17041. (a) (1) There shall be imposed for each taxable year upon
the entire taxable income of every resident of this state who is not
a part-year resident, except the head of a household as defined in
Section 17042, taxes in the following amounts and at the following
rates upon the amount of taxable income computed for the taxable year
as if the resident were a resident of this state for the entire
taxable year and for all prior taxable years for any carryover items,
deferred income, suspended losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $3,650........ 1% of the taxable income
Over $3,650 but $36.50 plus 2% of the
not excess
over $8,650............ over $3,650
Over $8,650 but $136.50 plus 4% of the
not excess
over $13,650........... over $8,650
Over $13,650 but $336.50 plus 6% of the
not excess
over $18,950........... over $13,650
Over $18,950 but $654.50 plus 8% of
not the
over $23,950........... excess
over $18,950
$1,054.50 plus 9.3% of
Over $23,950........... the
excess
over $23,950
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(b) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident, except the
head of a household as defined in Section 17042, a tax as calculated
in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (a) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(c) (1) There shall be imposed for each taxable year upon the
entire taxable income of every resident of this state who is not a
part-year resident for that taxable year, when the resident is the
head of a household, as defined in Section 17042, taxes in the
following amounts and at the following rates upon the amount of
taxable income computed for the taxable year as if the resident were
a resident of the state for the entire taxable year and for all prior
taxable years for carryover items, deferred income, suspended
losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $7,300......... 1% of the taxable
income
Over $7,300 but $73 plus 2% of the
not excess
over $17,300............ over $7,300
Over $17,300 but $273 plus 4% of the
not excess
over $22,300............ over $17,300
Over $22,300 but $473 plus 6% of the
not excess
over $27,600............ over $22,300
Over $27,600 but $791 plus 8% of the
not excess
over $32,600............ over $27,600
$1,191 plus 9.3% of the
Over $32,600............ excess
over $32,600
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(d) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident when the
nonresident or part-year resident is the head of a household, as
defined in Section 17042, a tax as calculated in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (c) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(e) There shall be imposed for each taxable year upon the taxable
income of every estate, trust, or common trust fund taxes equal to
the amount computed under subdivision (a) for an individual having
the same amount of taxable income.
(f) The tax imposed by this part is not a surtax.
(g) (1) Section 1(g) of the Internal Revenue Code, relating to
certain unearned income of children taxed as if parent's income,
shall apply, except as otherwise provided.
(2) Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is
modified, for purposes of this part, by substituting "1 percent" for
"10 percent."
(h) For each taxable year beginning on or after January 1, 1988,
the Franchise Tax Board shall recompute the income tax brackets
prescribed in subdivisions (a) and (c). That computation shall be
made as follows:
(1) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change in
the California Consumer Price Index for all items from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.
(2) The Franchise Tax Board shall do both of the following:
(A) Compute an inflation adjustment factor by adding 100 percent
to the percentage change figure that is furnished pursuant to
paragraph (1) and dividing the result by 100.
(B) Multiply the preceding taxable year income tax brackets by the
inflation adjustment factor determined in subparagraph (A) and round
off the resulting products to the nearest one dollar ($1).
(i) (1) For purposes of this part, the term "taxable income of a
nonresident or part-year resident" includes each of the following:
(A) For any part of the taxable year during which the taxpayer was
a resident of this state (as defined by Section 17014), all items of
gross income and all deductions, regardless of source.
(B) For any part of the taxable year during which the taxpayer was
not a resident of this state, gross income and deductions derived
from sources within this state, determined in accordance with Article
9 of Chapter 3 (commencing with Section 17301) and Chapter 11
(commencing with Section 17951).
(2) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), the amount of any net
operating loss sustained in any taxable year during any part of which
the taxpayer was not a resident of this state shall be limited to
the sum of the following:
(A) The amount of the loss attributable to the part of the taxable
year in which the taxpayer was a resident.
(B) The amount of the loss which, during the part of the taxable
year the taxpayer is not a resident, is attributable to California
source income and deductions allowable in arriving at taxable income
of a nonresident or part-year resident.
(3) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), any carryover items,
deferred income, suspended losses, or suspended deductions shall only
be includable or allowable to the extent that the carryover item,
deferred income, suspended loss, or suspended deduction was derived
from sources within this state, calculated as if the nonresident or
part-year resident, for the portion of the year he or she was a
nonresident, had been a nonresident for all prior years.
17041.5. Notwithstanding any statute, ordinance, regulation, rule
or decision to the contrary, no city, county, city and county,
governmental subdivision, district, public and quasi-public
corporation, municipal corporation, whether incorporated or not or
whether chartered or not, shall levy or collect or cause to be levied
or collected any tax upon the income, or any part thereof, of any
person, resident or nonresident.
This section shall not be construed so as to prohibit the levy or
collection of any otherwise authorized license tax upon a business
measured by or according to gross receipts.
17042. Section 2(b) and (c) of the Internal Revenue Code, relating
to definitions of head of household and certain married individuals
living apart, respectively, shall apply, except as otherwise
provided.
17043. (a) For each taxable year beginning on or after January 1,
2005, in addition to any other taxes imposed by this part, an
additional tax shall be imposed at the rate of 1 percent on that
portion of a taxpayer's taxable income in excess of one million
dollars ($1,000,000).
(b) For purposes of applying Part 10.2 (commencing with Section
18401) of Division 2, the tax imposed under this section shall be
treated as if imposed under Section 17041.
(c) The following shall not apply to the tax imposed by this
section:
(1) The provisions of Section 17039, relating to the allowance of
credits.
(2) The provisions of Section 17041, relating to filing status and
recomputation of the income tax brackets.
(3) The provisions of Section 17045, relating to joint returns.
17045. In the case of a joint return of a husband and wife under
Section 18521, the tax imposed by Section 17041 shall be twice the
tax which would be imposed if the taxable income were cut in half.
For purposes of this section, a return of a surviving spouse (as
defined in Section 17046) shall be treated as a joint return of a
husband and wife.
17046. For purposes of this part, "surviving spouse" has the same
meaning as that term is defined by Section 2(a) of the Internal
Revenue Code.
17048. (a) In lieu of the tax imposed under Section 17041,
individuals with taxable income of such amounts as prescribed by the
Franchise Tax Board, shall compute their taxes under tax tables
prescribed by the Franchise Tax Board. The tax tables shall reflect
the tax imposed under Section 17041 in income progressions of not
less than one hundred dollars ($100), giving effect to the marital or
other status of the individual. For purposes of this part, the tax
imposed by this section shall be treated as tax imposed by Section
17041.
(b) Subdivision (a) shall not apply to any of the following:
(1) An individual to whom subdivision (b) of Section 17504
(relating to the tax on lump-sum distributions) applies for the
taxable year.
(2) An individual making a return under Section 443(a)(1) of the
Internal Revenue Code for a period of less than 12 months on account
of a change in annual accounting period.
(3) An estate or trust.
17049. (a) If an item of income was included in the gross income of
an individual for a preceding taxable year or years because it
appeared that the individual had an unrestricted right to that item,
a deduction is allowable for the taxable year based on the repayment
of the item by the individual during the taxable year, and the amount
of that deduction exceeds three thousand dollars ($3,000), then the
tax imposed by this part for the taxable year on that individual
shall be the lesser of the following:
(1) The tax for the taxable year computed with that deduction.
(2) An amount equal to (A) the tax for the taxable year computed
without that deduction, minus (B) the decrease in tax under this part
for the preceding taxable year or years which would result solely
from the exclusion of the item or portion thereof from the gross
income required to be shown on the California return of that
individual for the preceding taxable year or years.
(b) If the decrease in tax determined under subparagraph (B) of
paragraph (2) of subdivision (a) for the preceding taxable year or
years exceeds the tax imposed for the taxable year, computed without
the deduction, that excess shall be considered to be a payment of tax
on the last day prescribed for the payment of tax for the taxable
year, and shall be refunded or credited in the same manner as if it
were an overpayment for the taxable year.
(c) Subdivision (a) does not apply to any deduction allowable with
respect to an item which was included in gross income by reason of
the sale or other disposition of stock in trade of the taxpayer, or
other property of a kind which would properly have been included in
the inventory of the taxpayer if on hand at the close of the prior
taxable year, or property held by the taxpayer primarily for sale to
customers in the ordinary course of his or her trade or business.
(d) If the tax imposed by this part for the taxable year is the
amount determined under paragraph (2) of subdivision (a), then the
deduction referred to in subdivision (a) shall not be taken into
account for any purpose of this part, or Part 10.2 (commencing with
Section 18401), other than this section.
(e) For purposes of determining whether paragraph (1) or paragraph
(2) of subdivision (a) applies, in any case where the exclusion
referred to in subparagraph (B) of paragraph (2) of subdivision (a)
results in a net operating loss or capital loss for the prior taxable
year, or years, that loss shall, for purposes of computing the
decrease in tax for the prior taxable year, or years, under
subparagraph (B) of paragraph (2) of subdivision (a), be carried over
to the same extent and in the same manner as is provided under
Section 17276, 17276.1, 17276.2, 17276.4, 17276.5, or 17276.7, or
Section 1212 of the Internal Revenue Code, as applicable for
California purposes, except that no carryover beyond the taxable year
shall be taken into account.
(f) For purposes of this part, the net operating loss or capital
loss described in subdivision (e) shall, after the application of
paragraph (1) or (2) of subdivision (a) for the taxable year, be
taken into account under Section 17276, 17276.1, 17276.2, 17276.4,
17276.5, or 17276.7, or Section 1212 of the Internal Revenue Code, as
applicable for California purposes, for taxable years after the
taxable year to the same extent and in the same manner as either of
the following:
(A) A net operating loss sustained for the taxable year, if
paragraph (1) of subdivision (a) applied.
(B) A net operating loss or capital loss sustained for the prior
taxable year, or years, if paragraph (2) of subdivision (a) applied.
(g) Regulations promulgated by the Secretary of the Treasury under
Section 1341 of the Internal Revenue Code shall apply, except to the
extent that those regulations conflict with this section, provisions
of this part, or with regulations promulgated by the Franchise Tax
Board.
17052.6. (a) For each taxable year beginning on or after January 1,
2000, there shall be allowed as a credit against the "net tax", as
defined in Section 17039, an amount determined in accordance with
Section 21 of the Internal Revenue Code, except that the amount of
the credit shall be a percentage, as provided in subdivision (b) of
the allowable federal credit without taking into account whether
there is a federal tax liability.
(b) For the purposes of subdivision (a), the percentage of the
allowable federal credit shall be determined as follows:
(1) For taxable years beginning before January 1, 2003:
The percentage
If the adjusted gross income of
is: credit is:
$40,000 or less.............. 63%
Over $40,000 but not over 53%
$70,000......................
Over $70,000 but not over 42%
$100,000.....................
Over $100,000................ 0%
(2) For taxable years beginning on or after January 1, 2003:
The percentage
If the adjusted gross income of
is: credit is:
$40,000 or less.............. 50%
Over $40,000 but not over 43%
$70,000......................
Over $70,000 but not over 34%
$100,000.....................
Over $100,000................ 0%
(c) In the case of a taxpayer whose credits provided under this
section exceed the taxpayer's tax liability computed under this part,
the excess shall be credited against other amounts due, if any, from
the taxpayer and the balance, if any, shall be paid from the Tax
Relief and Refund Account and refunded to the taxpayer.
(d) For purposes of this section, "adjusted gross income" means
adjusted gross income as computed for purposes of paragraph (2) of
subdivision (h) of Section 17024.5.
(e) The credit authorized by this section shall be limited, as
follows:
(1) Employment-related expenses, within the meaning of Section 21
of the Internal Revenue Code, shall be limited to expenses for
household services and care provided in this state.
(2) Earned income, within the meaning of Section 21(d) of the
Internal Revenue Code, shall be limited to earned income subject to
tax under this part. For purposes of this paragraph, compensation
received by a member of the armed forces for active services as a
member of the armed forces, other than pensions or retired pay, shall
be considered earned income subject to tax under this part, whether
or not the member is domiciled in this state.
(f) For purposes of this section, Section 21(b)(1) of the Internal
Revenue Code, relating to a qualifying individual, is modified to
additionally provide that a child, as defined in Section 151(c)(3) of
the Internal Revenue Code, shall be treated, for purposes of Section
152 of the Internal Revenue Code, as applicable for purposes of this
section, as receiving over one-half of his or her support during the
calendar year from the parent having custody for a greater portion
of the calendar year, that parent shall be treated as a "custodial
parent," within the meaning of Section 152(e) of the Internal Revenue
Code, as applicable for purposes of this section, and the child
shall be treated as a qualifying individual under Section 21(b)(1) of
the Internal Revenue Code, as applicable for purposes of this
section, if both of the following apply:
(1) The child receives over one-half of his or her support during
the calendar year from his or her parents who never married each
other and who lived apart at all times during the last six months of
the calendar year.
(2) The child is in the custody of one or both of his or her
parents for more than one-half of the calendar year.
(g) The amendments to this section made by Section 1.5 of Chapter
824 of the Statutes of 2002 shall apply only to taxable years
beginning on or after January 1, 2002.
17052.8. For each taxable year beginning on or after January 1,
1996, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039) an amount determined as follows:
(a) (1) (A) The amount of the credit shall be equal to one-third
of the federal credit computed in accordance with Section 43 of the
Internal Revenue Code.
(B) If a taxpayer elects, under Section 43(e) of the Internal
Revenue Code, not to apply Section 43 for federal tax purposes, this
election is binding and irrevocable for state purposes, and for
purposes of subparagraph (A), the federal credit shall be zero.
(2) "Qualified enhanced oil recovery project" shall include only
projects located within California.
(3) The credit allowed under this subdivision shall not be allowed
to any taxpayer for whom a depletion allowance is not permitted to
be computed under Section 613 of the Internal Revenue Code by reason
of paragraphs (2), (3), or (4) of subsection (d) of Section 613A of
the Internal Revenue Code.
(b) Section 43(d) of the Internal Revenue Code shall apply.
(c) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
for the succeeding 15 years.
(d) In the case where property which qualifies as part of the
taxpayer's "qualified enhanced oil recovery costs" also qualifies for
a credit under any other section in this part, the taxpayer shall
make an election on its original return as to which section applies
to all costs allocable to that item of qualified property. 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.
(e) No deduction shall be allowed as otherwise provided in this
part for that portion of any costs paid or incurred for the taxable
year which is equal to the amount of the credit allowed under this
section attributable to those costs.
(f) The basis of any property for which a credit is allowed under
this section shall be reduced by the amount of the credit
attributable to the property. The basis adjustment shall be made for
the taxable year for which the credit is allowed.
(g) No credit may be claimed under this section with respect to
any amount for which any other credit has been claimed under this
part.
17052.12. For each taxable year beginning on or after January 1,
1987, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039) for the taxable year an amount determined
in accordance with Section 41 of the Internal Revenue Code, except as
follows:
(a) For each taxable year beginning before January 1, 1997, the
reference to "20 percent" in Section 41(a)(1) of the Internal Revenue
Code is modified to read "8 percent."
(b) (1) For each taxable year beginning on or after January 1,
1997, and before January 1, 1999, the reference to "20 percent" in
Section 41(a)(1) of the Internal Revenue Code is modified to read "11
percent."
(2) For each taxable year beginning on or after January 1, 1999,
and before January 1, 2000, the reference to "20 percent" in Section
41(a)(1) of the Internal Revenue Code is modified to read "12
percent."
(3) For each taxable year beginning on or after January 1, 2000,
the reference to "20 percent" in Section 41(a)(1) of the Internal
Revenue Code is modified to read "15 percent."
(c) Section 41(a)(2) of the Internal Revenue Code shall not apply.
(d) "Qualified research" shall include only research conducted in
California.
(e) In the case where the credit allowed under this section
exceeds the "net tax," the excess may be carried over to reduce the
"net tax" in the following year, and succeeding years if necessary,
until the credit has been exhausted.
(f) (1) With respect to any expense paid or incurred after the
operative date of Section 6378, Section 41(b)(1) of the Internal
Revenue Code is modified to exclude from the definition of "qualified
research expense" any amount paid or incurred for tangible personal
property that is eligible for the exemption from sales or use tax
provided by Section 6378.
(2) For each taxable year beginning on or after January 1, 1998,
the reference to "Section 501(a)" in Section 41(b)(3)(C) of the
Internal Revenue Code, relating to contract research expenses, is
modified to read "this part or Part 11 (commencing with Section
23001)."
(g) (1) For each taxable year beginning on or after January 1,
2000:
(A) The reference to "3 percent" in Section 41(c)(4)(A)(i) of the
Internal Revenue Code is modified to read "one and forty-nine
hundredths of one percent."
(B) The reference to "4 percent" in Section 41(c)(4)(A)(ii) of the
Internal Revenue Code is modified to read "one and ninety-eight
hundredths of one percent."
(C) The reference to "5 percent" in Section 41(c)(4)(A)(iii) of
the Internal Revenue Code is modified to read "two and forty-eight
hundredths of one percent."
(2) Section 41(c)(4)(B) shall not apply and in lieu thereof an
election under Section 41(c)(4)(A) of the Internal Revenue Code may
be made for any taxable year of the taxpayer beginning on or after
January 1, 1998. That election shall apply to the taxable year for
which made and all succeeding taxable years unless revoked with the
consent of the Franchise Tax Board.
(3) Section 41(c)(7) of the Internal Revenue Code, relating to
gross receipts, is modified to take into account only those gross
receipts from the sale of property held primarily for sale to
customers in the ordinary course of the taxpayer's trade or business
that is delivered or shipped to a purchaser within this state,
regardless of f.o.b. point or any other condition of the sale.
(4) Section 41(c)(5) of the Internal Revenue Code, relating to
election of alternative simplified credit, shall not apply.
(h) Section 41(h) of the Internal Revenue Code, relating to
termination, shall not apply.
(i) Section 41(g) of the Internal Revenue Code, relating to
special rule for passthrough of credit, is modified by each of the
following:
(1) The last sentence shall not apply.
(2) If the amount determined under Section 41(a) of the Internal
Revenue Code for any taxable year exceeds the limitation of Section
41(g) of the Internal Revenue Code, that amount may be carried over
to other taxable years under the rules of subdivision (e); except
that the limitation of Section 41(g) of the Internal Revenue Code
shall be taken into account in each subsequent taxable year.
(j) Section 41(a)(3) of the Internal Revenue Code shall not apply.
(k) Section 41(b)(3)(D) of the Internal Revenue Code, relating to
amounts paid to eligible small businesses, universities, and federal
laboratories, shall not apply.
(l) Section 41(f)(6), relating to energy research consortium,
shall not apply.
17052.17. (a) For each taxable year beginning on or after January
1, 1988, and before January 1, 2012, there shall be allowed as a
credit against the "net tax" (as defined by Section 17039) an amount
equal to the amount determined in subdivision (b).
(b) (1) The amount of the credit allowed by this section shall be
30 percent of any of the following:
(A) The cost paid or incurred by the taxpayer on or after
September 23, 1988, for the startup expenses of establishing a child
care program or constructing a child care facility in California, to
be used primarily by the children of the taxpayer's employees.
(B) For each taxable year beginning on or after January 1, 1993,
the cost paid or incurred by the taxpayer for the startup expenses of
establishing a child care program or constructing a child care
facility in California, to be used primarily by the children of
employees of tenants leasing commercial or office space in a building
owned by the taxpayer.
(C) The cost paid or incurred by the taxpayer on or after
September 23, 1988, for contributions to California child care
information and referral services, including, but not limited to,
those that identify local child care services, offer information
describing these resources to the taxpayer's employees, and make
referrals of the taxpayer's employees to child care services where
there are vacancies.
In the case of a child care facility established by two or more
taxpayers, the credit shall be allowed to each taxpayer if the
facility is to be used primarily by the children of the employees of
each of the taxpayers or the children of the employees of the tenants
of each of the taxpayers.
(2) The amount of the credit allowed by this section shall not
exceed fifty thousand dollars ($50,000) for any taxable year.
(c) For purposes of this section, "startup expenses" include, but
are not limited to, feasibility studies, site preparation, and
construction, renovation or acquisition of facilities for purposes of
establishing or expanding onsite or nearsite centers by one or more
employers or one or more building owners leasing space to employers.
(d) If two or more taxpayers share in the costs eligible for the
credit provided by this section, each taxpayer shall be eligible to
receive a tax credit with respect to his, her, or its respective
share of the costs paid or incurred.
(e) (1) In the case where the credit allowed and limited under
subdivision (b) exceeds the "net tax," the excess may be carried over
to reduce the "net tax" in the following year, and succeeding years
if necessary, until the credit has been exhausted. However, the
excess from any one year shall not exceed fifty thousand dollars
($50,000).
(2) If the credit carryovers from preceding taxable years allowed
under paragraph (1) plus the credit allowed for the taxable year
under subdivision (b) would exceed an aggregate total of fifty
thousand dollars ($50,000), then the credit allowed to reduce the
"net tax" under this section for the taxable year shall be limited to
fifty thousand dollars ($50,000) and the amount in excess of the
fifty thousand dollar ($50,000) limit may be carried over and applied
against the "net tax" in the following year, and succeeding years if
necessary, in an amount which, when added to the credit allowed
under subdivision (b) for that succeeding taxable year, does not
exceed fifty thousand dollars ($50,000).
(f) No deduction shall be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year which is equal to the amount of the credit allowed under this
section attributable to those expenses.
(g) In lieu of claiming the tax credit provided by this section,
the taxpayer may elect to take depreciation pursuant to Section
17250. In addition, the taxpayer may take depreciation pursuant to
that section for the cost of a facility in excess of the amount of
the tax credit claimed under this section.
(h) The basis for any child care facility for which a credit is
allowed shall be reduced by the amount of the credit attributable to
the facility. The basis adjustment shall be made for the taxable year
for which the credit is allowed.
(i) No credit shall be allowed under subparagraph (B) of paragraph
(1) of subdivision (b) in the case of any taxpayer that is required
by any local ordinance or regulation to provide a child care
facility.
(j) (1) In order to be eligible for the credit allowed under
subparagraph (A) or (B) of paragraph (1) of subdivision (b), the
taxpayer shall submit to the Franchise Tax Board upon request a
statement certifying that the costs for which the credit is claimed
are incurred with respect to the startup expenses of establishing a
child care program or constructing a child care facility in
California to be used primarily by the children of the taxpayer's
employees or the children of the employees of tenants leasing
commercial or office space in a building owned by the taxpayer and
which will be in operation for at least 60 consecutive months after
completion.
(2) If the child care center for which a credit is claimed
pursuant to this section is disposed of or ceases to operate within
60 months after completion, that portion of the credit claimed which
represents the remaining portion of the 60-month period shall be
added to the taxpayer's tax liability in the taxable year of that
disposition or nonuse.
(k) In order to be allowed the credit under subparagraph (A) or
(B) of paragraph (1) of subdivision (b), the taxpayer shall indicate,
in the form and manner prescribed by the Franchise Tax Board, the
number of children that the child care program or facility will be
able to legally accommodate.
(l) On or before January 1, 2011, the Franchise Tax Board shall
submit to the Legislature a report on the following:
(1) The dollar amount of credits claimed annually.
(2) The number of child care facilities established or constructed
by taxpayers claiming the credit.
(3) The number of children served by these facilities.
(m) This section shall remain in effect only until December 1,
2012, and as of that date is repealed.
17052.18. (a) For each taxable year beginning on or after January
1, 1995, and before January 1, 2012, there shall be allowed as a
credit against the "net tax" (as defined by Section 17039) an amount
equal to the amount determined in subdivision (b).
(b) (1) The amount of the credit allowed by this section shall be
30 percent of the cost paid or incurred by the taxpayer for
contributions to a qualified care plan made on behalf of any
qualified dependent of the taxpayer's qualified employee.
(2) The amount of the credit allowed by this section in any
taxable year shall not exceed three hundred sixty dollars ($360) for
each qualified dependent.
(c) For purposes of this section:
(1) "Qualified care plan" means a plan providing qualified care.
(2) "Qualified care" includes, but is not limited to, onsite
service, center-based service, in-home care or home-provider care,
and a dependent care center as defined by Section 21(b)(2)(D) of the
Internal Revenue Code that is a specialized center with respect to
short-term illnesses of an employee's dependents. "Qualified care"
must be provided in this state under the authority of a license when
required by California law.
(3) "Specialized center" means a facility that provides care to
mildly ill children and that may do all of the following:
(A) Be staffed by pediatric nurses and day care workers.
(B) Admit children suffering from common childhood ailments
(including colds, flu, and chickenpox).
(C) Make special arrangements for well children with minor
problems associated with diabetes, asthma, breaks or sprains, and
recuperation from surgery.
(D) Separate children according to their illness and symptoms in
order to protect them from cross-infection.
(4) "Contributions" include direct payments to child care programs
or providers. "Contributions" do not include amounts contributed to
a qualified care plan pursuant to a salary reduction agreement to
provide benefits under a dependent care assistance program within the
meaning of Section 129 of the Internal Revenue Code, as applicable,
for purposes of Part 11 (commencing with Section 23001) and this
part.
(5) "Qualified employee" means any employee of the taxpayer who is
performing services for the taxpayer in this state, within the
meaning of Section 25133, during the period in which the qualified
care is performed.
(6) "Employee" includes an individual who is an employee within
the meaning of Section 401(c)(1) of the Internal Revenue Code
(relating to self-employed individuals).
(7) "Qualified dependent" means any dependent of a qualified
employee who is under the age of 12 years.
(d) If an employer makes contributions to a qualified care plan
and also collects fees from parents to support a child care facility
owned and operated by the employer, no credit shall be allowed under
this section for contributions in the amount, if any, by which the
sum of the contributions and fees exceed the total cost of providing
care. The Franchise Tax Board may require information about fees
collected from parents of children.
(e) If the duration of the child care received is less than 42
weeks, the employer shall claim a prorated portion of the allowable
credit. The employer shall prorate the credit using the ratio of the
number of weeks of care received divided by 42 weeks.
(f) If the credit allowed by this section exceeds the "net tax,"
the excess may be carried over to reduce the "net tax" in the
following year, and succeeding years if necessary until the credit
has been exhausted.
(g) The credit shall not be available to an employer if the care
provided on behalf of an employee is provided by an individual who:
(1) Qualifies as a dependent of that employee or that employee's
spouse under subdivision (d) of Section 17054.
(2) Is (within the meaning of Section 17056) a son, stepson,
daughter, or stepdaughter of that employee and is under the age of 19
at the close of that taxable year.
(h) The contributions to a qualified care plan shall not
discriminate in favor of employees who are officers, owners, or
highly compensated, or their dependents.
(i) No deduction shall be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year that is equal to the amount of the credit allowed under this
section.
(j) If the credit is taken by an employer for contributions to a
qualified care plan that is used at a facility owned by the employer,
the basis of that facility shall be reduced by the amount of the
credit. The basis adjustment shall be made for the taxable year for
which the credit is allowed.
(k) In order to be allowed the credit authorized under this
section the taxpayer shall indicate, in the form and manner
prescribed by the Franchise Tax Board, the number of children of
employers served by the qualified child care plan.
(l) On or before January 1, 2011, the Franchise Tax Board shall
submit to the Legislature a report on the following:
(1) The dollar amount of credits claimed annually.
(2) The number of children of employees served by the qualified
child care plan for which the taxpayer claimed a credit.
(m) This section shall remain in effect only until December 1,
2012, and as of that date is repealed.
17052.25. (a) For each taxable year beginning on or after January
1, 1994, there shall be allowed as a credit against the "net tax," as
defined in Section 17039, an amount equal to 50 percent of the costs
paid or incurred by a taxpayer for the adoption of any minor child
who is a citizen or legal resident of the United States and was in
the custody of a public agency of either this state or a political
subdivision of this state. The credit shall not exceed two thousand
five hundred dollars ($2,500) per minor child.
(b) "Costs" eligible for the credit pursuant to subdivision (a)
shall include the following:
(1) Fees for required services of either the Department of Social
Services or a licensed adoption agency.
(2) Travel and related expenses for the adoptive family that are
directly related to the adoption process.
(3) Medical fees and expenses that are not reimbursed by insurance
and are directly related to the adoption process.
(c) The credit authorized by this section shall be claimed for the
taxable year in which the decree or order of adoption is entered
pursuant to Section 8612 of the Family Code. However, the allowable
credit claimed may include any costs of that adoption paid or
incurred in any prior taxable year.
(d) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding years if necessary, until the
total credit of two thousand five hundred dollars ($2,500) per minor
child is exhausted.
(e) Any deduction otherwise allowed under this part for any amount
paid or incurred by the taxpayer upon which the credit is based
shall be reduced by the amount of the credit allowed under this
section.
17053.5. (a) (1) For a qualified renter, there shall be allowed a
credit against his or her "net tax," as defined in Section 17039. The
amount of the credit shall be as follows:
(A) For married couples filing joint returns, heads of household,
and surviving spouses, as defined in Section 17046, the credit shall
be equal to one hundred twenty dollars ($120) if adjusted gross
income is fifty thousand dollars ($50,000) or less.
(B) For other individuals, the credit shall be equal to sixty
dollars ($60) if adjusted gross income is twenty-five thousand
dollars ($25,000) or less.
(2) Except as provided in subdivision (b), a husband and wife
shall receive but one credit under this section. If the husband and
wife file separate returns, the credit may be taken by either or
equally divided between them, except as follows:
(A) If one spouse was a resident for the entire taxable year and
the other spouse was a nonresident for part or all of the taxable
year, the resident spouse shall be allowed one-half the credit
allowed to married persons and the nonresident spouse shall be
permitted one-half the credit allowed to married persons, prorated as
provided in subdivision (e).
(B) If both spouses were nonresidents for part of the taxable
year, the credit allowed to married persons shall be divided equally
between them subject to the proration provided in subdivision (e).
(b) For a husband and wife, if each spouse maintained a separate
place of residence and resided in this state during the entire
taxable year, each spouse will be allowed one-half the full credit
allowed to married persons provided in subdivision (a).
(c) For purposes of this section, a "qualified renter" means an
individual who satisfies both of the following:
(1) Was a resident of this state, as defined in Section 17014.
(2) Rented and occupied premises in this state which constituted
his or her principal place of residence during at least 50 percent of
the taxable year.
(d) "Qualified renter" does not include any of the following:
(1) An individual who for more than 50 percent of the taxable year
rented and occupied premises that were exempt from property taxes,
except that an individual, otherwise qualified, is deemed a qualified
renter if he or she or his or her landlord pays possessory interest
taxes, or the owner of those premises makes payments in lieu of
property taxes that are substantially equivalent to property taxes
paid on properties of comparable market value.
(2) An individual whose principal place of residence for more than
50 percent of the taxable year is with another person who claimed
that individual as a dependent for income tax purposes.
(3) An individual who has been granted or whose spouse has been
granted the homeowners' property tax exemption during the taxable
year. This paragraph does not apply to an individual whose spouse has
been granted the homeowners' property tax exemption if each spouse
maintained a separate residence for the entire taxable year.
(e) An otherwise qualified renter who is a nonresident for any
portion of the taxable year shall claim the credits set forth in
subdivision (a) at the rate of one-twelfth of those credits for each
full month that individual resided within this state during the
taxable year.
(f) A person claiming the credit provided in this section shall,
as part of that claim, and under penalty of perjury, furnish that
information as the Franchise Tax Board prescribes on a form supplied
by the board.
(g) The credit provided in this section shall be claimed on
returns in the form as the Franchise Tax Board may from time to time
prescribe.
(h) For purposes of this section, "premises" means a house or a
dwelling unit used to provide living accommodations in a building or
structure and the land incidental thereto, but does not include land
only, unless the dwelling unit is a mobilehome. The credit is not
allowed for any taxable year for the rental of land upon which a
mobilehome is located if the mobilehome has been granted a homeowners'
exemption under Section 218 in that year.
(i) This section shall become operative on January 1, 1998, and
applies to any taxable year beginning on or after January 1, 1998.
(j) For each taxable year beginning on or after January 1, 1999,
the Franchise Tax Board shall recompute the adjusted gross income
amounts set forth in subdivision (a). The computation shall be made
as follows:
(1) The Department of Industrial Relations shall transmit annually
to the Franchise Tax Board the percentage change in the California
Consumer Price Index for all items from June of the prior calendar
year to June of the current year, no later than August 1 of the
current calendar year.
(2) The Franchise Tax Board shall compute an inflation adjustment
factor by adding 100 percent to the portion of the percentage change
figure which is furnished pursuant to paragraph (1) and dividing the
result by 100.
(3) The Franchise Tax Board shall multiply the amount in
subparagraph (B) of paragraph (1) of subdivision (d) for the
preceding taxable year by the inflation adjustment factor determined
in paragraph (2), and round off the resulting products to the nearest
one dollar ($1).
(4) In computing the amounts pursuant to this subdivision, the
amounts provided in subparagraph (A) of paragraph (1) of subdivision
(a) shall be twice the amount provided in subparagraph (B) of
paragraph (1) of subdivision (a).
17053.6. (a) There shall be allowed as a credit against the "net
tax" (as defined by Section 17039) an amount equal to 10 percent of
the amount of wages paid or incurred during the taxable year to each
prisoner who is employed in a joint venture program established
pursuant to Article 1.5 of Chapter 5 of Title 1 of Part 3 of the
Penal Code, through agreement with the Director of Corrections.
(b) The Department of Corrections shall forward annually to the
Franchise Tax Board a list of all employers certified by the
Department of Corrections as active participants in a joint venture
program pursuant to Article 1.5 (commencing with Section 2717.1) of
Chapter 5 of Title 1 of Part 3 of the Penal Code. The list shall
include the certified participant's federal employer identification
number.
17053.7. (a) There shall be allowed as a credit against the "net
tax" (as defined by Section 17039) an amount equal to 10 percent of
the amount of wages paid to each employee who is certified by the
Employment Development Department to meet the requirements of Section
328 of the Unemployment Insurance Code.
The credit under this section shall not apply to an individual
unless, on or before the day on which that individual begins work for
the employer, the employer:
(1) Has received a certification from the Employment Development
Department, or
(2) Has requested in writing that certification from the
Employment Development Department.
For the purposes of this subdivision, if on or before the day on
which the individual begins work for the employer, the individual has
received from the Employment Development Department a written
preliminary determination that he or she is a member of a targeted
group, then the requirement of paragraph (1) or (2) shall be
applicable on or before the fifth day on which the individual begins
work for the employer.
(b) The credit under this section shall not apply to wages paid in
excess of three thousand dollars ($3,000) during a taxable year by a
taxpayer to the same individual. With respect to each qualified
employee, the aggregate credit under this section shall not exceed
six hundred dollars ($600).
(c) The credit under this section shall not apply to wages paid to
an individual:
(1) Who bears any of the relationships described in paragraphs (1)
to (8), inclusive, of Section 152(a) of the Internal Revenue Code to
the taxpayer; or
(2) Who, if the taxpayer is an estate or trust, is a grantor,
beneficiary, or fiduciary of the estate or trust, or is an individual
who bears any of the relationships described in paragraphs (1) to
(8), inclusive, of Section 152(a) of the Internal Revenue Code to a
grantor, beneficiary, or fiduciary of the estate or trust; or
(3) Who is a dependent (as described in Section 152(a)(9) of the
Internal Revenue Code) of the taxpayer, or, if the taxpayer is an
estate or trust, of a grantor, beneficiary, or a fiduciary of the
estate or trust.
(d) The credit under this section shall not apply to wages paid to
an individual if, prior to the hiring date of that individual, that
individual has been employed by the employer at any time during which
he or she was not certified by the Employment Development Department
to meet the requirements of Section 328 of the Unemployment
Insurance Code.
(e) If the certification of an employment has been revoked
pursuant to subdivision (c) of Section 328 of the Unemployment
Insurance Code, the credit under this section shall not apply to
wages paid by the employer after the date on which notice of
revocation is received by the employer.
(f) The credit under this section shall be in addition to any
deduction under this part to which the taxpayer may be entitled, if
any.
(g) The credit provided by this section shall be applied to wages
paid to each qualifying employee during the 24-month period beginning
on the date the employee begins working for the taxpayer.
(h) (1) A taxpayer may elect to have this section not apply for
any taxable year.
(2) An election under paragraph (1) for any taxable year may be
made (or revoked) at any time before the expiration of the four-year
period beginning on the last date prescribed by law for filing the
return for that taxable year (determined without regard to
extensions).
(3) An election under paragraph (1) (or revocation thereof) shall
be made in any manner which the Franchise Tax Board may prescribe.
(i) (1) In the case of a successor employer referred to in Section
3306(b)(1) of the Internal Revenue Code, the determination of the
amount of the credit under this section with respect to wages paid by
that successor employer shall be made in the same manner as if those
wages were paid by the predecessor employer referred to in that
section.
(2) No credit shall be determined under this section with respect
to remuneration paid by an employer to an employee for services
performed by that employee for another person, unless the amount
reasonably expected to be received by the employer for those services
from that other person exceeds the remuneration paid by the employer
to that employee for those services.
(j) The term "wages" shall not include either of the following:
(1) Payments defined in Section 51(c)(3) of the Internal Revenue
Code, relating to payments for services during labor disputes.
(2) Any amounts paid or incurred to an individual who begins work
for the employer after December 31, 1993.
17053.12. (a) In the case of a taxpayer who transports any
agricultural product donated in accordance with Chapter 5 (commencing
with Section 58501) of Part 1 of Division 21 of the Food and
Agricultural Code, for taxable years beginning on or after January 1,
1996, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039), an amount equal to 50 percent of the
transportation costs paid or incurred by the taxpayer in connection
with the transportation of that donated agricultural product.
(b) If any credit allowed by this section is claimed by the
taxpayer, any deduction otherwise allowed under this part for that
amount of the cost paid or incurred by the taxpayer which is eligible
for the credit that is claimed shall be reduced by the amount of the
credit allowed.
(c) Upon delivery of the donated agricultural product by a
taxpayer authorized to claim a credit pursuant to subdivision (a),
the nonprofit charitable organization shall provide a certificate to
the taxpayer who transported the agricultural product. The
certificate shall contain a statement signed and dated by a person
authorized by that organization that the product is donated under
Chapter 5 (commencing with Section 58501) of Part 1 of Division 21 of
the Food and Agricultural Code. The certificate shall also contain
the following information: the type and quantity of product donated,
the distance transported, the name of the transporter, the name of
the taxpayer donor, and the name and address of the donee. Upon the
request of the Franchise Tax Board, the taxpayer shall provide a copy
of the certification to the Franchise Tax Board.
(d) In the case where any credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding years if necessary, until the
credit has been exhausted.
17053.30. (a) There shall be allowed as a credit against the "net
tax," as defined in Section 17039, an amount equal to 55 percent of
the fair market value of any qualified contribution made on or after
January 1, 2000, and not later than June 30, 2008, and on or after
January 1, 2010, and not later than June 30, 2015, by the taxpayer
during the taxable year to the state, any local government, or any
designated nonprofit organization, pursuant to Division 28
(commencing with Section 37000) of the Public Resources Code.
(b) For purposes of this section, "qualified contribution" means a
contribution of property, as defined in Section 37002 of the Public
Resources Code, that has been approved for acceptance by the Wildlife
Conservation Board pursuant to Division 28 (commencing with Section
37000) of the Public Resources Code.
(c) In the case of any passthrough entity, the fair market value
of any qualified contribution approved for acceptance under Division
28 (commencing with Section 37000) of the Public Resources Code shall
be passed through to the partners or shareholders of the passthrough
entity in accordance with their interest in the passthrough entity
as of the date of the qualified contribution. For purposes of this
subdivision, the term "passthrough entity" means any partnership, "S"
corporation, or limited liability company treated as a partnership.
(d) If the credit allowed by this section exceeds the "net tax,"
the excess may be carried over to reduce the "net tax" in the
following year, and the succeeding seven years if necessary, until
the credit is exhausted.
(e) This credit shall be in lieu of any other credit or deduction
which the taxpayer may otherwise claim pursuant to this part with
respect to the property or any interest therein that is contributed.
17053.33. (a) For each taxable year beginning on or after January
1, 1998, there shall be allowed as a credit against the "net tax" (as
defined in Section 17039) for the taxable year an amount equal to
the sales or use tax paid or incurred during the taxable year by the
qualified taxpayer in connection with the qualified taxpayer's
purchase of qualified property.
(b) For purposes of this section:
(1) "Qualified property" means property that meets all of the
following requirements:
(A) Is any of the following:
(i) Machinery and machinery parts used for fabricating,
processing, assembling, and manufacturing.
(ii) Machinery and machinery parts used for the production of
renewable energy resources.
(iii) Machinery and machinery parts used for either of the
following:
(I) Air pollution control mechanisms.
(II) Water pollution control mechanisms.
(iv) Data processing and communications equipment, such as
computers, computer-automated drafting systems, copy machines,
telephone systems, and faxes.
(v) Motion picture manufacturing equipment central to production
and post production, such as cameras, audio recorders, and digital
image and sound processing equipment.
(B) The total cost of qualified property purchased and placed in
service in any taxable year that may be taken into account by any
qualified taxpayer for purposes of claiming this credit shall not
exceed one million dollars ($1,000,000).
(C) The qualified property is used by the qualified taxpayer
exclusively in a targeted tax area.
(D) The qualified property is purchased and placed in service
before the date the targeted tax area designation expires, is
revoked, is no longer binding, or becomes inoperative.
(2) (A) "Qualified taxpayer" means a person or entity that meets
both of the following:
(i) 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.
(ii) 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 States Office of Management and Budget, 1987 edition.
(B) 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 credit under this section or
Section 23633 shall be allowed to the pass-through entity and passed
through to the partners or shareholders in accordance with applicable
provisions of this part or Part 11 (commencing with Section 23001).
For purposes of this subparagraph, the term "pass-through entity"
means any partnership or S corporation.
(3) "Targeted tax area" means the area designated pursuant to
Chapter 12.93 (commencing with Section 7097) of Division 7 of Title 1
of the Government Code.
(c) If the qualified taxpayer is allowed a credit for qualified
property pursuant to this section, only one credit shall be allowed
to the taxpayer under this part with respect to that qualified
property.
(d) If the qualified taxpayer has purchased property upon which a
use tax has been paid or incurred, the credit provided by this
section shall be allowed only if qualified property of a comparable
quality and price is not timely available for purchase in this state.
(e) In the case where the credit otherwise allowed under this
section exceeds the "net tax" for the taxable year, that portion of
the credit that exceeds the "net tax" may be carried over and added
to the credit, if any, in the following year, and succeeding years if
necessary, until the credit is exhausted. The credit shall be
applied first to the earliest taxable years possible.
(f) Any qualified taxpayer who elects to be subject to this
section shall not be entitled to increase the basis of the qualified
property as otherwise required by Section 164(a) of the Internal
Revenue Code with respect to sales or use tax paid or incurred in
connection with the qualified taxpayer's purchase of qualified
property.
(g) (1) The amount of the credit otherwise allowed under this
section and Section 17053.34, including any credit carryover from
prior years, that may reduce the "net tax" for the taxable year shall
not exceed the amount of tax that would be imposed on the qualified
taxpayer's business income attributable to the targeted tax area
determined as if that attributable income represented all of the
income of the qualified taxpayer subject to tax under this part.
(2) Attributable income shall be that portion of the taxpayer's
California source business income that is apportioned to the targeted
tax area . For that purpose, the taxpayer's business income
attributable to sources in this state first shall be determined in
accordance with Chapter 17 (commencing with Section 25101) of Part
11. That business income shall be further apportioned to the targeted
tax area in accordance with Article 2 (commencing with Section
25120) of Chapter 17 of Part 11, modified for purposes of this
section in accordance with paragraph (3).
(3) Business income shall be apportioned to the targeted tax area
by multiplying the total California business income of the taxpayer
by a fraction, the numerator of which is the property factor plus the
payroll factor, and the denominator of which is two. For purposes of
this paragraph:
(A) The property factor is a fraction, the numerator of which is
the average value of the taxpayer's real and tangible personal
property owned or rented and used in the targeted tax area during the
taxable year, and the denominator of which is the average value of
all the taxpayer's real and tangible personal property owned or
rented and used in this state during the taxable year.
(B) The payroll factor is a fraction, the numerator of which is
the total amount paid by the taxpayer in the targeted tax area during
the taxable year for compensation, and the denominator of which is
the total compensation paid by the taxpayer in this state during the
taxable year.
(4) The portion of any credit remaining, if any, after application
of this subdivision, shall be carried over to succeeding taxable
years, as if it were an amount exceeding the "net tax" for the
taxable year, as provided in subdivision (e).
(5) In the event that a credit carryover is allowable under
subdivision (e) for any taxable year after the targeted tax area
designation has expired, has been revoked, is no longer binding, or
has become inoperative, the targeted tax area shall be deemed to
remain in existence for purposes of computing the limitation
specified in this subdivision.
(h) The amendments made to this section by the act adding this
subdivision shall apply to taxable years beginning on or after
January 1, 1998.
17053.34. (a) For each taxable year beginning on or after January
1, 1998, there shall be allowed a credit against the "net tax" (as
defined in Section 17039) to a qualified taxpayer who employs a
qualified employee in a targeted tax area during the taxable year.
The credit shall be equal to the sum of each of the following:
(1) Fifty percent of qualified wages in the first year of
employment.
(2) Forty percent of qualified wages in the second year of
employment.
(3) Thirty percent of qualified wages in the third year of
employment.
(4) Twenty percent of qualified wages in the fourth year of
employment.
(5) Ten percent of qualified wages in the fifth year of
employment.
(b) For purposes of this section:
(1) "Qualified wages" means:
(A) That portion of wages paid or incurred by the qualified
taxpayer during the taxable year to qualified employees that does not
exceed 150 percent of the minimum wage.
(B) Wages received during the 60-month period beginning with the
first day the employee commences employment with the qualified
taxpayer. Reemployment in connection with any increase, including a
regularly occurring seasonal increase, in the trade or business
operations of the qualified taxpayer does not constitute commencement
of employment for purposes of this section.
(C) Qualified wages do not include any wages paid or incurred by
the qualified taxpayer on or after the targeted tax area expiration
date. However, wages paid or incurred with respect to qualified
employees who are employed by the qualified taxpayer within the
targeted tax area within the 60-month period prior to the targeted
tax area expiration date shall continue to qualify for the credit
under this section after the targeted tax area expiration date, in
accordance with all provisions of this section applied as if the
targeted tax area designation were still in existence and binding.
(2) "Minimum wage" means the wage established by the Industrial
Welfare Commission as provided for in Chapter 1 (commencing with
Section 1171) of Part 4 of Division 2 of the Labor Code.
(3) "Targeted tax area expiration date" means the date the
targeted tax area designation expires, is revoked, is no longer
binding, or becomes inoperative.
(4) (A) "Qualified employee" means an individual who meets all of
the following requirements:
(i) At least 90 percent of his or her services for the qualified
taxpayer during the taxable year are directly related to the conduct
of the qualified taxpayer's trade or business located in a targeted
tax area.
(ii) Performs at least 50 percent of his or her services for the
qualified taxpayer during the taxable year in a targeted tax area.
(iii) Is hired by the qualified taxpayer after the date of
original designation of the area in which services were performed as
a targeted tax area.
(iv) Is any of the following:
(I) Immediately preceding the qualified employee's commencement of
employment with the qualified taxpayer, was a person eligible for
services under the federal Job Training Partnership Act (29 U.S.C.
Sec. 1501 et seq.), or its successor, who is receiving, or is
eligible to receive, subsidized employment, training, or services
funded by the federal Job Training Partnership Act, or its successor.
(II) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was a person eligible to
be a voluntary or mandatory registrant under the Greater Avenues for
Independence Act of 1985 (GAIN) provided for pursuant to Article 3.2
(commencing with Section 11320) of Chapter 2 of Part 3 of Division 9
of the Welfare and Institutions Code, or its successor.
(III) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was an economically
disadvantaged individual 14 years of age or older.
(IV) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was a dislocated worker
who meets any of the following:
(aa) Has b
17041. (a) (1) There shall be imposed for each taxable year upon
the entire taxable income of every resident of this state who is not
a part-year resident, except the head of a household as defined in
Section 17042, taxes in the following amounts and at the following
rates upon the amount of taxable income computed for the taxable year
as if the resident were a resident of this state for the entire
taxable year and for all prior taxable years for any carryover items,
deferred income, suspended losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $3,650........ 1% of the taxable income
Over $3,650 but $36.50 plus 2% of the
not excess
over $8,650............ over $3,650
Over $8,650 but $136.50 plus 4% of the
not excess
over $13,650........... over $8,650
Over $13,650 but $336.50 plus 6% of the
not excess
over $18,950........... over $13,650
Over $18,950 but $654.50 plus 8% of
not the
over $23,950........... excess
over $18,950
$1,054.50 plus 9.3% of
Over $23,950........... the
excess
over $23,950
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(b) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident, except the
head of a household as defined in Section 17042, a tax as calculated
in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (a) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(c) (1) There shall be imposed for each taxable year upon the
entire taxable income of every resident of this state who is not a
part-year resident for that taxable year, when the resident is the
head of a household, as defined in Section 17042, taxes in the
following amounts and at the following rates upon the amount of
taxable income computed for the taxable year as if the resident were
a resident of the state for the entire taxable year and for all prior
taxable years for carryover items, deferred income, suspended
losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $7,300......... 1% of the taxable
income
Over $7,300 but $73 plus 2% of the
not excess
over $17,300............ over $7,300
Over $17,300 but $273 plus 4% of the
not excess
over $22,300............ over $17,300
Over $22,300 but $473 plus 6% of the
not excess
over $27,600............ over $22,300
Over $27,600 but $791 plus 8% of the
not excess
over $32,600............ over $27,600
$1,191 plus 9.3% of the
Over $32,600............ excess
over $32,600
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(d) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident when the
nonresident or part-year resident is the head of a household, as
defined in Section 17042, a tax as calculated in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (c) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(e) There shall be imposed for each taxable year upon the taxable
income of every estate, trust, or common trust fund taxes equal to
the amount computed under subdivision (a) for an individual having
the same amount of taxable income.
(f) The tax imposed by this part is not a surtax.
(g) (1) Section 1(g) of the Internal Revenue Code, relating to
certain unearned income of children taxed as if parent's income,
shall apply, except as otherwise provided.
(2) Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is
modified, for purposes of this part, by substituting "1 percent" for
"10 percent."
(h) For each taxable year beginning on or after January 1, 1988,
the Franchise Tax Board shall recompute the income tax brackets
prescribed in subdivisions (a) and (c). That computation shall be
made as follows:
(1) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change in
the California Consumer Price Index for all items from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.
(2) The Franchise Tax Board shall do both of the following:
(A) Compute an inflation adjustment factor by adding 100 percent
to the percentage change figure that is furnished pursuant to
paragraph (1) and dividing the result by 100.
(B) Multiply the preceding taxable year income tax brackets by the
inflation adjustment factor determined in subparagraph (A) and round
off the resulting products to the nearest one dollar ($1).
(i) (1) For purposes of this part, the term "taxable income of a
nonresident or part-year resident" includes each of the following:
(A) For any part of the taxable year during which the taxpayer was
a resident of this state (as defined by Section 17014), all items of
gross income and all deductions, regardless of source.
(B) For any part of the taxable year during which the taxpayer was
not a resident of this state, gross income and deductions derived
from sources within this state, determined in accordance with Article
9 of Chapter 3 (commencing with Section 17301) and Chapter 11
(commencing with Section 17951).
(2) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), the amount of any net
operating loss sustained in any taxable year during any part of which
the taxpayer was not a resident of this state shall be limited to
the sum of the following:
(A) The amount of the loss attributable to the part of the taxable
year in which the taxpayer was a resident.
(B) The amount of the loss which, during the part of the taxable
year the taxpayer is not a resident, is attributable to California
source income and deductions allowable in arriving at taxable income
of a nonresident or part-year resident.
(3) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), any carryover items,
deferred income, suspended losses, or suspended deductions shall only
be includable or allowable to the extent that the carryover item,
deferred income, suspended loss, or suspended deduction was derived
from sources within this state, calculated as if the nonresident or
part-year resident, for the portion of the year he or she was a
nonresident, had been a nonresident for all prior years.
17041.5. Notwithstanding any statute, ordinance, regulation, rule
or decision to the contrary, no city, county, city and county,
governmental subdivision, district, public and quasi-public
corporation, municipal corporation, whether incorporated or not or
whether chartered or not, shall levy or collect or cause to be levied
or collected any tax upon the income, or any part thereof, of any
person, resident or nonresident.
This section shall not be construed so as to prohibit the levy or
collection of any otherwise authorized license tax upon a business
measured by or according to gross receipts.
17042. Section 2(b) and (c) of the Internal Revenue Code, relating
to definitions of head of household and certain married individuals
living apart, respectively, shall apply, except as otherwise
provided.
17043. (a) For each taxable year beginning on or after January 1,
2005, in addition to any other taxes imposed by this part, an
additional tax shall be imposed at the rate of 1 percent on that
portion of a taxpayer's taxable income in excess of one million
dollars ($1,000,000).
(b) For purposes of applying Part 10.2 (commencing with Section
18401) of Division 2, the tax imposed under this section shall be
treated as if imposed under Section 17041.
(c) The following shall not apply to the tax imposed by this
section:
(1) The provisions of Section 17039, relating to the allowance of
credits.
(2) The provisions of Section 17041, relating to filing status and
recomputation of the income tax brackets.
(3) The provisions of Section 17045, relating to joint returns.
17045. In the case of a joint return of a husband and wife under
Section 18521, the tax imposed by Section 17041 shall be twice the
tax which would be imposed if the taxable income were cut in half.
For purposes of this section, a return of a surviving spouse (as
defined in Section 17046) shall be treated as a joint return of a
husband and wife.
17046. For purposes of this part, "surviving spouse" has the same
meaning as that term is defined by Section 2(a) of the Internal
Revenue Code.
17048. (a) In lieu of the tax imposed under Section 17041,
individuals with taxable income of such amounts as prescribed by the
Franchise Tax Board, shall compute their taxes under tax tables
prescribed by the Franchise Tax Board. The tax tables shall reflect
the tax imposed under Section 17041 in income progressions of not
less than one hundred dollars ($100), giving effect to the marital or
other status of the individual. For purposes of this part, the tax
imposed by this section shall be treated as tax imposed by Section
17041.
(b) Subdivision (a) shall not apply to any of the following:
(1) An individual to whom subdivision (b) of Section 17504
(relating to the tax on lump-sum distributions) applies for the
taxable year.
(2) An individual making a return under Section 443(a)(1) of the
Internal Revenue Code for a period of less than 12 months on account
of a change in annual accounting period.
(3) An estate or trust.
17049. (a) If an item of income was included in the gross income of
an individual for a preceding taxable year or years because it
appeared that the individual had an unrestricted right to that item,
a deduction is allowable for the taxable year based on the repayment
of the item by the individual during the taxable year, and the amount
of that deduction exceeds three thousand dollars ($3,000), then the
tax imposed by this part for the taxable year on that individual
shall be the lesser of the following:
(1) The tax for the taxable year computed with that deduction.
(2) An amount equal to (A) the tax for the taxable year computed
without that deduction, minus (B) the decrease in tax under this part
for the preceding taxable year or years which would result solely
from the exclusion of the item or portion thereof from the gross
income required to be shown on the California return of that
individual for the preceding taxable year or years.
(b) If the decrease in tax determined under subparagraph (B) of
paragraph (2) of subdivision (a) for the preceding taxable year or
years exceeds the tax imposed for the taxable year, computed without
the deduction, that excess shall be considered to be a payment of tax
on the last day prescribed for the payment of tax for the taxable
year, and shall be refunded or credited in the same manner as if it
were an overpayment for the taxable year.
(c) Subdivision (a) does not apply to any deduction allowable with
respect to an item which was included in gross income by reason of
the sale or other disposition of stock in trade of the taxpayer, or
other property of a kind which would properly have been included in
the inventory of the taxpayer if on hand at the close of the prior
taxable year, or property held by the taxpayer primarily for sale to
customers in the ordinary course of his or her trade or business.
(d) If the tax imposed by this part for the taxable year is the
amount determined under paragraph (2) of subdivision (a), then the
deduction referred to in subdivision (a) shall not be taken into
account for any purpose of this part, or Part 10.2 (commencing with
Section 18401), other than this section.
(e) For purposes of determining whether paragraph (1) or paragraph
(2) of subdivision (a) applies, in any case where the exclusion
referred to in subparagraph (B) of paragraph (2) of subdivision (a)
results in a net operating loss or capital loss for the prior taxable
year, or years, that loss shall, for purposes of computing the
decrease in tax for the prior taxable year, or years, under
subparagraph (B) of paragraph (2) of subdivision (a), be carried over
to the same extent and in the same manner as is provided under
Section 17276, 17276.1, 17276.2, 17276.4, 17276.5, or 17276.7, or
Section 1212 of the Internal Revenue Code, as applicable for
California purposes, except that no carryover beyond the taxable year
shall be taken into account.
(f) For purposes of this part, the net operating loss or capital
loss described in subdivision (e) shall, after the application of
paragraph (1) or (2) of subdivision (a) for the taxable year, be
taken into account under Section 17276, 17276.1, 17276.2, 17276.4,
17276.5, or 17276.7, or Section 1212 of the Internal Revenue Code, as
applicable for California purposes, for taxable years after the
taxable year to the same extent and in the same manner as either of
the following:
(A) A net operating loss sustained for the taxable year, if
paragraph (1) of subdivision (a) applied.
(B) A net operating loss or capital loss sustained for the prior
taxable year, or years, if paragraph (2) of subdivision (a) applied.
(g) Regulations promulgated by the Secretary of the Treasury under
Section 1341 of the Internal Revenue Code shall apply, except to the
extent that those regulations conflict with this section, provisions
of this part, or with regulations promulgated by the Franchise Tax
Board.
17052.6. (a) For each taxable year beginning on or after January 1,
2000, there shall be allowed as a credit against the "net tax", as
defined in Section 17039, an amount determined in accordance with
Section 21 of the Internal Revenue Code, except that the amount of
the credit shall be a percentage, as provided in subdivision (b) of
the allowable federal credit without taking into account whether
there is a federal tax liability.
(b) For the purposes of subdivision (a), the percentage of the
allowable federal credit shall be determined as follows:
(1) For taxable years beginning before January 1, 2003:
The percentage
If the adjusted gross income of
is: credit is:
$40,000 or less.............. 63%
Over $40,000 but not over 53%
$70,000......................
Over $70,000 but not over 42%
$100,000.....................
Over $100,000................ 0%
(2) For taxable years beginning on or after January 1, 2003:
The percentage
If the adjusted gross income of
is: credit is:
$40,000 or less.............. 50%
Over $40,000 but not over 43%
$70,000......................
Over $70,000 but not over 34%
$100,000.....................
Over $100,000................ 0%
(c) In the case of a taxpayer whose credits provided under this
section exceed the taxpayer's tax liability computed under this part,
the excess shall be credited against other amounts due, if any, from
the taxpayer and the balance, if any, shall be paid from the Tax
Relief and Refund Account and refunded to the taxpayer.
(d) For purposes of this section, "adjusted gross income" means
adjusted gross income as computed for purposes of paragraph (2) of
subdivision (h) of Section 17024.5.
(e) The credit authorized by this section shall be limited, as
follows:
(1) Employment-related expenses, within the meaning of Section 21
of the Internal Revenue Code, shall be limited to expenses for
household services and care provided in this state.
(2) Earned income, within the meaning of Section 21(d) of the
Internal Revenue Code, shall be limited to earned income subject to
tax under this part. For purposes of this paragraph, compensation
received by a member of the armed forces for active services as a
member of the armed forces, other than pensions or retired pay, shall
be considered earned income subject to tax under this part, whether
or not the member is domiciled in this state.
(f) For purposes of this section, Section 21(b)(1) of the Internal
Revenue Code, relating to a qualifying individual, is modified to
additionally provide that a child, as defined in Section 151(c)(3) of
the Internal Revenue Code, shall be treated, for purposes of Section
152 of the Internal Revenue Code, as applicable for purposes of this
section, as receiving over one-half of his or her support during the
calendar year from the parent having custody for a greater portion
of the calendar year, that parent shall be treated as a "custodial
parent," within the meaning of Section 152(e) of the Internal Revenue
Code, as applicable for purposes of this section, and the child
shall be treated as a qualifying individual under Section 21(b)(1) of
the Internal Revenue Code, as applicable for purposes of this
section, if both of the following apply:
(1) The child receives over one-half of his or her support during
the calendar year from his or her parents who never married each
other and who lived apart at all times during the last six months of
the calendar year.
(2) The child is in the custody of one or both of his or her
parents for more than one-half of the calendar year.
(g) The amendments to this section made by Section 1.5 of Chapter
824 of the Statutes of 2002 shall apply only to taxable years
beginning on or after January 1, 2002.
17052.8. For each taxable year beginning on or after January 1,
1996, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039) an amount determined as follows:
(a) (1) (A) The amount of the credit shall be equal to one-third
of the federal credit computed in accordance with Section 43 of the
Internal Revenue Code.
(B) If a taxpayer elects, under Section 43(e) of the Internal
Revenue Code, not to apply Section 43 for federal tax purposes, this
election is binding and irrevocable for state purposes, and for
purposes of subparagraph (A), the federal credit shall be zero.
(2) "Qualified enhanced oil recovery project" shall include only
projects located within California.
(3) The credit allowed under this subdivision shall not be allowed
to any taxpayer for whom a depletion allowance is not permitted to
be computed under Section 613 of the Internal Revenue Code by reason
of paragraphs (2), (3), or (4) of subsection (d) of Section 613A of
the Internal Revenue Code.
(b) Section 43(d) of the Internal Revenue Code shall apply.
(c) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
for the succeeding 15 years.
(d) In the case where property which qualifies as part of the
taxpayer's "qualified enhanced oil recovery costs" also qualifies for
a credit under any other section in this part, the taxpayer shall
make an election on its original return as to which section applies
to all costs allocable to that item of qualified property. 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.
(e) No deduction shall be allowed as otherwise provided in this
part for that portion of any costs paid or incurred for the taxable
year which is equal to the amount of the credit allowed under this
section attributable to those costs.
(f) The basis of any property for which a credit is allowed under
this section shall be reduced by the amount of the credit
attributable to the property. The basis adjustment shall be made for
the taxable year for which the credit is allowed.
(g) No credit may be claimed under this section with respect to
any amount for which any other credit has been claimed under this
part.
17052.12. For each taxable year beginning on or after January 1,
1987, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039) for the taxable year an amount determined
in accordance with Section 41 of the Internal Revenue Code, except as
follows:
(a) For each taxable year beginning before January 1, 1997, the
reference to "20 percent" in Section 41(a)(1) of the Internal Revenue
Code is modified to read "8 percent."
(b) (1) For each taxable year beginning on or after January 1,
1997, and before January 1, 1999, the reference to "20 percent" in
Section 41(a)(1) of the Internal Revenue Code is modified to read "11
percent."
(2) For each taxable year beginning on or after January 1, 1999,
and before January 1, 2000, the reference to "20 percent" in Section
41(a)(1) of the Internal Revenue Code is modified to read "12
percent."
(3) For each taxable year beginning on or after January 1, 2000,
the reference to "20 percent" in Section 41(a)(1) of the Internal
Revenue Code is modified to read "15 percent."
(c) Section 41(a)(2) of the Internal Revenue Code shall not apply.
(d) "Qualified research" shall include only research conducted in
California.
(e) In the case where the credit allowed under this section
exceeds the "net tax," the excess may be carried over to reduce the
"net tax" in the following year, and succeeding years if necessary,
until the credit has been exhausted.
(f) (1) With respect to any expense paid or incurred after the
operative date of Section 6378, Section 41(b)(1) of the Internal
Revenue Code is modified to exclude from the definition of "qualified
research expense" any amount paid or incurred for tangible personal
property that is eligible for the exemption from sales or use tax
provided by Section 6378.
(2) For each taxable year beginning on or after January 1, 1998,
the reference to "Section 501(a)" in Section 41(b)(3)(C) of the
Internal Revenue Code, relating to contract research expenses, is
modified to read "this part or Part 11 (commencing with Section
23001)."
(g) (1) For each taxable year beginning on or after January 1,
2000:
(A) The reference to "3 percent" in Section 41(c)(4)(A)(i) of the
Internal Revenue Code is modified to read "one and forty-nine
hundredths of one percent."
(B) The reference to "4 percent" in Section 41(c)(4)(A)(ii) of the
Internal Revenue Code is modified to read "one and ninety-eight
hundredths of one percent."
(C) The reference to "5 percent" in Section 41(c)(4)(A)(iii) of
the Internal Revenue Code is modified to read "two and forty-eight
hundredths of one percent."
(2) Section 41(c)(4)(B) shall not apply and in lieu thereof an
election under Section 41(c)(4)(A) of the Internal Revenue Code may
be made for any taxable year of the taxpayer beginning on or after
January 1, 1998. That election shall apply to the taxable year for
which made and all succeeding taxable years unless revoked with the
consent of the Franchise Tax Board.
(3) Section 41(c)(7) of the Internal Revenue Code, relating to
gross receipts, is modified to take into account only those gross
receipts from the sale of property held primarily for sale to
customers in the ordinary course of the taxpayer's trade or business
that is delivered or shipped to a purchaser within this state,
regardless of f.o.b. point or any other condition of the sale.
(4) Section 41(c)(5) of the Internal Revenue Code, relating to
election of alternative simplified credit, shall not apply.
(h) Section 41(h) of the Internal Revenue Code, relating to
termination, shall not apply.
(i) Section 41(g) of the Internal Revenue Code, relating to
special rule for passthrough of credit, is modified by each of the
following:
(1) The last sentence shall not apply.
(2) If the amount determined under Section 41(a) of the Internal
Revenue Code for any taxable year exceeds the limitation of Section
41(g) of the Internal Revenue Code, that amount may be carried over
to other taxable years under the rules of subdivision (e); except
that the limitation of Section 41(g) of the Internal Revenue Code
shall be taken into account in each subsequent taxable year.
(j) Section 41(a)(3) of the Internal Revenue Code shall not apply.
(k) Section 41(b)(3)(D) of the Internal Revenue Code, relating to
amounts paid to eligible small businesses, universities, and federal
laboratories, shall not apply.
(l) Section 41(f)(6), relating to energy research consortium,
shall not apply.
17052.17. (a) For each taxable year beginning on or after January
1, 1988, and before January 1, 2012, there shall be allowed as a
credit against the "net tax" (as defined by Section 17039) an amount
equal to the amount determined in subdivision (b).
(b) (1) The amount of the credit allowed by this section shall be
30 percent of any of the following:
(A) The cost paid or incurred by the taxpayer on or after
September 23, 1988, for the startup expenses of establishing a child
care program or constructing a child care facility in California, to
be used primarily by the children of the taxpayer's employees.
(B) For each taxable year beginning on or after January 1, 1993,
the cost paid or incurred by the taxpayer for the startup expenses of
establishing a child care program or constructing a child care
facility in California, to be used primarily by the children of
employees of tenants leasing commercial or office space in a building
owned by the taxpayer.
(C) The cost paid or incurred by the taxpayer on or after
September 23, 1988, for contributions to California child care
information and referral services, including, but not limited to,
those that identify local child care services, offer information
describing these resources to the taxpayer's employees, and make
referrals of the taxpayer's employees to child care services where
there are vacancies.
In the case of a child care facility established by two or more
taxpayers, the credit shall be allowed to each taxpayer if the
facility is to be used primarily by the children of the employees of
each of the taxpayers or the children of the employees of the tenants
of each of the taxpayers.
(2) The amount of the credit allowed by this section shall not
exceed fifty thousand dollars ($50,000) for any taxable year.
(c) For purposes of this section, "startup expenses" include, but
are not limited to, feasibility studies, site preparation, and
construction, renovation or acquisition of facilities for purposes of
establishing or expanding onsite or nearsite centers by one or more
employers or one or more building owners leasing space to employers.
(d) If two or more taxpayers share in the costs eligible for the
credit provided by this section, each taxpayer shall be eligible to
receive a tax credit with respect to his, her, or its respective
share of the costs paid or incurred.
(e) (1) In the case where the credit allowed and limited under
subdivision (b) exceeds the "net tax," the excess may be carried over
to reduce the "net tax" in the following year, and succeeding years
if necessary, until the credit has been exhausted. However, the
excess from any one year shall not exceed fifty thousand dollars
($50,000).
(2) If the credit carryovers from preceding taxable years allowed
under paragraph (1) plus the credit allowed for the taxable year
under subdivision (b) would exceed an aggregate total of fifty
thousand dollars ($50,000), then the credit allowed to reduce the
"net tax" under this section for the taxable year shall be limited to
fifty thousand dollars ($50,000) and the amount in excess of the
fifty thousand dollar ($50,000) limit may be carried over and applied
against the "net tax" in the following year, and succeeding years if
necessary, in an amount which, when added to the credit allowed
under subdivision (b) for that succeeding taxable year, does not
exceed fifty thousand dollars ($50,000).
(f) No deduction shall be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year which is equal to the amount of the credit allowed under this
section attributable to those expenses.
(g) In lieu of claiming the tax credit provided by this section,
the taxpayer may elect to take depreciation pursuant to Section
17250. In addition, the taxpayer may take depreciation pursuant to
that section for the cost of a facility in excess of the amount of
the tax credit claimed under this section.
(h) The basis for any child care facility for which a credit is
allowed shall be reduced by the amount of the credit attributable to
the facility. The basis adjustment shall be made for the taxable year
for which the credit is allowed.
(i) No credit shall be allowed under subparagraph (B) of paragraph
(1) of subdivision (b) in the case of any taxpayer that is required
by any local ordinance or regulation to provide a child care
facility.
(j) (1) In order to be eligible for the credit allowed under
subparagraph (A) or (B) of paragraph (1) of subdivision (b), the
taxpayer shall submit to the Franchise Tax Board upon request a
statement certifying that the costs for which the credit is claimed
are incurred with respect to the startup expenses of establishing a
child care program or constructing a child care facility in
California to be used primarily by the children of the taxpayer's
employees or the children of the employees of tenants leasing
commercial or office space in a building owned by the taxpayer and
which will be in operation for at least 60 consecutive months after
completion.
(2) If the child care center for which a credit is claimed
pursuant to this section is disposed of or ceases to operate within
60 months after completion, that portion of the credit claimed which
represents the remaining portion of the 60-month period shall be
added to the taxpayer's tax liability in the taxable year of that
disposition or nonuse.
(k) In order to be allowed the credit under subparagraph (A) or
(B) of paragraph (1) of subdivision (b), the taxpayer shall indicate,
in the form and manner prescribed by the Franchise Tax Board, the
number of children that the child care program or facility will be
able to legally accommodate.
(l) On or before January 1, 2011, the Franchise Tax Board shall
submit to the Legislature a report on the following:
(1) The dollar amount of credits claimed annually.
(2) The number of child care facilities established or constructed
by taxpayers claiming the credit.
(3) The number of children served by these facilities.
(m) This section shall remain in effect only until December 1,
2012, and as of that date is repealed.
17052.18. (a) For each taxable year beginning on or after January
1, 1995, and before January 1, 2012, there shall be allowed as a
credit against the "net tax" (as defined by Section 17039) an amount
equal to the amount determined in subdivision (b).
(b) (1) The amount of the credit allowed by this section shall be
30 percent of the cost paid or incurred by the taxpayer for
contributions to a qualified care plan made on behalf of any
qualified dependent of the taxpayer's qualified employee.
(2) The amount of the credit allowed by this section in any
taxable year shall not exceed three hundred sixty dollars ($360) for
each qualified dependent.
(c) For purposes of this section:
(1) "Qualified care plan" means a plan providing qualified care.
(2) "Qualified care" includes, but is not limited to, onsite
service, center-based service, in-home care or home-provider care,
and a dependent care center as defined by Section 21(b)(2)(D) of the
Internal Revenue Code that is a specialized center with respect to
short-term illnesses of an employee's dependents. "Qualified care"
must be provided in this state under the authority of a license when
required by California law.
(3) "Specialized center" means a facility that provides care to
mildly ill children and that may do all of the following:
(A) Be staffed by pediatric nurses and day care workers.
(B) Admit children suffering from common childhood ailments
(including colds, flu, and chickenpox).
(C) Make special arrangements for well children with minor
problems associated with diabetes, asthma, breaks or sprains, and
recuperation from surgery.
(D) Separate children according to their illness and symptoms in
order to protect them from cross-infection.
(4) "Contributions" include direct payments to child care programs
or providers. "Contributions" do not include amounts contributed to
a qualified care plan pursuant to a salary reduction agreement to
provide benefits under a dependent care assistance program within the
meaning of Section 129 of the Internal Revenue Code, as applicable,
for purposes of Part 11 (commencing with Section 23001) and this
part.
(5) "Qualified employee" means any employee of the taxpayer who is
performing services for the taxpayer in this state, within the
meaning of Section 25133, during the period in which the qualified
care is performed.
(6) "Employee" includes an individual who is an employee within
the meaning of Section 401(c)(1) of the Internal Revenue Code
(relating to self-employed individuals).
(7) "Qualified dependent" means any dependent of a qualified
employee who is under the age of 12 years.
(d) If an employer makes contributions to a qualified care plan
and also collects fees from parents to support a child care facility
owned and operated by the employer, no credit shall be allowed under
this section for contributions in the amount, if any, by which the
sum of the contributions and fees exceed the total cost of providing
care. The Franchise Tax Board may require information about fees
collected from parents of children.
(e) If the duration of the child care received is less than 42
weeks, the employer shall claim a prorated portion of the allowable
credit. The employer shall prorate the credit using the ratio of the
number of weeks of care received divided by 42 weeks.
(f) If the credit allowed by this section exceeds the "net tax,"
the excess may be carried over to reduce the "net tax" in the
following year, and succeeding years if necessary until the credit
has been exhausted.
(g) The credit shall not be available to an employer if the care
provided on behalf of an employee is provided by an individual who:
(1) Qualifies as a dependent of that employee or that employee's
spouse under subdivision (d) of Section 17054.
(2) Is (within the meaning of Section 17056) a son, stepson,
daughter, or stepdaughter of that employee and is under the age of 19
at the close of that taxable year.
(h) The contributions to a qualified care plan shall not
discriminate in favor of employees who are officers, owners, or
highly compensated, or their dependents.
(i) No deduction shall be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year that is equal to the amount of the credit allowed under this
section.
(j) If the credit is taken by an employer for contributions to a
qualified care plan that is used at a facility owned by the employer,
the basis of that facility shall be reduced by the amount of the
credit. The basis adjustment shall be made for the taxable year for
which the credit is allowed.
(k) In order to be allowed the credit authorized under this
section the taxpayer shall indicate, in the form and manner
prescribed by the Franchise Tax Board, the number of children of
employers served by the qualified child care plan.
(l) On or before January 1, 2011, the Franchise Tax Board shall
submit to the Legislature a report on the following:
(1) The dollar amount of credits claimed annually.
(2) The number of children of employees served by the qualified
child care plan for which the taxpayer claimed a credit.
(m) This section shall remain in effect only until December 1,
2012, and as of that date is repealed.
17052.25. (a) For each taxable year beginning on or after January
1, 1994, there shall be allowed as a credit against the "net tax," as
defined in Section 17039, an amount equal to 50 percent of the costs
paid or incurred by a taxpayer for the adoption of any minor child
who is a citizen or legal resident of the United States and was in
the custody of a public agency of either this state or a political
subdivision of this state. The credit shall not exceed two thousand
five hundred dollars ($2,500) per minor child.
(b) "Costs" eligible for the credit pursuant to subdivision (a)
shall include the following:
(1) Fees for required services of either the Department of Social
Services or a licensed adoption agency.
(2) Travel and related expenses for the adoptive family that are
directly related to the adoption process.
(3) Medical fees and expenses that are not reimbursed by insurance
and are directly related to the adoption process.
(c) The credit authorized by this section shall be claimed for the
taxable year in which the decree or order of adoption is entered
pursuant to Section 8612 of the Family Code. However, the allowable
credit claimed may include any costs of that adoption paid or
incurred in any prior taxable year.
(d) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding years if necessary, until the
total credit of two thousand five hundred dollars ($2,500) per minor
child is exhausted.
(e) Any deduction otherwise allowed under this part for any amount
paid or incurred by the taxpayer upon which the credit is based
shall be reduced by the amount of the credit allowed under this
section.
17053.5. (a) (1) For a qualified renter, there shall be allowed a
credit against his or her "net tax," as defined in Section 17039. The
amount of the credit shall be as follows:
(A) For married couples filing joint returns, heads of household,
and surviving spouses, as defined in Section 17046, the credit shall
be equal to one hundred twenty dollars ($120) if adjusted gross
income is fifty thousand dollars ($50,000) or less.
(B) For other individuals, the credit shall be equal to sixty
dollars ($60) if adjusted gross income is twenty-five thousand
dollars ($25,000) or less.
(2) Except as provided in subdivision (b), a husband and wife
shall receive but one credit under this section. If the husband and
wife file separate returns, the credit may be taken by either or
equally divided between them, except as follows:
(A) If one spouse was a resident for the entire taxable year and
the other spouse was a nonresident for part or all of the taxable
year, the resident spouse shall be allowed one-half the credit
allowed to married persons and the nonresident spouse shall be
permitted one-half the credit allowed to married persons, prorated as
provided in subdivision (e).
(B) If both spouses were nonresidents for part of the taxable
year, the credit allowed to married persons shall be divided equally
between them subject to the proration provided in subdivision (e).
(b) For a husband and wife, if each spouse maintained a separate
place of residence and resided in this state during the entire
taxable year, each spouse will be allowed one-half the full credit
allowed to married persons provided in subdivision (a).
(c) For purposes of this section, a "qualified renter" means an
individual who satisfies both of the following:
(1) Was a resident of this state, as defined in Section 17014.
(2) Rented and occupied premises in this state which constituted
his or her principal place of residence during at least 50 percent of
the taxable year.
(d) "Qualified renter" does not include any of the following:
(1) An individual who for more than 50 percent of the taxable year
rented and occupied premises that were exempt from property taxes,
except that an individual, otherwise qualified, is deemed a qualified
renter if he or she or his or her landlord pays possessory interest
taxes, or the owner of those premises makes payments in lieu of
property taxes that are substantially equivalent to property taxes
paid on properties of comparable market value.
(2) An individual whose principal place of residence for more than
50 percent of the taxable year is with another person who claimed
that individual as a dependent for income tax purposes.
(3) An individual who has been granted or whose spouse has been
granted the homeowners' property tax exemption during the taxable
year. This paragraph does not apply to an individual whose spouse has
been granted the homeowners' property tax exemption if each spouse
maintained a separate residence for the entire taxable year.
(e) An otherwise qualified renter who is a nonresident for any
portion of the taxable year shall claim the credits set forth in
subdivision (a) at the rate of one-twelfth of those credits for each
full month that individual resided within this state during the
taxable year.
(f) A person claiming the credit provided in this section shall,
as part of that claim, and under penalty of perjury, furnish that
information as the Franchise Tax Board prescribes on a form supplied
by the board.
(g) The credit provided in this section shall be claimed on
returns in the form as the Franchise Tax Board may from time to time
prescribe.
(h) For purposes of this section, "premises" means a house or a
dwelling unit used to provide living accommodations in a building or
structure and the land incidental thereto, but does not include land
only, unless the dwelling unit is a mobilehome. The credit is not
allowed for any taxable year for the rental of land upon which a
mobilehome is located if the mobilehome has been granted a homeowners'
exemption under Section 218 in that year.
(i) This section shall become operative on January 1, 1998, and
applies to any taxable year beginning on or after January 1, 1998.
(j) For each taxable year beginning on or after January 1, 1999,
the Franchise Tax Board shall recompute the adjusted gross income
amounts set forth in subdivision (a). The computation shall be made
as follows:
(1) The Department of Industrial Relations shall transmit annually
to the Franchise Tax Board the percentage change in the California
Consumer Price Index for all items from June of the prior calendar
year to June of the current year, no later than August 1 of the
current calendar year.
(2) The Franchise Tax Board shall compute an inflation adjustment
factor by adding 100 percent to the portion of the percentage change
figure which is furnished pursuant to paragraph (1) and dividing the
result by 100.
(3) The Franchise Tax Board shall multiply the amount in
subparagraph (B) of paragraph (1) of subdivision (d) for the
preceding taxable year by the inflation adjustment factor determined
in paragraph (2), and round off the resulting products to the nearest
one dollar ($1).
(4) In computing the amounts pursuant to this subdivision, the
amounts provided in subparagraph (A) of paragraph (1) of subdivision
(a) shall be twice the amount provided in subparagraph (B) of
paragraph (1) of subdivision (a).
17053.6. (a) There shall be allowed as a credit against the "net
tax" (as defined by Section 17039) an amount equal to 10 percent of
the amount of wages paid or incurred during the taxable year to each
prisoner who is employed in a joint venture program established
pursuant to Article 1.5 of Chapter 5 of Title 1 of Part 3 of the
Penal Code, through agreement with the Director of Corrections.
(b) The Department of Corrections shall forward annually to the
Franchise Tax Board a list of all employers certified by the
Department of Corrections as active participants in a joint venture
program pursuant to Article 1.5 (commencing with Section 2717.1) of
Chapter 5 of Title 1 of Part 3 of the Penal Code. The list shall
include the certified participant's federal employer identification
number.
17053.7. (a) There shall be allowed as a credit against the "net
tax" (as defined by Section 17039) an amount equal to 10 percent of
the amount of wages paid to each employee who is certified by the
Employment Development Department to meet the requirements of Section
328 of the Unemployment Insurance Code.
The credit under this section shall not apply to an individual
unless, on or before the day on which that individual begins work for
the employer, the employer:
(1) Has received a certification from the Employment Development
Department, or
(2) Has requested in writing that certification from the
Employment Development Department.
For the purposes of this subdivision, if on or before the day on
which the individual begins work for the employer, the individual has
received from the Employment Development Department a written
preliminary determination that he or she is a member of a targeted
group, then the requirement of paragraph (1) or (2) shall be
applicable on or before the fifth day on which the individual begins
work for the employer.
(b) The credit under this section shall not apply to wages paid in
excess of three thousand dollars ($3,000) during a taxable year by a
taxpayer to the same individual. With respect to each qualified
employee, the aggregate credit under this section shall not exceed
six hundred dollars ($600).
(c) The credit under this section shall not apply to wages paid to
an individual:
(1) Who bears any of the relationships described in paragraphs (1)
to (8), inclusive, of Section 152(a) of the Internal Revenue Code to
the taxpayer; or
(2) Who, if the taxpayer is an estate or trust, is a grantor,
beneficiary, or fiduciary of the estate or trust, or is an individual
who bears any of the relationships described in paragraphs (1) to
(8), inclusive, of Section 152(a) of the Internal Revenue Code to a
grantor, beneficiary, or fiduciary of the estate or trust; or
(3) Who is a dependent (as described in Section 152(a)(9) of the
Internal Revenue Code) of the taxpayer, or, if the taxpayer is an
estate or trust, of a grantor, beneficiary, or a fiduciary of the
estate or trust.
(d) The credit under this section shall not apply to wages paid to
an individual if, prior to the hiring date of that individual, that
individual has been employed by the employer at any time during which
he or she was not certified by the Employment Development Department
to meet the requirements of Section 328 of the Unemployment
Insurance Code.
(e) If the certification of an employment has been revoked
pursuant to subdivision (c) of Section 328 of the Unemployment
Insurance Code, the credit under this section shall not apply to
wages paid by the employer after the date on which notice of
revocation is received by the employer.
(f) The credit under this section shall be in addition to any
deduction under this part to which the taxpayer may be entitled, if
any.
(g) The credit provided by this section shall be applied to wages
paid to each qualifying employee during the 24-month period beginning
on the date the employee begins working for the taxpayer.
(h) (1) A taxpayer may elect to have this section not apply for
any taxable year.
(2) An election under paragraph (1) for any taxable year may be
made (or revoked) at any time before the expiration of the four-year
period beginning on the last date prescribed by law for filing the
return for that taxable year (determined without regard to
extensions).
(3) An election under paragraph (1) (or revocation thereof) shall
be made in any manner which the Franchise Tax Board may prescribe.
(i) (1) In the case of a successor employer referred to in Section
3306(b)(1) of the Internal Revenue Code, the determination of the
amount of the credit under this section with respect to wages paid by
that successor employer shall be made in the same manner as if those
wages were paid by the predecessor employer referred to in that
section.
(2) No credit shall be determined under this section with respect
to remuneration paid by an employer to an employee for services
performed by that employee for another person, unless the amount
reasonably expected to be received by the employer for those services
from that other person exceeds the remuneration paid by the employer
to that employee for those services.
(j) The term "wages" shall not include either of the following:
(1) Payments defined in Section 51(c)(3) of the Internal Revenue
Code, relating to payments for services during labor disputes.
(2) Any amounts paid or incurred to an individual who begins work
for the employer after December 31, 1993.
17053.12. (a) In the case of a taxpayer who transports any
agricultural product donated in accordance with Chapter 5 (commencing
with Section 58501) of Part 1 of Division 21 of the Food and
Agricultural Code, for taxable years beginning on or after January 1,
1996, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039), an amount equal to 50 percent of the
transportation costs paid or incurred by the taxpayer in connection
with the transportation of that donated agricultural product.
(b) If any credit allowed by this section is claimed by the
taxpayer, any deduction otherwise allowed under this part for that
amount of the cost paid or incurred by the taxpayer which is eligible
for the credit that is claimed shall be reduced by the amount of the
credit allowed.
(c) Upon delivery of the donated agricultural product by a
taxpayer authorized to claim a credit pursuant to subdivision (a),
the nonprofit charitable organization shall provide a certificate to
the taxpayer who transported the agricultural product. The
certificate shall contain a statement signed and dated by a person
authorized by that organization that the product is donated under
Chapter 5 (commencing with Section 58501) of Part 1 of Division 21 of
the Food and Agricultural Code. The certificate shall also contain
the following information: the type and quantity of product donated,
the distance transported, the name of the transporter, the name of
the taxpayer donor, and the name and address of the donee. Upon the
request of the Franchise Tax Board, the taxpayer shall provide a copy
of the certification to the Franchise Tax Board.
(d) In the case where any credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding years if necessary, until the
credit has been exhausted.
17053.30. (a) There shall be allowed as a credit against the "net
tax," as defined in Section 17039, an amount equal to 55 percent of
the fair market value of any qualified contribution made on or after
January 1, 2000, and not later than June 30, 2008, and on or after
January 1, 2010, and not later than June 30, 2015, by the taxpayer
during the taxable year to the state, any local government, or any
designated nonprofit organization, pursuant to Division 28
(commencing with Section 37000) of the Public Resources Code.
(b) For purposes of this section, "qualified contribution" means a
contribution of property, as defined in Section 37002 of the Public
Resources Code, that has been approved for acceptance by the Wildlife
Conservation Board pursuant to Division 28 (commencing with Section
37000) of the Public Resources Code.
(c) In the case of any passthrough entity, the fair market value
of any qualified contribution approved for acceptance under Division
28 (commencing with Section 37000) of the Public Resources Code shall
be passed through to the partners or shareholders of the passthrough
entity in accordance with their interest in the passthrough entity
as of the date of the qualified contribution. For purposes of this
subdivision, the term "passthrough entity" means any partnership, "S"
corporation, or limited liability company treated as a partnership.
(d) If the credit allowed by this section exceeds the "net tax,"
the excess may be carried over to reduce the "net tax" in the
following year, and the succeeding seven years if necessary, until
the credit is exhausted.
(e) This credit shall be in lieu of any other credit or deduction
which the taxpayer may otherwise claim pursuant to this part with
respect to the property or any interest therein that is contributed.
17053.33. (a) For each taxable year beginning on or after January
1, 1998, there shall be allowed as a credit against the "net tax" (as
defined in Section 17039) for the taxable year an amount equal to
the sales or use tax paid or incurred during the taxable year by the
qualified taxpayer in connection with the qualified taxpayer's
purchase of qualified property.
(b) For purposes of this section:
(1) "Qualified property" means property that meets all of the
following requirements:
(A) Is any of the following:
(i) Machinery and machinery parts used for fabricating,
processing, assembling, and manufacturing.
(ii) Machinery and machinery parts used for the production of
renewable energy resources.
(iii) Machinery and machinery parts used for either of the
following:
(I) Air pollution control mechanisms.
(II) Water pollution control mechanisms.
(iv) Data processing and communications equipment, such as
computers, computer-automated drafting systems, copy machines,
telephone systems, and faxes.
(v) Motion picture manufacturing equipment central to production
and post production, such as cameras, audio recorders, and digital
image and sound processing equipment.
(B) The total cost of qualified property purchased and placed in
service in any taxable year that may be taken into account by any
qualified taxpayer for purposes of claiming this credit shall not
exceed one million dollars ($1,000,000).
(C) The qualified property is used by the qualified taxpayer
exclusively in a targeted tax area.
(D) The qualified property is purchased and placed in service
before the date the targeted tax area designation expires, is
revoked, is no longer binding, or becomes inoperative.
(2) (A) "Qualified taxpayer" means a person or entity that meets
both of the following:
(i) 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.
(ii) 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 States Office of Management and Budget, 1987 edition.
(B) 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 credit under this section or
Section 23633 shall be allowed to the pass-through entity and passed
through to the partners or shareholders in accordance with applicable
provisions of this part or Part 11 (commencing with Section 23001).
For purposes of this subparagraph, the term "pass-through entity"
means any partnership or S corporation.
(3) "Targeted tax area" means the area designated pursuant to
Chapter 12.93 (commencing with Section 7097) of Division 7 of Title 1
of the Government Code.
(c) If the qualified taxpayer is allowed a credit for qualified
property pursuant to this section, only one credit shall be allowed
to the taxpayer under this part with respect to that qualified
property.
(d) If the qualified taxpayer has purchased property upon which a
use tax has been paid or incurred, the credit provided by this
section shall be allowed only if qualified property of a comparable
quality and price is not timely available for purchase in this state.
(e) In the case where the credit otherwise allowed under this
section exceeds the "net tax" for the taxable year, that portion of
the credit that exceeds the "net tax" may be carried over and added
to the credit, if any, in the following year, and succeeding years if
necessary, until the credit is exhausted. The credit shall be
applied first to the earliest taxable years possible.
(f) Any qualified taxpayer who elects to be subject to this
section shall not be entitled to increase the basis of the qualified
property as otherwise required by Section 164(a) of the Internal
Revenue Code with respect to sales or use tax paid or incurred in
connection with the qualified taxpayer's purchase of qualified
property.
(g) (1) The amount of the credit otherwise allowed under this
section and Section 17053.34, including any credit carryover from
prior years, that may reduce the "net tax" for the taxable year shall
not exceed the amount of tax that would be imposed on the qualified
taxpayer's business income attributable to the targeted tax area
determined as if that attributable income represented all of the
income of the qualified taxpayer subject to tax under this part.
(2) Attributable income shall be that portion of the taxpayer's
California source business income that is apportioned to the targeted
tax area . For that purpose, the taxpayer's business income
attributable to sources in this state first shall be determined in
accordance with Chapter 17 (commencing with Section 25101) of Part
11. That business income shall be further apportioned to the targeted
tax area in accordance with Article 2 (commencing with Section
25120) of Chapter 17 of Part 11, modified for purposes of this
section in accordance with paragraph (3).
(3) Business income shall be apportioned to the targeted tax area
by multiplying the total California business income of the taxpayer
by a fraction, the numerator of which is the property factor plus the
payroll factor, and the denominator of which is two. For purposes of
this paragraph:
(A) The property factor is a fraction, the numerator of which is
the average value of the taxpayer's real and tangible personal
property owned or rented and used in the targeted tax area during the
taxable year, and the denominator of which is the average value of
all the taxpayer's real and tangible personal property owned or
rented and used in this state during the taxable year.
(B) The payroll factor is a fraction, the numerator of which is
the total amount paid by the taxpayer in the targeted tax area during
the taxable year for compensation, and the denominator of which is
the total compensation paid by the taxpayer in this state during the
taxable year.
(4) The portion of any credit remaining, if any, after application
of this subdivision, shall be carried over to succeeding taxable
years, as if it were an amount exceeding the "net tax" for the
taxable year, as provided in subdivision (e).
(5) In the event that a credit carryover is allowable under
subdivision (e) for any taxable year after the targeted tax area
designation has expired, has been revoked, is no longer binding, or
has become inoperative, the targeted tax area shall be deemed to
remain in existence for purposes of computing the limitation
specified in this subdivision.
(h) The amendments made to this section by the act adding this
subdivision shall apply to taxable years beginning on or after
January 1, 1998.
17053.34. (a) For each taxable year beginning on or after January
1, 1998, there shall be allowed a credit against the "net tax" (as
defined in Section 17039) to a qualified taxpayer who employs a
qualified employee in a targeted tax area during the taxable year.
The credit shall be equal to the sum of each of the following:
(1) Fifty percent of qualified wages in the first year of
employment.
(2) Forty percent of qualified wages in the second year of
employment.
(3) Thirty percent of qualified wages in the third year of
employment.
(4) Twenty percent of qualified wages in the fourth year of
employment.
(5) Ten percent of qualified wages in the fifth year of
employment.
(b) For purposes of this section:
(1) "Qualified wages" means:
(A) That portion of wages paid or incurred by the qualified
taxpayer during the taxable year to qualified employees that does not
exceed 150 percent of the minimum wage.
(B) Wages received during the 60-month period beginning with the
first day the employee commences employment with the qualified
taxpayer. Reemployment in connection with any increase, including a
regularly occurring seasonal increase, in the trade or business
operations of the qualified taxpayer does not constitute commencement
of employment for purposes of this section.
(C) Qualified wages do not include any wages paid or incurred by
the qualified taxpayer on or after the targeted tax area expiration
date. However, wages paid or incurred with respect to qualified
employees who are employed by the qualified taxpayer within the
targeted tax area within the 60-month period prior to the targeted
tax area expiration date shall continue to qualify for the credit
under this section after the targeted tax area expiration date, in
accordance with all provisions of this section applied as if the
targeted tax area designation were still in existence and binding.
(2) "Minimum wage" means the wage established by the Industrial
Welfare Commission as provided for in Chapter 1 (commencing with
Section 1171) of Part 4 of Division 2 of the Labor Code.
(3) "Targeted tax area expiration date" means the date the
targeted tax area designation expires, is revoked, is no longer
binding, or becomes inoperative.
(4) (A) "Qualified employee" means an individual who meets all of
the following requirements:
(i) At least 90 percent of his or her services for the qualified
taxpayer during the taxable year are directly related to the conduct
of the qualified taxpayer's trade or business located in a targeted
tax area.
(ii) Performs at least 50 percent of his or her services for the
qualified taxpayer during the taxable year in a targeted tax area.
(iii) Is hired by the qualified taxpayer after the date of
original designation of the area in which services were performed as
a targeted tax area.
(iv) Is any of the following:
(I) Immediately preceding the qualified employee's commencement of
employment with the qualified taxpayer, was a person eligible for
services under the federal Job Training Partnership Act (29 U.S.C.
Sec. 1501 et seq.), or its successor, who is receiving, or is
eligible to receive, subsidized employment, training, or services
funded by the federal Job Training Partnership Act, or its successor.
(II) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was a person eligible to
be a voluntary or mandatory registrant under the Greater Avenues for
Independence Act of 1985 (GAIN) provided for pursuant to Article 3.2
(commencing with Section 11320) of Chapter 2 of Part 3 of Division 9
of the Welfare and Institutions Code, or its successor.
(III) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was an economically
disadvantaged individual 14 years of age or older.
(IV) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was a dislocated worker
who meets any of the following:
(aa) Has b
17041. (a) (1) There shall be imposed for each taxable year upon
the entire taxable income of every resident of this state who is not
a part-year resident, except the head of a household as defined in
Section 17042, taxes in the following amounts and at the following
rates upon the amount of taxable income computed for the taxable year
as if the resident were a resident of this state for the entire
taxable year and for all prior taxable years for any carryover items,
deferred income, suspended losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $3,650........ 1% of the taxable income
Over $3,650 but $36.50 plus 2% of the
not excess
over $8,650............ over $3,650
Over $8,650 but $136.50 plus 4% of the
not excess
over $13,650........... over $8,650
Over $13,650 but $336.50 plus 6% of the
not excess
over $18,950........... over $13,650
Over $18,950 but $654.50 plus 8% of
not the
over $23,950........... excess
over $18,950
$1,054.50 plus 9.3% of
Over $23,950........... the
excess
over $23,950
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(b) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident, except the
head of a household as defined in Section 17042, a tax as calculated
in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (a) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(c) (1) There shall be imposed for each taxable year upon the
entire taxable income of every resident of this state who is not a
part-year resident for that taxable year, when the resident is the
head of a household, as defined in Section 17042, taxes in the
following amounts and at the following rates upon the amount of
taxable income computed for the taxable year as if the resident were
a resident of the state for the entire taxable year and for all prior
taxable years for carryover items, deferred income, suspended
losses, or suspended deductions:
If the taxable income The tax is:
is:
Not over $7,300......... 1% of the taxable
income
Over $7,300 but $73 plus 2% of the
not excess
over $17,300............ over $7,300
Over $17,300 but $273 plus 4% of the
not excess
over $22,300............ over $17,300
Over $22,300 but $473 plus 6% of the
not excess
over $27,600............ over $22,300
Over $27,600 but $791 plus 8% of the
not excess
over $32,600............ over $27,600
$1,191 plus 9.3% of the
Over $32,600............ excess
over $32,600
(2) For taxable years beginning on or after January 1, 2009, and
before January 1, 2011, the percentages specified in the table in
paragraph (1) shall be increased by adding 0.25 percent to each
percentage.
(d) (1) There shall be imposed for each taxable year upon the
taxable income of every nonresident or part-year resident when the
nonresident or part-year resident is the head of a household, as
defined in Section 17042, a tax as calculated in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by
multiplying the "taxable income of a nonresident or part-year
resident," as defined in subdivision (i), by a rate (expressed as a
percentage) equal to the tax computed under subdivision (c) on the
entire taxable income of the nonresident or part-year resident as if
the nonresident or part-year resident were a resident of this state
for the taxable year and as if the nonresident or part-year resident
were a resident of this state for all prior taxable years for any
carryover items, deferred income, suspended losses, or suspended
deductions, divided by the amount of that income.
(e) There shall be imposed for each taxable year upon the taxable
income of every estate, trust, or common trust fund taxes equal to
the amount computed under subdivision (a) for an individual having
the same amount of taxable income.
(f) The tax imposed by this part is not a surtax.
(g) (1) Section 1(g) of the Internal Revenue Code, relating to
certain unearned income of children taxed as if parent's income,
shall apply, except as otherwise provided.
(2) Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is
modified, for purposes of this part, by substituting "1 percent" for
"10 percent."
(h) For each taxable year beginning on or after January 1, 1988,
the Franchise Tax Board shall recompute the income tax brackets
prescribed in subdivisions (a) and (c). That computation shall be
made as follows:
(1) The California Department of Industrial Relations shall
transmit annually to the Franchise Tax Board the percentage change in
the California Consumer Price Index for all items from June of the
prior calendar year to June of the current calendar year, no later
than August 1 of the current calendar year.
(2) The Franchise Tax Board shall do both of the following:
(A) Compute an inflation adjustment factor by adding 100 percent
to the percentage change figure that is furnished pursuant to
paragraph (1) and dividing the result by 100.
(B) Multiply the preceding taxable year income tax brackets by the
inflation adjustment factor determined in subparagraph (A) and round
off the resulting products to the nearest one dollar ($1).
(i) (1) For purposes of this part, the term "taxable income of a
nonresident or part-year resident" includes each of the following:
(A) For any part of the taxable year during which the taxpayer was
a resident of this state (as defined by Section 17014), all items of
gross income and all deductions, regardless of source.
(B) For any part of the taxable year during which the taxpayer was
not a resident of this state, gross income and deductions derived
from sources within this state, determined in accordance with Article
9 of Chapter 3 (commencing with Section 17301) and Chapter 11
(commencing with Section 17951).
(2) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), the amount of any net
operating loss sustained in any taxable year during any part of which
the taxpayer was not a resident of this state shall be limited to
the sum of the following:
(A) The amount of the loss attributable to the part of the taxable
year in which the taxpayer was a resident.
(B) The amount of the loss which, during the part of the taxable
year the taxpayer is not a resident, is attributable to California
source income and deductions allowable in arriving at taxable income
of a nonresident or part-year resident.
(3) For purposes of computing "taxable income of a nonresident or
part-year resident" under paragraph (1), any carryover items,
deferred income, suspended losses, or suspended deductions shall only
be includable or allowable to the extent that the carryover item,
deferred income, suspended loss, or suspended deduction was derived
from sources within this state, calculated as if the nonresident or
part-year resident, for the portion of the year he or she was a
nonresident, had been a nonresident for all prior years.
17041.5. Notwithstanding any statute, ordinance, regulation, rule
or decision to the contrary, no city, county, city and county,
governmental subdivision, district, public and quasi-public
corporation, municipal corporation, whether incorporated or not or
whether chartered or not, shall levy or collect or cause to be levied
or collected any tax upon the income, or any part thereof, of any
person, resident or nonresident.
This section shall not be construed so as to prohibit the levy or
collection of any otherwise authorized license tax upon a business
measured by or according to gross receipts.
17042. Section 2(b) and (c) of the Internal Revenue Code, relating
to definitions of head of household and certain married individuals
living apart, respectively, shall apply, except as otherwise
provided.
17043. (a) For each taxable year beginning on or after January 1,
2005, in addition to any other taxes imposed by this part, an
additional tax shall be imposed at the rate of 1 percent on that
portion of a taxpayer's taxable income in excess of one million
dollars ($1,000,000).
(b) For purposes of applying Part 10.2 (commencing with Section
18401) of Division 2, the tax imposed under this section shall be
treated as if imposed under Section 17041.
(c) The following shall not apply to the tax imposed by this
section:
(1) The provisions of Section 17039, relating to the allowance of
credits.
(2) The provisions of Section 17041, relating to filing status and
recomputation of the income tax brackets.
(3) The provisions of Section 17045, relating to joint returns.
17045. In the case of a joint return of a husband and wife under
Section 18521, the tax imposed by Section 17041 shall be twice the
tax which would be imposed if the taxable income were cut in half.
For purposes of this section, a return of a surviving spouse (as
defined in Section 17046) shall be treated as a joint return of a
husband and wife.
17046. For purposes of this part, "surviving spouse" has the same
meaning as that term is defined by Section 2(a) of the Internal
Revenue Code.
17048. (a) In lieu of the tax imposed under Section 17041,
individuals with taxable income of such amounts as prescribed by the
Franchise Tax Board, shall compute their taxes under tax tables
prescribed by the Franchise Tax Board. The tax tables shall reflect
the tax imposed under Section 17041 in income progressions of not
less than one hundred dollars ($100), giving effect to the marital or
other status of the individual. For purposes of this part, the tax
imposed by this section shall be treated as tax imposed by Section
17041.
(b) Subdivision (a) shall not apply to any of the following:
(1) An individual to whom subdivision (b) of Section 17504
(relating to the tax on lump-sum distributions) applies for the
taxable year.
(2) An individual making a return under Section 443(a)(1) of the
Internal Revenue Code for a period of less than 12 months on account
of a change in annual accounting period.
(3) An estate or trust.
17049. (a) If an item of income was included in the gross income of
an individual for a preceding taxable year or years because it
appeared that the individual had an unrestricted right to that item,
a deduction is allowable for the taxable year based on the repayment
of the item by the individual during the taxable year, and the amount
of that deduction exceeds three thousand dollars ($3,000), then the
tax imposed by this part for the taxable year on that individual
shall be the lesser of the following:
(1) The tax for the taxable year computed with that deduction.
(2) An amount equal to (A) the tax for the taxable year computed
without that deduction, minus (B) the decrease in tax under this part
for the preceding taxable year or years which would result solely
from the exclusion of the item or portion thereof from the gross
income required to be shown on the California return of that
individual for the preceding taxable year or years.
(b) If the decrease in tax determined under subparagraph (B) of
paragraph (2) of subdivision (a) for the preceding taxable year or
years exceeds the tax imposed for the taxable year, computed without
the deduction, that excess shall be considered to be a payment of tax
on the last day prescribed for the payment of tax for the taxable
year, and shall be refunded or credited in the same manner as if it
were an overpayment for the taxable year.
(c) Subdivision (a) does not apply to any deduction allowable with
respect to an item which was included in gross income by reason of
the sale or other disposition of stock in trade of the taxpayer, or
other property of a kind which would properly have been included in
the inventory of the taxpayer if on hand at the close of the prior
taxable year, or property held by the taxpayer primarily for sale to
customers in the ordinary course of his or her trade or business.
(d) If the tax imposed by this part for the taxable year is the
amount determined under paragraph (2) of subdivision (a), then the
deduction referred to in subdivision (a) shall not be taken into
account for any purpose of this part, or Part 10.2 (commencing with
Section 18401), other than this section.
(e) For purposes of determining whether paragraph (1) or paragraph
(2) of subdivision (a) applies, in any case where the exclusion
referred to in subparagraph (B) of paragraph (2) of subdivision (a)
results in a net operating loss or capital loss for the prior taxable
year, or years, that loss shall, for purposes of computing the
decrease in tax for the prior taxable year, or years, under
subparagraph (B) of paragraph (2) of subdivision (a), be carried over
to the same extent and in the same manner as is provided under
Section 17276, 17276.1, 17276.2, 17276.4, 17276.5, or 17276.7, or
Section 1212 of the Internal Revenue Code, as applicable for
California purposes, except that no carryover beyond the taxable year
shall be taken into account.
(f) For purposes of this part, the net operating loss or capital
loss described in subdivision (e) shall, after the application of
paragraph (1) or (2) of subdivision (a) for the taxable year, be
taken into account under Section 17276, 17276.1, 17276.2, 17276.4,
17276.5, or 17276.7, or Section 1212 of the Internal Revenue Code, as
applicable for California purposes, for taxable years after the
taxable year to the same extent and in the same manner as either of
the following:
(A) A net operating loss sustained for the taxable year, if
paragraph (1) of subdivision (a) applied.
(B) A net operating loss or capital loss sustained for the prior
taxable year, or years, if paragraph (2) of subdivision (a) applied.
(g) Regulations promulgated by the Secretary of the Treasury under
Section 1341 of the Internal Revenue Code shall apply, except to the
extent that those regulations conflict with this section, provisions
of this part, or with regulations promulgated by the Franchise Tax
Board.
17052.6. (a) For each taxable year beginning on or after January 1,
2000, there shall be allowed as a credit against the "net tax", as
defined in Section 17039, an amount determined in accordance with
Section 21 of the Internal Revenue Code, except that the amount of
the credit shall be a percentage, as provided in subdivision (b) of
the allowable federal credit without taking into account whether
there is a federal tax liability.
(b) For the purposes of subdivision (a), the percentage of the
allowable federal credit shall be determined as follows:
(1) For taxable years beginning before January 1, 2003:
The percentage
If the adjusted gross income of
is: credit is:
$40,000 or less.............. 63%
Over $40,000 but not over 53%
$70,000......................
Over $70,000 but not over 42%
$100,000.....................
Over $100,000................ 0%
(2) For taxable years beginning on or after January 1, 2003:
The percentage
If the adjusted gross income of
is: credit is:
$40,000 or less.............. 50%
Over $40,000 but not over 43%
$70,000......................
Over $70,000 but not over 34%
$100,000.....................
Over $100,000................ 0%
(c) In the case of a taxpayer whose credits provided under this
section exceed the taxpayer's tax liability computed under this part,
the excess shall be credited against other amounts due, if any, from
the taxpayer and the balance, if any, shall be paid from the Tax
Relief and Refund Account and refunded to the taxpayer.
(d) For purposes of this section, "adjusted gross income" means
adjusted gross income as computed for purposes of paragraph (2) of
subdivision (h) of Section 17024.5.
(e) The credit authorized by this section shall be limited, as
follows:
(1) Employment-related expenses, within the meaning of Section 21
of the Internal Revenue Code, shall be limited to expenses for
household services and care provided in this state.
(2) Earned income, within the meaning of Section 21(d) of the
Internal Revenue Code, shall be limited to earned income subject to
tax under this part. For purposes of this paragraph, compensation
received by a member of the armed forces for active services as a
member of the armed forces, other than pensions or retired pay, shall
be considered earned income subject to tax under this part, whether
or not the member is domiciled in this state.
(f) For purposes of this section, Section 21(b)(1) of the Internal
Revenue Code, relating to a qualifying individual, is modified to
additionally provide that a child, as defined in Section 151(c)(3) of
the Internal Revenue Code, shall be treated, for purposes of Section
152 of the Internal Revenue Code, as applicable for purposes of this
section, as receiving over one-half of his or her support during the
calendar year from the parent having custody for a greater portion
of the calendar year, that parent shall be treated as a "custodial
parent," within the meaning of Section 152(e) of the Internal Revenue
Code, as applicable for purposes of this section, and the child
shall be treated as a qualifying individual under Section 21(b)(1) of
the Internal Revenue Code, as applicable for purposes of this
section, if both of the following apply:
(1) The child receives over one-half of his or her support during
the calendar year from his or her parents who never married each
other and who lived apart at all times during the last six months of
the calendar year.
(2) The child is in the custody of one or both of his or her
parents for more than one-half of the calendar year.
(g) The amendments to this section made by Section 1.5 of Chapter
824 of the Statutes of 2002 shall apply only to taxable years
beginning on or after January 1, 2002.
17052.8. For each taxable year beginning on or after January 1,
1996, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039) an amount determined as follows:
(a) (1) (A) The amount of the credit shall be equal to one-third
of the federal credit computed in accordance with Section 43 of the
Internal Revenue Code.
(B) If a taxpayer elects, under Section 43(e) of the Internal
Revenue Code, not to apply Section 43 for federal tax purposes, this
election is binding and irrevocable for state purposes, and for
purposes of subparagraph (A), the federal credit shall be zero.
(2) "Qualified enhanced oil recovery project" shall include only
projects located within California.
(3) The credit allowed under this subdivision shall not be allowed
to any taxpayer for whom a depletion allowance is not permitted to
be computed under Section 613 of the Internal Revenue Code by reason
of paragraphs (2), (3), or (4) of subsection (d) of Section 613A of
the Internal Revenue Code.
(b) Section 43(d) of the Internal Revenue Code shall apply.
(c) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
for the succeeding 15 years.
(d) In the case where property which qualifies as part of the
taxpayer's "qualified enhanced oil recovery costs" also qualifies for
a credit under any other section in this part, the taxpayer shall
make an election on its original return as to which section applies
to all costs allocable to that item of qualified property. 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.
(e) No deduction shall be allowed as otherwise provided in this
part for that portion of any costs paid or incurred for the taxable
year which is equal to the amount of the credit allowed under this
section attributable to those costs.
(f) The basis of any property for which a credit is allowed under
this section shall be reduced by the amount of the credit
attributable to the property. The basis adjustment shall be made for
the taxable year for which the credit is allowed.
(g) No credit may be claimed under this section with respect to
any amount for which any other credit has been claimed under this
part.
17052.12. For each taxable year beginning on or after January 1,
1987, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039) for the taxable year an amount determined
in accordance with Section 41 of the Internal Revenue Code, except as
follows:
(a) For each taxable year beginning before January 1, 1997, the
reference to "20 percent" in Section 41(a)(1) of the Internal Revenue
Code is modified to read "8 percent."
(b) (1) For each taxable year beginning on or after January 1,
1997, and before January 1, 1999, the reference to "20 percent" in
Section 41(a)(1) of the Internal Revenue Code is modified to read "11
percent."
(2) For each taxable year beginning on or after January 1, 1999,
and before January 1, 2000, the reference to "20 percent" in Section
41(a)(1) of the Internal Revenue Code is modified to read "12
percent."
(3) For each taxable year beginning on or after January 1, 2000,
the reference to "20 percent" in Section 41(a)(1) of the Internal
Revenue Code is modified to read "15 percent."
(c) Section 41(a)(2) of the Internal Revenue Code shall not apply.
(d) "Qualified research" shall include only research conducted in
California.
(e) In the case where the credit allowed under this section
exceeds the "net tax," the excess may be carried over to reduce the
"net tax" in the following year, and succeeding years if necessary,
until the credit has been exhausted.
(f) (1) With respect to any expense paid or incurred after the
operative date of Section 6378, Section 41(b)(1) of the Internal
Revenue Code is modified to exclude from the definition of "qualified
research expense" any amount paid or incurred for tangible personal
property that is eligible for the exemption from sales or use tax
provided by Section 6378.
(2) For each taxable year beginning on or after January 1, 1998,
the reference to "Section 501(a)" in Section 41(b)(3)(C) of the
Internal Revenue Code, relating to contract research expenses, is
modified to read "this part or Part 11 (commencing with Section
23001)."
(g) (1) For each taxable year beginning on or after January 1,
2000:
(A) The reference to "3 percent" in Section 41(c)(4)(A)(i) of the
Internal Revenue Code is modified to read "one and forty-nine
hundredths of one percent."
(B) The reference to "4 percent" in Section 41(c)(4)(A)(ii) of the
Internal Revenue Code is modified to read "one and ninety-eight
hundredths of one percent."
(C) The reference to "5 percent" in Section 41(c)(4)(A)(iii) of
the Internal Revenue Code is modified to read "two and forty-eight
hundredths of one percent."
(2) Section 41(c)(4)(B) shall not apply and in lieu thereof an
election under Section 41(c)(4)(A) of the Internal Revenue Code may
be made for any taxable year of the taxpayer beginning on or after
January 1, 1998. That election shall apply to the taxable year for
which made and all succeeding taxable years unless revoked with the
consent of the Franchise Tax Board.
(3) Section 41(c)(7) of the Internal Revenue Code, relating to
gross receipts, is modified to take into account only those gross
receipts from the sale of property held primarily for sale to
customers in the ordinary course of the taxpayer's trade or business
that is delivered or shipped to a purchaser within this state,
regardless of f.o.b. point or any other condition of the sale.
(4) Section 41(c)(5) of the Internal Revenue Code, relating to
election of alternative simplified credit, shall not apply.
(h) Section 41(h) of the Internal Revenue Code, relating to
termination, shall not apply.
(i) Section 41(g) of the Internal Revenue Code, relating to
special rule for passthrough of credit, is modified by each of the
following:
(1) The last sentence shall not apply.
(2) If the amount determined under Section 41(a) of the Internal
Revenue Code for any taxable year exceeds the limitation of Section
41(g) of the Internal Revenue Code, that amount may be carried over
to other taxable years under the rules of subdivision (e); except
that the limitation of Section 41(g) of the Internal Revenue Code
shall be taken into account in each subsequent taxable year.
(j) Section 41(a)(3) of the Internal Revenue Code shall not apply.
(k) Section 41(b)(3)(D) of the Internal Revenue Code, relating to
amounts paid to eligible small businesses, universities, and federal
laboratories, shall not apply.
(l) Section 41(f)(6), relating to energy research consortium,
shall not apply.
17052.17. (a) For each taxable year beginning on or after January
1, 1988, and before January 1, 2012, there shall be allowed as a
credit against the "net tax" (as defined by Section 17039) an amount
equal to the amount determined in subdivision (b).
(b) (1) The amount of the credit allowed by this section shall be
30 percent of any of the following:
(A) The cost paid or incurred by the taxpayer on or after
September 23, 1988, for the startup expenses of establishing a child
care program or constructing a child care facility in California, to
be used primarily by the children of the taxpayer's employees.
(B) For each taxable year beginning on or after January 1, 1993,
the cost paid or incurred by the taxpayer for the startup expenses of
establishing a child care program or constructing a child care
facility in California, to be used primarily by the children of
employees of tenants leasing commercial or office space in a building
owned by the taxpayer.
(C) The cost paid or incurred by the taxpayer on or after
September 23, 1988, for contributions to California child care
information and referral services, including, but not limited to,
those that identify local child care services, offer information
describing these resources to the taxpayer's employees, and make
referrals of the taxpayer's employees to child care services where
there are vacancies.
In the case of a child care facility established by two or more
taxpayers, the credit shall be allowed to each taxpayer if the
facility is to be used primarily by the children of the employees of
each of the taxpayers or the children of the employees of the tenants
of each of the taxpayers.
(2) The amount of the credit allowed by this section shall not
exceed fifty thousand dollars ($50,000) for any taxable year.
(c) For purposes of this section, "startup expenses" include, but
are not limited to, feasibility studies, site preparation, and
construction, renovation or acquisition of facilities for purposes of
establishing or expanding onsite or nearsite centers by one or more
employers or one or more building owners leasing space to employers.
(d) If two or more taxpayers share in the costs eligible for the
credit provided by this section, each taxpayer shall be eligible to
receive a tax credit with respect to his, her, or its respective
share of the costs paid or incurred.
(e) (1) In the case where the credit allowed and limited under
subdivision (b) exceeds the "net tax," the excess may be carried over
to reduce the "net tax" in the following year, and succeeding years
if necessary, until the credit has been exhausted. However, the
excess from any one year shall not exceed fifty thousand dollars
($50,000).
(2) If the credit carryovers from preceding taxable years allowed
under paragraph (1) plus the credit allowed for the taxable year
under subdivision (b) would exceed an aggregate total of fifty
thousand dollars ($50,000), then the credit allowed to reduce the
"net tax" under this section for the taxable year shall be limited to
fifty thousand dollars ($50,000) and the amount in excess of the
fifty thousand dollar ($50,000) limit may be carried over and applied
against the "net tax" in the following year, and succeeding years if
necessary, in an amount which, when added to the credit allowed
under subdivision (b) for that succeeding taxable year, does not
exceed fifty thousand dollars ($50,000).
(f) No deduction shall be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year which is equal to the amount of the credit allowed under this
section attributable to those expenses.
(g) In lieu of claiming the tax credit provided by this section,
the taxpayer may elect to take depreciation pursuant to Section
17250. In addition, the taxpayer may take depreciation pursuant to
that section for the cost of a facility in excess of the amount of
the tax credit claimed under this section.
(h) The basis for any child care facility for which a credit is
allowed shall be reduced by the amount of the credit attributable to
the facility. The basis adjustment shall be made for the taxable year
for which the credit is allowed.
(i) No credit shall be allowed under subparagraph (B) of paragraph
(1) of subdivision (b) in the case of any taxpayer that is required
by any local ordinance or regulation to provide a child care
facility.
(j) (1) In order to be eligible for the credit allowed under
subparagraph (A) or (B) of paragraph (1) of subdivision (b), the
taxpayer shall submit to the Franchise Tax Board upon request a
statement certifying that the costs for which the credit is claimed
are incurred with respect to the startup expenses of establishing a
child care program or constructing a child care facility in
California to be used primarily by the children of the taxpayer's
employees or the children of the employees of tenants leasing
commercial or office space in a building owned by the taxpayer and
which will be in operation for at least 60 consecutive months after
completion.
(2) If the child care center for which a credit is claimed
pursuant to this section is disposed of or ceases to operate within
60 months after completion, that portion of the credit claimed which
represents the remaining portion of the 60-month period shall be
added to the taxpayer's tax liability in the taxable year of that
disposition or nonuse.
(k) In order to be allowed the credit under subparagraph (A) or
(B) of paragraph (1) of subdivision (b), the taxpayer shall indicate,
in the form and manner prescribed by the Franchise Tax Board, the
number of children that the child care program or facility will be
able to legally accommodate.
(l) On or before January 1, 2011, the Franchise Tax Board shall
submit to the Legislature a report on the following:
(1) The dollar amount of credits claimed annually.
(2) The number of child care facilities established or constructed
by taxpayers claiming the credit.
(3) The number of children served by these facilities.
(m) This section shall remain in effect only until December 1,
2012, and as of that date is repealed.
17052.18. (a) For each taxable year beginning on or after January
1, 1995, and before January 1, 2012, there shall be allowed as a
credit against the "net tax" (as defined by Section 17039) an amount
equal to the amount determined in subdivision (b).
(b) (1) The amount of the credit allowed by this section shall be
30 percent of the cost paid or incurred by the taxpayer for
contributions to a qualified care plan made on behalf of any
qualified dependent of the taxpayer's qualified employee.
(2) The amount of the credit allowed by this section in any
taxable year shall not exceed three hundred sixty dollars ($360) for
each qualified dependent.
(c) For purposes of this section:
(1) "Qualified care plan" means a plan providing qualified care.
(2) "Qualified care" includes, but is not limited to, onsite
service, center-based service, in-home care or home-provider care,
and a dependent care center as defined by Section 21(b)(2)(D) of the
Internal Revenue Code that is a specialized center with respect to
short-term illnesses of an employee's dependents. "Qualified care"
must be provided in this state under the authority of a license when
required by California law.
(3) "Specialized center" means a facility that provides care to
mildly ill children and that may do all of the following:
(A) Be staffed by pediatric nurses and day care workers.
(B) Admit children suffering from common childhood ailments
(including colds, flu, and chickenpox).
(C) Make special arrangements for well children with minor
problems associated with diabetes, asthma, breaks or sprains, and
recuperation from surgery.
(D) Separate children according to their illness and symptoms in
order to protect them from cross-infection.
(4) "Contributions" include direct payments to child care programs
or providers. "Contributions" do not include amounts contributed to
a qualified care plan pursuant to a salary reduction agreement to
provide benefits under a dependent care assistance program within the
meaning of Section 129 of the Internal Revenue Code, as applicable,
for purposes of Part 11 (commencing with Section 23001) and this
part.
(5) "Qualified employee" means any employee of the taxpayer who is
performing services for the taxpayer in this state, within the
meaning of Section 25133, during the period in which the qualified
care is performed.
(6) "Employee" includes an individual who is an employee within
the meaning of Section 401(c)(1) of the Internal Revenue Code
(relating to self-employed individuals).
(7) "Qualified dependent" means any dependent of a qualified
employee who is under the age of 12 years.
(d) If an employer makes contributions to a qualified care plan
and also collects fees from parents to support a child care facility
owned and operated by the employer, no credit shall be allowed under
this section for contributions in the amount, if any, by which the
sum of the contributions and fees exceed the total cost of providing
care. The Franchise Tax Board may require information about fees
collected from parents of children.
(e) If the duration of the child care received is less than 42
weeks, the employer shall claim a prorated portion of the allowable
credit. The employer shall prorate the credit using the ratio of the
number of weeks of care received divided by 42 weeks.
(f) If the credit allowed by this section exceeds the "net tax,"
the excess may be carried over to reduce the "net tax" in the
following year, and succeeding years if necessary until the credit
has been exhausted.
(g) The credit shall not be available to an employer if the care
provided on behalf of an employee is provided by an individual who:
(1) Qualifies as a dependent of that employee or that employee's
spouse under subdivision (d) of Section 17054.
(2) Is (within the meaning of Section 17056) a son, stepson,
daughter, or stepdaughter of that employee and is under the age of 19
at the close of that taxable year.
(h) The contributions to a qualified care plan shall not
discriminate in favor of employees who are officers, owners, or
highly compensated, or their dependents.
(i) No deduction shall be allowed as otherwise provided in this
part for that portion of expenses paid or incurred for the taxable
year that is equal to the amount of the credit allowed under this
section.
(j) If the credit is taken by an employer for contributions to a
qualified care plan that is used at a facility owned by the employer,
the basis of that facility shall be reduced by the amount of the
credit. The basis adjustment shall be made for the taxable year for
which the credit is allowed.
(k) In order to be allowed the credit authorized under this
section the taxpayer shall indicate, in the form and manner
prescribed by the Franchise Tax Board, the number of children of
employers served by the qualified child care plan.
(l) On or before January 1, 2011, the Franchise Tax Board shall
submit to the Legislature a report on the following:
(1) The dollar amount of credits claimed annually.
(2) The number of children of employees served by the qualified
child care plan for which the taxpayer claimed a credit.
(m) This section shall remain in effect only until December 1,
2012, and as of that date is repealed.
17052.25. (a) For each taxable year beginning on or after January
1, 1994, there shall be allowed as a credit against the "net tax," as
defined in Section 17039, an amount equal to 50 percent of the costs
paid or incurred by a taxpayer for the adoption of any minor child
who is a citizen or legal resident of the United States and was in
the custody of a public agency of either this state or a political
subdivision of this state. The credit shall not exceed two thousand
five hundred dollars ($2,500) per minor child.
(b) "Costs" eligible for the credit pursuant to subdivision (a)
shall include the following:
(1) Fees for required services of either the Department of Social
Services or a licensed adoption agency.
(2) Travel and related expenses for the adoptive family that are
directly related to the adoption process.
(3) Medical fees and expenses that are not reimbursed by insurance
and are directly related to the adoption process.
(c) The credit authorized by this section shall be claimed for the
taxable year in which the decree or order of adoption is entered
pursuant to Section 8612 of the Family Code. However, the allowable
credit claimed may include any costs of that adoption paid or
incurred in any prior taxable year.
(d) In the case where the credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding years if necessary, until the
total credit of two thousand five hundred dollars ($2,500) per minor
child is exhausted.
(e) Any deduction otherwise allowed under this part for any amount
paid or incurred by the taxpayer upon which the credit is based
shall be reduced by the amount of the credit allowed under this
section.
17053.5. (a) (1) For a qualified renter, there shall be allowed a
credit against his or her "net tax," as defined in Section 17039. The
amount of the credit shall be as follows:
(A) For married couples filing joint returns, heads of household,
and surviving spouses, as defined in Section 17046, the credit shall
be equal to one hundred twenty dollars ($120) if adjusted gross
income is fifty thousand dollars ($50,000) or less.
(B) For other individuals, the credit shall be equal to sixty
dollars ($60) if adjusted gross income is twenty-five thousand
dollars ($25,000) or less.
(2) Except as provided in subdivision (b), a husband and wife
shall receive but one credit under this section. If the husband and
wife file separate returns, the credit may be taken by either or
equally divided between them, except as follows:
(A) If one spouse was a resident for the entire taxable year and
the other spouse was a nonresident for part or all of the taxable
year, the resident spouse shall be allowed one-half the credit
allowed to married persons and the nonresident spouse shall be
permitted one-half the credit allowed to married persons, prorated as
provided in subdivision (e).
(B) If both spouses were nonresidents for part of the taxable
year, the credit allowed to married persons shall be divided equally
between them subject to the proration provided in subdivision (e).
(b) For a husband and wife, if each spouse maintained a separate
place of residence and resided in this state during the entire
taxable year, each spouse will be allowed one-half the full credit
allowed to married persons provided in subdivision (a).
(c) For purposes of this section, a "qualified renter" means an
individual who satisfies both of the following:
(1) Was a resident of this state, as defined in Section 17014.
(2) Rented and occupied premises in this state which constituted
his or her principal place of residence during at least 50 percent of
the taxable year.
(d) "Qualified renter" does not include any of the following:
(1) An individual who for more than 50 percent of the taxable year
rented and occupied premises that were exempt from property taxes,
except that an individual, otherwise qualified, is deemed a qualified
renter if he or she or his or her landlord pays possessory interest
taxes, or the owner of those premises makes payments in lieu of
property taxes that are substantially equivalent to property taxes
paid on properties of comparable market value.
(2) An individual whose principal place of residence for more than
50 percent of the taxable year is with another person who claimed
that individual as a dependent for income tax purposes.
(3) An individual who has been granted or whose spouse has been
granted the homeowners' property tax exemption during the taxable
year. This paragraph does not apply to an individual whose spouse has
been granted the homeowners' property tax exemption if each spouse
maintained a separate residence for the entire taxable year.
(e) An otherwise qualified renter who is a nonresident for any
portion of the taxable year shall claim the credits set forth in
subdivision (a) at the rate of one-twelfth of those credits for each
full month that individual resided within this state during the
taxable year.
(f) A person claiming the credit provided in this section shall,
as part of that claim, and under penalty of perjury, furnish that
information as the Franchise Tax Board prescribes on a form supplied
by the board.
(g) The credit provided in this section shall be claimed on
returns in the form as the Franchise Tax Board may from time to time
prescribe.
(h) For purposes of this section, "premises" means a house or a
dwelling unit used to provide living accommodations in a building or
structure and the land incidental thereto, but does not include land
only, unless the dwelling unit is a mobilehome. The credit is not
allowed for any taxable year for the rental of land upon which a
mobilehome is located if the mobilehome has been granted a homeowners'
exemption under Section 218 in that year.
(i) This section shall become operative on January 1, 1998, and
applies to any taxable year beginning on or after January 1, 1998.
(j) For each taxable year beginning on or after January 1, 1999,
the Franchise Tax Board shall recompute the adjusted gross income
amounts set forth in subdivision (a). The computation shall be made
as follows:
(1) The Department of Industrial Relations shall transmit annually
to the Franchise Tax Board the percentage change in the California
Consumer Price Index for all items from June of the prior calendar
year to June of the current year, no later than August 1 of the
current calendar year.
(2) The Franchise Tax Board shall compute an inflation adjustment
factor by adding 100 percent to the portion of the percentage change
figure which is furnished pursuant to paragraph (1) and dividing the
result by 100.
(3) The Franchise Tax Board shall multiply the amount in
subparagraph (B) of paragraph (1) of subdivision (d) for the
preceding taxable year by the inflation adjustment factor determined
in paragraph (2), and round off the resulting products to the nearest
one dollar ($1).
(4) In computing the amounts pursuant to this subdivision, the
amounts provided in subparagraph (A) of paragraph (1) of subdivision
(a) shall be twice the amount provided in subparagraph (B) of
paragraph (1) of subdivision (a).
17053.6. (a) There shall be allowed as a credit against the "net
tax" (as defined by Section 17039) an amount equal to 10 percent of
the amount of wages paid or incurred during the taxable year to each
prisoner who is employed in a joint venture program established
pursuant to Article 1.5 of Chapter 5 of Title 1 of Part 3 of the
Penal Code, through agreement with the Director of Corrections.
(b) The Department of Corrections shall forward annually to the
Franchise Tax Board a list of all employers certified by the
Department of Corrections as active participants in a joint venture
program pursuant to Article 1.5 (commencing with Section 2717.1) of
Chapter 5 of Title 1 of Part 3 of the Penal Code. The list shall
include the certified participant's federal employer identification
number.
17053.7. (a) There shall be allowed as a credit against the "net
tax" (as defined by Section 17039) an amount equal to 10 percent of
the amount of wages paid to each employee who is certified by the
Employment Development Department to meet the requirements of Section
328 of the Unemployment Insurance Code.
The credit under this section shall not apply to an individual
unless, on or before the day on which that individual begins work for
the employer, the employer:
(1) Has received a certification from the Employment Development
Department, or
(2) Has requested in writing that certification from the
Employment Development Department.
For the purposes of this subdivision, if on or before the day on
which the individual begins work for the employer, the individual has
received from the Employment Development Department a written
preliminary determination that he or she is a member of a targeted
group, then the requirement of paragraph (1) or (2) shall be
applicable on or before the fifth day on which the individual begins
work for the employer.
(b) The credit under this section shall not apply to wages paid in
excess of three thousand dollars ($3,000) during a taxable year by a
taxpayer to the same individual. With respect to each qualified
employee, the aggregate credit under this section shall not exceed
six hundred dollars ($600).
(c) The credit under this section shall not apply to wages paid to
an individual:
(1) Who bears any of the relationships described in paragraphs (1)
to (8), inclusive, of Section 152(a) of the Internal Revenue Code to
the taxpayer; or
(2) Who, if the taxpayer is an estate or trust, is a grantor,
beneficiary, or fiduciary of the estate or trust, or is an individual
who bears any of the relationships described in paragraphs (1) to
(8), inclusive, of Section 152(a) of the Internal Revenue Code to a
grantor, beneficiary, or fiduciary of the estate or trust; or
(3) Who is a dependent (as described in Section 152(a)(9) of the
Internal Revenue Code) of the taxpayer, or, if the taxpayer is an
estate or trust, of a grantor, beneficiary, or a fiduciary of the
estate or trust.
(d) The credit under this section shall not apply to wages paid to
an individual if, prior to the hiring date of that individual, that
individual has been employed by the employer at any time during which
he or she was not certified by the Employment Development Department
to meet the requirements of Section 328 of the Unemployment
Insurance Code.
(e) If the certification of an employment has been revoked
pursuant to subdivision (c) of Section 328 of the Unemployment
Insurance Code, the credit under this section shall not apply to
wages paid by the employer after the date on which notice of
revocation is received by the employer.
(f) The credit under this section shall be in addition to any
deduction under this part to which the taxpayer may be entitled, if
any.
(g) The credit provided by this section shall be applied to wages
paid to each qualifying employee during the 24-month period beginning
on the date the employee begins working for the taxpayer.
(h) (1) A taxpayer may elect to have this section not apply for
any taxable year.
(2) An election under paragraph (1) for any taxable year may be
made (or revoked) at any time before the expiration of the four-year
period beginning on the last date prescribed by law for filing the
return for that taxable year (determined without regard to
extensions).
(3) An election under paragraph (1) (or revocation thereof) shall
be made in any manner which the Franchise Tax Board may prescribe.
(i) (1) In the case of a successor employer referred to in Section
3306(b)(1) of the Internal Revenue Code, the determination of the
amount of the credit under this section with respect to wages paid by
that successor employer shall be made in the same manner as if those
wages were paid by the predecessor employer referred to in that
section.
(2) No credit shall be determined under this section with respect
to remuneration paid by an employer to an employee for services
performed by that employee for another person, unless the amount
reasonably expected to be received by the employer for those services
from that other person exceeds the remuneration paid by the employer
to that employee for those services.
(j) The term "wages" shall not include either of the following:
(1) Payments defined in Section 51(c)(3) of the Internal Revenue
Code, relating to payments for services during labor disputes.
(2) Any amounts paid or incurred to an individual who begins work
for the employer after December 31, 1993.
17053.12. (a) In the case of a taxpayer who transports any
agricultural product donated in accordance with Chapter 5 (commencing
with Section 58501) of Part 1 of Division 21 of the Food and
Agricultural Code, for taxable years beginning on or after January 1,
1996, there shall be allowed as a credit against the "net tax" (as
defined by Section 17039), an amount equal to 50 percent of the
transportation costs paid or incurred by the taxpayer in connection
with the transportation of that donated agricultural product.
(b) If any credit allowed by this section is claimed by the
taxpayer, any deduction otherwise allowed under this part for that
amount of the cost paid or incurred by the taxpayer which is eligible
for the credit that is claimed shall be reduced by the amount of the
credit allowed.
(c) Upon delivery of the donated agricultural product by a
taxpayer authorized to claim a credit pursuant to subdivision (a),
the nonprofit charitable organization shall provide a certificate to
the taxpayer who transported the agricultural product. The
certificate shall contain a statement signed and dated by a person
authorized by that organization that the product is donated under
Chapter 5 (commencing with Section 58501) of Part 1 of Division 21 of
the Food and Agricultural Code. The certificate shall also contain
the following information: the type and quantity of product donated,
the distance transported, the name of the transporter, the name of
the taxpayer donor, and the name and address of the donee. Upon the
request of the Franchise Tax Board, the taxpayer shall provide a copy
of the certification to the Franchise Tax Board.
(d) In the case where any credit allowed by this section exceeds
the "net tax," the excess may be carried over to reduce the "net tax"
in the following year, and succeeding years if necessary, until the
credit has been exhausted.
17053.30. (a) There shall be allowed as a credit against the "net
tax," as defined in Section 17039, an amount equal to 55 percent of
the fair market value of any qualified contribution made on or after
January 1, 2000, and not later than June 30, 2008, and on or after
January 1, 2010, and not later than June 30, 2015, by the taxpayer
during the taxable year to the state, any local government, or any
designated nonprofit organization, pursuant to Division 28
(commencing with Section 37000) of the Public Resources Code.
(b) For purposes of this section, "qualified contribution" means a
contribution of property, as defined in Section 37002 of the Public
Resources Code, that has been approved for acceptance by the Wildlife
Conservation Board pursuant to Division 28 (commencing with Section
37000) of the Public Resources Code.
(c) In the case of any passthrough entity, the fair market value
of any qualified contribution approved for acceptance under Division
28 (commencing with Section 37000) of the Public Resources Code shall
be passed through to the partners or shareholders of the passthrough
entity in accordance with their interest in the passthrough entity
as of the date of the qualified contribution. For purposes of this
subdivision, the term "passthrough entity" means any partnership, "S"
corporation, or limited liability company treated as a partnership.
(d) If the credit allowed by this section exceeds the "net tax,"
the excess may be carried over to reduce the "net tax" in the
following year, and the succeeding seven years if necessary, until
the credit is exhausted.
(e) This credit shall be in lieu of any other credit or deduction
which the taxpayer may otherwise claim pursuant to this part with
respect to the property or any interest therein that is contributed.
17053.33. (a) For each taxable year beginning on or after January
1, 1998, there shall be allowed as a credit against the "net tax" (as
defined in Section 17039) for the taxable year an amount equal to
the sales or use tax paid or incurred during the taxable year by the
qualified taxpayer in connection with the qualified taxpayer's
purchase of qualified property.
(b) For purposes of this section:
(1) "Qualified property" means property that meets all of the
following requirements:
(A) Is any of the following:
(i) Machinery and machinery parts used for fabricating,
processing, assembling, and manufacturing.
(ii) Machinery and machinery parts used for the production of
renewable energy resources.
(iii) Machinery and machinery parts used for either of the
following:
(I) Air pollution control mechanisms.
(II) Water pollution control mechanisms.
(iv) Data processing and communications equipment, such as
computers, computer-automated drafting systems, copy machines,
telephone systems, and faxes.
(v) Motion picture manufacturing equipment central to production
and post production, such as cameras, audio recorders, and digital
image and sound processing equipment.
(B) The total cost of qualified property purchased and placed in
service in any taxable year that may be taken into account by any
qualified taxpayer for purposes of claiming this credit shall not
exceed one million dollars ($1,000,000).
(C) The qualified property is used by the qualified taxpayer
exclusively in a targeted tax area.
(D) The qualified property is purchased and placed in service
before the date the targeted tax area designation expires, is
revoked, is no longer binding, or becomes inoperative.
(2) (A) "Qualified taxpayer" means a person or entity that meets
both of the following:
(i) 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.
(ii) 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 States Office of Management and Budget, 1987 edition.
(B) 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 credit under this section or
Section 23633 shall be allowed to the pass-through entity and passed
through to the partners or shareholders in accordance with applicable
provisions of this part or Part 11 (commencing with Section 23001).
For purposes of this subparagraph, the term "pass-through entity"
means any partnership or S corporation.
(3) "Targeted tax area" means the area designated pursuant to
Chapter 12.93 (commencing with Section 7097) of Division 7 of Title 1
of the Government Code.
(c) If the qualified taxpayer is allowed a credit for qualified
property pursuant to this section, only one credit shall be allowed
to the taxpayer under this part with respect to that qualified
property.
(d) If the qualified taxpayer has purchased property upon which a
use tax has been paid or incurred, the credit provided by this
section shall be allowed only if qualified property of a comparable
quality and price is not timely available for purchase in this state.
(e) In the case where the credit otherwise allowed under this
section exceeds the "net tax" for the taxable year, that portion of
the credit that exceeds the "net tax" may be carried over and added
to the credit, if any, in the following year, and succeeding years if
necessary, until the credit is exhausted. The credit shall be
applied first to the earliest taxable years possible.
(f) Any qualified taxpayer who elects to be subject to this
section shall not be entitled to increase the basis of the qualified
property as otherwise required by Section 164(a) of the Internal
Revenue Code with respect to sales or use tax paid or incurred in
connection with the qualified taxpayer's purchase of qualified
property.
(g) (1) The amount of the credit otherwise allowed under this
section and Section 17053.34, including any credit carryover from
prior years, that may reduce the "net tax" for the taxable year shall
not exceed the amount of tax that would be imposed on the qualified
taxpayer's business income attributable to the targeted tax area
determined as if that attributable income represented all of the
income of the qualified taxpayer subject to tax under this part.
(2) Attributable income shall be that portion of the taxpayer's
California source business income that is apportioned to the targeted
tax area . For that purpose, the taxpayer's business income
attributable to sources in this state first shall be determined in
accordance with Chapter 17 (commencing with Section 25101) of Part
11. That business income shall be further apportioned to the targeted
tax area in accordance with Article 2 (commencing with Section
25120) of Chapter 17 of Part 11, modified for purposes of this
section in accordance with paragraph (3).
(3) Business income shall be apportioned to the targeted tax area
by multiplying the total California business income of the taxpayer
by a fraction, the numerator of which is the property factor plus the
payroll factor, and the denominator of which is two. For purposes of
this paragraph:
(A) The property factor is a fraction, the numerator of which is
the average value of the taxpayer's real and tangible personal
property owned or rented and used in the targeted tax area during the
taxable year, and the denominator of which is the average value of
all the taxpayer's real and tangible personal property owned or
rented and used in this state during the taxable year.
(B) The payroll factor is a fraction, the numerator of which is
the total amount paid by the taxpayer in the targeted tax area during
the taxable year for compensation, and the denominator of which is
the total compensation paid by the taxpayer in this state during the
taxable year.
(4) The portion of any credit remaining, if any, after application
of this subdivision, shall be carried over to succeeding taxable
years, as if it were an amount exceeding the "net tax" for the
taxable year, as provided in subdivision (e).
(5) In the event that a credit carryover is allowable under
subdivision (e) for any taxable year after the targeted tax area
designation has expired, has been revoked, is no longer binding, or
has become inoperative, the targeted tax area shall be deemed to
remain in existence for purposes of computing the limitation
specified in this subdivision.
(h) The amendments made to this section by the act adding this
subdivision shall apply to taxable years beginning on or after
January 1, 1998.
17053.34. (a) For each taxable year beginning on or after January
1, 1998, there shall be allowed a credit against the "net tax" (as
defined in Section 17039) to a qualified taxpayer who employs a
qualified employee in a targeted tax area during the taxable year.
The credit shall be equal to the sum of each of the following:
(1) Fifty percent of qualified wages in the first year of
employment.
(2) Forty percent of qualified wages in the second year of
employment.
(3) Thirty percent of qualified wages in the third year of
employment.
(4) Twenty percent of qualified wages in the fourth year of
employment.
(5) Ten percent of qualified wages in the fifth year of
employment.
(b) For purposes of this section:
(1) "Qualified wages" means:
(A) That portion of wages paid or incurred by the qualified
taxpayer during the taxable year to qualified employees that does not
exceed 150 percent of the minimum wage.
(B) Wages received during the 60-month period beginning with the
first day the employee commences employment with the qualified
taxpayer. Reemployment in connection with any increase, including a
regularly occurring seasonal increase, in the trade or business
operations of the qualified taxpayer does not constitute commencement
of employment for purposes of this section.
(C) Qualified wages do not include any wages paid or incurred by
the qualified taxpayer on or after the targeted tax area expiration
date. However, wages paid or incurred with respect to qualified
employees who are employed by the qualified taxpayer within the
targeted tax area within the 60-month period prior to the targeted
tax area expiration date shall continue to qualify for the credit
under this section after the targeted tax area expiration date, in
accordance with all provisions of this section applied as if the
targeted tax area designation were still in existence and binding.
(2) "Minimum wage" means the wage established by the Industrial
Welfare Commission as provided for in Chapter 1 (commencing with
Section 1171) of Part 4 of Division 2 of the Labor Code.
(3) "Targeted tax area expiration date" means the date the
targeted tax area designation expires, is revoked, is no longer
binding, or becomes inoperative.
(4) (A) "Qualified employee" means an individual who meets all of
the following requirements:
(i) At least 90 percent of his or her services for the qualified
taxpayer during the taxable year are directly related to the conduct
of the qualified taxpayer's trade or business located in a targeted
tax area.
(ii) Performs at least 50 percent of his or her services for the
qualified taxpayer during the taxable year in a targeted tax area.
(iii) Is hired by the qualified taxpayer after the date of
original designation of the area in which services were performed as
a targeted tax area.
(iv) Is any of the following:
(I) Immediately preceding the qualified employee's commencement of
employment with the qualified taxpayer, was a person eligible for
services under the federal Job Training Partnership Act (29 U.S.C.
Sec. 1501 et seq.), or its successor, who is receiving, or is
eligible to receive, subsidized employment, training, or services
funded by the federal Job Training Partnership Act, or its successor.
(II) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was a person eligible to
be a voluntary or mandatory registrant under the Greater Avenues for
Independence Act of 1985 (GAIN) provided for pursuant to Article 3.2
(commencing with Section 11320) of Chapter 2 of Part 3 of Division 9
of the Welfare and Institutions Code, or its successor.
(III) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was an economically
disadvantaged individual 14 years of age or older.
(IV) Immediately preceding the qualified employee's commencement
of employment with the qualified taxpayer, was a dislocated worker
who meets any of the following:
(aa) Has b
