State Codes and Statutes

Statutes > California > Rtc > 18401-18409

REVENUE AND TAXATION CODE
SECTION 18401-18409



18401.  Each provision of this part shall apply to Part 10
(commencing with Section 17001) and Part 11 (commencing with Section
23001), unless otherwise provided.



18402.  (a) Except where the context otherwise requires, the general
provisions and definitions provided in Chapter 1 (commencing with
Section 17001) of Part 10 and in Chapter 1 (commencing with Section
23001) of Part 11 shall apply to this part.
   (b) For purposes of this part, "person" includes an individual,
fiduciary, partnership, limited liability company, corporation, or
organization exempt from taxation under Section 23701.
   (c) (1) Whenever provisions of this part are applied in connection
with Part 10 (commencing with Section 17001), the terms "taxpayer,"
"corporation" and "taxable year" have the same meaning as defined in
Chapter 1 (commencing with Section 17001) of Part 10.
   (2) Whenever provisions of this part are applied in connection
with Part 11 (commencing with Section 23001), the terms "taxpayer,"
"corporation," "income year," and "taxable year" have the same
meaning as defined in Article 2 (commencing with Section 23030) of
Chapter 1 of Part 11.



18403.  For purposes of this part, any return, declaration, report,
statement, or other document required to be made or filed under Part
10 (commencing with Section 17001) or Part 11 (commencing with
Section 23001) shall be deemed to have been required to be made or
filed under this part.



18405.  (a) In the case of a new statutory provision in Part 7.5
(commencing with Section 13201), Part 10 (commencing with Section
17001), Part 10.2 (commencing with Section 18401), or Part 11
(commencing with Section 23001), or the addition of a new part, the
Franchise Tax Board itself is authorized to grant relief as set forth
in subdivision (b) from the requirements of the new statutory
provision in a manner as provided in subdivision (c).
   (b) The relief provided in subdivision (a) may be granted only for
the first taxable year for which the new statutory provision is
operative and only when substantial unintentional noncompliance with
the new provision has occurred by a class of affected taxpayers. The
relief is limited to waiving penalties or perfecting elections and
may be granted only to taxpayers who timely paid taxes and other
required amounts shown on the return consistent with the election and
who timely filed their return (with regard to extension).
   (c) The relief granted in this section shall, upon the
recommendation of the Executive Officer of the Franchise Tax Board,
be made by resolution of the Franchise Tax Board that sets forth the
conditions, time, and manner as the Franchise Tax Board determines
are necessary. The resolution shall be adopted only by an affirmative
vote of each of the three members of the Franchise Tax Board.
   (d) For purposes of this section:
   (1) "New statutory provision" means a complete, newly established
tax program, tax credit, exemption, deduction, exclusion, penalty, or
reporting or payment requirement and does not mean amendments made
to existing tax provisions that make minor modifications or technical
changes.
   (2) "Perfecting elections" includes correcting omissions or errors
only when substantial evidence is present with the filed return that
the taxpayer intended to make the election and does not include
making an election where one was not previously attempted to be made.
   (3) "Substantial unintentional noncompliance," for purposes of
Part 11 (commencing with Section 23001), includes any case in which
the taxpayer filed a water's-edge contract with a timely filed
original return and timely paid all taxes and other required amounts
shown on the return consistent with the water's-edge election, but
where the taxpayer's election is or might be invalidated by reason of
the act or omission of an affiliated corporation that is not the
parent or a subsidiary of the taxpayer. In that case, notwithstanding
anything to the contrary in this section, relief shall be deemed
granted to validate the taxpayer's water's-edge election, conditioned
only upon an agreement by the affiliated corporation to either (A)
file a water's-edge contract and pay all taxes and other required
amounts consistent with that election, or (B) waive any right, with
respect to any taxable year for which the corporation did not make a
water's-edge election on its own timely filed return, to determine
its income derived from or attributable to sources within this state
pursuant to that election, whichever measure produces the greater
amount of tax.
   (e) This section shall apply to any Franchise Tax Board resolution
adopted after the effective date of this section with respect to any
taxable year that is subject to an open statute of limitations on
the date of the resolution.



18405.1.  (a) Notwithstanding Section 18405, the Franchise Tax Board
may, in its discretion, permit elections made under Section 25111 to
be perfected during the period of limitations prescribed under
Sections 19057 and 19306 for the applicable taxable year. The statute
of limitations of all taxpayers in a water's-edge group whose
taxable year falls, in whole or in part, within the period of the
election shall remain open to receive adjustments, under claim or
deficiency, consistent with that perfection of the election.
   (b) Subdivision (a) does not apply to the 1988 taxable year of any
taxpayer whose water's-edge election has been perfected pursuant to
Section 18405.



18407.  Section 6011 of the Internal Revenue Code, relating to
general requirement of return, statement, or list, shall apply,
except as otherwise provided.
   (a) Section 6011(a) of the Internal Revenue Code, relating to
general rule, is modified as follows:
   (1) The phrase "any person liable for any tax imposed by Part 10
(commencing with Section 17001), Part 11 (commencing with Section
23001), or this part," shall be substituted for the phrase "when
required by regulations prescribed by the Secretary any person made
liable for any tax imposed by this title," contained therein.
   (2) "Secretary of the Treasury under Section 6011 of the Internal
Revenue Code for federal income tax purposes or by the Franchise Tax
Board" shall be substituted for "Secretary."
   (3) To additionally provide that "reportable transaction" includes
any transaction of a type that the Secretary of the Treasury under
Section 6011 of the Internal Revenue Code for federal income tax
purposes or the Franchise Tax Board under this section for California
income or franchise tax purposes determines as having a potential
for tax avoidance or evasion including deductions, basis, credits,
entity classification, dividend elimination, or omission of income,
and shall be reported on the return or the statement required to be
made.
   (4) To additionally provide that "listed transaction" includes any
transaction that is the same as, or substantially similar to, a
transaction specifically identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board under this section for
California income or franchise tax purposes, as a tax avoidance
transaction including deductions, basis, credits, entity
classification, dividend elimination, or omission of income and shall
be reported on the return or statement required to be made.
   (A) The Franchise Tax Board shall identify and publish "listed
transactions" (whether identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board) through the use of
Franchise Tax Board Notices or other published positions. In
addition, the "listed transactions" identified and published pursuant
to the preceding sentence shall be published on the Web site of the
Franchise Tax Board.
   (B) The Franchise Tax Board shall conduct a public outreach
program to make taxpayers aware of the new and increased penalties
associated with the use of tax avoidance transactions including
deductions, basis, credits, entity classification, dividend
elimination, or omission of income.
   (5) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraph (4).
   (b) Section 6011(b) of the Internal Revenue Code, relating to
identification of taxpayer, does not apply and, in lieu thereof,
Section 18408 shall apply.
   (c) Section 6011(c) of the Internal Revenue Code, relating to
returns, etc., of DISCs and former DISCs and FSCs and former FSCs,
does not apply.
   (d) Section 6011(d) of the Internal Revenue Code, relating to
authority to require information concerning Section 912 allowances,
does not apply.
   (e) Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, etc., shall take
into account Section 18408 and shall also include the modifications
made to Section 6011(e) of the Internal Revenue Code by Section
18408.
   (f) Section 6011(f)(2) of the Internal Revenue Code, relating to
incentives, does not apply.



18407.  Section 6011 of the Internal Revenue Code, relating to
general requirement of return, statement, or list, shall apply,
except as otherwise provided.
   (a) Section 6011(a) of the Internal Revenue Code, relating to
general rule, is modified as follows:
   (1) The phrase "any person liable for any tax imposed by Part 10
(commencing with Section 17001), Part 11 (commencing with Section
23001), or this part," shall be substituted for the phrase "when
required by regulations prescribed by the Secretary any person made
liable for any tax imposed by this title," contained therein.
   (2) "Secretary of the Treasury under Section 6011 of the Internal
Revenue Code for federal income tax purposes or by the Franchise Tax
Board" shall be substituted for "Secretary."
   (3) To additionally provide that "reportable transaction" includes
any transaction of a type that the Secretary of the Treasury under
Section 6011 of the Internal Revenue Code for federal income tax
purposes or the Franchise Tax Board under this section for California
income or franchise tax purposes determines as having a potential
for tax avoidance or evasion including deductions, basis, credits,
entity classification, dividend elimination, or omission of income,
and shall be reported on the return or the statement required to be
made.
   (4) To additionally provide that "listed transaction" includes any
transaction that is the same as, or substantially similar to, a
transaction specifically identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board under this section for
California income or franchise tax purposes, as a tax avoidance
transaction including deductions, basis, credits, entity
classification, dividend elimination, or omission of income and shall
be reported on the return or statement required to be made.
   (A) The Franchise Tax Board shall identify and publish "listed
transactions" (whether identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board) through the use of
Franchise Tax Board Notices or other published positions. In
addition, the "listed transactions" identified and published pursuant
to the preceding sentence shall be published on the Web site of the
Franchise Tax Board.
   (B) The Franchise Tax Board shall conduct a public outreach
program to make taxpayers aware of the new and increased penalties
associated with the use of tax avoidance transactions including
deductions, basis, credits, entity classification, dividend
elimination, or omission of income.
   (5) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraph (4).
   (b) Section 6011(b) of the Internal Revenue Code, relating to
identification of taxpayer, does not apply and, in lieu thereof,
Section 18408 shall apply.
   (c) Section 6011(c) of the Internal Revenue Code, relating to
returns, etc., of DISCs and former DISCs and FSCs and former FSCs,
does not apply.
   (d) Section 6011(d) of the Internal Revenue Code, relating to
authority to require information concerning Section 912 allowances,
does not apply.
   (e) Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, etc., shall take
into account Section 18408 and shall also include the modifications
made to Section 6011(e) of the Internal Revenue Code by Section
18408.
   (f) Section 6011(f)(2) of the Internal Revenue Code, relating to
incentives, does not apply.



18408.  The Franchise Tax Board is authorized to require that
information with respect to persons subject to the taxes imposed by
Article 5 (commencing with Section 18661) of Chapter 2 (relating to
tax withheld at source) as is necessary or helpful in securing proper
identification of those persons.



18409.  (a) The Franchise Tax Board shall prescribe regulations
providing standards for determining which returns shall be filed on
magnetic media or in other machine-readable form. The Franchise Tax
Board may not require returns of any tax imposed by Part 10
(commencing with Section 17001) on estates and trusts to be other
than on paper forms supplied by the Franchise Tax Board. In
prescribing those regulations, the Franchise Tax Board shall take
into account, among other relevant factors, the ability of the
taxpayer to comply at a reasonable cost with that filing requirement.
   (b) (1) Subdivision (a) is applicable only to taxpayers required
to file returns on magnetic media or in other machine-readable form
pursuant to Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, and the regulations
adopted thereto.
   (2) For purposes of paragraph (1), the last sentence of Section
6011(e)(2) of the Internal Revenue Code, does not apply.
   (3) In addition, the regulations under subdivision (a) shall not
require that returns filed on magnetic media or in other
machine-readable form contain more information than is required to be
included in similar returns filed with the Internal Revenue Service
under Section 6011(e) of the Internal Revenue Code and the
regulations adopted thereto.
   (c) In lieu of the magnetic media or other machine-readable form
returns required by this section, a copy of the similar magnetic
media or other machine-readable form returns filed with the Internal
Revenue Service pursuant to Section 6011(e) of the Internal Revenue
Code, and the regulations adopted thereto, may be filed with the
Franchise Tax Board.


State Codes and Statutes

Statutes > California > Rtc > 18401-18409

REVENUE AND TAXATION CODE
SECTION 18401-18409



18401.  Each provision of this part shall apply to Part 10
(commencing with Section 17001) and Part 11 (commencing with Section
23001), unless otherwise provided.



18402.  (a) Except where the context otherwise requires, the general
provisions and definitions provided in Chapter 1 (commencing with
Section 17001) of Part 10 and in Chapter 1 (commencing with Section
23001) of Part 11 shall apply to this part.
   (b) For purposes of this part, "person" includes an individual,
fiduciary, partnership, limited liability company, corporation, or
organization exempt from taxation under Section 23701.
   (c) (1) Whenever provisions of this part are applied in connection
with Part 10 (commencing with Section 17001), the terms "taxpayer,"
"corporation" and "taxable year" have the same meaning as defined in
Chapter 1 (commencing with Section 17001) of Part 10.
   (2) Whenever provisions of this part are applied in connection
with Part 11 (commencing with Section 23001), the terms "taxpayer,"
"corporation," "income year," and "taxable year" have the same
meaning as defined in Article 2 (commencing with Section 23030) of
Chapter 1 of Part 11.



18403.  For purposes of this part, any return, declaration, report,
statement, or other document required to be made or filed under Part
10 (commencing with Section 17001) or Part 11 (commencing with
Section 23001) shall be deemed to have been required to be made or
filed under this part.



18405.  (a) In the case of a new statutory provision in Part 7.5
(commencing with Section 13201), Part 10 (commencing with Section
17001), Part 10.2 (commencing with Section 18401), or Part 11
(commencing with Section 23001), or the addition of a new part, the
Franchise Tax Board itself is authorized to grant relief as set forth
in subdivision (b) from the requirements of the new statutory
provision in a manner as provided in subdivision (c).
   (b) The relief provided in subdivision (a) may be granted only for
the first taxable year for which the new statutory provision is
operative and only when substantial unintentional noncompliance with
the new provision has occurred by a class of affected taxpayers. The
relief is limited to waiving penalties or perfecting elections and
may be granted only to taxpayers who timely paid taxes and other
required amounts shown on the return consistent with the election and
who timely filed their return (with regard to extension).
   (c) The relief granted in this section shall, upon the
recommendation of the Executive Officer of the Franchise Tax Board,
be made by resolution of the Franchise Tax Board that sets forth the
conditions, time, and manner as the Franchise Tax Board determines
are necessary. The resolution shall be adopted only by an affirmative
vote of each of the three members of the Franchise Tax Board.
   (d) For purposes of this section:
   (1) "New statutory provision" means a complete, newly established
tax program, tax credit, exemption, deduction, exclusion, penalty, or
reporting or payment requirement and does not mean amendments made
to existing tax provisions that make minor modifications or technical
changes.
   (2) "Perfecting elections" includes correcting omissions or errors
only when substantial evidence is present with the filed return that
the taxpayer intended to make the election and does not include
making an election where one was not previously attempted to be made.
   (3) "Substantial unintentional noncompliance," for purposes of
Part 11 (commencing with Section 23001), includes any case in which
the taxpayer filed a water's-edge contract with a timely filed
original return and timely paid all taxes and other required amounts
shown on the return consistent with the water's-edge election, but
where the taxpayer's election is or might be invalidated by reason of
the act or omission of an affiliated corporation that is not the
parent or a subsidiary of the taxpayer. In that case, notwithstanding
anything to the contrary in this section, relief shall be deemed
granted to validate the taxpayer's water's-edge election, conditioned
only upon an agreement by the affiliated corporation to either (A)
file a water's-edge contract and pay all taxes and other required
amounts consistent with that election, or (B) waive any right, with
respect to any taxable year for which the corporation did not make a
water's-edge election on its own timely filed return, to determine
its income derived from or attributable to sources within this state
pursuant to that election, whichever measure produces the greater
amount of tax.
   (e) This section shall apply to any Franchise Tax Board resolution
adopted after the effective date of this section with respect to any
taxable year that is subject to an open statute of limitations on
the date of the resolution.



18405.1.  (a) Notwithstanding Section 18405, the Franchise Tax Board
may, in its discretion, permit elections made under Section 25111 to
be perfected during the period of limitations prescribed under
Sections 19057 and 19306 for the applicable taxable year. The statute
of limitations of all taxpayers in a water's-edge group whose
taxable year falls, in whole or in part, within the period of the
election shall remain open to receive adjustments, under claim or
deficiency, consistent with that perfection of the election.
   (b) Subdivision (a) does not apply to the 1988 taxable year of any
taxpayer whose water's-edge election has been perfected pursuant to
Section 18405.



18407.  Section 6011 of the Internal Revenue Code, relating to
general requirement of return, statement, or list, shall apply,
except as otherwise provided.
   (a) Section 6011(a) of the Internal Revenue Code, relating to
general rule, is modified as follows:
   (1) The phrase "any person liable for any tax imposed by Part 10
(commencing with Section 17001), Part 11 (commencing with Section
23001), or this part," shall be substituted for the phrase "when
required by regulations prescribed by the Secretary any person made
liable for any tax imposed by this title," contained therein.
   (2) "Secretary of the Treasury under Section 6011 of the Internal
Revenue Code for federal income tax purposes or by the Franchise Tax
Board" shall be substituted for "Secretary."
   (3) To additionally provide that "reportable transaction" includes
any transaction of a type that the Secretary of the Treasury under
Section 6011 of the Internal Revenue Code for federal income tax
purposes or the Franchise Tax Board under this section for California
income or franchise tax purposes determines as having a potential
for tax avoidance or evasion including deductions, basis, credits,
entity classification, dividend elimination, or omission of income,
and shall be reported on the return or the statement required to be
made.
   (4) To additionally provide that "listed transaction" includes any
transaction that is the same as, or substantially similar to, a
transaction specifically identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board under this section for
California income or franchise tax purposes, as a tax avoidance
transaction including deductions, basis, credits, entity
classification, dividend elimination, or omission of income and shall
be reported on the return or statement required to be made.
   (A) The Franchise Tax Board shall identify and publish "listed
transactions" (whether identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board) through the use of
Franchise Tax Board Notices or other published positions. In
addition, the "listed transactions" identified and published pursuant
to the preceding sentence shall be published on the Web site of the
Franchise Tax Board.
   (B) The Franchise Tax Board shall conduct a public outreach
program to make taxpayers aware of the new and increased penalties
associated with the use of tax avoidance transactions including
deductions, basis, credits, entity classification, dividend
elimination, or omission of income.
   (5) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraph (4).
   (b) Section 6011(b) of the Internal Revenue Code, relating to
identification of taxpayer, does not apply and, in lieu thereof,
Section 18408 shall apply.
   (c) Section 6011(c) of the Internal Revenue Code, relating to
returns, etc., of DISCs and former DISCs and FSCs and former FSCs,
does not apply.
   (d) Section 6011(d) of the Internal Revenue Code, relating to
authority to require information concerning Section 912 allowances,
does not apply.
   (e) Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, etc., shall take
into account Section 18408 and shall also include the modifications
made to Section 6011(e) of the Internal Revenue Code by Section
18408.
   (f) Section 6011(f)(2) of the Internal Revenue Code, relating to
incentives, does not apply.



18407.  Section 6011 of the Internal Revenue Code, relating to
general requirement of return, statement, or list, shall apply,
except as otherwise provided.
   (a) Section 6011(a) of the Internal Revenue Code, relating to
general rule, is modified as follows:
   (1) The phrase "any person liable for any tax imposed by Part 10
(commencing with Section 17001), Part 11 (commencing with Section
23001), or this part," shall be substituted for the phrase "when
required by regulations prescribed by the Secretary any person made
liable for any tax imposed by this title," contained therein.
   (2) "Secretary of the Treasury under Section 6011 of the Internal
Revenue Code for federal income tax purposes or by the Franchise Tax
Board" shall be substituted for "Secretary."
   (3) To additionally provide that "reportable transaction" includes
any transaction of a type that the Secretary of the Treasury under
Section 6011 of the Internal Revenue Code for federal income tax
purposes or the Franchise Tax Board under this section for California
income or franchise tax purposes determines as having a potential
for tax avoidance or evasion including deductions, basis, credits,
entity classification, dividend elimination, or omission of income,
and shall be reported on the return or the statement required to be
made.
   (4) To additionally provide that "listed transaction" includes any
transaction that is the same as, or substantially similar to, a
transaction specifically identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board under this section for
California income or franchise tax purposes, as a tax avoidance
transaction including deductions, basis, credits, entity
classification, dividend elimination, or omission of income and shall
be reported on the return or statement required to be made.
   (A) The Franchise Tax Board shall identify and publish "listed
transactions" (whether identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board) through the use of
Franchise Tax Board Notices or other published positions. In
addition, the "listed transactions" identified and published pursuant
to the preceding sentence shall be published on the Web site of the
Franchise Tax Board.
   (B) The Franchise Tax Board shall conduct a public outreach
program to make taxpayers aware of the new and increased penalties
associated with the use of tax avoidance transactions including
deductions, basis, credits, entity classification, dividend
elimination, or omission of income.
   (5) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraph (4).
   (b) Section 6011(b) of the Internal Revenue Code, relating to
identification of taxpayer, does not apply and, in lieu thereof,
Section 18408 shall apply.
   (c) Section 6011(c) of the Internal Revenue Code, relating to
returns, etc., of DISCs and former DISCs and FSCs and former FSCs,
does not apply.
   (d) Section 6011(d) of the Internal Revenue Code, relating to
authority to require information concerning Section 912 allowances,
does not apply.
   (e) Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, etc., shall take
into account Section 18408 and shall also include the modifications
made to Section 6011(e) of the Internal Revenue Code by Section
18408.
   (f) Section 6011(f)(2) of the Internal Revenue Code, relating to
incentives, does not apply.



18408.  The Franchise Tax Board is authorized to require that
information with respect to persons subject to the taxes imposed by
Article 5 (commencing with Section 18661) of Chapter 2 (relating to
tax withheld at source) as is necessary or helpful in securing proper
identification of those persons.



18409.  (a) The Franchise Tax Board shall prescribe regulations
providing standards for determining which returns shall be filed on
magnetic media or in other machine-readable form. The Franchise Tax
Board may not require returns of any tax imposed by Part 10
(commencing with Section 17001) on estates and trusts to be other
than on paper forms supplied by the Franchise Tax Board. In
prescribing those regulations, the Franchise Tax Board shall take
into account, among other relevant factors, the ability of the
taxpayer to comply at a reasonable cost with that filing requirement.
   (b) (1) Subdivision (a) is applicable only to taxpayers required
to file returns on magnetic media or in other machine-readable form
pursuant to Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, and the regulations
adopted thereto.
   (2) For purposes of paragraph (1), the last sentence of Section
6011(e)(2) of the Internal Revenue Code, does not apply.
   (3) In addition, the regulations under subdivision (a) shall not
require that returns filed on magnetic media or in other
machine-readable form contain more information than is required to be
included in similar returns filed with the Internal Revenue Service
under Section 6011(e) of the Internal Revenue Code and the
regulations adopted thereto.
   (c) In lieu of the magnetic media or other machine-readable form
returns required by this section, a copy of the similar magnetic
media or other machine-readable form returns filed with the Internal
Revenue Service pursuant to Section 6011(e) of the Internal Revenue
Code, and the regulations adopted thereto, may be filed with the
Franchise Tax Board.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Rtc > 18401-18409

REVENUE AND TAXATION CODE
SECTION 18401-18409



18401.  Each provision of this part shall apply to Part 10
(commencing with Section 17001) and Part 11 (commencing with Section
23001), unless otherwise provided.



18402.  (a) Except where the context otherwise requires, the general
provisions and definitions provided in Chapter 1 (commencing with
Section 17001) of Part 10 and in Chapter 1 (commencing with Section
23001) of Part 11 shall apply to this part.
   (b) For purposes of this part, "person" includes an individual,
fiduciary, partnership, limited liability company, corporation, or
organization exempt from taxation under Section 23701.
   (c) (1) Whenever provisions of this part are applied in connection
with Part 10 (commencing with Section 17001), the terms "taxpayer,"
"corporation" and "taxable year" have the same meaning as defined in
Chapter 1 (commencing with Section 17001) of Part 10.
   (2) Whenever provisions of this part are applied in connection
with Part 11 (commencing with Section 23001), the terms "taxpayer,"
"corporation," "income year," and "taxable year" have the same
meaning as defined in Article 2 (commencing with Section 23030) of
Chapter 1 of Part 11.



18403.  For purposes of this part, any return, declaration, report,
statement, or other document required to be made or filed under Part
10 (commencing with Section 17001) or Part 11 (commencing with
Section 23001) shall be deemed to have been required to be made or
filed under this part.



18405.  (a) In the case of a new statutory provision in Part 7.5
(commencing with Section 13201), Part 10 (commencing with Section
17001), Part 10.2 (commencing with Section 18401), or Part 11
(commencing with Section 23001), or the addition of a new part, the
Franchise Tax Board itself is authorized to grant relief as set forth
in subdivision (b) from the requirements of the new statutory
provision in a manner as provided in subdivision (c).
   (b) The relief provided in subdivision (a) may be granted only for
the first taxable year for which the new statutory provision is
operative and only when substantial unintentional noncompliance with
the new provision has occurred by a class of affected taxpayers. The
relief is limited to waiving penalties or perfecting elections and
may be granted only to taxpayers who timely paid taxes and other
required amounts shown on the return consistent with the election and
who timely filed their return (with regard to extension).
   (c) The relief granted in this section shall, upon the
recommendation of the Executive Officer of the Franchise Tax Board,
be made by resolution of the Franchise Tax Board that sets forth the
conditions, time, and manner as the Franchise Tax Board determines
are necessary. The resolution shall be adopted only by an affirmative
vote of each of the three members of the Franchise Tax Board.
   (d) For purposes of this section:
   (1) "New statutory provision" means a complete, newly established
tax program, tax credit, exemption, deduction, exclusion, penalty, or
reporting or payment requirement and does not mean amendments made
to existing tax provisions that make minor modifications or technical
changes.
   (2) "Perfecting elections" includes correcting omissions or errors
only when substantial evidence is present with the filed return that
the taxpayer intended to make the election and does not include
making an election where one was not previously attempted to be made.
   (3) "Substantial unintentional noncompliance," for purposes of
Part 11 (commencing with Section 23001), includes any case in which
the taxpayer filed a water's-edge contract with a timely filed
original return and timely paid all taxes and other required amounts
shown on the return consistent with the water's-edge election, but
where the taxpayer's election is or might be invalidated by reason of
the act or omission of an affiliated corporation that is not the
parent or a subsidiary of the taxpayer. In that case, notwithstanding
anything to the contrary in this section, relief shall be deemed
granted to validate the taxpayer's water's-edge election, conditioned
only upon an agreement by the affiliated corporation to either (A)
file a water's-edge contract and pay all taxes and other required
amounts consistent with that election, or (B) waive any right, with
respect to any taxable year for which the corporation did not make a
water's-edge election on its own timely filed return, to determine
its income derived from or attributable to sources within this state
pursuant to that election, whichever measure produces the greater
amount of tax.
   (e) This section shall apply to any Franchise Tax Board resolution
adopted after the effective date of this section with respect to any
taxable year that is subject to an open statute of limitations on
the date of the resolution.



18405.1.  (a) Notwithstanding Section 18405, the Franchise Tax Board
may, in its discretion, permit elections made under Section 25111 to
be perfected during the period of limitations prescribed under
Sections 19057 and 19306 for the applicable taxable year. The statute
of limitations of all taxpayers in a water's-edge group whose
taxable year falls, in whole or in part, within the period of the
election shall remain open to receive adjustments, under claim or
deficiency, consistent with that perfection of the election.
   (b) Subdivision (a) does not apply to the 1988 taxable year of any
taxpayer whose water's-edge election has been perfected pursuant to
Section 18405.



18407.  Section 6011 of the Internal Revenue Code, relating to
general requirement of return, statement, or list, shall apply,
except as otherwise provided.
   (a) Section 6011(a) of the Internal Revenue Code, relating to
general rule, is modified as follows:
   (1) The phrase "any person liable for any tax imposed by Part 10
(commencing with Section 17001), Part 11 (commencing with Section
23001), or this part," shall be substituted for the phrase "when
required by regulations prescribed by the Secretary any person made
liable for any tax imposed by this title," contained therein.
   (2) "Secretary of the Treasury under Section 6011 of the Internal
Revenue Code for federal income tax purposes or by the Franchise Tax
Board" shall be substituted for "Secretary."
   (3) To additionally provide that "reportable transaction" includes
any transaction of a type that the Secretary of the Treasury under
Section 6011 of the Internal Revenue Code for federal income tax
purposes or the Franchise Tax Board under this section for California
income or franchise tax purposes determines as having a potential
for tax avoidance or evasion including deductions, basis, credits,
entity classification, dividend elimination, or omission of income,
and shall be reported on the return or the statement required to be
made.
   (4) To additionally provide that "listed transaction" includes any
transaction that is the same as, or substantially similar to, a
transaction specifically identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board under this section for
California income or franchise tax purposes, as a tax avoidance
transaction including deductions, basis, credits, entity
classification, dividend elimination, or omission of income and shall
be reported on the return or statement required to be made.
   (A) The Franchise Tax Board shall identify and publish "listed
transactions" (whether identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board) through the use of
Franchise Tax Board Notices or other published positions. In
addition, the "listed transactions" identified and published pursuant
to the preceding sentence shall be published on the Web site of the
Franchise Tax Board.
   (B) The Franchise Tax Board shall conduct a public outreach
program to make taxpayers aware of the new and increased penalties
associated with the use of tax avoidance transactions including
deductions, basis, credits, entity classification, dividend
elimination, or omission of income.
   (5) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraph (4).
   (b) Section 6011(b) of the Internal Revenue Code, relating to
identification of taxpayer, does not apply and, in lieu thereof,
Section 18408 shall apply.
   (c) Section 6011(c) of the Internal Revenue Code, relating to
returns, etc., of DISCs and former DISCs and FSCs and former FSCs,
does not apply.
   (d) Section 6011(d) of the Internal Revenue Code, relating to
authority to require information concerning Section 912 allowances,
does not apply.
   (e) Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, etc., shall take
into account Section 18408 and shall also include the modifications
made to Section 6011(e) of the Internal Revenue Code by Section
18408.
   (f) Section 6011(f)(2) of the Internal Revenue Code, relating to
incentives, does not apply.



18407.  Section 6011 of the Internal Revenue Code, relating to
general requirement of return, statement, or list, shall apply,
except as otherwise provided.
   (a) Section 6011(a) of the Internal Revenue Code, relating to
general rule, is modified as follows:
   (1) The phrase "any person liable for any tax imposed by Part 10
(commencing with Section 17001), Part 11 (commencing with Section
23001), or this part," shall be substituted for the phrase "when
required by regulations prescribed by the Secretary any person made
liable for any tax imposed by this title," contained therein.
   (2) "Secretary of the Treasury under Section 6011 of the Internal
Revenue Code for federal income tax purposes or by the Franchise Tax
Board" shall be substituted for "Secretary."
   (3) To additionally provide that "reportable transaction" includes
any transaction of a type that the Secretary of the Treasury under
Section 6011 of the Internal Revenue Code for federal income tax
purposes or the Franchise Tax Board under this section for California
income or franchise tax purposes determines as having a potential
for tax avoidance or evasion including deductions, basis, credits,
entity classification, dividend elimination, or omission of income,
and shall be reported on the return or the statement required to be
made.
   (4) To additionally provide that "listed transaction" includes any
transaction that is the same as, or substantially similar to, a
transaction specifically identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board under this section for
California income or franchise tax purposes, as a tax avoidance
transaction including deductions, basis, credits, entity
classification, dividend elimination, or omission of income and shall
be reported on the return or statement required to be made.
   (A) The Franchise Tax Board shall identify and publish "listed
transactions" (whether identified by the Secretary of the Treasury
under Section 6011 of the Internal Revenue Code for federal income
tax purposes or by the Franchise Tax Board) through the use of
Franchise Tax Board Notices or other published positions. In
addition, the "listed transactions" identified and published pursuant
to the preceding sentence shall be published on the Web site of the
Franchise Tax Board.
   (B) The Franchise Tax Board shall conduct a public outreach
program to make taxpayers aware of the new and increased penalties
associated with the use of tax avoidance transactions including
deductions, basis, credits, entity classification, dividend
elimination, or omission of income.
   (5) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code does not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraph (4).
   (b) Section 6011(b) of the Internal Revenue Code, relating to
identification of taxpayer, does not apply and, in lieu thereof,
Section 18408 shall apply.
   (c) Section 6011(c) of the Internal Revenue Code, relating to
returns, etc., of DISCs and former DISCs and FSCs and former FSCs,
does not apply.
   (d) Section 6011(d) of the Internal Revenue Code, relating to
authority to require information concerning Section 912 allowances,
does not apply.
   (e) Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, etc., shall take
into account Section 18408 and shall also include the modifications
made to Section 6011(e) of the Internal Revenue Code by Section
18408.
   (f) Section 6011(f)(2) of the Internal Revenue Code, relating to
incentives, does not apply.



18408.  The Franchise Tax Board is authorized to require that
information with respect to persons subject to the taxes imposed by
Article 5 (commencing with Section 18661) of Chapter 2 (relating to
tax withheld at source) as is necessary or helpful in securing proper
identification of those persons.



18409.  (a) The Franchise Tax Board shall prescribe regulations
providing standards for determining which returns shall be filed on
magnetic media or in other machine-readable form. The Franchise Tax
Board may not require returns of any tax imposed by Part 10
(commencing with Section 17001) on estates and trusts to be other
than on paper forms supplied by the Franchise Tax Board. In
prescribing those regulations, the Franchise Tax Board shall take
into account, among other relevant factors, the ability of the
taxpayer to comply at a reasonable cost with that filing requirement.
   (b) (1) Subdivision (a) is applicable only to taxpayers required
to file returns on magnetic media or in other machine-readable form
pursuant to Section 6011(e) of the Internal Revenue Code, relating to
regulations requiring returns on magnetic media, and the regulations
adopted thereto.
   (2) For purposes of paragraph (1), the last sentence of Section
6011(e)(2) of the Internal Revenue Code, does not apply.
   (3) In addition, the regulations under subdivision (a) shall not
require that returns filed on magnetic media or in other
machine-readable form contain more information than is required to be
included in similar returns filed with the Internal Revenue Service
under Section 6011(e) of the Internal Revenue Code and the
regulations adopted thereto.
   (c) In lieu of the magnetic media or other machine-readable form
returns required by this section, a copy of the similar magnetic
media or other machine-readable form returns filed with the Internal
Revenue Service pursuant to Section 6011(e) of the Internal Revenue
Code, and the regulations adopted thereto, may be filed with the
Franchise Tax Board.