17201. (a) Part VI of Subchapter B of Chapter 1 of Subtitle A of
the Internal Revenue Code, relating to itemized deductions for
individuals and corporations, shall apply, except as otherwise
provided.
(b) Part VII of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to additional itemized deductions for
individuals, shall apply, except as otherwise provided.
(c) Part IX of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to items not deductible, shall apply,
except as otherwise provided.
17201.4. Section 179B of the Internal Revenue Code, relating to
deductions for capital costs incurred in complying with Environmental
Protection Agency sulfur regulations, shall not apply.
17201.5. Section 181 of the Internal Revenue Code, relating to
treatment of certain qualified film and television productions, shall
not apply.
17201.6. Section 199 of the Internal Revenue Code, relating to
income attributable to domestic production activities, shall not
apply.
17202. There shall be allowed to an employer as an ordinary and
necessary expense paid or incurred during the taxable year in
carrying on any trade or business (as provided in Section 162(a) of
the Internal Revenue Code), the expenses involved in carrying out a
parking cash-out program, as defined by subdivision (f) of Section
65088.1 of the Government Code.
17203. For purposes of applying limitations on the deductions
described in this section, any reference to "compensation" or "earned
income" shall be a reference to the amount required to be used for
purposes of limiting the deduction in computing federal income tax
for the same taxable year.
(a) The deduction allowed by Section 219 of the Internal Revenue
Code.
(b) The deductions allowed by Sections 162(l) and 404 of the
Internal Revenue Code in the case of an individual who is an employee
within the meaning of Section 401(c)(1) of the Internal Revenue
Code.
17204. Section 165(h)(3) of the Internal Revenue Code, relating to
special rules for losses in federally declared disasters, shall not
apply.
17204.7. Section 222 of the Internal Revenue Code, relating to
qualified tuition and related expenses, shall not apply.
17206. (a) For purposes of Section 17201, Section 170 of the
Internal Revenue Code, relating to charitable, etc., contributions
and gifts, shall be applied to allow a taxpayer to elect to treat any
contribution described in subdivision (b) made in January 2005, as
if that contribution was made on December 31, 2004, and not in
January 2005.
(b) A contribution is described in this subdivision if that
contribution is a cash contribution made for the relief of victims in
areas affected by the December 26, 2004, Indian Ocean tsunami for
which a charitable contribution deduction is allowable under Section
17201.
17206.5. (a) For purposes of Section 170 of the Internal Revenue
Code, a taxpayer may treat any contribution described in subdivision
(b) made after January 11, 2010, and before March 1, 2010, as if the
contribution was made on December 31, 2009, and not in 2010.
(b) A contribution is described in this subdivision if the
contribution is a cash contribution made for the relief of victims in
the 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), a
telephone bill showing the name of the donee organization, the date
of the contribution, and the amount of the contribution shall be
treated as meeting the recordkeeping requirements of this part and
Part 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 following
disasters:
(1) Forest fire or any other related casualty occurring in 1985 in
California.
(2) Storm, flooding, or any other related casualty occurring in
1986 in California.
(3) Any loss sustained during 1987 as a result of a forest fire or
any other related casualty.
(4) Earthquake, aftershock, or any other related casualty
occurring in 1987 in California.
(5) Earthquake, aftershock, or any other related casualty
occurring in 1989 in California.
(6) Any loss sustained during 1990 as a result of fire or any
other related casualty in California.
(7) Any loss sustained as a result of the Oakland/Berkeley Fire of
1991, or any other related casualty.
(8) Any loss sustained as a result of storm, flooding, or any
other related casualty occurring in February 1992 in California.
(9) Earthquake, aftershock, or any other related casualty
occurring in April 1992 in the County of Humboldt.
(10) Riots, arson, or any other related casualty occurring in
April or May 1992 in California.
(11) Any loss sustained as a result of the earthquakes that
occurred in the County of San Bernardino in June and July of 1992, or
any other related casualty.
(12) Any loss sustained as a result of the Fountain Fire that
occurred in the County of Shasta, or as a result of either of the
fires in the Counties of Calaveras and Trinity that occurred in
August 1992, or any other related casualty.
(13) Any loss sustained as a result of storm, flooding, or any
other 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 January
1993.
(14) Any loss sustained as a result of a fire that occurred in the
Counties of Los Angeles, Orange, Riverside, San Bernardino, San
Diego, and Ventura, during October or November of 1993, or any other
related casualty.
(15) Any loss sustained as a result of the earthquake,
aftershocks, or any other related casualty that occurred in the
Counties 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 the
County of San Luis Obispo during August of 1994, or any other
related casualty.
(17) Any loss sustained as a result of the storms or flooding
occurring in 1995, or any other related casualty, sustained in any
county of this state subject to a disaster declaration with respect
to the storms and flooding.
(18) Any loss sustained as a result of the storms or flooding
occurring in December 1996 or January 1997, or any related casualty,
sustained in any county of this state subject to a disaster
declaration with respect to the storms or flooding.
(19) Any loss sustained as a result of the storms or flooding
occurring in February 1998, or any related casualty, sustained in any
county of this state subject to a disaster declaration with respect
to the storms or flooding.
(20) Any loss sustained as a result of a freeze occurring in the
winter of 1998-99, or any related casualty, sustained in any county
of this state subject to a disaster declaration with respect to the
freeze.
(21) Any loss sustained as a result of an earthquake occurring in
September 2000, that was included in the Governor's proclamation of a
state of emergency for the County of Napa.
(22) Any loss sustained as a result of the Middle River levee
break in San Joaquin County occurring in June 2004.
(23) Any losses sustained as a result of the fires that occurred
in 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 San
Luis 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 that
occurred in Shasta County, commencing August 11, 2004, and any other
related casualty.
(26) Any loss sustained in the Counties of Kern, Los Angeles,
Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and
Ventura as a result of the severe rainstorms, related flooding and
slides, and any other related casualties, that occurred in December
2004, 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 severe
rainstorms, related flooding and slides, and any other related
casualties, that occurred in December 2005, January 2006, March 2006,
or April 2006.
(28) Any loss sustained in the County of San Bernardino as a
result of the wildfires that occurred in July 2006.
(29) Any loss sustained in the Counties of Riverside and Ventura
as 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, San
Bernardino, San Diego, San Luis Obispo, Santa Barbara, Santa Clara,
Stanislaus, Tulare, Ventura, and Yuba that were the subject of the
Governor's proclamations of a state of emergency for the severe
freezing conditions that occurred in January 2007.
(31) Any loss sustained in the County of El Dorado as a result of
wildfires that occurred in June 2007.
(32) Any loss sustained in the Counties of Santa Barbara and
Ventura as a result of the Zaca Fire that occurred during the 2007
calendar year.
(33) Any loss sustained in the County of Inyo as a result of
wildfires 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 a
result of wildfires that occurred during the 2007 calendar year that
were the subject of the Governor's disaster proclamations of
September 15, 2007, and October 21, 2007.
(35) Any loss sustained in the County of Riverside as a result of
extremely 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, and
Trinity as a result of wildfires that occurred in May or June 2008
that were the subject of the Governor's proclamations of a state of
emergency.
(37) Any loss sustained in the County of Santa Barbara as a result
of wildfires that occurred in July 2008.
(38) Any loss sustained in the County of Inyo as a result of the
severe rainstorms, related flooding and landslides, and any other
related casualties, that occurred in July 2008.
(39) Any loss sustained in the County of Humboldt as a result of
wildfires that commenced in May 2008.
(40) Any loss sustained in the County of Santa Barbara as a result
of wildfires that commenced in November 2008.
(41) Any loss sustained in the Counties of Los Angeles and Ventura
as a result of wildfires that commenced in October 2008 or November
2008 that were the subject of the Governor's proclamations of a state
of emergency.
(42) Any loss sustained in the Counties of Orange, Riverside, and
San Bernardino as a result of wildfires that commenced in November
2008.
(43) Any loss sustained in the County of Santa Barbara as a result
of wildfires that commenced in May 2009.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in paragraphs (15) to (43), inclusive, of
subdivision (a), the election under Section 165(i) of the Internal
Revenue Code may be made on a return or amended return filed on or
before the due date of the return (determined with regard to
extension) 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 in
subdivision (b), with respect to losses sustained in the County of
Humboldt as a result of the earthquake that occurred in January 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.3. (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 sustained in the County of
Imperial as a result of the earthquake that occurred in April 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.4. (a) Section 165(i) of the Internal Revenue Code is
modified to additionally provide that an appraisal for the purpose of
obtaining a loan of federal funds or a loan guarantee from the
federal government as a result of a presidentially declared disaster,
as defined by Section 1033(h)(3) of the Internal Revenue Code, may
be 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 in
regulations or other guidance of the Secretary of the Treasury under
Section 165(i)(4) of the Internal Revenue Code, as added by Section
912 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 in
subdivision (b), with respect to losses resulting from any of the
following disasters:
(1) Any loss sustained in the Counties of Los Angeles and Monterey
as a result of wildfires that commenced in August 2009.
(2) Any loss sustained in the County of Placer as a result of
wildfires that commenced in August 2009.
(3) Any loss sustained in the Counties of Calaveras, Imperial, Los
Angeles, Orange, Riverside, San Bernardino, San Francisco, and
Siskiyou as a result of winter storms that commenced in January 2010.
(4) Any loss sustained in the County of Kern as a result of the
wildfires that commenced in July 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.8. (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 sustained in the County of
San Mateo as a result of the explosion and fire that occurred in
September 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) This section and Section 165(i) of the Internal Revenue Code
shall be applicable to any of the losses listed in subdivision (a)
sustained in any county or city in this state which was proclaimed by
the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17208.1. (a) There shall be allowed as a deduction the amount of
interest paid or incurred by a taxpayer during the taxable year on
any loan or financed indebtedness obtained from a publicly owned
utility company for the purpose of acquiring and installing any
energy efficient product or equipment to a qualified residence
located in this state.
(b) For purposes of this section:
(1) "Energy efficient product or equipment" means any product or
equipment certified by a publicly owned utility company that will
improve the energy efficiency, as defined by paragraph (2) of
subdivision (a) of Section 399.4 of the Public Utilities Code, of a
qualified residence on which the product or equipment is installed or
applied.
(2) "Energy efficient product or equipment" shall include, but not
be limited to, heating, ventilation, air-conditioning, lighting,
solar, advanced metering of energy usage, windows, insulation, zone
heating products, and weatherization systems.
(3) "Zone heating products" mean gas room heaters certified by the
California Energy Commission or wood fueled stoves certified by the
federal Environmental Protection Agency.
(4) "Publicly owned utility company" has the same meaning as set
forth in subdivision (d) of Section 9604 of the Public Utilities
Code.
(5) "Qualified residence" has the same meaning as set forth in
Section 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 to
finance the acquisition and installation of energy efficient products
and equipment installed or applied to a qualified residence located
in this state.
(c) Any interest amount that is allowed as a deduction pursuant to
this section (and the application of Section 17072) may not
otherwise be allowed as a deduction for purposes of this part.
(d) The publicly owned utility company shall issue a federal
income tax Form 1098, or similar form, for the purpose of notifying
the taxpayer of his or her eligibility for the deduction allowed by
this section.
(e) The deduction allowed by this section shall be in lieu of any
credit allowed by this part for interest paid or incurred by the
taxpayer in connection with the purchase of energy efficient
equipment.
(f) The Legislature finds and declares that many taxpayers may be
unaware that they may deduct interest paid or incurred pursuant to
this section. The Legislature further finds that it is important to
inform taxpayers of this deduction. Therefore, it is the intent of
the Legislature to encourage all publicly owned utility companies to
inform their customers in writing that they may deduct interest paid
or incurred pursuant to this section. It is the further intent of the
Legislature to encourage all publicly owned utility companies that
are unable to offer customer financing to acquire or install energy
efficient products and equipment to inform their customers in writing
that interest on a home equity or home improvement loan used to
purchase energy efficient products and equipment may also be tax
deductible.
(g) It is the intent of the Legislature to inquire with the
Internal Revenue Service as to whether the loan program administered
by the Sacramento Municipal Utility District qualifies for an
interest deduction in compliance with the Internal Revenue Code and
the regulations thereunder.
17215. (a) Section 220(a) of the Internal Revenue Code, relating to
deduction allowed, is modified to provide that the amount allowed as
a deduction shall be an amount equal to the amount allowed to that
individual as a deduction under Section 220 of the Internal Revenue
Code, relating to medical savings accounts, on the federal income tax
return filed for the same taxable year by that individual.
(b) Section 220(f)(4) of the Internal Revenue Code, relating to
additional tax on distributions not used for qualified medical
expenses, is modified by substituting "10 percent" in lieu of "15
percent."
17215.1. Section 220(f)(5) of the Internal Revenue Code, relating
to rollover contributions, shall not apply.
17215.4. Section 223 of the Internal Revenue Code, relating to
health savings accounts, shall not apply.
17220. (a) Section 164(a)(3) of the Internal Revenue Code, relating
to the deductibility of state, local, and foreign income, war
profits, and excess profits taxes, shall not apply.
(b) Section 164(b)(5) of the Internal Revenue Code, relating to
general sales taxes, shall not apply.
(c) In addition to the provisions of Section 164(c) of the
Internal Revenue Code, relating to deduction denied in case of
certain taxes, no deduction shall be allowed for any tax imposed
under Chapter 10.5 (commencing with Section 17935), Chapter 10.6
(commencing with Section 17941), or Chapter 10.7 (commencing with
Section 17951) of this part or under Part 11 (commencing with Section
23001).
17222. No deduction shall be allowed for the tax deducted and
withheld under Section 18662 and Section 13020 of the Unemployment
Insurance Code either to the employer or to the recipient of the
income in computing taxable income under this part.
17224. Section 163(e) of the Internal Revenue Code is modified as
follows:
(a) For taxable years beginning on or after January 1, 1987, and
before the taxable year in which the debt obligation matures or is
sold, exchanged, or otherwise disposed, the amount deductible under
this part is the same as the amount deductible on the federal tax
return.
(b) The difference between the amount deductible on the federal
tax return and the amount allowable under this part, with respect to
obligations issued after December 31, 1984, for taxable years
beginning before January 1, 1987, shall be allowed as a deduction in
the 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 yield
original issue discount obligations, shall apply.
17225. Section 163(h)(3)(E) of the Internal Revenue Code, relating
to mortgage insurance premiums treated as interest, shall not apply.
17230. Payments made to the California Housing Finance Agency by
the borrower pursuant to Section 52514 of the Health and Safety Code
shall be considered payments of interest for purposes of Section 163
of the Internal Revenue Code.
17235. (a) There shall be allowed as a deduction the amount of net
interest received by the taxpayer in payment on indebtedness of a
person or entity engaged in the conduct of a trade or business
located in an enterprise zone.
(b) No deduction shall be allowed under this section unless at the
time the indebtedness is incurred each of the following requirements
are met:
(1) The trade or business is located solely within an enterprise
zone.
(2) The indebtedness is incurred solely in connection with
activity within the enterprise zone.
(3) The taxpayer has no equity or other ownership interest in the
debtor.
(c) "Enterprise zone" means an area designated as an enterprise
zone pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
17250. (a) Section 168 of the Internal Revenue Code is modified as
follows:
(1) Any reference to "tax imposed by this chapter" in Section 168
of the Internal Revenue Code means "net tax," as defined in Section
17039.
(2) (A) Section 168(e)(3) is modified to provide that any
grapevine, replaced in a vineyard in California in any taxable year
beginning on or after January 1, 1992, as a direct result of a
phylloxera infestation in that vineyard, or replaced in a vineyard in
California in any taxable year beginning on or after January 1,
1997, as a direct result of Pierce's disease in that vineyard, shall
be "five-year property," rather than "10-year property."
(B) Section 168(g)(3) of the Internal Revenue Code is modified to
provide that any grapevine, replaced in a vineyard in California in
any taxable year beginning on or after January 1, 1992, as a direct
result of a phylloxera infestation in that vineyard, or replaced in a
vineyard in California in any taxable year beginning on or after
January 1, 1997, as a direct result of Pierce's disease in that
vineyard, shall have a class life of 10 years.
(C) Every taxpayer claiming a depreciation deduction with respect
to grapevines as described in this paragraph shall obtain a written
certification from an independent state-certified integrated pest
management adviser, or a state agricultural commissioner or adviser,
that specifies that the replanting was necessary to restore a
vineyard infested with phylloxera or Pierce's disease. The taxpayer
shall retain the certification for future audit purposes.
(3) Section 168(j) of the Internal Revenue Code, relating to
property on Indian reservations, shall not apply.
(4) Section 168(k) of the Internal Revenue Code, relating to
special 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 Revenue
Code 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 Internal
Revenue Code, relating to qualified leasehold improvement property,
qualified restaurant property, and qualified retail improvement
property, respectively, shall not apply.
(8) Section 168(l) of the Internal Revenue Code, relating to
special allowance for cellulosic biofuel plant property, shall not
apply.
(9) Section 168(m) of the Internal Revenue Code, relating to
special allowance for certain reuse and recycling property, shall not
apply.
(10) Section 168(n) of the Internal Revenue Code, relating to
special allowance for qualified disaster assistance property, shall
not apply.
(11) Section 168(i)(15)(D) of the Internal Revenue Code, relating
to 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 shall
not apply.
(b) Section 169 of the Internal Revenue Code, relating to
amortization of pollution control facilities, is modified as follows:
(1) The deduction allowed by Section 169 of the Internal Revenue
Code shall be allowed only with respect to facilities located in this
state.
(2) The "state certifying authority," as defined in Section 169(d)
(2) of the Internal Revenue Code, means the State Air Resources
Board, in the case of air pollution, and the State Water Resources
Control Board, in the case of water pollution.
17250.5. (a) Section 167(g) of the Internal Revenue Code, relating
to depreciation under income forecast method, shall be modified as
follows:
(1) Section 167(g)(2)(C) of the Internal Revenue Code is modified
by substituting "Section 19521" for "Section 460(b)(7)" of the
Internal Revenue Code.
(2) Section 167(g)(5)(D) of the Internal Revenue Code is modified
by substituting "Part 10.2 (commencing with Section 18401) (other
than Section 19136)" for "Subtitle F (other than Sections 6654 and
6655)."
(3) Section 167(g)(5)(E) of the Internal Revenue Code, relating to
treatment of distribution costs, shall not apply.
(4) Section 167(g)(7) of the Internal Revenue Code, relating to
treatment of participations and residuals, shall not apply.
(b) Section 167(h) of the Internal Revenue Code, relating to
amortization of geological and geophysical expenditures, shall not
apply.
17255. (a) Section 179(b)(1) of the Internal Revenue Code, relating
to dollar limitation, shall not apply and in lieu thereof, the
aggregate cost which may be taken into account under Section 179(a)
of the Internal Revenue Code for any taxable year shall not exceed
twenty-five thousand dollars ($25,000).
(b) Section 179(b)(2) of the Internal Revenue Code, relating to
reduction in limitation, shall not apply and in lieu thereof, the
limitation under subdivision (a) for any taxable year shall be
reduced, but not to below zero, by the amount by which the cost of
Section 179 property, as defined in Section 179(d)(1) of the Internal
Revenue Code, except as otherwise provided, placed in service during
the taxable year exceeds two hundred thousand dollars ($200,000).
(c) Section 179 of the Internal Revenue Code is modified to
provide that the "aggregate amount disallowed" referred to in Section
179(b)(3)(B) of the Internal Revenue Code shall be computed under
this part as it read on the date the property generating the amount
disallowed was placed in service.
(d) Section 179(b)(5) of the Internal Revenue Code, relating to
inflation adjustments, shall not apply.
(e) The last sentence in Section 179(c)(2) of the Internal Revenue
Code, relating to election irrevocable, shall not apply.
(f) Section 179(d)(1)(A)(ii) of the Internal Revenue Code shall
not apply.
(g) Section 179(e) of the Internal Revenue Code, relating to
special rules for qualified disaster assistance property, shall not
apply.
17256. Section 179A of the Internal Revenue Code, relating to
deduction for clean-fuel vehicles and certain refueling property,
shall not apply.
17257. Section 179C of the Internal Revenue Code, relating to
election to expense certain refineries, shall not apply.
17257.2. Section 179D of the Internal Revenue Code, relating to
energy efficient commercial buildings deduction, shall not apply.
17257.4. Section 179E of the Internal Revenue Code, relating to
election to expense advanced mine safety equipment, shall not apply.
17260. (a) No deduction, other than depreciation, shall be allowed
for expenditures for tertiary injectants as provided by Section 193
of the Internal Revenue Code.
(b) Section 263(a) of the Internal Revenue Code shall not apply to
expenditures for which a deduction is allowed under Section 17266 or
17267.2.
17267.2. (a) A taxpayer may elect to treat 40 percent of the cost
of any Section 17267.2 property as an expense which is not chargeable
to a capital account. Any cost so treated shall be allowed as a
deduction for the taxable year in which the taxpayer places the
Section 17267.2 property in service.
(b) In the case of a husband and wife filing separate returns for
a taxable year, the applicable amount under subdivision (a) shall be
equal to 50 percent of the percentage specified in subdivision (a).
(c) (1) An election under this section for any taxable year shall
do both of the following:
(A) Specify the items of Section 17267.2 property to which the
election applies and the percentage of the cost of each of those
items that are to be taken into account under subdivision (a).
(B) Be made on the taxpayer's original return of the tax imposed
by this part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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) of
the Internal Revenue Code).
(B) Purchased and placed in service by the taxpayer for exclusive
use in a trade or business conducted within an enterprise zone
designated pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
(C) Purchased and placed in service before the date the enterprise
zone designation expires, is no longer binding, or becomes
inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or Section 707 (b) of the Internal Revenue Code.
However, in applying Section 267(b) and 267(c) for purposes of this
section, Section 267(c) (4) shall be treated as providing that the
family 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 acquiring
it is not determined in whole or in part by reference to the
adjusted basis of that property in the hands of the person from whom
it is acquired.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
taxpayer may not make an election for the taxable year under Section
179 of the Internal Revenue Code because of the application of the
provisions of Section 179(d) of the Internal Revenue Code.
(6) In the case of a partnership, the percentage limitation
specified in subdivision (a) shall apply at the partnership level and
at the partner level.
(e) For purposes of this section, "taxpayer" means a person or
entity who conducts a trade or business within an enterprise zone
designated pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
(f) Any taxpayer who elects to be subject to this section shall
not be entitled to claim for the same property, the deduction under
Section 179 of the Internal Revenue Code, relating to an election to
expense certain depreciable business assets. However, the taxpayer
may claim depreciation by any method permitted by Section 168 of the
Internal Revenue Code, commencing with the taxable year following the
taxable year in which the Section 17267.2 property is placed in
service.
(g) The aggregate cost of all Section 17267.2 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amount for the taxable year of
the designation of the relevant enterprise zone 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
(h) Any amounts deducted under subdivision (a) with respect to
property subject to this section that ceases to be used in the
taxpayer's trade or business within an enterprise zone at any time
before the close of the second taxable year after the property is
placed in service shall be included in income in the taxable year in
which 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 cost
of any Section 17267.6 property as an expense that is not chargeable
to a capital account. Any cost so treated shall be allowed as a
deduction for the taxable year in which the qualified taxpayer places
the Section 17267.6 property in service.
(b) In the case of a husband and wife filing separate returns for
a taxable year, the applicable amount under subdivision (a) shall be
equal to 50 percent of the percentage specified in subdivision (a).
(c) (1) An election under this section for any taxable year shall
do both of the following:
(A) Specify the items of Section 17267.6 property to which the
election applies and the percentage of the cost of each of those
items that are to be taken into account under subdivision (a).
(B) Be made on the qualified taxpayer's original return of the tax
imposed by this part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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 the
Internal Revenue Code).
(B) Purchased and placed in service by the qualified taxpayer for
exclusive use in a trade or business conducted within a targeted tax
area designated pursuant to Chapter 12.93 (commencing with Section
7097) of Division 7 of Title 1 of the Government Code.
(C) Purchased and placed in service before the date the targeted
tax area designation expires, is revoked, is no longer binding, or
becomes inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or Section 707(b) of the Internal Revenue Code.
However, in applying Sections 267(b) and 267(c) for purposes of this
section, Section 267(c)(4) shall be treated as providing that the
family 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 acquiring
it is not determined in whole or in part by reference to the
adjusted basis of that property in the hands of the person from whom
it is acquired.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
qualified taxpayer may not make an election for the taxable year
under Section 179 of the Internal Revenue Code because of the
application of the provisions of Section 179(d) of the Internal
Revenue Code.
(6) In the case of a partnership, the percentage limitation
specified in subdivision (a) shall apply at the partnership level and
at the partner level.
(e) (1) For purposes of this section, "qualified taxpayer" means a
person or entity that meets both of the following:
(A) Is engaged in a trade or business within a targeted tax area
designated 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 2000
to 2099, inclusive; 2200 to 3999, inclusive; 4200 to 4299, inclusive;
4500 to 4599, inclusive, and 4700 to 5199, inclusive, of the
Standard Industrial Classification (SIC) Manual published by the
United State Office of Management and Budget, 1987 edition.
(2) In the case of any pass-through entity, the determination of
whether a taxpayer is a qualified taxpayer under this section shall
be made at the entity level and any deduction under this section or
Section 24356.6 shall be allowed to the pass-through entity and
passed through to the partners or shareholders in accordance with
applicable provisions of this part of Part 11 (commencing with
Section 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 this
section shall not be entitled to claim for the same property, the
deduction under Section 179 of the Internal Revenue Code, relating to
an election to expense certain depreciable business assets. However,
the qualified taxpayer may claim depreciation by any method
permitted by Section 168 of the Internal Revenue Code, commencing
with the taxable year following the taxable year in which the Section
17267.6 property is placed in service.
(g) The aggregate cost of all Section 17267.6 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amount for the taxable year of
the designation of the relevant targeted tax area 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
(h) Any amounts deducted under subdivision (a) with respect to
Section 17267.6 property that ceases to be used in the qualified
taxpayer's trade or business within a targeted tax area at any time
before the close of the second taxable year after the property is
placed in service shall be included in income in the taxable year in
which 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 any
Section 17268 property as an expense that is not chargeable to the
capital account. Any cost so treated shall be allowed as a deduction
for the taxable year in which the taxpayer places the Section 17268
property in service.
(b) In the case of a husband or wife filing separate returns for a
taxable year in which a spouse is entitled to the deduction under
subdivision (a), the applicable amount shall be equal to 50 percent
of the amount otherwise determined under subdivision (a).
(c) (1) An election under this section for any taxable year shall
meet both of the following requirements:
(A) Specify the items of Section 17268 property to which the
election applies and the portion of the cost of each of those items
that is to be taken into account under subdivision (a).
(B) Be made on the taxpayer's return of the tax imposed by this
part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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 the
Internal Revenue Code).
(B) Purchased by the taxpayer for exclusive use in a trade or
business conducted within a LAMBRA.
(C) Purchased before the date the LAMBRA designation expires, is
no longer binding, or becomes inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or 707(b) of the Internal Revenue Code (but, in
applying Section 267(b) and Section 267(c) of the Internal Revenue
Code for purposes of this section, Section 267(c)(4) of the Internal
Revenue Code shall be treated as providing that the family of an
individual shall include only his or her spouse, ancestors, and
lineal descendants).
(B) The basis of the property in the hands of the person acquiring
it is not determined by either of the following:
(i) In whole or in part by reference to the adjusted basis of the
property in the hands of the person from whom acquired.
(ii) Under Section 1014 of the Internal Revenue Code, relating to
basis of property acquired from a decedent.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
taxpayer may not make an election for the taxable year under Section
179 of the Internal Revenue Code because of the provisions of Section
179(d) of the Internal Revenue Code.
(6) In the case of a partnership, the dollar limitation in
subdivision (f) shall apply at the partnership level and at the
partner level.
(7) This section shall not apply to any property described in
Section 168(f) of the Internal Revenue Code, relating to property to
which 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 area
designated in accordance with the provisions of Section 7114 of the
Government Code.
(2) "Taxpayer" means a taxpayer that conducts a trade or business
within a LAMBRA and, for the first two taxable years, has a net
increase 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 by
subtracting the total number of full-time employees (defined as 2,000
paid hours per employee per year) the taxpayer employed in this
state in the taxable year prior to commencing business operations in
the LAMBRA from the total number of full-time employees the taxpayer
employed in this state during the second taxable year after
commencing business operations in the LAMBRA. For taxpayers who
commence doing business in this state with their LAMBRA business
operation, the number of employees for the taxable year prior to
commencing business operations in the LAMBRA shall be zero. If the
taxpayer has a net increase in jobs in the state, the credit shall be
allowed only if one or more full-time employees is employed within
the LAMBRA.
(B) The total number of employees employed in the LAMBRA shall
equal the sum of both of the following:
(i) The total number of hours worked in the LAMBRA for the
taxpayer by employees (not to exceed 2,000 hours per employee) who
are paid an hourly wage divided by 2,000.
(ii) The total number of months worked in the LAMBRA for the
taxpayer by employees who are salaried employees divided by 12.
(C) In the case of a taxpayer who first commences doing business
in 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 the
number of months of the taxable year that the taxpayer was doing
business in the LAMBRA and the denominator of which is 12.
(f) The aggregate cost of all Section 17268 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amounts for the taxable year of
the 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 used
exclusively in a trade or business conducted within a LAMBRA.
(h) (1) Any amounts deducted under subdivision (a) with respect to
property that ceases to be used in the trade or business within a
LAMBRA at any time before the close of the second taxable year after
the property was placed in service shall be included in income for
that year.
(2) At the close of the second taxable year, if the taxpayer has
not increased the number of its employees as determined by paragraph
(2) of subdivision (e), then the amount of the deduction previously
claimed shall be added to the taxpayer's taxable income for the
taxpayer's second taxable year.
(i) Any taxpayer who elects to be subject to this section shall
not be entitled to claim for the same property the deduction under
Section 179 of the Internal Revenue Code, relating to an election to
expense certain depreciable business assets.
17269. Whereas, the people of the State of California desire to
promote and achieve tax equity and fairness among all the state's
citizens and further desire to conform to the public policy of
nondiscrimination, the Legislature hereby enacts the following for
these reasons and for no other purpose:
(a) The provisions of Section 162 (a) of the Internal Revenue Code
shall not be applicable to expenses incurred by a taxpayer with
respect to expenditures made at, or payments made to, a club which
restricts membership or the use of its services or facilities on the
basis of ancestry or any characteristic listed or defined in Section
11135 of the Government Code.
(b) A club described in subdivision (a) holding an alcoholic
beverage license pursuant to Division 9 (commencing with Section
23000) of the Business and Professions Code, except a club holding an
alcoholic beverage license pursuant to Section 23425 thereof, shall
provide on each receipt furnished to a taxpayer a printed statement
as follows:
"The expenditures covered by this receipt are nondeductible for
state income tax purposes or franchise tax purposes."
(c) For purposes of this section:
(1) "Expenses" means those expenses otherwise deductible under
Section 162(a) of the Internal Revenue Code, except for subdivision
(a), and includes, but is not limited to, club membership dues and
assessments, food and beverage expenses, expenses for services
furnished by the club, and reimbursements or salary adjustments to
officers or employees for any of the preceding expenses.
(2) "Club" means a club as defined in Division 9 (commencing with
Section 23000) of the Business and Professions Code, except a club as
defined in Section 23425 thereof.
17270. (a) For purposes of Section 162(a)(2) of the Internal
Revenue Code, relating to travel expenses, all of the following shall
apply:
(1) The place of residence of a member of the Legislature within
the 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, shall
not 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 modified
to refer to Section 17041 in lieu of Section 11(b)(1) of the
Internal Revenue Code.
17273. For each taxable year beginning on or after January 1, 1999,
Section 162(l)(1) of the Internal Revenue Code, relating to
applicable percentage, is modified to provide that Section 2002 of
the 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 the
contrary, no deduction shall be allowed for interest, taxes,
depreciation, or amortization paid or incurred in the taxable year
with respect to substandard housing located in this state, except as
provided in subdivision (e).
(b) "Substandard housing" means occupied dwellings from which the
taxpayer derives rental income or unoccupied or abandoned dwellings
for which both of the following apply:
(1) Either of the following occurs:
(A) For occupied dwellings from which the taxpayer derives rental
income, a state or local government regulatory agency has determined
that the housing violates state law or local codes dealing with
health, safety, or building.
(B) For dwellings that are unoccupied or abandoned for at least 90
days, a state or local government regulatory agency has cited the
housing for conditions that constitute a serious violation of state
law or local codes dealing with health, safety, or building, and that
constitute 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 not
been brought to a condition of compliance within six months after the
date of the notice or the time prescribed in the notice, whichever
period is later.
(B) Good faith efforts for compliance have not been commenced, as
determined 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 the
date for compliance prescribed in the written notice of violation,
been brought into compliance with the conditions stated in the
written notice of violation of the Employee Housing Act (Part 1
(commencing with Section 17000) of Division 13 of the Health and
Safety Code) issued by the enforcement agency that specifies the
application of this section. The regulatory agency may, for good
cause shown, extend the compliance date prescribed in a violation
notice.
(c) (1) When the period specified in paragraph (2) of subdivision
(b) has expired without compliance, the regulatory agency shall mail
to the taxpayer a notice of noncompliance. The notice of
noncompliance shall be in a form and shall include information
prescribed by the Franchise Tax Board, shall be mailed by certified
mail to the taxpayer at the taxpayer's last known address, and shall
advise the taxpayer of (A) an intent to notify the Franchise Tax
Board of the noncompliance within 10 days unless an appeal is filed,
(B) where an appeal may be filed, and (C) a general description of
the tax consequences of the filing with the Franchise Tax Board.
Appeals shall be made to the same body and in the same manner as
appeals from other actions of the regulatory agency. If no appeal is
made within 10 days or if after disposition of the appeal the
regulatory 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 legal
description or the lot and block numbers of the real property, the
assessor's parcel number, and the name of the owner of record as
shown on the latest equalized assessment roll. In addition, the
regulatory agency shall, at the same time as notification of the
notice of noncompliance is sent to the Franchise Tax Board, record a
copy of the notice of noncompliance in the office of the recorder for
the county in which the substandard housing is located that includes
a statement of tax consequences that may be determined by the
Franchise Tax Board. However, the failure to record a notice with the
county recorder does not relieve the liability of any taxpayer nor
does it create any liability on the part of the regulatory agency.
(3) The regulatory agency may charge the taxpayer a fee in an
amount not to exceed the regulatory agency's costs incurred in
recording any notice of noncompliance or issuing any release of that
notice. The notice of compliance shall be recorded and shall serve to
expunge the notice of noncompliance. The notice of compliance shall
contain the same recording information required for the notice of
noncompliance. No deduction by the taxpayer, or any other taxpayer
who obtains title to the property subsequent to the recordation of
the notice of noncompliance, shall be allowed for the items provided
in subdivision (a) from the date of the notice of noncompliance until
the date the regulatory agency determines that the substandard
housing has been brought to a condition of compliance. The regulatory
agency shall mail to the Franchise Tax Board and the taxpayer a
notice of compliance, which notice shall be in the form and include
the information prescribed by the Franchise Tax Board. In the event
the period of noncompliance does not cover an entire taxable year,
the deductions shall be denied at the rate of 1/12 for each full
month during the period of noncompliance.
(4) If the property is owned by more than one owner or if the
recorded title is in the name of a fictitious owner, the notice
requirements provided in subdivision (b) and this subdivision shall
be satisfied for each owner if the notices are mailed to one owner or
to the fictitious name owner at the address appearing on the latest
availa
17201. (a) Part VI of Subchapter B of Chapter 1 of Subtitle A of
the Internal Revenue Code, relating to itemized deductions for
individuals and corporations, shall apply, except as otherwise
provided.
(b) Part VII of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to additional itemized deductions for
individuals, shall apply, except as otherwise provided.
(c) Part IX of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to items not deductible, shall apply,
except as otherwise provided.
17201.4. Section 179B of the Internal Revenue Code, relating to
deductions for capital costs incurred in complying with Environmental
Protection Agency sulfur regulations, shall not apply.
17201.5. Section 181 of the Internal Revenue Code, relating to
treatment of certain qualified film and television productions, shall
not apply.
17201.6. Section 199 of the Internal Revenue Code, relating to
income attributable to domestic production activities, shall not
apply.
17202. There shall be allowed to an employer as an ordinary and
necessary expense paid or incurred during the taxable year in
carrying on any trade or business (as provided in Section 162(a) of
the Internal Revenue Code), the expenses involved in carrying out a
parking cash-out program, as defined by subdivision (f) of Section
65088.1 of the Government Code.
17203. For purposes of applying limitations on the deductions
described in this section, any reference to "compensation" or "earned
income" shall be a reference to the amount required to be used for
purposes of limiting the deduction in computing federal income tax
for the same taxable year.
(a) The deduction allowed by Section 219 of the Internal Revenue
Code.
(b) The deductions allowed by Sections 162(l) and 404 of the
Internal Revenue Code in the case of an individual who is an employee
within the meaning of Section 401(c)(1) of the Internal Revenue
Code.
17204. Section 165(h)(3) of the Internal Revenue Code, relating to
special rules for losses in federally declared disasters, shall not
apply.
17204.7. Section 222 of the Internal Revenue Code, relating to
qualified tuition and related expenses, shall not apply.
17206. (a) For purposes of Section 17201, Section 170 of the
Internal Revenue Code, relating to charitable, etc., contributions
and gifts, shall be applied to allow a taxpayer to elect to treat any
contribution described in subdivision (b) made in January 2005, as
if that contribution was made on December 31, 2004, and not in
January 2005.
(b) A contribution is described in this subdivision if that
contribution is a cash contribution made for the relief of victims in
areas affected by the December 26, 2004, Indian Ocean tsunami for
which a charitable contribution deduction is allowable under Section
17201.
17206.5. (a) For purposes of Section 170 of the Internal Revenue
Code, a taxpayer may treat any contribution described in subdivision
(b) made after January 11, 2010, and before March 1, 2010, as if the
contribution was made on December 31, 2009, and not in 2010.
(b) A contribution is described in this subdivision if the
contribution is a cash contribution made for the relief of victims in
the 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), a
telephone bill showing the name of the donee organization, the date
of the contribution, and the amount of the contribution shall be
treated as meeting the recordkeeping requirements of this part and
Part 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 following
disasters:
(1) Forest fire or any other related casualty occurring in 1985 in
California.
(2) Storm, flooding, or any other related casualty occurring in
1986 in California.
(3) Any loss sustained during 1987 as a result of a forest fire or
any other related casualty.
(4) Earthquake, aftershock, or any other related casualty
occurring in 1987 in California.
(5) Earthquake, aftershock, or any other related casualty
occurring in 1989 in California.
(6) Any loss sustained during 1990 as a result of fire or any
other related casualty in California.
(7) Any loss sustained as a result of the Oakland/Berkeley Fire of
1991, or any other related casualty.
(8) Any loss sustained as a result of storm, flooding, or any
other related casualty occurring in February 1992 in California.
(9) Earthquake, aftershock, or any other related casualty
occurring in April 1992 in the County of Humboldt.
(10) Riots, arson, or any other related casualty occurring in
April or May 1992 in California.
(11) Any loss sustained as a result of the earthquakes that
occurred in the County of San Bernardino in June and July of 1992, or
any other related casualty.
(12) Any loss sustained as a result of the Fountain Fire that
occurred in the County of Shasta, or as a result of either of the
fires in the Counties of Calaveras and Trinity that occurred in
August 1992, or any other related casualty.
(13) Any loss sustained as a result of storm, flooding, or any
other 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 January
1993.
(14) Any loss sustained as a result of a fire that occurred in the
Counties of Los Angeles, Orange, Riverside, San Bernardino, San
Diego, and Ventura, during October or November of 1993, or any other
related casualty.
(15) Any loss sustained as a result of the earthquake,
aftershocks, or any other related casualty that occurred in the
Counties 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 the
County of San Luis Obispo during August of 1994, or any other
related casualty.
(17) Any loss sustained as a result of the storms or flooding
occurring in 1995, or any other related casualty, sustained in any
county of this state subject to a disaster declaration with respect
to the storms and flooding.
(18) Any loss sustained as a result of the storms or flooding
occurring in December 1996 or January 1997, or any related casualty,
sustained in any county of this state subject to a disaster
declaration with respect to the storms or flooding.
(19) Any loss sustained as a result of the storms or flooding
occurring in February 1998, or any related casualty, sustained in any
county of this state subject to a disaster declaration with respect
to the storms or flooding.
(20) Any loss sustained as a result of a freeze occurring in the
winter of 1998-99, or any related casualty, sustained in any county
of this state subject to a disaster declaration with respect to the
freeze.
(21) Any loss sustained as a result of an earthquake occurring in
September 2000, that was included in the Governor's proclamation of a
state of emergency for the County of Napa.
(22) Any loss sustained as a result of the Middle River levee
break in San Joaquin County occurring in June 2004.
(23) Any losses sustained as a result of the fires that occurred
in 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 San
Luis 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 that
occurred in Shasta County, commencing August 11, 2004, and any other
related casualty.
(26) Any loss sustained in the Counties of Kern, Los Angeles,
Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and
Ventura as a result of the severe rainstorms, related flooding and
slides, and any other related casualties, that occurred in December
2004, 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 severe
rainstorms, related flooding and slides, and any other related
casualties, that occurred in December 2005, January 2006, March 2006,
or April 2006.
(28) Any loss sustained in the County of San Bernardino as a
result of the wildfires that occurred in July 2006.
(29) Any loss sustained in the Counties of Riverside and Ventura
as 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, San
Bernardino, San Diego, San Luis Obispo, Santa Barbara, Santa Clara,
Stanislaus, Tulare, Ventura, and Yuba that were the subject of the
Governor's proclamations of a state of emergency for the severe
freezing conditions that occurred in January 2007.
(31) Any loss sustained in the County of El Dorado as a result of
wildfires that occurred in June 2007.
(32) Any loss sustained in the Counties of Santa Barbara and
Ventura as a result of the Zaca Fire that occurred during the 2007
calendar year.
(33) Any loss sustained in the County of Inyo as a result of
wildfires 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 a
result of wildfires that occurred during the 2007 calendar year that
were the subject of the Governor's disaster proclamations of
September 15, 2007, and October 21, 2007.
(35) Any loss sustained in the County of Riverside as a result of
extremely 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, and
Trinity as a result of wildfires that occurred in May or June 2008
that were the subject of the Governor's proclamations of a state of
emergency.
(37) Any loss sustained in the County of Santa Barbara as a result
of wildfires that occurred in July 2008.
(38) Any loss sustained in the County of Inyo as a result of the
severe rainstorms, related flooding and landslides, and any other
related casualties, that occurred in July 2008.
(39) Any loss sustained in the County of Humboldt as a result of
wildfires that commenced in May 2008.
(40) Any loss sustained in the County of Santa Barbara as a result
of wildfires that commenced in November 2008.
(41) Any loss sustained in the Counties of Los Angeles and Ventura
as a result of wildfires that commenced in October 2008 or November
2008 that were the subject of the Governor's proclamations of a state
of emergency.
(42) Any loss sustained in the Counties of Orange, Riverside, and
San Bernardino as a result of wildfires that commenced in November
2008.
(43) Any loss sustained in the County of Santa Barbara as a result
of wildfires that commenced in May 2009.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in paragraphs (15) to (43), inclusive, of
subdivision (a), the election under Section 165(i) of the Internal
Revenue Code may be made on a return or amended return filed on or
before the due date of the return (determined with regard to
extension) 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 in
subdivision (b), with respect to losses sustained in the County of
Humboldt as a result of the earthquake that occurred in January 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.3. (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 sustained in the County of
Imperial as a result of the earthquake that occurred in April 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.4. (a) Section 165(i) of the Internal Revenue Code is
modified to additionally provide that an appraisal for the purpose of
obtaining a loan of federal funds or a loan guarantee from the
federal government as a result of a presidentially declared disaster,
as defined by Section 1033(h)(3) of the Internal Revenue Code, may
be 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 in
regulations or other guidance of the Secretary of the Treasury under
Section 165(i)(4) of the Internal Revenue Code, as added by Section
912 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 in
subdivision (b), with respect to losses resulting from any of the
following disasters:
(1) Any loss sustained in the Counties of Los Angeles and Monterey
as a result of wildfires that commenced in August 2009.
(2) Any loss sustained in the County of Placer as a result of
wildfires that commenced in August 2009.
(3) Any loss sustained in the Counties of Calaveras, Imperial, Los
Angeles, Orange, Riverside, San Bernardino, San Francisco, and
Siskiyou as a result of winter storms that commenced in January 2010.
(4) Any loss sustained in the County of Kern as a result of the
wildfires that commenced in July 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.8. (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 sustained in the County of
San Mateo as a result of the explosion and fire that occurred in
September 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) This section and Section 165(i) of the Internal Revenue Code
shall be applicable to any of the losses listed in subdivision (a)
sustained in any county or city in this state which was proclaimed by
the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17208.1. (a) There shall be allowed as a deduction the amount of
interest paid or incurred by a taxpayer during the taxable year on
any loan or financed indebtedness obtained from a publicly owned
utility company for the purpose of acquiring and installing any
energy efficient product or equipment to a qualified residence
located in this state.
(b) For purposes of this section:
(1) "Energy efficient product or equipment" means any product or
equipment certified by a publicly owned utility company that will
improve the energy efficiency, as defined by paragraph (2) of
subdivision (a) of Section 399.4 of the Public Utilities Code, of a
qualified residence on which the product or equipment is installed or
applied.
(2) "Energy efficient product or equipment" shall include, but not
be limited to, heating, ventilation, air-conditioning, lighting,
solar, advanced metering of energy usage, windows, insulation, zone
heating products, and weatherization systems.
(3) "Zone heating products" mean gas room heaters certified by the
California Energy Commission or wood fueled stoves certified by the
federal Environmental Protection Agency.
(4) "Publicly owned utility company" has the same meaning as set
forth in subdivision (d) of Section 9604 of the Public Utilities
Code.
(5) "Qualified residence" has the same meaning as set forth in
Section 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 to
finance the acquisition and installation of energy efficient products
and equipment installed or applied to a qualified residence located
in this state.
(c) Any interest amount that is allowed as a deduction pursuant to
this section (and the application of Section 17072) may not
otherwise be allowed as a deduction for purposes of this part.
(d) The publicly owned utility company shall issue a federal
income tax Form 1098, or similar form, for the purpose of notifying
the taxpayer of his or her eligibility for the deduction allowed by
this section.
(e) The deduction allowed by this section shall be in lieu of any
credit allowed by this part for interest paid or incurred by the
taxpayer in connection with the purchase of energy efficient
equipment.
(f) The Legislature finds and declares that many taxpayers may be
unaware that they may deduct interest paid or incurred pursuant to
this section. The Legislature further finds that it is important to
inform taxpayers of this deduction. Therefore, it is the intent of
the Legislature to encourage all publicly owned utility companies to
inform their customers in writing that they may deduct interest paid
or incurred pursuant to this section. It is the further intent of the
Legislature to encourage all publicly owned utility companies that
are unable to offer customer financing to acquire or install energy
efficient products and equipment to inform their customers in writing
that interest on a home equity or home improvement loan used to
purchase energy efficient products and equipment may also be tax
deductible.
(g) It is the intent of the Legislature to inquire with the
Internal Revenue Service as to whether the loan program administered
by the Sacramento Municipal Utility District qualifies for an
interest deduction in compliance with the Internal Revenue Code and
the regulations thereunder.
17215. (a) Section 220(a) of the Internal Revenue Code, relating to
deduction allowed, is modified to provide that the amount allowed as
a deduction shall be an amount equal to the amount allowed to that
individual as a deduction under Section 220 of the Internal Revenue
Code, relating to medical savings accounts, on the federal income tax
return filed for the same taxable year by that individual.
(b) Section 220(f)(4) of the Internal Revenue Code, relating to
additional tax on distributions not used for qualified medical
expenses, is modified by substituting "10 percent" in lieu of "15
percent."
17215.1. Section 220(f)(5) of the Internal Revenue Code, relating
to rollover contributions, shall not apply.
17215.4. Section 223 of the Internal Revenue Code, relating to
health savings accounts, shall not apply.
17220. (a) Section 164(a)(3) of the Internal Revenue Code, relating
to the deductibility of state, local, and foreign income, war
profits, and excess profits taxes, shall not apply.
(b) Section 164(b)(5) of the Internal Revenue Code, relating to
general sales taxes, shall not apply.
(c) In addition to the provisions of Section 164(c) of the
Internal Revenue Code, relating to deduction denied in case of
certain taxes, no deduction shall be allowed for any tax imposed
under Chapter 10.5 (commencing with Section 17935), Chapter 10.6
(commencing with Section 17941), or Chapter 10.7 (commencing with
Section 17951) of this part or under Part 11 (commencing with Section
23001).
17222. No deduction shall be allowed for the tax deducted and
withheld under Section 18662 and Section 13020 of the Unemployment
Insurance Code either to the employer or to the recipient of the
income in computing taxable income under this part.
17224. Section 163(e) of the Internal Revenue Code is modified as
follows:
(a) For taxable years beginning on or after January 1, 1987, and
before the taxable year in which the debt obligation matures or is
sold, exchanged, or otherwise disposed, the amount deductible under
this part is the same as the amount deductible on the federal tax
return.
(b) The difference between the amount deductible on the federal
tax return and the amount allowable under this part, with respect to
obligations issued after December 31, 1984, for taxable years
beginning before January 1, 1987, shall be allowed as a deduction in
the 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 yield
original issue discount obligations, shall apply.
17225. Section 163(h)(3)(E) of the Internal Revenue Code, relating
to mortgage insurance premiums treated as interest, shall not apply.
17230. Payments made to the California Housing Finance Agency by
the borrower pursuant to Section 52514 of the Health and Safety Code
shall be considered payments of interest for purposes of Section 163
of the Internal Revenue Code.
17235. (a) There shall be allowed as a deduction the amount of net
interest received by the taxpayer in payment on indebtedness of a
person or entity engaged in the conduct of a trade or business
located in an enterprise zone.
(b) No deduction shall be allowed under this section unless at the
time the indebtedness is incurred each of the following requirements
are met:
(1) The trade or business is located solely within an enterprise
zone.
(2) The indebtedness is incurred solely in connection with
activity within the enterprise zone.
(3) The taxpayer has no equity or other ownership interest in the
debtor.
(c) "Enterprise zone" means an area designated as an enterprise
zone pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
17250. (a) Section 168 of the Internal Revenue Code is modified as
follows:
(1) Any reference to "tax imposed by this chapter" in Section 168
of the Internal Revenue Code means "net tax," as defined in Section
17039.
(2) (A) Section 168(e)(3) is modified to provide that any
grapevine, replaced in a vineyard in California in any taxable year
beginning on or after January 1, 1992, as a direct result of a
phylloxera infestation in that vineyard, or replaced in a vineyard in
California in any taxable year beginning on or after January 1,
1997, as a direct result of Pierce's disease in that vineyard, shall
be "five-year property," rather than "10-year property."
(B) Section 168(g)(3) of the Internal Revenue Code is modified to
provide that any grapevine, replaced in a vineyard in California in
any taxable year beginning on or after January 1, 1992, as a direct
result of a phylloxera infestation in that vineyard, or replaced in a
vineyard in California in any taxable year beginning on or after
January 1, 1997, as a direct result of Pierce's disease in that
vineyard, shall have a class life of 10 years.
(C) Every taxpayer claiming a depreciation deduction with respect
to grapevines as described in this paragraph shall obtain a written
certification from an independent state-certified integrated pest
management adviser, or a state agricultural commissioner or adviser,
that specifies that the replanting was necessary to restore a
vineyard infested with phylloxera or Pierce's disease. The taxpayer
shall retain the certification for future audit purposes.
(3) Section 168(j) of the Internal Revenue Code, relating to
property on Indian reservations, shall not apply.
(4) Section 168(k) of the Internal Revenue Code, relating to
special 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 Revenue
Code 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 Internal
Revenue Code, relating to qualified leasehold improvement property,
qualified restaurant property, and qualified retail improvement
property, respectively, shall not apply.
(8) Section 168(l) of the Internal Revenue Code, relating to
special allowance for cellulosic biofuel plant property, shall not
apply.
(9) Section 168(m) of the Internal Revenue Code, relating to
special allowance for certain reuse and recycling property, shall not
apply.
(10) Section 168(n) of the Internal Revenue Code, relating to
special allowance for qualified disaster assistance property, shall
not apply.
(11) Section 168(i)(15)(D) of the Internal Revenue Code, relating
to 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 shall
not apply.
(b) Section 169 of the Internal Revenue Code, relating to
amortization of pollution control facilities, is modified as follows:
(1) The deduction allowed by Section 169 of the Internal Revenue
Code shall be allowed only with respect to facilities located in this
state.
(2) The "state certifying authority," as defined in Section 169(d)
(2) of the Internal Revenue Code, means the State Air Resources
Board, in the case of air pollution, and the State Water Resources
Control Board, in the case of water pollution.
17250.5. (a) Section 167(g) of the Internal Revenue Code, relating
to depreciation under income forecast method, shall be modified as
follows:
(1) Section 167(g)(2)(C) of the Internal Revenue Code is modified
by substituting "Section 19521" for "Section 460(b)(7)" of the
Internal Revenue Code.
(2) Section 167(g)(5)(D) of the Internal Revenue Code is modified
by substituting "Part 10.2 (commencing with Section 18401) (other
than Section 19136)" for "Subtitle F (other than Sections 6654 and
6655)."
(3) Section 167(g)(5)(E) of the Internal Revenue Code, relating to
treatment of distribution costs, shall not apply.
(4) Section 167(g)(7) of the Internal Revenue Code, relating to
treatment of participations and residuals, shall not apply.
(b) Section 167(h) of the Internal Revenue Code, relating to
amortization of geological and geophysical expenditures, shall not
apply.
17255. (a) Section 179(b)(1) of the Internal Revenue Code, relating
to dollar limitation, shall not apply and in lieu thereof, the
aggregate cost which may be taken into account under Section 179(a)
of the Internal Revenue Code for any taxable year shall not exceed
twenty-five thousand dollars ($25,000).
(b) Section 179(b)(2) of the Internal Revenue Code, relating to
reduction in limitation, shall not apply and in lieu thereof, the
limitation under subdivision (a) for any taxable year shall be
reduced, but not to below zero, by the amount by which the cost of
Section 179 property, as defined in Section 179(d)(1) of the Internal
Revenue Code, except as otherwise provided, placed in service during
the taxable year exceeds two hundred thousand dollars ($200,000).
(c) Section 179 of the Internal Revenue Code is modified to
provide that the "aggregate amount disallowed" referred to in Section
179(b)(3)(B) of the Internal Revenue Code shall be computed under
this part as it read on the date the property generating the amount
disallowed was placed in service.
(d) Section 179(b)(5) of the Internal Revenue Code, relating to
inflation adjustments, shall not apply.
(e) The last sentence in Section 179(c)(2) of the Internal Revenue
Code, relating to election irrevocable, shall not apply.
(f) Section 179(d)(1)(A)(ii) of the Internal Revenue Code shall
not apply.
(g) Section 179(e) of the Internal Revenue Code, relating to
special rules for qualified disaster assistance property, shall not
apply.
17256. Section 179A of the Internal Revenue Code, relating to
deduction for clean-fuel vehicles and certain refueling property,
shall not apply.
17257. Section 179C of the Internal Revenue Code, relating to
election to expense certain refineries, shall not apply.
17257.2. Section 179D of the Internal Revenue Code, relating to
energy efficient commercial buildings deduction, shall not apply.
17257.4. Section 179E of the Internal Revenue Code, relating to
election to expense advanced mine safety equipment, shall not apply.
17260. (a) No deduction, other than depreciation, shall be allowed
for expenditures for tertiary injectants as provided by Section 193
of the Internal Revenue Code.
(b) Section 263(a) of the Internal Revenue Code shall not apply to
expenditures for which a deduction is allowed under Section 17266 or
17267.2.
17267.2. (a) A taxpayer may elect to treat 40 percent of the cost
of any Section 17267.2 property as an expense which is not chargeable
to a capital account. Any cost so treated shall be allowed as a
deduction for the taxable year in which the taxpayer places the
Section 17267.2 property in service.
(b) In the case of a husband and wife filing separate returns for
a taxable year, the applicable amount under subdivision (a) shall be
equal to 50 percent of the percentage specified in subdivision (a).
(c) (1) An election under this section for any taxable year shall
do both of the following:
(A) Specify the items of Section 17267.2 property to which the
election applies and the percentage of the cost of each of those
items that are to be taken into account under subdivision (a).
(B) Be made on the taxpayer's original return of the tax imposed
by this part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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) of
the Internal Revenue Code).
(B) Purchased and placed in service by the taxpayer for exclusive
use in a trade or business conducted within an enterprise zone
designated pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
(C) Purchased and placed in service before the date the enterprise
zone designation expires, is no longer binding, or becomes
inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or Section 707 (b) of the Internal Revenue Code.
However, in applying Section 267(b) and 267(c) for purposes of this
section, Section 267(c) (4) shall be treated as providing that the
family 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 acquiring
it is not determined in whole or in part by reference to the
adjusted basis of that property in the hands of the person from whom
it is acquired.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
taxpayer may not make an election for the taxable year under Section
179 of the Internal Revenue Code because of the application of the
provisions of Section 179(d) of the Internal Revenue Code.
(6) In the case of a partnership, the percentage limitation
specified in subdivision (a) shall apply at the partnership level and
at the partner level.
(e) For purposes of this section, "taxpayer" means a person or
entity who conducts a trade or business within an enterprise zone
designated pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
(f) Any taxpayer who elects to be subject to this section shall
not be entitled to claim for the same property, the deduction under
Section 179 of the Internal Revenue Code, relating to an election to
expense certain depreciable business assets. However, the taxpayer
may claim depreciation by any method permitted by Section 168 of the
Internal Revenue Code, commencing with the taxable year following the
taxable year in which the Section 17267.2 property is placed in
service.
(g) The aggregate cost of all Section 17267.2 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amount for the taxable year of
the designation of the relevant enterprise zone 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
(h) Any amounts deducted under subdivision (a) with respect to
property subject to this section that ceases to be used in the
taxpayer's trade or business within an enterprise zone at any time
before the close of the second taxable year after the property is
placed in service shall be included in income in the taxable year in
which 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 cost
of any Section 17267.6 property as an expense that is not chargeable
to a capital account. Any cost so treated shall be allowed as a
deduction for the taxable year in which the qualified taxpayer places
the Section 17267.6 property in service.
(b) In the case of a husband and wife filing separate returns for
a taxable year, the applicable amount under subdivision (a) shall be
equal to 50 percent of the percentage specified in subdivision (a).
(c) (1) An election under this section for any taxable year shall
do both of the following:
(A) Specify the items of Section 17267.6 property to which the
election applies and the percentage of the cost of each of those
items that are to be taken into account under subdivision (a).
(B) Be made on the qualified taxpayer's original return of the tax
imposed by this part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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 the
Internal Revenue Code).
(B) Purchased and placed in service by the qualified taxpayer for
exclusive use in a trade or business conducted within a targeted tax
area designated pursuant to Chapter 12.93 (commencing with Section
7097) of Division 7 of Title 1 of the Government Code.
(C) Purchased and placed in service before the date the targeted
tax area designation expires, is revoked, is no longer binding, or
becomes inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or Section 707(b) of the Internal Revenue Code.
However, in applying Sections 267(b) and 267(c) for purposes of this
section, Section 267(c)(4) shall be treated as providing that the
family 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 acquiring
it is not determined in whole or in part by reference to the
adjusted basis of that property in the hands of the person from whom
it is acquired.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
qualified taxpayer may not make an election for the taxable year
under Section 179 of the Internal Revenue Code because of the
application of the provisions of Section 179(d) of the Internal
Revenue Code.
(6) In the case of a partnership, the percentage limitation
specified in subdivision (a) shall apply at the partnership level and
at the partner level.
(e) (1) For purposes of this section, "qualified taxpayer" means a
person or entity that meets both of the following:
(A) Is engaged in a trade or business within a targeted tax area
designated 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 2000
to 2099, inclusive; 2200 to 3999, inclusive; 4200 to 4299, inclusive;
4500 to 4599, inclusive, and 4700 to 5199, inclusive, of the
Standard Industrial Classification (SIC) Manual published by the
United State Office of Management and Budget, 1987 edition.
(2) In the case of any pass-through entity, the determination of
whether a taxpayer is a qualified taxpayer under this section shall
be made at the entity level and any deduction under this section or
Section 24356.6 shall be allowed to the pass-through entity and
passed through to the partners or shareholders in accordance with
applicable provisions of this part of Part 11 (commencing with
Section 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 this
section shall not be entitled to claim for the same property, the
deduction under Section 179 of the Internal Revenue Code, relating to
an election to expense certain depreciable business assets. However,
the qualified taxpayer may claim depreciation by any method
permitted by Section 168 of the Internal Revenue Code, commencing
with the taxable year following the taxable year in which the Section
17267.6 property is placed in service.
(g) The aggregate cost of all Section 17267.6 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amount for the taxable year of
the designation of the relevant targeted tax area 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
(h) Any amounts deducted under subdivision (a) with respect to
Section 17267.6 property that ceases to be used in the qualified
taxpayer's trade or business within a targeted tax area at any time
before the close of the second taxable year after the property is
placed in service shall be included in income in the taxable year in
which 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 any
Section 17268 property as an expense that is not chargeable to the
capital account. Any cost so treated shall be allowed as a deduction
for the taxable year in which the taxpayer places the Section 17268
property in service.
(b) In the case of a husband or wife filing separate returns for a
taxable year in which a spouse is entitled to the deduction under
subdivision (a), the applicable amount shall be equal to 50 percent
of the amount otherwise determined under subdivision (a).
(c) (1) An election under this section for any taxable year shall
meet both of the following requirements:
(A) Specify the items of Section 17268 property to which the
election applies and the portion of the cost of each of those items
that is to be taken into account under subdivision (a).
(B) Be made on the taxpayer's return of the tax imposed by this
part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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 the
Internal Revenue Code).
(B) Purchased by the taxpayer for exclusive use in a trade or
business conducted within a LAMBRA.
(C) Purchased before the date the LAMBRA designation expires, is
no longer binding, or becomes inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or 707(b) of the Internal Revenue Code (but, in
applying Section 267(b) and Section 267(c) of the Internal Revenue
Code for purposes of this section, Section 267(c)(4) of the Internal
Revenue Code shall be treated as providing that the family of an
individual shall include only his or her spouse, ancestors, and
lineal descendants).
(B) The basis of the property in the hands of the person acquiring
it is not determined by either of the following:
(i) In whole or in part by reference to the adjusted basis of the
property in the hands of the person from whom acquired.
(ii) Under Section 1014 of the Internal Revenue Code, relating to
basis of property acquired from a decedent.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
taxpayer may not make an election for the taxable year under Section
179 of the Internal Revenue Code because of the provisions of Section
179(d) of the Internal Revenue Code.
(6) In the case of a partnership, the dollar limitation in
subdivision (f) shall apply at the partnership level and at the
partner level.
(7) This section shall not apply to any property described in
Section 168(f) of the Internal Revenue Code, relating to property to
which 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 area
designated in accordance with the provisions of Section 7114 of the
Government Code.
(2) "Taxpayer" means a taxpayer that conducts a trade or business
within a LAMBRA and, for the first two taxable years, has a net
increase 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 by
subtracting the total number of full-time employees (defined as 2,000
paid hours per employee per year) the taxpayer employed in this
state in the taxable year prior to commencing business operations in
the LAMBRA from the total number of full-time employees the taxpayer
employed in this state during the second taxable year after
commencing business operations in the LAMBRA. For taxpayers who
commence doing business in this state with their LAMBRA business
operation, the number of employees for the taxable year prior to
commencing business operations in the LAMBRA shall be zero. If the
taxpayer has a net increase in jobs in the state, the credit shall be
allowed only if one or more full-time employees is employed within
the LAMBRA.
(B) The total number of employees employed in the LAMBRA shall
equal the sum of both of the following:
(i) The total number of hours worked in the LAMBRA for the
taxpayer by employees (not to exceed 2,000 hours per employee) who
are paid an hourly wage divided by 2,000.
(ii) The total number of months worked in the LAMBRA for the
taxpayer by employees who are salaried employees divided by 12.
(C) In the case of a taxpayer who first commences doing business
in 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 the
number of months of the taxable year that the taxpayer was doing
business in the LAMBRA and the denominator of which is 12.
(f) The aggregate cost of all Section 17268 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amounts for the taxable year of
the 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 used
exclusively in a trade or business conducted within a LAMBRA.
(h) (1) Any amounts deducted under subdivision (a) with respect to
property that ceases to be used in the trade or business within a
LAMBRA at any time before the close of the second taxable year after
the property was placed in service shall be included in income for
that year.
(2) At the close of the second taxable year, if the taxpayer has
not increased the number of its employees as determined by paragraph
(2) of subdivision (e), then the amount of the deduction previously
claimed shall be added to the taxpayer's taxable income for the
taxpayer's second taxable year.
(i) Any taxpayer who elects to be subject to this section shall
not be entitled to claim for the same property the deduction under
Section 179 of the Internal Revenue Code, relating to an election to
expense certain depreciable business assets.
17269. Whereas, the people of the State of California desire to
promote and achieve tax equity and fairness among all the state's
citizens and further desire to conform to the public policy of
nondiscrimination, the Legislature hereby enacts the following for
these reasons and for no other purpose:
(a) The provisions of Section 162 (a) of the Internal Revenue Code
shall not be applicable to expenses incurred by a taxpayer with
respect to expenditures made at, or payments made to, a club which
restricts membership or the use of its services or facilities on the
basis of ancestry or any characteristic listed or defined in Section
11135 of the Government Code.
(b) A club described in subdivision (a) holding an alcoholic
beverage license pursuant to Division 9 (commencing with Section
23000) of the Business and Professions Code, except a club holding an
alcoholic beverage license pursuant to Section 23425 thereof, shall
provide on each receipt furnished to a taxpayer a printed statement
as follows:
"The expenditures covered by this receipt are nondeductible for
state income tax purposes or franchise tax purposes."
(c) For purposes of this section:
(1) "Expenses" means those expenses otherwise deductible under
Section 162(a) of the Internal Revenue Code, except for subdivision
(a), and includes, but is not limited to, club membership dues and
assessments, food and beverage expenses, expenses for services
furnished by the club, and reimbursements or salary adjustments to
officers or employees for any of the preceding expenses.
(2) "Club" means a club as defined in Division 9 (commencing with
Section 23000) of the Business and Professions Code, except a club as
defined in Section 23425 thereof.
17270. (a) For purposes of Section 162(a)(2) of the Internal
Revenue Code, relating to travel expenses, all of the following shall
apply:
(1) The place of residence of a member of the Legislature within
the 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, shall
not 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 modified
to refer to Section 17041 in lieu of Section 11(b)(1) of the
Internal Revenue Code.
17273. For each taxable year beginning on or after January 1, 1999,
Section 162(l)(1) of the Internal Revenue Code, relating to
applicable percentage, is modified to provide that Section 2002 of
the 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 the
contrary, no deduction shall be allowed for interest, taxes,
depreciation, or amortization paid or incurred in the taxable year
with respect to substandard housing located in this state, except as
provided in subdivision (e).
(b) "Substandard housing" means occupied dwellings from which the
taxpayer derives rental income or unoccupied or abandoned dwellings
for which both of the following apply:
(1) Either of the following occurs:
(A) For occupied dwellings from which the taxpayer derives rental
income, a state or local government regulatory agency has determined
that the housing violates state law or local codes dealing with
health, safety, or building.
(B) For dwellings that are unoccupied or abandoned for at least 90
days, a state or local government regulatory agency has cited the
housing for conditions that constitute a serious violation of state
law or local codes dealing with health, safety, or building, and that
constitute 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 not
been brought to a condition of compliance within six months after the
date of the notice or the time prescribed in the notice, whichever
period is later.
(B) Good faith efforts for compliance have not been commenced, as
determined 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 the
date for compliance prescribed in the written notice of violation,
been brought into compliance with the conditions stated in the
written notice of violation of the Employee Housing Act (Part 1
(commencing with Section 17000) of Division 13 of the Health and
Safety Code) issued by the enforcement agency that specifies the
application of this section. The regulatory agency may, for good
cause shown, extend the compliance date prescribed in a violation
notice.
(c) (1) When the period specified in paragraph (2) of subdivision
(b) has expired without compliance, the regulatory agency shall mail
to the taxpayer a notice of noncompliance. The notice of
noncompliance shall be in a form and shall include information
prescribed by the Franchise Tax Board, shall be mailed by certified
mail to the taxpayer at the taxpayer's last known address, and shall
advise the taxpayer of (A) an intent to notify the Franchise Tax
Board of the noncompliance within 10 days unless an appeal is filed,
(B) where an appeal may be filed, and (C) a general description of
the tax consequences of the filing with the Franchise Tax Board.
Appeals shall be made to the same body and in the same manner as
appeals from other actions of the regulatory agency. If no appeal is
made within 10 days or if after disposition of the appeal the
regulatory 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 legal
description or the lot and block numbers of the real property, the
assessor's parcel number, and the name of the owner of record as
shown on the latest equalized assessment roll. In addition, the
regulatory agency shall, at the same time as notification of the
notice of noncompliance is sent to the Franchise Tax Board, record a
copy of the notice of noncompliance in the office of the recorder for
the county in which the substandard housing is located that includes
a statement of tax consequences that may be determined by the
Franchise Tax Board. However, the failure to record a notice with the
county recorder does not relieve the liability of any taxpayer nor
does it create any liability on the part of the regulatory agency.
(3) The regulatory agency may charge the taxpayer a fee in an
amount not to exceed the regulatory agency's costs incurred in
recording any notice of noncompliance or issuing any release of that
notice. The notice of compliance shall be recorded and shall serve to
expunge the notice of noncompliance. The notice of compliance shall
contain the same recording information required for the notice of
noncompliance. No deduction by the taxpayer, or any other taxpayer
who obtains title to the property subsequent to the recordation of
the notice of noncompliance, shall be allowed for the items provided
in subdivision (a) from the date of the notice of noncompliance until
the date the regulatory agency determines that the substandard
housing has been brought to a condition of compliance. The regulatory
agency shall mail to the Franchise Tax Board and the taxpayer a
notice of compliance, which notice shall be in the form and include
the information prescribed by the Franchise Tax Board. In the event
the period of noncompliance does not cover an entire taxable year,
the deductions shall be denied at the rate of 1/12 for each full
month during the period of noncompliance.
(4) If the property is owned by more than one owner or if the
recorded title is in the name of a fictitious owner, the notice
requirements provided in subdivision (b) and this subdivision shall
be satisfied for each owner if the notices are mailed to one owner or
to the fictitious name owner at the address appearing on the latest
availa
17201. (a) Part VI of Subchapter B of Chapter 1 of Subtitle A of
the Internal Revenue Code, relating to itemized deductions for
individuals and corporations, shall apply, except as otherwise
provided.
(b) Part VII of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to additional itemized deductions for
individuals, shall apply, except as otherwise provided.
(c) Part IX of Subchapter B of Chapter 1 of Subtitle A of the
Internal Revenue Code, relating to items not deductible, shall apply,
except as otherwise provided.
17201.4. Section 179B of the Internal Revenue Code, relating to
deductions for capital costs incurred in complying with Environmental
Protection Agency sulfur regulations, shall not apply.
17201.5. Section 181 of the Internal Revenue Code, relating to
treatment of certain qualified film and television productions, shall
not apply.
17201.6. Section 199 of the Internal Revenue Code, relating to
income attributable to domestic production activities, shall not
apply.
17202. There shall be allowed to an employer as an ordinary and
necessary expense paid or incurred during the taxable year in
carrying on any trade or business (as provided in Section 162(a) of
the Internal Revenue Code), the expenses involved in carrying out a
parking cash-out program, as defined by subdivision (f) of Section
65088.1 of the Government Code.
17203. For purposes of applying limitations on the deductions
described in this section, any reference to "compensation" or "earned
income" shall be a reference to the amount required to be used for
purposes of limiting the deduction in computing federal income tax
for the same taxable year.
(a) The deduction allowed by Section 219 of the Internal Revenue
Code.
(b) The deductions allowed by Sections 162(l) and 404 of the
Internal Revenue Code in the case of an individual who is an employee
within the meaning of Section 401(c)(1) of the Internal Revenue
Code.
17204. Section 165(h)(3) of the Internal Revenue Code, relating to
special rules for losses in federally declared disasters, shall not
apply.
17204.7. Section 222 of the Internal Revenue Code, relating to
qualified tuition and related expenses, shall not apply.
17206. (a) For purposes of Section 17201, Section 170 of the
Internal Revenue Code, relating to charitable, etc., contributions
and gifts, shall be applied to allow a taxpayer to elect to treat any
contribution described in subdivision (b) made in January 2005, as
if that contribution was made on December 31, 2004, and not in
January 2005.
(b) A contribution is described in this subdivision if that
contribution is a cash contribution made for the relief of victims in
areas affected by the December 26, 2004, Indian Ocean tsunami for
which a charitable contribution deduction is allowable under Section
17201.
17206.5. (a) For purposes of Section 170 of the Internal Revenue
Code, a taxpayer may treat any contribution described in subdivision
(b) made after January 11, 2010, and before March 1, 2010, as if the
contribution was made on December 31, 2009, and not in 2010.
(b) A contribution is described in this subdivision if the
contribution is a cash contribution made for the relief of victims in
the 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), a
telephone bill showing the name of the donee organization, the date
of the contribution, and the amount of the contribution shall be
treated as meeting the recordkeeping requirements of this part and
Part 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 following
disasters:
(1) Forest fire or any other related casualty occurring in 1985 in
California.
(2) Storm, flooding, or any other related casualty occurring in
1986 in California.
(3) Any loss sustained during 1987 as a result of a forest fire or
any other related casualty.
(4) Earthquake, aftershock, or any other related casualty
occurring in 1987 in California.
(5) Earthquake, aftershock, or any other related casualty
occurring in 1989 in California.
(6) Any loss sustained during 1990 as a result of fire or any
other related casualty in California.
(7) Any loss sustained as a result of the Oakland/Berkeley Fire of
1991, or any other related casualty.
(8) Any loss sustained as a result of storm, flooding, or any
other related casualty occurring in February 1992 in California.
(9) Earthquake, aftershock, or any other related casualty
occurring in April 1992 in the County of Humboldt.
(10) Riots, arson, or any other related casualty occurring in
April or May 1992 in California.
(11) Any loss sustained as a result of the earthquakes that
occurred in the County of San Bernardino in June and July of 1992, or
any other related casualty.
(12) Any loss sustained as a result of the Fountain Fire that
occurred in the County of Shasta, or as a result of either of the
fires in the Counties of Calaveras and Trinity that occurred in
August 1992, or any other related casualty.
(13) Any loss sustained as a result of storm, flooding, or any
other 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 January
1993.
(14) Any loss sustained as a result of a fire that occurred in the
Counties of Los Angeles, Orange, Riverside, San Bernardino, San
Diego, and Ventura, during October or November of 1993, or any other
related casualty.
(15) Any loss sustained as a result of the earthquake,
aftershocks, or any other related casualty that occurred in the
Counties 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 the
County of San Luis Obispo during August of 1994, or any other
related casualty.
(17) Any loss sustained as a result of the storms or flooding
occurring in 1995, or any other related casualty, sustained in any
county of this state subject to a disaster declaration with respect
to the storms and flooding.
(18) Any loss sustained as a result of the storms or flooding
occurring in December 1996 or January 1997, or any related casualty,
sustained in any county of this state subject to a disaster
declaration with respect to the storms or flooding.
(19) Any loss sustained as a result of the storms or flooding
occurring in February 1998, or any related casualty, sustained in any
county of this state subject to a disaster declaration with respect
to the storms or flooding.
(20) Any loss sustained as a result of a freeze occurring in the
winter of 1998-99, or any related casualty, sustained in any county
of this state subject to a disaster declaration with respect to the
freeze.
(21) Any loss sustained as a result of an earthquake occurring in
September 2000, that was included in the Governor's proclamation of a
state of emergency for the County of Napa.
(22) Any loss sustained as a result of the Middle River levee
break in San Joaquin County occurring in June 2004.
(23) Any losses sustained as a result of the fires that occurred
in 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 San
Luis 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 that
occurred in Shasta County, commencing August 11, 2004, and any other
related casualty.
(26) Any loss sustained in the Counties of Kern, Los Angeles,
Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and
Ventura as a result of the severe rainstorms, related flooding and
slides, and any other related casualties, that occurred in December
2004, 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 severe
rainstorms, related flooding and slides, and any other related
casualties, that occurred in December 2005, January 2006, March 2006,
or April 2006.
(28) Any loss sustained in the County of San Bernardino as a
result of the wildfires that occurred in July 2006.
(29) Any loss sustained in the Counties of Riverside and Ventura
as 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, San
Bernardino, San Diego, San Luis Obispo, Santa Barbara, Santa Clara,
Stanislaus, Tulare, Ventura, and Yuba that were the subject of the
Governor's proclamations of a state of emergency for the severe
freezing conditions that occurred in January 2007.
(31) Any loss sustained in the County of El Dorado as a result of
wildfires that occurred in June 2007.
(32) Any loss sustained in the Counties of Santa Barbara and
Ventura as a result of the Zaca Fire that occurred during the 2007
calendar year.
(33) Any loss sustained in the County of Inyo as a result of
wildfires 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 a
result of wildfires that occurred during the 2007 calendar year that
were the subject of the Governor's disaster proclamations of
September 15, 2007, and October 21, 2007.
(35) Any loss sustained in the County of Riverside as a result of
extremely 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, and
Trinity as a result of wildfires that occurred in May or June 2008
that were the subject of the Governor's proclamations of a state of
emergency.
(37) Any loss sustained in the County of Santa Barbara as a result
of wildfires that occurred in July 2008.
(38) Any loss sustained in the County of Inyo as a result of the
severe rainstorms, related flooding and landslides, and any other
related casualties, that occurred in July 2008.
(39) Any loss sustained in the County of Humboldt as a result of
wildfires that commenced in May 2008.
(40) Any loss sustained in the County of Santa Barbara as a result
of wildfires that commenced in November 2008.
(41) Any loss sustained in the Counties of Los Angeles and Ventura
as a result of wildfires that commenced in October 2008 or November
2008 that were the subject of the Governor's proclamations of a state
of emergency.
(42) Any loss sustained in the Counties of Orange, Riverside, and
San Bernardino as a result of wildfires that commenced in November
2008.
(43) Any loss sustained in the County of Santa Barbara as a result
of wildfires that commenced in May 2009.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in paragraphs (15) to (43), inclusive, of
subdivision (a), the election under Section 165(i) of the Internal
Revenue Code may be made on a return or amended return filed on or
before the due date of the return (determined with regard to
extension) 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 in
subdivision (b), with respect to losses sustained in the County of
Humboldt as a result of the earthquake that occurred in January 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.3. (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 sustained in the County of
Imperial as a result of the earthquake that occurred in April 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.4. (a) Section 165(i) of the Internal Revenue Code is
modified to additionally provide that an appraisal for the purpose of
obtaining a loan of federal funds or a loan guarantee from the
federal government as a result of a presidentially declared disaster,
as defined by Section 1033(h)(3) of the Internal Revenue Code, may
be 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 in
regulations or other guidance of the Secretary of the Treasury under
Section 165(i)(4) of the Internal Revenue Code, as added by Section
912 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 in
subdivision (b), with respect to losses resulting from any of the
following disasters:
(1) Any loss sustained in the Counties of Los Angeles and Monterey
as a result of wildfires that commenced in August 2009.
(2) Any loss sustained in the County of Placer as a result of
wildfires that commenced in August 2009.
(3) Any loss sustained in the Counties of Calaveras, Imperial, Los
Angeles, Orange, Riverside, San Bernardino, San Francisco, and
Siskiyou as a result of winter storms that commenced in January 2010.
(4) Any loss sustained in the County of Kern as a result of the
wildfires that commenced in July 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17207.8. (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 sustained in the County of
San Mateo as a result of the explosion and fire that occurred in
September 2010.
(b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining 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 the
next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
(d) This section and Section 165(i) of the Internal Revenue Code
shall be applicable to any of the losses listed in subdivision (a)
sustained in any county or city in this state which was proclaimed by
the Governor to be in a state of disaster.
(e) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.
17208.1. (a) There shall be allowed as a deduction the amount of
interest paid or incurred by a taxpayer during the taxable year on
any loan or financed indebtedness obtained from a publicly owned
utility company for the purpose of acquiring and installing any
energy efficient product or equipment to a qualified residence
located in this state.
(b) For purposes of this section:
(1) "Energy efficient product or equipment" means any product or
equipment certified by a publicly owned utility company that will
improve the energy efficiency, as defined by paragraph (2) of
subdivision (a) of Section 399.4 of the Public Utilities Code, of a
qualified residence on which the product or equipment is installed or
applied.
(2) "Energy efficient product or equipment" shall include, but not
be limited to, heating, ventilation, air-conditioning, lighting,
solar, advanced metering of energy usage, windows, insulation, zone
heating products, and weatherization systems.
(3) "Zone heating products" mean gas room heaters certified by the
California Energy Commission or wood fueled stoves certified by the
federal Environmental Protection Agency.
(4) "Publicly owned utility company" has the same meaning as set
forth in subdivision (d) of Section 9604 of the Public Utilities
Code.
(5) "Qualified residence" has the same meaning as set forth in
Section 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 to
finance the acquisition and installation of energy efficient products
and equipment installed or applied to a qualified residence located
in this state.
(c) Any interest amount that is allowed as a deduction pursuant to
this section (and the application of Section 17072) may not
otherwise be allowed as a deduction for purposes of this part.
(d) The publicly owned utility company shall issue a federal
income tax Form 1098, or similar form, for the purpose of notifying
the taxpayer of his or her eligibility for the deduction allowed by
this section.
(e) The deduction allowed by this section shall be in lieu of any
credit allowed by this part for interest paid or incurred by the
taxpayer in connection with the purchase of energy efficient
equipment.
(f) The Legislature finds and declares that many taxpayers may be
unaware that they may deduct interest paid or incurred pursuant to
this section. The Legislature further finds that it is important to
inform taxpayers of this deduction. Therefore, it is the intent of
the Legislature to encourage all publicly owned utility companies to
inform their customers in writing that they may deduct interest paid
or incurred pursuant to this section. It is the further intent of the
Legislature to encourage all publicly owned utility companies that
are unable to offer customer financing to acquire or install energy
efficient products and equipment to inform their customers in writing
that interest on a home equity or home improvement loan used to
purchase energy efficient products and equipment may also be tax
deductible.
(g) It is the intent of the Legislature to inquire with the
Internal Revenue Service as to whether the loan program administered
by the Sacramento Municipal Utility District qualifies for an
interest deduction in compliance with the Internal Revenue Code and
the regulations thereunder.
17215. (a) Section 220(a) of the Internal Revenue Code, relating to
deduction allowed, is modified to provide that the amount allowed as
a deduction shall be an amount equal to the amount allowed to that
individual as a deduction under Section 220 of the Internal Revenue
Code, relating to medical savings accounts, on the federal income tax
return filed for the same taxable year by that individual.
(b) Section 220(f)(4) of the Internal Revenue Code, relating to
additional tax on distributions not used for qualified medical
expenses, is modified by substituting "10 percent" in lieu of "15
percent."
17215.1. Section 220(f)(5) of the Internal Revenue Code, relating
to rollover contributions, shall not apply.
17215.4. Section 223 of the Internal Revenue Code, relating to
health savings accounts, shall not apply.
17220. (a) Section 164(a)(3) of the Internal Revenue Code, relating
to the deductibility of state, local, and foreign income, war
profits, and excess profits taxes, shall not apply.
(b) Section 164(b)(5) of the Internal Revenue Code, relating to
general sales taxes, shall not apply.
(c) In addition to the provisions of Section 164(c) of the
Internal Revenue Code, relating to deduction denied in case of
certain taxes, no deduction shall be allowed for any tax imposed
under Chapter 10.5 (commencing with Section 17935), Chapter 10.6
(commencing with Section 17941), or Chapter 10.7 (commencing with
Section 17951) of this part or under Part 11 (commencing with Section
23001).
17222. No deduction shall be allowed for the tax deducted and
withheld under Section 18662 and Section 13020 of the Unemployment
Insurance Code either to the employer or to the recipient of the
income in computing taxable income under this part.
17224. Section 163(e) of the Internal Revenue Code is modified as
follows:
(a) For taxable years beginning on or after January 1, 1987, and
before the taxable year in which the debt obligation matures or is
sold, exchanged, or otherwise disposed, the amount deductible under
this part is the same as the amount deductible on the federal tax
return.
(b) The difference between the amount deductible on the federal
tax return and the amount allowable under this part, with respect to
obligations issued after December 31, 1984, for taxable years
beginning before January 1, 1987, shall be allowed as a deduction in
the 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 yield
original issue discount obligations, shall apply.
17225. Section 163(h)(3)(E) of the Internal Revenue Code, relating
to mortgage insurance premiums treated as interest, shall not apply.
17230. Payments made to the California Housing Finance Agency by
the borrower pursuant to Section 52514 of the Health and Safety Code
shall be considered payments of interest for purposes of Section 163
of the Internal Revenue Code.
17235. (a) There shall be allowed as a deduction the amount of net
interest received by the taxpayer in payment on indebtedness of a
person or entity engaged in the conduct of a trade or business
located in an enterprise zone.
(b) No deduction shall be allowed under this section unless at the
time the indebtedness is incurred each of the following requirements
are met:
(1) The trade or business is located solely within an enterprise
zone.
(2) The indebtedness is incurred solely in connection with
activity within the enterprise zone.
(3) The taxpayer has no equity or other ownership interest in the
debtor.
(c) "Enterprise zone" means an area designated as an enterprise
zone pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
17250. (a) Section 168 of the Internal Revenue Code is modified as
follows:
(1) Any reference to "tax imposed by this chapter" in Section 168
of the Internal Revenue Code means "net tax," as defined in Section
17039.
(2) (A) Section 168(e)(3) is modified to provide that any
grapevine, replaced in a vineyard in California in any taxable year
beginning on or after January 1, 1992, as a direct result of a
phylloxera infestation in that vineyard, or replaced in a vineyard in
California in any taxable year beginning on or after January 1,
1997, as a direct result of Pierce's disease in that vineyard, shall
be "five-year property," rather than "10-year property."
(B) Section 168(g)(3) of the Internal Revenue Code is modified to
provide that any grapevine, replaced in a vineyard in California in
any taxable year beginning on or after January 1, 1992, as a direct
result of a phylloxera infestation in that vineyard, or replaced in a
vineyard in California in any taxable year beginning on or after
January 1, 1997, as a direct result of Pierce's disease in that
vineyard, shall have a class life of 10 years.
(C) Every taxpayer claiming a depreciation deduction with respect
to grapevines as described in this paragraph shall obtain a written
certification from an independent state-certified integrated pest
management adviser, or a state agricultural commissioner or adviser,
that specifies that the replanting was necessary to restore a
vineyard infested with phylloxera or Pierce's disease. The taxpayer
shall retain the certification for future audit purposes.
(3) Section 168(j) of the Internal Revenue Code, relating to
property on Indian reservations, shall not apply.
(4) Section 168(k) of the Internal Revenue Code, relating to
special 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 Revenue
Code 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 Internal
Revenue Code, relating to qualified leasehold improvement property,
qualified restaurant property, and qualified retail improvement
property, respectively, shall not apply.
(8) Section 168(l) of the Internal Revenue Code, relating to
special allowance for cellulosic biofuel plant property, shall not
apply.
(9) Section 168(m) of the Internal Revenue Code, relating to
special allowance for certain reuse and recycling property, shall not
apply.
(10) Section 168(n) of the Internal Revenue Code, relating to
special allowance for qualified disaster assistance property, shall
not apply.
(11) Section 168(i)(15)(D) of the Internal Revenue Code, relating
to 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 shall
not apply.
(b) Section 169 of the Internal Revenue Code, relating to
amortization of pollution control facilities, is modified as follows:
(1) The deduction allowed by Section 169 of the Internal Revenue
Code shall be allowed only with respect to facilities located in this
state.
(2) The "state certifying authority," as defined in Section 169(d)
(2) of the Internal Revenue Code, means the State Air Resources
Board, in the case of air pollution, and the State Water Resources
Control Board, in the case of water pollution.
17250.5. (a) Section 167(g) of the Internal Revenue Code, relating
to depreciation under income forecast method, shall be modified as
follows:
(1) Section 167(g)(2)(C) of the Internal Revenue Code is modified
by substituting "Section 19521" for "Section 460(b)(7)" of the
Internal Revenue Code.
(2) Section 167(g)(5)(D) of the Internal Revenue Code is modified
by substituting "Part 10.2 (commencing with Section 18401) (other
than Section 19136)" for "Subtitle F (other than Sections 6654 and
6655)."
(3) Section 167(g)(5)(E) of the Internal Revenue Code, relating to
treatment of distribution costs, shall not apply.
(4) Section 167(g)(7) of the Internal Revenue Code, relating to
treatment of participations and residuals, shall not apply.
(b) Section 167(h) of the Internal Revenue Code, relating to
amortization of geological and geophysical expenditures, shall not
apply.
17255. (a) Section 179(b)(1) of the Internal Revenue Code, relating
to dollar limitation, shall not apply and in lieu thereof, the
aggregate cost which may be taken into account under Section 179(a)
of the Internal Revenue Code for any taxable year shall not exceed
twenty-five thousand dollars ($25,000).
(b) Section 179(b)(2) of the Internal Revenue Code, relating to
reduction in limitation, shall not apply and in lieu thereof, the
limitation under subdivision (a) for any taxable year shall be
reduced, but not to below zero, by the amount by which the cost of
Section 179 property, as defined in Section 179(d)(1) of the Internal
Revenue Code, except as otherwise provided, placed in service during
the taxable year exceeds two hundred thousand dollars ($200,000).
(c) Section 179 of the Internal Revenue Code is modified to
provide that the "aggregate amount disallowed" referred to in Section
179(b)(3)(B) of the Internal Revenue Code shall be computed under
this part as it read on the date the property generating the amount
disallowed was placed in service.
(d) Section 179(b)(5) of the Internal Revenue Code, relating to
inflation adjustments, shall not apply.
(e) The last sentence in Section 179(c)(2) of the Internal Revenue
Code, relating to election irrevocable, shall not apply.
(f) Section 179(d)(1)(A)(ii) of the Internal Revenue Code shall
not apply.
(g) Section 179(e) of the Internal Revenue Code, relating to
special rules for qualified disaster assistance property, shall not
apply.
17256. Section 179A of the Internal Revenue Code, relating to
deduction for clean-fuel vehicles and certain refueling property,
shall not apply.
17257. Section 179C of the Internal Revenue Code, relating to
election to expense certain refineries, shall not apply.
17257.2. Section 179D of the Internal Revenue Code, relating to
energy efficient commercial buildings deduction, shall not apply.
17257.4. Section 179E of the Internal Revenue Code, relating to
election to expense advanced mine safety equipment, shall not apply.
17260. (a) No deduction, other than depreciation, shall be allowed
for expenditures for tertiary injectants as provided by Section 193
of the Internal Revenue Code.
(b) Section 263(a) of the Internal Revenue Code shall not apply to
expenditures for which a deduction is allowed under Section 17266 or
17267.2.
17267.2. (a) A taxpayer may elect to treat 40 percent of the cost
of any Section 17267.2 property as an expense which is not chargeable
to a capital account. Any cost so treated shall be allowed as a
deduction for the taxable year in which the taxpayer places the
Section 17267.2 property in service.
(b) In the case of a husband and wife filing separate returns for
a taxable year, the applicable amount under subdivision (a) shall be
equal to 50 percent of the percentage specified in subdivision (a).
(c) (1) An election under this section for any taxable year shall
do both of the following:
(A) Specify the items of Section 17267.2 property to which the
election applies and the percentage of the cost of each of those
items that are to be taken into account under subdivision (a).
(B) Be made on the taxpayer's original return of the tax imposed
by this part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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) of
the Internal Revenue Code).
(B) Purchased and placed in service by the taxpayer for exclusive
use in a trade or business conducted within an enterprise zone
designated pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
(C) Purchased and placed in service before the date the enterprise
zone designation expires, is no longer binding, or becomes
inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or Section 707 (b) of the Internal Revenue Code.
However, in applying Section 267(b) and 267(c) for purposes of this
section, Section 267(c) (4) shall be treated as providing that the
family 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 acquiring
it is not determined in whole or in part by reference to the
adjusted basis of that property in the hands of the person from whom
it is acquired.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
taxpayer may not make an election for the taxable year under Section
179 of the Internal Revenue Code because of the application of the
provisions of Section 179(d) of the Internal Revenue Code.
(6) In the case of a partnership, the percentage limitation
specified in subdivision (a) shall apply at the partnership level and
at the partner level.
(e) For purposes of this section, "taxpayer" means a person or
entity who conducts a trade or business within an enterprise zone
designated pursuant to Chapter 12.8 (commencing with Section 7070) of
Division 7 of Title 1 of the Government Code.
(f) Any taxpayer who elects to be subject to this section shall
not be entitled to claim for the same property, the deduction under
Section 179 of the Internal Revenue Code, relating to an election to
expense certain depreciable business assets. However, the taxpayer
may claim depreciation by any method permitted by Section 168 of the
Internal Revenue Code, commencing with the taxable year following the
taxable year in which the Section 17267.2 property is placed in
service.
(g) The aggregate cost of all Section 17267.2 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amount for the taxable year of
the designation of the relevant enterprise zone 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
(h) Any amounts deducted under subdivision (a) with respect to
property subject to this section that ceases to be used in the
taxpayer's trade or business within an enterprise zone at any time
before the close of the second taxable year after the property is
placed in service shall be included in income in the taxable year in
which 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 cost
of any Section 17267.6 property as an expense that is not chargeable
to a capital account. Any cost so treated shall be allowed as a
deduction for the taxable year in which the qualified taxpayer places
the Section 17267.6 property in service.
(b) In the case of a husband and wife filing separate returns for
a taxable year, the applicable amount under subdivision (a) shall be
equal to 50 percent of the percentage specified in subdivision (a).
(c) (1) An election under this section for any taxable year shall
do both of the following:
(A) Specify the items of Section 17267.6 property to which the
election applies and the percentage of the cost of each of those
items that are to be taken into account under subdivision (a).
(B) Be made on the qualified taxpayer's original return of the tax
imposed by this part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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 the
Internal Revenue Code).
(B) Purchased and placed in service by the qualified taxpayer for
exclusive use in a trade or business conducted within a targeted tax
area designated pursuant to Chapter 12.93 (commencing with Section
7097) of Division 7 of Title 1 of the Government Code.
(C) Purchased and placed in service before the date the targeted
tax area designation expires, is revoked, is no longer binding, or
becomes inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or Section 707(b) of the Internal Revenue Code.
However, in applying Sections 267(b) and 267(c) for purposes of this
section, Section 267(c)(4) shall be treated as providing that the
family 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 acquiring
it is not determined in whole or in part by reference to the
adjusted basis of that property in the hands of the person from whom
it is acquired.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
qualified taxpayer may not make an election for the taxable year
under Section 179 of the Internal Revenue Code because of the
application of the provisions of Section 179(d) of the Internal
Revenue Code.
(6) In the case of a partnership, the percentage limitation
specified in subdivision (a) shall apply at the partnership level and
at the partner level.
(e) (1) For purposes of this section, "qualified taxpayer" means a
person or entity that meets both of the following:
(A) Is engaged in a trade or business within a targeted tax area
designated 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 2000
to 2099, inclusive; 2200 to 3999, inclusive; 4200 to 4299, inclusive;
4500 to 4599, inclusive, and 4700 to 5199, inclusive, of the
Standard Industrial Classification (SIC) Manual published by the
United State Office of Management and Budget, 1987 edition.
(2) In the case of any pass-through entity, the determination of
whether a taxpayer is a qualified taxpayer under this section shall
be made at the entity level and any deduction under this section or
Section 24356.6 shall be allowed to the pass-through entity and
passed through to the partners or shareholders in accordance with
applicable provisions of this part of Part 11 (commencing with
Section 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 this
section shall not be entitled to claim for the same property, the
deduction under Section 179 of the Internal Revenue Code, relating to
an election to expense certain depreciable business assets. However,
the qualified taxpayer may claim depreciation by any method
permitted by Section 168 of the Internal Revenue Code, commencing
with the taxable year following the taxable year in which the Section
17267.6 property is placed in service.
(g) The aggregate cost of all Section 17267.6 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amount for the taxable year of
the designation of the relevant targeted tax area 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
(h) Any amounts deducted under subdivision (a) with respect to
Section 17267.6 property that ceases to be used in the qualified
taxpayer's trade or business within a targeted tax area at any time
before the close of the second taxable year after the property is
placed in service shall be included in income in the taxable year in
which 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 any
Section 17268 property as an expense that is not chargeable to the
capital account. Any cost so treated shall be allowed as a deduction
for the taxable year in which the taxpayer places the Section 17268
property in service.
(b) In the case of a husband or wife filing separate returns for a
taxable year in which a spouse is entitled to the deduction under
subdivision (a), the applicable amount shall be equal to 50 percent
of the amount otherwise determined under subdivision (a).
(c) (1) An election under this section for any taxable year shall
meet both of the following requirements:
(A) Specify the items of Section 17268 property to which the
election applies and the portion of the cost of each of those items
that is to be taken into account under subdivision (a).
(B) Be made on the taxpayer's return of the tax imposed by this
part for the taxable year.
(2) Any election made under this section, and any specification
contained in that election, may not be revoked except with the
consent 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 the
Internal Revenue Code).
(B) Purchased by the taxpayer for exclusive use in a trade or
business conducted within a LAMBRA.
(C) Purchased before the date the LAMBRA designation expires, is
no longer binding, or becomes inoperative.
(2) For purposes of paragraph (1), "purchase" means any
acquisition of property, but only if both of the following apply:
(A) The property is not acquired from a person whose relationship
to the person acquiring it would result in the disallowance of losses
under Section 267 or 707(b) of the Internal Revenue Code (but, in
applying Section 267(b) and Section 267(c) of the Internal Revenue
Code for purposes of this section, Section 267(c)(4) of the Internal
Revenue Code shall be treated as providing that the family of an
individual shall include only his or her spouse, ancestors, and
lineal descendants).
(B) The basis of the property in the hands of the person acquiring
it is not determined by either of the following:
(i) In whole or in part by reference to the adjusted basis of the
property in the hands of the person from whom acquired.
(ii) Under Section 1014 of the Internal Revenue Code, relating to
basis of property acquired from a decedent.
(3) For purposes of this section, the cost of property does not
include that portion of the basis of the property that is determined
by reference to the basis of other property held at any time by the
person acquiring the property.
(4) This section shall not apply to estates and trusts.
(5) This section shall not apply to any property for which the
taxpayer may not make an election for the taxable year under Section
179 of the Internal Revenue Code because of the provisions of Section
179(d) of the Internal Revenue Code.
(6) In the case of a partnership, the dollar limitation in
subdivision (f) shall apply at the partnership level and at the
partner level.
(7) This section shall not apply to any property described in
Section 168(f) of the Internal Revenue Code, relating to property to
which 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 area
designated in accordance with the provisions of Section 7114 of the
Government Code.
(2) "Taxpayer" means a taxpayer that conducts a trade or business
within a LAMBRA and, for the first two taxable years, has a net
increase 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 by
subtracting the total number of full-time employees (defined as 2,000
paid hours per employee per year) the taxpayer employed in this
state in the taxable year prior to commencing business operations in
the LAMBRA from the total number of full-time employees the taxpayer
employed in this state during the second taxable year after
commencing business operations in the LAMBRA. For taxpayers who
commence doing business in this state with their LAMBRA business
operation, the number of employees for the taxable year prior to
commencing business operations in the LAMBRA shall be zero. If the
taxpayer has a net increase in jobs in the state, the credit shall be
allowed only if one or more full-time employees is employed within
the LAMBRA.
(B) The total number of employees employed in the LAMBRA shall
equal the sum of both of the following:
(i) The total number of hours worked in the LAMBRA for the
taxpayer by employees (not to exceed 2,000 hours per employee) who
are paid an hourly wage divided by 2,000.
(ii) The total number of months worked in the LAMBRA for the
taxpayer by employees who are salaried employees divided by 12.
(C) In the case of a taxpayer who first commences doing business
in 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 the
number of months of the taxable year that the taxpayer was doing
business in the LAMBRA and the denominator of which is 12.
(f) The aggregate cost of all Section 17268 property that may be
taken into account under subdivision (a) for any taxable year shall
not exceed the following applicable amounts for the taxable year of
the 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 used
exclusively in a trade or business conducted within a LAMBRA.
(h) (1) Any amounts deducted under subdivision (a) with respect to
property that ceases to be used in the trade or business within a
LAMBRA at any time before the close of the second taxable year after
the property was placed in service shall be included in income for
that year.
(2) At the close of the second taxable year, if the taxpayer has
not increased the number of its employees as determined by paragraph
(2) of subdivision (e), then the amount of the deduction previously
claimed shall be added to the taxpayer's taxable income for the
taxpayer's second taxable year.
(i) Any taxpayer who elects to be subject to this section shall
not be entitled to claim for the same property the deduction under
Section 179 of the Internal Revenue Code, relating to an election to
expense certain depreciable business assets.
17269. Whereas, the people of the State of California desire to
promote and achieve tax equity and fairness among all the state's
citizens and further desire to conform to the public policy of
nondiscrimination, the Legislature hereby enacts the following for
these reasons and for no other purpose:
(a) The provisions of Section 162 (a) of the Internal Revenue Code
shall not be applicable to expenses incurred by a taxpayer with
respect to expenditures made at, or payments made to, a club which
restricts membership or the use of its services or facilities on the
basis of ancestry or any characteristic listed or defined in Section
11135 of the Government Code.
(b) A club described in subdivision (a) holding an alcoholic
beverage license pursuant to Division 9 (commencing with Section
23000) of the Business and Professions Code, except a club holding an
alcoholic beverage license pursuant to Section 23425 thereof, shall
provide on each receipt furnished to a taxpayer a printed statement
as follows:
"The expenditures covered by this receipt are nondeductible for
state income tax purposes or franchise tax purposes."
(c) For purposes of this section:
(1) "Expenses" means those expenses otherwise deductible under
Section 162(a) of the Internal Revenue Code, except for subdivision
(a), and includes, but is not limited to, club membership dues and
assessments, food and beverage expenses, expenses for services
furnished by the club, and reimbursements or salary adjustments to
officers or employees for any of the preceding expenses.
(2) "Club" means a club as defined in Division 9 (commencing with
Section 23000) of the Business and Professions Code, except a club as
defined in Section 23425 thereof.
17270. (a) For purposes of Section 162(a)(2) of the Internal
Revenue Code, relating to travel expenses, all of the following shall
apply:
(1) The place of residence of a member of the Legislature within
the 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, shall
not 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 modified
to refer to Section 17041 in lieu of Section 11(b)(1) of the
Internal Revenue Code.
17273. For each taxable year beginning on or after January 1, 1999,
Section 162(l)(1) of the Internal Revenue Code, relating to
applicable percentage, is modified to provide that Section 2002 of
the 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 the
contrary, no deduction shall be allowed for interest, taxes,
depreciation, or amortization paid or incurred in the taxable year
with respect to substandard housing located in this state, except as
provided in subdivision (e).
(b) "Substandard housing" means occupied dwellings from which the
taxpayer derives rental income or unoccupied or abandoned dwellings
for which both of the following apply:
(1) Either of the following occurs:
(A) For occupied dwellings from which the taxpayer derives rental
income, a state or local government regulatory agency has determined
that the housing violates state law or local codes dealing with
health, safety, or building.
(B) For dwellings that are unoccupied or abandoned for at least 90
days, a state or local government regulatory agency has cited the
housing for conditions that constitute a serious violation of state
law or local codes dealing with health, safety, or building, and that
constitute 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 not
been brought to a condition of compliance within six months after the
date of the notice or the time prescribed in the notice, whichever
period is later.
(B) Good faith efforts for compliance have not been commenced, as
determined 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 the
date for compliance prescribed in the written notice of violation,
been brought into compliance with the conditions stated in the
written notice of violation of the Employee Housing Act (Part 1
(commencing with Section 17000) of Division 13 of the Health and
Safety Code) issued by the enforcement agency that specifies the
application of this section. The regulatory agency may, for good
cause shown, extend the compliance date prescribed in a violation
notice.
(c) (1) When the period specified in paragraph (2) of subdivision
(b) has expired without compliance, the regulatory agency shall mail
to the taxpayer a notice of noncompliance. The notice of
noncompliance shall be in a form and shall include information
prescribed by the Franchise Tax Board, shall be mailed by certified
mail to the taxpayer at the taxpayer's last known address, and shall
advise the taxpayer of (A) an intent to notify the Franchise Tax
Board of the noncompliance within 10 days unless an appeal is filed,
(B) where an appeal may be filed, and (C) a general description of
the tax consequences of the filing with the Franchise Tax Board.
Appeals shall be made to the same body and in the same manner as
appeals from other actions of the regulatory agency. If no appeal is
made within 10 days or if after disposition of the appeal the
regulatory 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 legal
description or the lot and block numbers of the real property, the
assessor's parcel number, and the name of the owner of record as
shown on the latest equalized assessment roll. In addition, the
regulatory agency shall, at the same time as notification of the
notice of noncompliance is sent to the Franchise Tax Board, record a
copy of the notice of noncompliance in the office of the recorder for
the county in which the substandard housing is located that includes
a statement of tax consequences that may be determined by the
Franchise Tax Board. However, the failure to record a notice with the
county recorder does not relieve the liability of any taxpayer nor
does it create any liability on the part of the regulatory agency.
(3) The regulatory agency may charge the taxpayer a fee in an
amount not to exceed the regulatory agency's costs incurred in
recording any notice of noncompliance or issuing any release of that
notice. The notice of compliance shall be recorded and shall serve to
expunge the notice of noncompliance. The notice of compliance shall
contain the same recording information required for the notice of
noncompliance. No deduction by the taxpayer, or any other taxpayer
who obtains title to the property subsequent to the recordation of
the notice of noncompliance, shall be allowed for the items provided
in subdivision (a) from the date of the notice of noncompliance until
the date the regulatory agency determines that the substandard
housing has been brought to a condition of compliance. The regulatory
agency shall mail to the Franchise Tax Board and the taxpayer a
notice of compliance, which notice shall be in the form and include
the information prescribed by the Franchise Tax Board. In the event
the period of noncompliance does not cover an entire taxable year,
the deductions shall be denied at the rate of 1/12 for each full
month during the period of noncompliance.
(4) If the property is owned by more than one owner or if the
recorded title is in the name of a fictitious owner, the notice
requirements provided in subdivision (b) and this subdivision shall
be satisfied for each owner if the notices are mailed to one owner or
to the fictitious name owner at the address appearing on the latest
availa
