of limiting the deduction in computing federal income taxfor the same taxable year. (a) The deduction allowed by Section 219 of the Internal RevenueCode. (b) The deductions allowed by Sections 162(l) and 404 of theInternal Revenue Code in the case of an individual who is an employeewithin the meaning of Section 401(c)(1) of the Internal RevenueCode.17204.  Section 165(h)(3) of the Internal Revenue Code, relating tospecial rules for losses in federally declared disasters, shall notapply.17204.7.  Section 222 of the Internal Revenue Code, relating toqualified tuition and related expenses, shall not apply.17206.  (a) For purposes of Section 17201, Section 170 of theInternal Revenue Code, relating to charitable, etc., contributionsand gifts, shall be applied to allow a taxpayer to elect to treat anycontribution described in subdivision (b) made in January 2005, asif that contribution was made on December 31, 2004, and not inJanuary 2005. (b) A contribution is described in this subdivision if thatcontribution is a cash contribution made for the relief of victims inareas affected by the December 26, 2004, Indian Ocean tsunami forwhich a charitable contribution deduction is allowable under Section17201.17206.5.  (a) For purposes of Section 170 of the Internal RevenueCode, a taxpayer may treat any contribution described in subdivision(b) made after January 11, 2010, and before March 1, 2010, as if thecontribution was made on December 31, 2009, and not in 2010. (b) A contribution is described in this subdivision if thecontribution is a cash contribution made for the relief of victims inthe areas affected by the earthquake in Haiti on January 12, 2010,for which a charitable deduction is allowable. (c) In the case of a contribution described in subdivision (b), atelephone bill showing the name of the donee organization, the dateof the contribution, and the amount of the contribution shall betreated as meeting the recordkeeping requirements of this part andPart 10.2 (commencing with Section 18401). (d) This section shall remain in effect only until December 1,2011, and as of that date is repealed.17207.  (a) An excess disaster loss, as defined in subdivision (c),shall be carried to other taxable years as provided in subdivision(b), with respect to losses resulting from any of the followingdisasters: (1) Forest fire or any other related casualty occurring in 1985 inCalifornia. (2) Storm, flooding, or any other related casualty occurring in1986 in California. (3) Any loss sustained during 1987 as a result of a forest fire orany other related casualty. (4) Earthquake, aftershock, or any other related casualtyoccurring in 1987 in California. (5) Earthquake, aftershock, or any other related casualtyoccurring in 1989 in California. (6) Any loss sustained during 1990 as a result of fire or anyother related casualty in California. (7) Any loss sustained as a result of the Oakland/Berkeley Fire of1991, or any other related casualty. (8) Any loss sustained as a result of storm, flooding, or anyother related casualty occurring in February 1992 in California. (9) Earthquake, aftershock, or any other related casualtyoccurring in April 1992 in the County of Humboldt. (10) Riots, arson, or any other related casualty occurring inApril or May 1992 in California. (11) Any loss sustained as a result of the earthquakes thatoccurred in the County of San Bernardino in June and July of 1992, orany other related casualty. (12) Any loss sustained as a result of the Fountain Fire thatoccurred in the County of Shasta, or as a result of either of thefires in the Counties of Calaveras and Trinity that occurred inAugust 1992, or any other related casualty. (13) Any loss sustained as a result of storm, flooding, or anyother related casualty that occurred in the Counties of Alpine,Contra Costa, Fresno, Humboldt, Imperial, Lassen, Los Angeles,Madera, Mendocino, Modoc, Monterey, Napa, Orange, Plumas, Riverside,San Bernardino, San Diego, Santa Barbara, Sierra, Siskiyou, Sonoma,Tehama, Trinity, and Tulare, and the City of Fillmore in January1993. (14) Any loss sustained as a result of a fire that occurred in theCounties of Los Angeles, Orange, Riverside, San Bernardino, SanDiego, and Ventura, during October or November of 1993, or any otherrelated casualty. (15) Any loss sustained as a result of the earthquake,aftershocks, or any other related casualty that occurred in theCounties of Los Angeles, Orange, and Ventura on or after January 17,1994. (16) Any loss sustained as a result of a fire that occurred in theCounty of San Luis Obispo during August of 1994, or any otherrelated casualty. (17) Any loss sustained as a result of the storms or floodingoccurring in 1995, or any other related casualty, sustained in anycounty of this state subject to a disaster declaration with respectto the storms and flooding. (18) Any loss sustained as a result of the storms or floodingoccurring in December 1996 or January 1997, or any related casualty,sustained in any county of this state subject to a disasterdeclaration with respect to the storms or flooding. (19) Any loss sustained as a result of the storms or floodingoccurring in February 1998, or any related casualty, sustained in anycounty of this state subject to a disaster declaration with respectto the storms or flooding. (20) Any loss sustained as a result of a freeze occurring in thewinter of 1998-99, or any related casualty, sustained in any countyof this state subject to a disaster declaration with respect to thefreeze. (21) Any loss sustained as a result of an earthquake occurring inSeptember 2000, that was included in the Governor's proclamation of astate of emergency for the County of Napa. (22) Any loss sustained as a result of the Middle River leveebreak in San Joaquin County occurring in June 2004. (23) Any losses sustained as a result of the fires that occurredin the Counties of Los Angeles, Riverside, San Bernardino, San Diego,and Ventura in October and November 2003, or as a result of floods,mudflows, and debris flows, directly related to fires. (24) Any losses sustained in the Counties of Santa Barbara and SanLuis Obispo as a result of the San Simeon earthquake, aftershocks,and any other related casualties. (25) Any losses sustained as a result of the wildfires thatoccurred in Shasta County, commencing August 11, 2004, and any otherrelated casualty. (26) Any loss sustained in the Counties of Kern, Los Angeles,Orange, Riverside, San Bernardino, San Diego, Santa Barbara, andVentura as a result of the severe rainstorms, related flooding andslides, and any other related casualties, that occurred in December2004, January 2005, February 2005, March 2005, or June 2005. (27) Any loss sustained in the Counties of Alameda, Alpine,Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado,Fresno, Humboldt, Kings, Lake, Lassen, Madera, Marin, Mariposa,Mendocino, Merced, Monterey, Napa, Nevada, Placer, Plumas,Sacramento, San Joaquin, San Luis Obispo, San Mateo, Santa Cruz,Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter,Trinity, Tulare, Tuolumne, Yolo, and Yuba as a result of the severerainstorms, related flooding and slides, and any other relatedcasualties, that occurred in December 2005, January 2006, March 2006,or April 2006. (28) Any loss sustained in the County of San Bernardino as aresult of the wildfires that occurred in July 2006. (29) Any loss sustained in the Counties of Riverside and Venturaas a result of wildfires that occurred during the 2006 calendar year. (30) Any loss sustained in the Counties of El Dorado, Fresno,Imperial, Kern, Kings, Madera, Merced, Monterey, Riverside, SanBernardino, San Diego, San Luis Obispo, Santa Barbara, Santa Clara,Stanislaus, Tulare, Ventura, and Yuba that were the subject of theGovernor's proclamations of a state of emergency for the severefreezing conditions that occurred in January 2007. (31) Any loss sustained in the County of El Dorado as a result ofwildfires that occurred in June 2007. (32) Any loss sustained in the Counties of Santa Barbara andVentura as a result of the Zaca Fire that occurred during the 2007calendar year. (33) Any loss sustained in the County of Inyo as a result ofwildfires that commenced in July 2007. (34) Any loss sustained in the Counties of Los Angeles, Orange,Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura as aresult of wildfires that occurred during the 2007 calendar year thatwere the subject of the Governor's disaster proclamations ofSeptember 15, 2007, and October 21, 2007. (35) Any loss sustained in the County of Riverside as a result ofextremely strong and damaging winds that occurred in October 2007. (36) Any loss sustained in the Counties of Butte, Kern, Mariposa,Mendocino, Monterey, Plumas, Santa Clara, Santa Cruz, Shasta, andTrinity as a result of wildfires that occurred in May or June 2008that were the subject of the Governor's proclamations of a state ofemergency. (37) Any loss sustained in the County of Santa Barbara as a resultof wildfires that occurred in July 2008. (38) Any loss sustained in the County of Inyo as a result of thesevere rainstorms, related flooding and landslides, and any otherrelated casualties, that occurred in July 2008. (39) Any loss sustained in the County of Humboldt as a result ofwildfires that commenced in May 2008. (40) Any loss sustained in the County of Santa Barbara as a resultof wildfires that commenced in November 2008. (41) Any loss sustained in the Counties of Los Angeles and Venturaas a result of wildfires that commenced in October 2008 or November2008 that were the subject of the Governor's proclamations of a stateof emergency. (42) Any loss sustained in the Counties of Orange, Riverside, andSan Bernardino as a result of wildfires that commenced in November2008. (43) Any loss sustained in the County of Santa Barbara as a resultof wildfires that commenced in May 2009. (b) (1) In the case of any loss allowed under Section 165(c) ofthe Internal Revenue Code, relating to limitation of losses ofindividuals, any excess disaster loss shall be carried forward toeach of the five taxable years following the taxable year for whichthe loss is claimed. However, if there is any excess disaster lossremaining after the five-year period, then the applicable percentage,as set forth in paragraph (1) of subdivision (b) of Section 17276,of that excess disaster loss shall be carried forward to each of thenext 10 taxable years. (2) The entire amount of any excess disaster loss as defined insubdivision (c) shall be carried to the earliest of the taxable yearsto which, by reason of subdivision (b), the loss may be carried. Theportion of the loss which shall be carried to each of the othertaxable years shall be the excess, if any, of the amount of excessdisaster loss over the sum of the adjusted taxable income for each ofthe prior taxable years to which that excess disaster loss iscarried. (c) "Excess disaster loss" means a disaster loss computed pursuantto Section 165 of the Internal Revenue Code which exceeds theadjusted taxable income of the year of loss or, if the election underSection 165(i) of the Internal Revenue Code is made, the adjustedtaxable income of the year preceding the loss. (d) The provisions of this section and Section 165(i) of theInternal Revenue Code shall be applicable to any of the losses listedin subdivision (a) sustained in any county or city in this statewhich was proclaimed by the Governor to be in a state of disaster. (e) Losses allowable under this section may not be taken intoaccount in computing a net operating loss deduction under Section 172of the Internal Revenue Code. (f) For purposes of this section, "adjusted taxable income" shallbe defined by Section 1212(b)(2)(B) of the Internal Revenue Code. (g) For losses described in paragraphs (15) to (43), inclusive, ofsubdivision (a), the election under Section 165(i) of the InternalRevenue Code may be made on a return or amended return filed on orbefore the due date of the return (determined with regard toextension) for the taxable year in which the disaster occurred.17207.2.  (a) An excess disaster loss, as defined in subdivision(c), shall be carried to other taxable years as provided insubdivision (b), with respect to losses sustained in the County ofHumboldt as a result of the earthquake that occurred in January 2010. (b) (1) In the case of any loss allowed under Section 165(c) ofthe Internal Revenue Code, relating to limitation of losses ofindividuals, any excess disaster loss shall be carried forward toeach of the five taxable years following the taxable year for whichthe loss is claimed. However, if there is any excess disaster lossremaining after the five-year period, then the applicable percentage,as set forth in paragraph (1) of subdivision (b) of Section 17276,of that excess disaster loss shall be carried forward to each of thenext 10 taxable years. (2) The entire amount of any excess disaster loss as defined insubdivision (c) shall be carried to the earliest of the taxable yearsto which, by reason of subdivision (b), the loss may be carried. Theportion of the loss which shall be carried to each of the othertaxable years shall be the excess, if any, of the amount of excessdisaster loss over the sum of the adjusted taxable income for each ofthe prior taxable years to which that excess disaster loss iscarried. (c) "Excess disaster loss" means a disaster loss computed pursuantto Section 165 of the Internal Revenue Code which exceeds theadjusted taxable income of the year of loss or, if the election underSection 165(i) of the Internal Revenue Code is made, the adjustedtaxable income of the year preceding the loss. (d) The provisions of this section and Section 165(i) of theInternal Revenue Code shall be applicable to any of the losses listedin subdivision (a) sustained in any county or city in this statewhich was proclaimed by the Governor to be in a state of disaster. (e) Losses allowable under this section may not be taken intoaccount in computing a net operating loss deduction under Section 172of the Internal Revenue Code. (f) For purposes of this section, "adjusted taxable income" shallbe defined by Section 1212(b)(2)(B) of the Internal Revenue Code. (g) For losses described in subdivision (a), the election underSection 165(i) of the Internal Revenue Code may be made on a returnor amended return filed on or before the due date of the return(determined with regard to extension) for the taxable year in whichthe disaster occurred.17207.3.  (a) An excess disaster loss, as defined in subdivision(c), shall be carried to other taxable years as provided insubdivision (b), with respect to losses sustained in the County ofImperial as a result of the earthquake that occurred in April 2010. (b) (1) In the case of any loss allowed under Section 165(c) ofthe Internal Revenue Code, relating to limitation of losses ofindividuals, any excess disaster loss shall be carried forward toeach of the five taxable years following the taxable year for whichthe loss is claimed. However, if there is any excess disaster lossremaining after the five-year period, then the applicable percentage,as set forth in paragraph (1) of subdivision (b) of Section 17276,of that excess disaster loss shall be carried forward to each of thenext 10 taxable years. (2) The entire amount of any excess disaster loss as defined insubdivision (c) shall be carried to the earliest of the taxable yearsto which, by reason of subdivision (b), the loss may be carried. Theportion of the loss which shall be carried to each of the othertaxable years shall be the excess, if any, of the amount of excessdisaster loss over the sum of the adjusted taxable income for each ofthe prior taxable years to which that excess disaster loss iscarried. (c) "Excess disaster loss" means a disaster loss computed pursuantto Section 165 of the Internal Revenue Code which exceeds theadjusted taxable income of the year of loss or, if the election underSection 165(i) of the Internal Revenue Code is made, the adjustedtaxable income of the year preceding the loss. (d) The provisions of this section and Section 165(i) of theInternal Revenue Code shall be applicable to any of the losses listedin subdivision (a) sustained in any county or city in this statewhich was proclaimed by the Governor to be in a state of disaster. (e) Losses allowable under this section may not be taken intoaccount in computing a net operating loss deduction under Section 172of the Internal Revenue Code. (f) For purposes of this section, "adjusted taxable income" shallbe defined by Section 1212(b)(2)(B) of the Internal Revenue Code. (g) For losses described in subdivision (a), the election underSection 165(i) of the Internal Revenue Code may be made on a returnor amended return filed on or before the due date of the return(determined with regard to extension) for the taxable year in whichthe disaster occurred.17207.4.  (a) Section 165(i) of the Internal Revenue Code ismodified to additionally provide that an appraisal for the purpose ofobtaining a loan of federal funds or a loan guarantee from thefederal government as a result of a presidentially declared disaster,as defined by Section 1033(h)(3) of the Internal Revenue Code, maybe used to establish the amount of any loss described in Section 165(i)(1) or (2) of the Internal Revenue Code to the extent provided inregulations or other guidance of the Secretary of the Treasury underSection 165(i)(4) of the Internal Revenue Code, as added by Section912 of Public Law 105-34. (b) This section shall apply on and after August 5, 1997.17207.6.  (a) An excess disaster loss, as defined in subdivision(c), shall be carried to other taxable years as provided insubdivision (b), with respect to losses resulting from any of thefollowing disasters: (1) Any loss sustained in the Counties of Los Angeles and Montereyas a result of wildfires that commenced in August 2009. (2) Any loss sustained in the County of Placer as a result ofwildfires that commenced in August 2009. (3) Any loss sustained in the Counties of Calaveras, Imperial, LosAngeles, Orange, Riverside, San Bernardino, San Francisco, andSiskiyou as a result of winter storms that commenced in January 2010. (4) Any loss sustained in the County of Kern as a result of thewildfires that commenced in July 2010. (b) (1) In the case of any loss allowed under Section 165(c) ofthe Internal Revenue Code, relating to limitation of losses ofindividuals, any excess disaster loss shall be carried forward toeach of the five taxable years following the taxable year for whichthe loss is claimed. However, if there is any excess disaster lossremaining after the five-year period, then the applicable percentage,as set forth in paragraph (1) of subdivision (b) of Section 17276,of that excess disaster loss shall be carried forward to each of thenext 10 taxable years. (2) The entire amount of any excess disaster loss as defined insubdivision (c) shall be carried to the earliest of the taxable yearsto which, by reason of subdivision (b), the loss may be carried. Theportion of the loss which shall be carried to each of the othertaxable years shall be the excess, if any, of the amount of excessdisaster loss over the sum of the adjusted taxable income for each ofthe prior taxable years to which that excess disaster loss iscarried. (c) "Excess disaster loss" means a disaster loss computed pursuantto Section 165 of the Internal Revenue Code which exceeds theadjusted taxable income of the year of loss or, if the election underSection 165(i) of the Internal Revenue Code is made, the adjustedtaxable income of the year preceding the loss. (d) The provisions of this section and Section 165(i) of theInternal Revenue Code shall be applicable to any of the losses listedin subdivision (a) sustained in any county or city in this statewhich was proclaimed by the Governor to be in a state of disaster. (e) Losses allowable under this section may not be taken intoaccount in computing a net operating loss deduction under Section 172of the Internal Revenue Code. (f) For purposes of this section, "adjusted taxable income" shallbe defined by Section 1212(b)(2)(B) of the Internal Revenue Code. (g) For losses described in subdivision (a), the election underSection 165(i) of the Internal Revenue Code may be made on a returnor amended return filed on or before the due date of the return(determined with regard to extension) for the taxable year in whichthe disaster occurred.17207.8.  (a) An excess disaster loss, as defined in subdivision(c), shall be carried to other taxable years as provided insubdivision (b), with respect to losses sustained in the County ofSan Mateo as a result of the explosion and fire that occurred inSeptember 2010. (b) (1) In the case of any loss allowed under Section 165(c) ofthe Internal Revenue Code, relating to limitation of losses ofindividuals, any excess disaster loss shall be carried forward toeach of the five taxable years following the taxable year for whichthe loss is claimed. However, if there is any excess disaster lossremaining after the five-year period, then the applicable percentage,as set forth in paragraph (1) of subdivision (b) of Section 17276,of that excess disaster loss shall be carried forward to each of thenext 10 taxable years. (2) The entire amount of any excess disaster loss as defined insubdivision (c) shall be carried to the earliest of the taxable yearsto which, by reason of subdivision (b), the loss may be carried. Theportion of the loss which shall be carried to each of the othertaxable years shall be the excess, if any, of the amount of excessdisaster loss over the sum of the adjusted taxable income for each ofthe prior taxable years to which that excess disaster loss iscarried. (c) "Excess disaster loss" means a disaster loss computed pursuantto Section 165 of the Internal Revenue Code which exceeds theadjusted taxable income of the year of loss or, if the election underSection 165(i) of the Internal Revenue Code is made, the adjustedtaxable income of the year preceding the loss. (d) This section and Section 165(i) of the Internal Revenue Codeshall be applicable to any of the losses listed in subdivision (a)sustained in any county or city in this state which was proclaimed bythe Governor to be in a state of disaster. (e) Losses allowable under this section may not be taken intoaccount in computing a net operating loss deduction under Section 172of the Internal Revenue Code. (f) For purposes of this section, "adjusted taxable income" shallbe defined by Section 1212(b)(2)(B) of the Internal Revenue Code. (g) For losses described in subdivision (a), the election underSection 165(i) of the Internal Revenue Code may be made on a returnor amended return filed on or before the due date of the return(determined with regard to extension) for the taxable year in whichthe disaster occurred.17208.1.  (a) There shall be allowed as a deduction the amount ofinterest paid or incurred by a taxpayer during the taxable year onany loan or financed indebtedness obtained from a publicly ownedutility company for the purpose of acquiring and installing anyenergy efficient product or equipment to a qualified residencelocated in this state. (b) For purposes of this section: (1) "Energy efficient product or equipment" means any product orequipment certified by a publicly owned utility company that willimprove the energy efficiency, as defined by paragraph (2) ofsubdivision (a) of Section 399.4 of the Public Utilities Code, of aqualified residence on which the product or equipment is installed orapplied. (2) "Energy efficient product or equipment" shall include, but notbe limited to, heating, ventilation, air-conditioning, lighting,solar, advanced metering of energy usage, windows, insulation, zoneheating products, and weatherization systems. (3) "Zone heating products" mean gas room heaters certified by theCalifornia Energy Commission or wood fueled stoves certified by thefederal Environmental Protection Agency. (4) "Publicly owned utility company" has the same meaning as setforth in subdivision (d) of Section 9604 of the Public UtilitiesCode. (5) "Qualified residence" has the same meaning as set forth inSection 163(h)(4)(A) of the Internal Revenue Code. (6) "Publicly owned utility company loan or financial indebtedness"means any amount borrowed from a publicly owned utility company tofinance the acquisition and installation of energy efficient productsand equipment installed or applied to a qualified residence locatedin this state. (c) Any interest amount that is allowed as a deduction pursuant tothis section (and the application of Section 17072) may nototherwise be allowed as a deduction for purposes of this part. (d) The publicly owned utility company shall issue a federalincome tax Form 1098, or similar form, for the purpose of notifyingthe taxpayer of his or her eligibility for the deduction allowed bythis section. (e) The deduction allowed by this section shall be in lieu of anycredit allowed by this part for interest paid or incurred by thetaxpayer in connection with the purchase of energy efficientequipment. (f) The Legislature finds and declares that many taxpayers may beunaware that they may deduct interest paid or incurred pursuant tothis section. The Legislature further finds that it is important toinform taxpayers of this deduction. Therefore, it is the intent ofthe Legislature to encourage all publicly owned utility companies toinform their customers in writing that they may deduct interest paidor incurred pursuant to this section. It is the further intent of theLegislature to encourage all publicly owned utility companies thatare unable to offer customer financing to acquire or install energyefficient products and equipment to inform their customers in writingthat interest on a home equity or home improvement loan used topurchase energy efficient products and equipment may also be taxdeductible. (g) It is the intent of the Legislature to inquire with theInternal Revenue Service as to whether the loan program administeredby the Sacramento Municipal Utility District qualifies for aninterest deduction in compliance with the Internal Revenue Code andthe regulations thereunder.17215.  (a) Section 220(a) of the Internal Revenue Code, relating todeduction allowed, is modified to provide that the amount allowed asa deduction shall be an amount equal to the amount allowed to thatindividual as a deduction under Section 220 of the Internal RevenueCode, relating to medical savings accounts, on the federal income taxreturn filed for the same taxable year by that individual. (b) Section 220(f)(4) of the Internal Revenue Code, relating toadditional tax on distributions not used for qualified medicalexpenses, is modified by substituting "10 percent" in lieu of "15percent."17215.1.  Section 220(f)(5) of the Internal Revenue Code, relatingto rollover contributions, shall not apply.17215.4.  Section 223 of the Internal Revenue Code, relating tohealth savings accounts, shall not apply.17220.  (a) Section 164(a)(3) of the Internal Revenue Code, relatingto the deductibility of state, local, and foreign income, warprofits, and excess profits taxes, shall not apply. (b) Section 164(b)(5) of the Internal Revenue Code, relating togeneral sales taxes, shall not apply. (c) In addition to the provisions of Section 164(c) of theInternal Revenue Code, relating to deduction denied in case ofcertain taxes, no deduction shall be allowed for any tax imposedunder Chapter 10.5 (commencing with Section 17935), Chapter 10.6(commencing with Section 17941), or Chapter 10.7 (commencing withSection 17951) of this part or under Part 11 (commencing with Section23001).17222.  No deduction shall be allowed for the tax deducted andwithheld under Section 18662 and Section 13020 of the UnemploymentInsurance Code either to the employer or to the recipient of theincome in computing taxable income under this part.17224.  Section 163(e) of the Internal Revenue Code is modified asfollows: (a) For taxable years beginning on or after January 1, 1987, andbefore the taxable year in which the debt obligation matures or issold, exchanged, or otherwise disposed, the amount deductible underthis part is the same as the amount deductible on the federal taxreturn. (b) The difference between the amount deductible on the federaltax return and the amount allowable under this part, with respect toobligations issued after December 31, 1984, for taxable yearsbeginning before January 1, 1987, shall be allowed as a deduction inthe taxable year in which the debt obligation matures or is sold,exchanged, or otherwise disposed. (c) The provisions of Section 7202(c) of Public Law 101-239,relating to the effective date for treatment of certain high yieldoriginal issue discount obligations, shall apply.17225.  Section 163(h)(3)(E) of the Internal Revenue Code, relatingto mortgage insurance premiums treated as interest, shall not apply.17230.  Payments made to the California Housing Finance Agency bythe borrower pursuant to Section 52514 of the Health and Safety Codeshall be considered payments of interest for purposes of Section 163of the Internal Revenue Code.17235.  (a) There shall be allowed as a deduction the amount of netinterest received by the taxpayer in payment on indebtedness of aperson or entity engaged in the conduct of a trade or businesslocated in an enterprise zone. (b) No deduction shall be allowed under this section unless at thetime the indebtedness is incurred each of the following requirementsare met: (1) The trade or business is located solely within an enterprisezone. (2) The indebtedness is incurred solely in connection withactivity within the enterprise zone. (3) The taxpayer has no equity or other ownership interest in thedebtor. (c) "Enterprise zone" means an area designated as an enterprisezone pursuant to Chapter 12.8 (commencing with Section 7070) ofDivision 7 of Title 1 of the Government Code.17250.  (a) Section 168 of the Internal Revenue Code is modified asfollows: (1) Any reference to "tax imposed by this chapter" in Section 168of the Internal Revenue Code means "net tax," as defined in Section17039. (2) (A) Section 168(e)(3) is modified to provide that anygrapevine, replaced in a vineyard in California in any taxable yearbeginning on or after January 1, 1992, as a direct result of aphylloxera infestation in that vineyard, or replaced in a vineyard inCalifornia in any taxable year beginning on or after January 1,1997, as a direct result of Pierce's disease in that vineyard, shallbe "five-year property," rather than "10-year property." (B) Section 168(g)(3) of the Internal Revenue Code is modified toprovide that any grapevine, replaced in a vineyard in California inany taxable year beginning on or after January 1, 1992, as a directresult of a phylloxera infestation in that vineyard, or replaced in avineyard in California in any taxable year beginning on or afterJanuary 1, 1997, as a direct result of Pierce's disease in thatvineyard, shall have a class life of 10 years. (C) Every taxpayer claiming a depreciation deduction with respectto grapevines as described in this paragraph shall obtain a writtencertification from an independent state-certified integrated pestmanagement adviser, or a state agricultural commissioner or adviser,that specifies that the replanting was necessary to restore avineyard infested with phylloxera or Pierce's disease. The taxpayershall retain the certification for future audit purposes. (3) Section 168(j) of the Internal Revenue Code, relating toproperty on Indian reservations, shall not apply. (4) Section 168(k) of the Internal Revenue Code, relating tospecial allowance for certain property acquired after December 31,2007, and before January 1, 2009, shall not apply. (5) Sections 168(b)(3)(G) and 168(b)(3)(H) of the Internal RevenueCode shall not apply. (6) Sections 168(e)(3)(E)(iv), 168(e)(3)(E)(v), and 168(e)(3)(E)(ix) of the Internal Revenue Code shall not apply. (7) Sections 168(e)(6), 168(e)(7), and 168(e)(8) of the InternalRevenue Code, relating to qualified leasehold improvement property,qualified restaurant property, and qualified retail improvementproperty, respectively, shall not apply. (8) Section 168(l) of the Internal Revenue Code, relating tospecial allowance for cellulosic biofuel plant property, shall notapply. (9) Section 168(m) of the Internal Revenue Code, relating tospecial allowance for certain reuse and recycling property, shall notapply. (10) Section 168(n) of the Internal Revenue Code, relating tospecial allowance for qualified disaster assistance property, shallnot apply. (11) Section 168(i)(15)(D) of the Internal Revenue Code, relatingto termination, is modified by substituting the phrase "December 31,2007" for the phrase "December 31, 2009." (12) Section 168(e)(3)(B)(vii) of the Internal Revenue Code shallnot apply. (b) Section 169 of the Internal Revenue Code, relating toamortization of pollution control facilities, is modified as follows: (1) The deduction allowed by Section 169 of the Internal RevenueCode shall be allowed only with respect to facilities located in thisstate. (2) The "state certifying authority," as defined in Section 169(d)(2) of the Internal Revenue Code, means the State Air ResourcesBoard, in the case of air pollution, and the State Water ResourcesControl Board, in the case of water pollution.17250.5.  (a) Section 167(g) of the Internal Revenue Code, relatingto depreciation under income forecast method, shall be modified asfollows: (1) Section 167(g)(2)(C) of the Internal Revenue Code is modifiedby substituting "Section 19521" for "Section 460(b)(7)" of theInternal Revenue Code. (2) Section 167(g)(5)(D) of the Internal Revenue Code is modifiedby substituting "Part 10.2 (commencing with Section 18401) (otherthan Section 19136)" for "Subtitle F (other than Sections 6654 and6655)." (3) Section 167(g)(5)(E) of the Internal Revenue Code, relating totreatment of distribution costs, shall not apply. (4) Section 167(g)(7) of the Internal Revenue Code, relating totreatment of participations and residuals, shall not apply. (b) Section 167(h) of the Internal Revenue Code, relating toamortization of geological and geophysical expenditures, shall notapply.17255.  (a) Section 179(b)(1) of the Internal Revenue Code, relatingto dollar limitation, shall not apply and in lieu thereof, theaggregate cost which may be taken into account under Section 179(a)of the Internal Revenue Code for any taxable year shall not exceedtwenty-five thousand dollars ($25,000). (b) Section 179(b)(2) of the Internal Revenue Code, relating toreduction in limitation, shall not apply and in lieu thereof, thelimitation under subdivision (a) for any taxable year shall bereduced, but not to below zero, by the amount by which the cost ofSection 179 property, as defined in Section 179(d)(1) of the InternalRevenue Code, except as otherwise provided, placed in service duringthe taxable year exceeds two hundred thousand dollars ($200,000). (c) Section 179 of the Internal Revenue Code is modified toprovide that the "aggregate amount disallowed" referred to in Section179(b)(3)(B) of the Internal Revenue Code shall be computed underthis part as it read on the date the property generating the amountdisallowed was placed in service. (d) Section 179(b)(5) of the Internal Revenue Code, relating toinflation adjustments, shall not apply. (e) The last sentence in Section 179(c)(2) of the Internal RevenueCode, relating to election irrevocable, shall not apply. (f) Section 179(d)(1)(A)(ii) of the Internal Revenue Code shallnot apply. (g) Section 179(e) of the Internal Revenue Code, relating tospecial rules for qualified disaster assistance property, shall notapply.17256.  Section 179A of the Internal Revenue Code, relating todeduction for clean-fuel vehicles and certain refueling property,shall not apply.17257.  Section 179C of the Internal Revenue Code, relating toelection to expense certain refineries, shall not apply.17257.2.  Section 179D of the Internal Revenue Code, relating toenergy efficient commercial buildings deduction, shall not apply.17257.4.  Section 179E of the Internal Revenue Code, relating toelection to expense advanced mine safety equipment, shall not apply.17260.  (a) No deduction, other than depreciation, shall be allowedfor expenditures for tertiary injectants as provided by Section 193of the Internal Revenue Code. (b) Section 263(a) of the Internal Revenue Code shall not apply toexpenditures for which a deduction is allowed under Section 17266 or17267.2.17267.2.  (a) A taxpayer may elect to treat 40 percent of the costof any Section 17267.2 property as an expense which is not chargeableto a capital account. Any cost so treated shall be allowed as adeduction for the taxable year in which the taxpayer places theSection 17267.2 property in service. (b) In the case of a husband and wife filing separate returns fora taxable year, the applicable amount under subdivision (a) shall beequal to 50 percent of the percentage specified in subdivision (a). (c) (1) An election under this section for any taxable year shalldo both of the following: (A) Specify the items of Section 17267.2 property to which theelection applies and the percentage of the cost of each of thoseitems that are to be taken into account under subdivision (a). (B) Be made on the taxpayer's original return of the tax imposedby this part for the taxable year. (2) Any election made under this section, and any specificationcontained in that election, may not be revoked except with theconsent of the Franchise Tax Board. (d) (1) For purposes of this section, "Section 17267.2 property"means any recovery property that is: (A) Section 1245 property (as defined in Section 1245(a) (3) ofthe Internal Revenue Code). (B) Purchased and placed in service by the taxpayer for exclusiveuse in a trade or business conducted within an enterprise zonedesignated pursuant to Chapter 12.8 (commencing with Section 7070) ofDivision 7 of Title 1 of the Government Code. (C) Purchased and placed in service before the date the enterprisezone designation expires, is no longer binding, or becomesinoperative. (2) For purposes of paragraph (1), "purchase" means anyacquisition of property, but only if both of the following apply: (A) The property is not acquired from a person whose relationshipto the person acquiring it would result in the disallowance of lossesunder Section 267 or Section 707 (b) of the Internal Revenue Code.However, in applying Section 267(b) and 267(c) for purposes of thissection, Section 267(c) (4) shall be treated as providing that thefamily of an individual shall include only the individual's spouse,ancestors, and lineal descendants. (B) The basis of the property in the hands of the person acquiringit is not determined in whole or in part by reference to theadjusted basis of that property in the hands of the person from whomit is acquired. (3) For purposes of this section, the cost of property does notinclude that portion of the basis of the property that is determinedby reference to the basis of other property held at any time by theperson acquiring the property. (4) This section shall not apply to estates and trusts. (5) This section shall not apply to any property for which thetaxpayer may not make an election for the taxable year under Section179 of the Internal Revenue Code because of the application of theprovisions of Section 179(d) of the Internal Revenue Code. (6) In the case of a partnership, the percentage limitationspecified in subdivision (a) shall apply at the partnership level andat the partner level. (e) For purposes of this section, "taxpayer" means a person orentity who conducts a trade or business within an enterprise zonedesignated pursuant to Chapter 12.8 (commencing with Section 7070) ofDivision 7 of Title 1 of the Government Code. (f) Any taxpayer who elects to be subject to this section shallnot be entitled to claim for the same property, the deduction underSection 179 of the Internal Revenue Code, relating to an election toexpense certain depreciable business assets. However, the taxpayermay claim depreciation by any method permitted by Section 168 of theInternal Revenue Code, commencing with the taxable year following thetaxable year in which the Section 17267.2 property is placed inservice. (g) The aggregate cost of all Section 17267.2 property that may betaken into account under subdivision (a) for any taxable year shallnot exceed the following applicable amount for the taxable year ofthe designation of the relevant enterprise zone and taxable yearsthereafter: The applicable amount is:  Taxable year of designation..... $100,000  1st taxable year thereafter..... 100,000  2nd taxable year thereafter..... 75,000  3rd taxable year thereafter..... 75,000  Each taxable year thereafter.... 50,000 (h) Any amounts deducted under subdivision (a) with respect toproperty subject to this section that ceases to be used in thetaxpayer's trade or business within an enterprise zone at any timebefore the close of the second taxable year after the property isplaced in service shall be included in income in the taxable year inwhich the property ceases to be so used.17267.6.  (a) For each taxable year beginning on or after January 1,1998, a qualified taxpayer may elect to treat 40 percent of the costof any Section 17267.6 property as an expense that is not chargeableto a capital account. Any cost so treated shall be allowed as adeduction for the taxable year in which the qualified taxpayer placesthe Section 17267.6 property in service. (b) In the case of a husband and wife filing separate returns fora taxable year, the applicable amount under subdivision (a) shall beequal to 50 percent of the percentage specified in subdivision (a). (c) (1) An election under this section for any taxable year shalldo both of the following: (A) Specify the items of Section 17267.6 property to which theelection applies and the percentage of the cost of each of thoseitems that are to be taken into account under subdivision (a). (B) Be made on the qualified taxpayer's original return of the taximposed by this part for the taxable year. (2) Any election made under this section, and any specificationcontained in that election, may not be revoked except with theconsent of the Franchise Tax Board. (d) (1) For purposes of this section, "Section 17267.6 property"means any recovery property that is: (A) Section 1245 property (as defined in Section 1245(a)(3) of theInternal Revenue Code). (B) Purchased and placed in service by the qualified taxpayer forexclusive use in a trade or business conducted within a targeted taxarea designated pursuant to Chapter 12.93 (commencing with Section7097) of Division 7 of Title 1 of the Government Code. (C) Purchased and placed in service before the date the targetedtax area designation expires, is revoked, is no longer binding, orbecomes inoperative. (2) For purposes of paragraph (1), "purchase" means anyacquisition of property, but only if both of the following apply: (A) The property is not acquired from a person whose relationshipto the person acquiring it would result in the disallowance of lossesunder Section 267 or Section 707(b) of the Internal Revenue Code.However, in applying Sections 267(b) and 267(c) for purposes of thissection, Section 267(c)(4) shall be treated as providing that thefamily of an individual shall include only the individual's spouse,ancestors, and lineal descendants. (B) The basis of the property in the hands of the person acquiringit is not determined in whole or in part by reference to theadjusted basis of that property in the hands of the person from whomit is acquired. (3) For purposes of this section, the cost of property does notinclude that portion of the basis of the property that is determinedby reference to the basis of other property held at any time by theperson acquiring the property. (4) This section shall not apply to estates and trusts. (5) This section shall not apply to any property for which thequalified taxpayer may not make an election for the taxable yearunder Section 179 of the Internal Revenue Code because of theapplication of the provisions of Section 179(d) of the InternalRevenue Code. (6) In the case of a partnership, the percentage limitationspecified in subdivision (a) shall apply at the partnership level andat the partner level. (e) (1) For purposes of this section, "qualified taxpayer" means aperson or entity that meets both of the following: (A) Is engaged in a trade or business within a targeted tax areadesignated pursuant to Chapter 12.93 (commencing with Section 7097)of Division 7 of Title 1 of the Government Code. (B) Is engaged in those lines of business described in Codes 2000to 2099, inclusive; 2200 to 3999, inclusive; 4200 to 4299, inclusive;4500 to 4599, inclusive, and 4700 to 5199, inclusive, of theStandard Industrial Classification (SIC) Manual published by theUnited State Office of Management and Budget, 1987 edition. (2) In the case of any pass-through entity, the determination ofwhether a taxpayer is a qualified taxpayer under this section shallbe made at the entity level and any deduction under this section orSection 24356.6 shall be allowed to the pass-through entity andpassed through to the partners or shareholders in accordance withapplicable provisions of this part of Part 11 (commencing withSection 23001). For purposes of this subparagraph, the term"pass-through entity" means any partnership or S corporation. (f) Any qualified taxpayer who elects to be subject to thissection shall not be entitled to claim for the same property, thededuction under Section 179 of the Internal Revenue Code, relating toan election to expense certain depreciable business assets. However,the qualified taxpayer may claim depreciation by any methodpermitted by Section 168 of the Internal Revenue Code, commencingwith the taxable year following the taxable year in which the Section17267.6 property is placed in service. (g) The aggregate cost of all Section 17267.6 property that may betaken into account under subdivision (a) for any taxable year shallnot exceed the following applicable amount for the taxable year ofthe designation of the relevant targeted tax area and taxable yearsthereafter: The applicable amount is:  Taxable year of designation..... $100,000  1st taxable year thereafter..... 100,000  2nd taxable year thereafter..... 75,000  3rd taxable year thereafter..... 75,000  Each taxable year thereafter.... 50,000 (h) Any amounts deducted under subdivision (a) with respect toSection 17267.6 property that ceases to be used in the qualifiedtaxpayer's trade or business within a targeted tax area at any timebefore the close of the second taxable year after the property isplaced in service shall be included in income in the taxable year inwhich the property ceases to be so used.17268.  (a) For each taxable year beginning on or after January 1,1995, a taxpayer may elect to treat 40 percent of the cost of anySection 17268 property as an expense that is not chargeable to thecapital account. Any cost so treated shall be allowed as a deductionfor the taxable year in which the taxpayer places the Section 17268property in service. (b) In the case of a husband or wife filing separate returns for ataxable year in which a spouse is entitled to the deduction undersubdivision (a), the applicable amount shall be equal to 50 percentof the amount otherwise determined under subdivision (a). (c) (1) An election under this section for any taxable year shallmeet both of the following requirements: (A) Specify the items of Section 17268 property to which theelection applies and the portion of the cost of each of those itemsthat is to be taken into account under subdivision (a). (B) Be made on the taxpayer's return of the tax imposed by thispart for the taxable year. (2) Any election made under this section, and any specificationcontained in that election, may not be revoked except with theconsent of the Franchise Tax Board. (d) (1) For purposes of this section, "Section 17268 property"means any recovery property that is each of the following: (A) Section 1245 property (as defined in Section 1245(a)(3) of theInternal Revenue Code). (B) Purchased by the taxpayer for exclusive use in a trade orbusiness conducted within a LAMBRA. (C) Purchased before the date the LAMBRA designation expires, isno longer binding, or becomes inoperative. (2) For purposes of paragraph (1), "purchase" means anyacquisition of property, but only if both of the following apply: (A) The property is not acquired from a person whose relationshipto the person acquiring it would result in the disallowance of lossesunder Section 267 or 707(b) of the Internal Revenue Code (but, inapplying Section 267(b) and Section 267(c) of the Internal RevenueCode for purposes of this section, Section 267(c)(4) of the InternalRevenue Code shall be treated as providing that the family of anindividual shall include only his or her spouse, ancestors, andlineal descendants). (B) The basis of the property in the hands of the person acquiringit is not determined by either of the following: (i) In whole or in part by reference to the adjusted basis of theproperty in the hands of the person from whom acquired. (ii) Under Section 1014 of the Internal Revenue Code, relating tobasis of property acquired from a decedent. (3) For purposes of this section, the cost of property does notinclude that portion of the basis of the property that is determinedby reference to the basis of other property held at any time by theperson acquiring the property. (4) This section shall not apply to estates and trusts. (5) This section shall not apply to any property for which thetaxpayer may not make an election for the taxable year under Section179 of the Internal Revenue Code because of the provisions of Section179(d) of the Internal Revenue Code. (6) In the case of a partnership, the dollar limitation insubdivision (f) shall apply at the partnership level and at thepartner level. (7) This section shall not apply to any property described inSection 168(f) of the Internal Revenue Code, relating to property towhich Section 168 of the Internal Revenue Code does not apply. (e) For purposes of this section: (1) "LAMBRA" means a local agency military base recovery areadesignated in accordance with the provisions of Section 7114 of theGovernment Code. (2) "Taxpayer" means a taxpayer that conducts a trade or businesswithin a LAMBRA and, for the first two taxable years, has a netincrease in jobs (defined as 2,000 paid hours per employee per year)of one or more employees in the LAMBRA. (A) The net increase in the number of jobs shall be determined bysubtracting the total number of full-time employees (defined as 2,000paid hours per employee per year) the taxpayer employed in thisstate in the taxable year prior to commencing business operations inthe LAMBRA from the total number of full-time employees the taxpayeremployed in this state during the second taxable year aftercommencing business operations in the LAMBRA. For taxpayers whocommence doing business in this state with their LAMBRA businessoperation, the number of employees for the taxable year prior tocommencing business operations in the LAMBRA shall be zero. If thetaxpayer has a net increase in jobs in the state, the credit shall beallowed only if one or more full-time employees is employed withinthe LAMBRA. (B) The total number of employees employed in the LAMBRA shallequal the sum of both of the following: (i) The total number of hours worked in the LAMBRA for thetaxpayer by employees (not to exceed 2,000 hours per employee) whoare paid an hourly wage divided by 2,000. (ii) The total number of months worked in the LAMBRA for thetaxpayer by employees who are salaried employees divided by 12. (C) In the case of a taxpayer who first commences doing businessin the LAMBRA during the taxable year, for purposes of clauses (i)and (ii), respectively, of subparagraph (B) the divisors "2,000" and"12" shall be multiplied by a fraction, the numerator of which is thenumber of months of the taxable year that the taxpayer was doingbusiness in the LAMBRA and the denominator of which is 12. (f) The aggregate cost of all Section 17268 property that may betaken into account under subdivision (a) for any taxable year shallnot exceed the following applicable amounts for the taxable year ofthe designation of the relevant LAMBRA and taxable years thereafter: The applicable amount is:  Taxable year of designation..... $100,000  1st taxable year thereafter..... 100,000  2nd taxable year thereafter..... 75,000  3rd taxable year thereafter..... 75,000  Each taxable year thereafter.... 50,000 (g) This section shall apply only to property that is usedexclusively in a trade or business conducted within a LAMBRA. (h) (1) Any amounts deducted under subdivision (a) with respect toproperty that ceases to be used in the trade or business within aLAMBRA at any time before the close of the second taxable year afterthe property was placed in service shall be included in income forthat year. (2) At the close of the second taxable year, if the taxpayer hasnot increased the number of its employees as determined by paragraph(2) of subdivision (e), then the amount of the deduction previouslyclaimed shall be added to the taxpayer's taxable income for thetaxpayer's second taxable year. (i) Any taxpayer who elects to be subject to this section shallnot be entitled to claim for the same property the deduction underSection 179 of the Internal Revenue Code, relating to an election toexpense certain depreciable business assets.17269.  Whereas, the people of the State of California desire topromote and achieve tax equity and fairness among all the state'scitizens and further desire to conform to the public policy ofnondiscrimination, the Legislature hereby enacts the following forthese reasons and for no other purpose: (a) The provisions of Section 162 (a) of the Internal Revenue Codeshall not be applicable to expenses incurred by a taxpayer withrespect to expenditures made at, or payments made to, a club whichrestricts membership or the use of its services or facilities on thebasis of ancestry or any characteristic listed or defined in Section11135 of the Government Code. (b) A club described in subdivision (a) holding an alcoholicbeverage license pursuant to Division 9 (commencing with Section23000) of the Business and Professions Code, except a club holding analcoholic beverage license pursuant to Section 23425 thereof, shallprovide on each receipt furnished to a taxpayer a printed statementas follows: "The expenditures covered by this receipt are nondeductible forstate income tax purposes or franchise tax purposes." (c) For purposes of this section: (1) "Expenses" means those expenses otherwise deductible underSection 162(a) of the Internal Revenue Code, except for subdivision(a), and includes, but is not limited to, club membership dues andassessments, food and beverage expenses, expenses for servicesfurnished by the club, and reimbursements or salary adjustments toofficers or employees for any of the preceding expenses. (2) "Club" means a club as defined in Division 9 (commencing withSection 23000) of the Business and Professions Code, except a club asdefined in Section 23425 thereof.17270.  (a) For purposes of Section 162(a)(2) of the InternalRevenue Code, relating to travel expenses, all of the following shallapply: (1) The place of residence of a member of the Legislature withinthe district represented shall be considered the tax home. (2) The provisions of Section 162(h) of the Internal Revenue Code,relating to state legislators' travel expenses away from home, shallnot be applied. (b) The provisions of Section 280C(a) of the Internal Revenue Code(relating to rule for employment credits) shall not apply. (c) Section 280C(c)(3)(B) of the Internal Revenue Code is modifiedto refer to Section 17041 in lieu of Section 11(b)(1) of theInternal Revenue Code.17273.  For each taxable year beginning on or after January 1, 1999,Section 162(l)(1) of the Internal Revenue Code, relating toapplicable percentage, is modified to provide that Section 2002 ofthe Tax and Trade Relief Extension Act of 1998 (P.L. 105-277),relating to phase in of a 100-percent deduction for health insurance,shall apply.17274.  (a) Notwithstanding any other provisions in this part to thecontrary, no deduction shall be allowed for interest, taxes,depreciation, or amortization paid or incurred in the taxable yearwith respect to substandard housing located in this state, except asprovided in subdivision (e). (b) "Substandard housing" means occupied dwellings from which thetaxpayer derives rental income or unoccupied or abandoned dwellingsfor which both of the following apply: (1) Either of the following occurs: (A) For occupied dwellings from which the taxpayer derives rentalincome, a state or local government regulatory agency has determinedthat the housing violates state law or local codes dealing withhealth, safety, or building. (B) For dwellings that are unoccupied or abandoned for at least 90days, a state or local government regulatory agency has cited thehousing for conditions that constitute a serious violation of statelaw or local codes dealing with health, safety, or building, and thatconstitute a threat to public health and safety. (2) Either of the following occurs: (A) After written notice of violation by the regulatory agency,specifying the applicability of this section, the housing has notbeen brought to a condition of compliance within six months after thedate of the notice or the time prescribed in the notice, whicheverperiod is later. (B) Good faith efforts for compliance have not been commenced, asdetermined by the regulatory agency. "Substandard housing" also means employee housing that has not,within 30 days of the date of the written notice of violation or thedate for compliance prescribed in the written notice of violation,been brought into compliance with the conditions stated in thewritten notice of violation of the Employee Housing Act (Part 1(commencing with Section 17000) of Division 13 of the Health andSafety Code) issued by the enforcement agency that specifies theapplication of this section. The regulatory agency may, for goodcause shown, extend the compliance date prescribed in a violationnotice. (c) (1) When the period specified in paragraph (2) of subdivision(b) has expired without compliance, the regulatory agency shall mailto the taxpayer a notice of noncompliance. The notice ofnoncompliance shall be in a form and shall include informationprescribed by the Franchise Tax Board, shall be mailed by certifiedmail to the taxpayer at the taxpayer's last known address, and shalladvise the taxpayer of (A) an intent to notify the Franchise TaxBoard of the noncompliance within 10 days unless an appeal is filed,(B) where an appeal may be filed, and (C) a general description ofthe tax consequences of the filing with the Franchise Tax Board.Appeals shall be made to the same body and in the same manner asappeals from other actions of the regulatory agency. If no appeal ismade within 10 days or if after disposition of the appeal theregulatory agency is sustained, the regulatory agency shall notify,in writing, the Franchise Tax Board of the noncompliance. (2) The notice of noncompliance shall contain the legaldescription or the lot and block numbers of the real property, theassessor's parcel number, and the name of the owner of record asshown on the latest equalized assessment roll. In addition, theregulatory agency shall, at the same time as notification of thenotice of noncompliance is sent to the Franchise Tax Board, record acopy of the notice of noncompliance in the office of the recorder forthe county in which the substandard housing is located that includesa statement of tax consequences that may be determined by theFranchise Tax Board. However, the failure to record a notice with thecounty recorder does not relieve the liability of any taxpayer nordoes it create any liability on the part of the regulatory agency. (3) The regulatory agency may charge the taxpayer a fee in anamount not to exceed the regulatory agency's costs incurred inrecording any notice of noncompliance or issuing any release of thatnotice. The notice of compliance shall be recorded and shall serve toexpunge the notice of noncompliance. The notice of compliance shallcontain the same recording information required for the notice ofnoncompliance. No deduction by the taxpayer, or any other taxpayerwho obtains title to the property subsequent to the recordation ofthe notice of noncompliance, shall be allowed for the items providedin subdivision (a) from the date of the notice of noncompliance untilthe date the regulatory agency determines that the substandardhousing has been brought to a condition of compliance. The regulatoryagency shall mail to the Franchise Tax Board and the taxpayer anotice of compliance, which notice shall be in the form and includethe information prescribed by the Franchise Tax Board. In the eventthe period of noncompliance does not cover an entire taxable year,the deductions shall be denied at the rate of 1/12 for each fullmonth during the period of noncompliance. (4) If the property is owned by more than one owner or if therecorded title is in the name of a fictitious owner, the noticerequirements provided in subdivision (b) and this subdivision shallbe satisfied for each owner if the notices are mailed to one owner orto the fictitious name owner at the address appearing on the latestavaila