23400. (a) Part VI of Subchapter A of Chapter 1 of Subtitle A of
the Internal Revenue Code, relating to alternative minimum tax, shall
apply, except as otherwise provided.
(b) A corporation electing under Chapter 4.5 (commencing with
Section 23800) to be treated as an "S corporation" shall not be
subject to the tax imposed by this chapter.
23453. (a) There shall be allowed as a credit against the regular
tax (as defined by subdivision (c) of Section 23455), for any taxable
year, an amount equal to the minimum tax credit for that taxable
year.
(b) For purposes of subdivision (a), the minimum tax credit shall
be determined in accordance with Section 53 of the Internal Revenue
Code, except as otherwise provided in this part.
(c) For purposes of this chapter, the amount determined under
Section 53(c)(1) of the Internal Revenue Code shall be the regular
tax as defined by subdivision (c) of Section 23455, reduced by the
sum of the credits allowable under this part other than any credit
which reduces the tax below the tentative minimum tax, as defined by
Section 23455.
23455. For purposes of this part, Section 55 of the Internal
Revenue Code is modified as follows:
(a) Section 55(b)(1) of the Internal Revenue Code, relating to
tentative minimum tax, is modified by requiring the tentative minimum
tax for the taxable year to be imposed as follows:
(1) With respect to corporations subject to tax under Chapter 2
(commencing with Section 23101), other than banks or financial
corporations, according to or measured by net income, for the
privilege of doing business within this state, at a rate of 7 percent
upon the basis of so much of the alternative minimum taxable income
for the taxable year as exceeds the exemption amount.
(2) With respect to corporations subject to tax under Chapter 3
(commencing with Section 23501), on net income from sources within
this state, at a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income for the taxable year as exceeds
the exemption amount.
(3) With respect to organizations or trusts subject to tax under
Article 2 (commencing with Section 23731) of Chapter 4, on the
unrelated business income from sources within this state, at a rate
of 7 percent upon the basis of so much of the alternative taxable
income for the taxable year as exceeds the exemption amount.
(4) With respect to banks subject to tax under Section 23181,
according to or measured by net income, for the privilege of doing
business within this state, in an amount equal to the sum of the
following:
(A) At a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income as exceeds the exemption amount.
(B) At the rate determined under Section 23186, less the rate
prescribed by Section 23151, upon the basis of net income for the
taxable year.
(5) With respect to financial corporations subject to tax under
Section 23183, according to or measured by net income, for the
privilege of doing business within this state, in an amount equal to
the sum of the following:
(A) At a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income as exceeds the exemption amount.
(B) At the rate determined under Section 23186, less the rate
prescribed by Section 23151, upon the basis of net income for the
taxable year.
(b) Section 55(b)(2) of the Internal Revenue Code, relating to the
definition of alternative minimum taxable income, is modified as
follows:
(1) For corporations whose net income is determined under Chapter
17 (commencing with Section 25101), alternative minimum taxable
income shall be allocated and apportioned in the same manner as net
income is allocated and apportioned for purposes of the regular tax.
(2) With respect to taxpayers subject to Article 4 (commencing
with Section 23221) of Chapter 2, Article 4 (commencing with Section
23221) to Article 9 (commencing with Section 23361), inclusive, shall
apply to the tax imposed by this section except that Section 23221
shall not apply.
(3) For purposes of computing the alternative minimum tax for
taxable years in which a taxpayer commenced doing business,
dissolves, withdraws, or ceases doing business, Sections 18601,
23151, 23151.1, 23151.2, 23181, 23183, 23183.1, 23183.2, 23201 to
23204, inclusive, 23222 to 23224.5, inclusive, 23282, 23332.5, and
23504 shall be applied with due regard for the rate and alternative
minimum taxable income prescribed by this chapter.
(c) Section 55(c) of the Internal Revenue Code, relating to the
definition of regular tax, is modified to read:
(1) For purposes of this chapter, "regular tax" means the amount
of tax imposed under Chapter 2 (commencing with Section 23101) or
Chapter 3 (commencing with Section 23501) or Article 2 (commencing
with Section 23731) of Chapter 4, but does not include any amount
imposed under paragraph (1) of subdivision (e) of Section 24667 or
paragraph (2) of subdivision (f) of Section 24667.
(2) The tax specified in paragraph (1) shall be the amount
determined prior to reduction by any credits against the tax.
(d) The rate of 7 percent prescribed in subdivision (a) shall be
6.65 percent for any taxable year beginning on or after January 1,
1997. The change in rate provided in this subdivision shall be made
without proration otherwise required by Section 24251.
23455.5. Section 55(e) of the Internal Revenue Code, relating to
exemption for small corporations, shall not apply.
23456. For purposes of this part, Section 56 of the Internal
Revenue Code is modified as follows:
(a) (1) Section 56(a)(2) of the Internal Revenue Code, relating to
mining exploration and development costs, shall apply only to
expenses incurred during taxable years beginning on or after January
1, 1988.
(2) Section 56(a)(5) of the Internal Revenue Code, relating to
pollution control facilities, shall apply only to amounts allowable
as a deduction under Section 24372.3.
(3) (A) Section 56(a)(6) of the Internal Revenue Code, as in
effect on January 1, 1997, relating to installment sales of certain
property, shall not apply to payments received in taxable years
beginning on or after January 1, 1997, with respect to dispositions
occurring in taxable years beginning after December 31, 1987.
(B) This paragraph shall not apply to any taxable year beginning
on or after January 1, 1998.
(b) For purposes of applying Section 56(d) of the Internal Revenue
Code, all references to "December 31, 1986," are modified to read
"December 31, 1987," and all references to "January 1, 1987," are
modified to read "January 1, 1988."
(c) Section 56(d)(1) of the Internal Revenue Code is modified to
include the provisions of Section 25108.
(d) For each taxable year beginning on or after January 1, 1988,
and before January 1, 1990, Section 56(f)(2)(E) of the Internal
Revenue Code, as it read during that period, is modified to refer to
both of the following:
(1) Cooperatives under Section 24404 in lieu of the deduction
allowed under Section 1382(b) of the Internal Revenue Code.
(2) Credit unions under Section 24405 as though the deduction
allowed under Section 1382(b) of the Internal Revenue Code applied to
credit unions.
(e) Section 56(g) of the Internal Revenue Code, relating to
adjustments based on adjusted current earnings, is modified to
provide that for corporations whose income is determined under
Chapter 17 (commencing with Section 25101), adjusted current earnings
shall be allocated and apportioned in the same manner as net income
is allocated and apportioned for purposes of the regular tax. In
addition, each of the following shall apply:
(1) Sections 56(g)(1)(A) and 56(g)(3) of the Internal Revenue Code
are modified to provide that the term "adjusted current earnings"
means the sum of the adjusted current earnings of that corporation
apportionable to this state and the adjusted current earnings
allocable to this state.
(2) Section 56(g)(1)(B) of the Internal Revenue Code is modified
to provide that the term "alternative minimum taxable income" means
the sum of the alternative minimum taxable income of that corporation
apportionable to this state and the alternative minimum taxable
income allocable to this state.
(f) Section 56(g)(4)(A) of the Internal Revenue Code is modified
to provide the following:
(1) In the case of any property placed in service on or after
January 1, 1981, and prior to January 1, 1987, other than residential
rental property for which an election was made under former Section
24349.5, the amount allowable as depreciation or amortization with
respect to that property shall be the same amount that would have
been allowable for the taxable year had the taxpayer depreciated the
property under the straight line method for each taxable year of the
useful life (determined without regard to Section 24354.2) for which
the taxpayer has held the property.
(2) In the case of any property placed in service on or after
January 1, 1987, and prior to January 1, 1990, other than residential
rental property for which an election was made under former Section
24349.5, the amount allowable as depreciation or amortization with
respect to that property shall be determined by each of the
following:
(A) Taking into account the adjusted basis of that property (as
determined for purposes of computing alternative minimum taxable
income) as of the close of the last taxable year beginning before
January 1, 1990.
(B) Using the straight line method over the remainder of the
recovery period applicable to that property under the alternative
system of Section 168(g) of the Internal Revenue Code.
(3) The amendments made to paragraph (2) by the act adding this
paragraph shall apply to taxable years beginning on or after January
1, 1990.
(4) The last sentence of Section 56(g)(4)(A)(i) of the Internal
Revenue Code, shall not apply to taxable years beginning before
January 1, 1998.
(g) (1) Section 56(g)(4)(C) of the Internal Revenue Code, relating
to disallowance of items not deductible in computing earnings and
profits, shall be modified as follows:
(A) (i) A deduction shall be allowed for amounts allowable as a
deduction for purposes of the regular tax under Sections 24402,
24410, 24411, and 25106.
(ii) For each taxable year beginning on or after January 1, 1990,
a deduction shall be allowed for amounts allowable as a deduction to
a credit union for purposes of the regular tax under Section 24405.
(B) Section 56(g)(4)(C)(ii) of the Internal Revenue Code, relating
to special rule for certain dividends, shall not be applicable.
(C) Section 56(g)(4)(C)(iii) of the Internal Revenue Code,
relating to treatment of taxes on dividends from 936 corporations,
shall not be applicable.
(D) Section 56(g)(4)(C)(iv) of the Internal Revenue Code, relating
to special rule for certain dividends received by certain
cooperatives, shall not be applicable.
(2) Section 56(g)(4)(D)(ii) of the Internal Revenue Code is
modified to specify that Sections 24364 and 24407 shall not apply to
expenditures paid or incurred in taxable years beginning on or after
January 1, 1990.
(3) With respect to corporations that are not subject to the tax
imposed under Chapter 2 (commencing with Section 23101), the amount
of interest income included in the adjusted current earnings shall
not exceed the amount of interest income included for purposes of the
regular tax.
(4) Appropriate adjustments shall be made to limit deductions from
adjusted current earnings for interest expense in accordance with
the provisions of Sections 24344 and 24425.
(h) The provisions of Section 56(d)(3), relating to net operating
loss attributable to federally declared disasters, shall not apply.
23456.5. The amendments to Section 56 of the Internal Revenue Code
by Section 4(1) of Public Law 106-519, regarding adjustments in
computing alternative minimum tax income relating to the exclusion
under Section 114 of the Internal Revenue Code, shall not apply.
23456.5. The amendments to Section 56 of the Internal Revenue Code
by Section 4(1) of Public Law 106-519, regarding adjustments in
computing alternative minimum tax income relating to the exclusion
under Section 114 of the Internal Revenue Code, shall not apply.
23457. For purposes of this part, Section 57 of the Internal
Revenue Code is modified as follows:
(a) Section 57(a)(5) of the Internal Revenue Code, relating to
tax-exempt interest, shall not be applicable.
(b) Section 57(a)(6) of the Internal Revenue Code, relating to
accelerated depreciation or amortization on certain property placed
in service before January 1, 1987, is modified to read: With respect
to each property as described in Section 1250(c) of the Internal
Revenue Code as that provision read on April 1, 1970, the amount by
which the deduction allowable for the taxable year for exhaustion,
wear, tear, obsolescence, or amortization exceeds the depreciation
deduction that would have been allowable for the taxable year, had
the taxpayer depreciated the property under the straight line method
for each taxable year of its useful life (determined without regard
to Section 24354.2 or 24381) for which the taxpayer has held the
property.
23459. For purposes of this part, the provisions of Section 59 of
the Internal Revenue Code are modified as follows:
(a) Section 59(a) of the Internal Revenue Code, relating to the
alternative minimum tax foreign tax credit, shall not be applicable.
(b) Section 59(b) of the Internal Revenue Code, relating to income
eligible for the credit under Section 936 of the Internal Revenue
Code, shall not be applicable.
(c) Subparagraphs (A), (B), and (C) of Section 59(e)(2) of the
Internal Revenue Code, relating to qualified expenditures, are
modified to refer to:
(1) Section 24364, in lieu of the deduction under Section 173 of
the Internal Revenue Code.
(2) Section 24423, in lieu of the deduction under Section 263(c)
of the Internal Revenue Code.
23400. (a) Part VI of Subchapter A of Chapter 1 of Subtitle A of
the Internal Revenue Code, relating to alternative minimum tax, shall
apply, except as otherwise provided.
(b) A corporation electing under Chapter 4.5 (commencing with
Section 23800) to be treated as an "S corporation" shall not be
subject to the tax imposed by this chapter.
23453. (a) There shall be allowed as a credit against the regular
tax (as defined by subdivision (c) of Section 23455), for any taxable
year, an amount equal to the minimum tax credit for that taxable
year.
(b) For purposes of subdivision (a), the minimum tax credit shall
be determined in accordance with Section 53 of the Internal Revenue
Code, except as otherwise provided in this part.
(c) For purposes of this chapter, the amount determined under
Section 53(c)(1) of the Internal Revenue Code shall be the regular
tax as defined by subdivision (c) of Section 23455, reduced by the
sum of the credits allowable under this part other than any credit
which reduces the tax below the tentative minimum tax, as defined by
Section 23455.
23455. For purposes of this part, Section 55 of the Internal
Revenue Code is modified as follows:
(a) Section 55(b)(1) of the Internal Revenue Code, relating to
tentative minimum tax, is modified by requiring the tentative minimum
tax for the taxable year to be imposed as follows:
(1) With respect to corporations subject to tax under Chapter 2
(commencing with Section 23101), other than banks or financial
corporations, according to or measured by net income, for the
privilege of doing business within this state, at a rate of 7 percent
upon the basis of so much of the alternative minimum taxable income
for the taxable year as exceeds the exemption amount.
(2) With respect to corporations subject to tax under Chapter 3
(commencing with Section 23501), on net income from sources within
this state, at a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income for the taxable year as exceeds
the exemption amount.
(3) With respect to organizations or trusts subject to tax under
Article 2 (commencing with Section 23731) of Chapter 4, on the
unrelated business income from sources within this state, at a rate
of 7 percent upon the basis of so much of the alternative taxable
income for the taxable year as exceeds the exemption amount.
(4) With respect to banks subject to tax under Section 23181,
according to or measured by net income, for the privilege of doing
business within this state, in an amount equal to the sum of the
following:
(A) At a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income as exceeds the exemption amount.
(B) At the rate determined under Section 23186, less the rate
prescribed by Section 23151, upon the basis of net income for the
taxable year.
(5) With respect to financial corporations subject to tax under
Section 23183, according to or measured by net income, for the
privilege of doing business within this state, in an amount equal to
the sum of the following:
(A) At a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income as exceeds the exemption amount.
(B) At the rate determined under Section 23186, less the rate
prescribed by Section 23151, upon the basis of net income for the
taxable year.
(b) Section 55(b)(2) of the Internal Revenue Code, relating to the
definition of alternative minimum taxable income, is modified as
follows:
(1) For corporations whose net income is determined under Chapter
17 (commencing with Section 25101), alternative minimum taxable
income shall be allocated and apportioned in the same manner as net
income is allocated and apportioned for purposes of the regular tax.
(2) With respect to taxpayers subject to Article 4 (commencing
with Section 23221) of Chapter 2, Article 4 (commencing with Section
23221) to Article 9 (commencing with Section 23361), inclusive, shall
apply to the tax imposed by this section except that Section 23221
shall not apply.
(3) For purposes of computing the alternative minimum tax for
taxable years in which a taxpayer commenced doing business,
dissolves, withdraws, or ceases doing business, Sections 18601,
23151, 23151.1, 23151.2, 23181, 23183, 23183.1, 23183.2, 23201 to
23204, inclusive, 23222 to 23224.5, inclusive, 23282, 23332.5, and
23504 shall be applied with due regard for the rate and alternative
minimum taxable income prescribed by this chapter.
(c) Section 55(c) of the Internal Revenue Code, relating to the
definition of regular tax, is modified to read:
(1) For purposes of this chapter, "regular tax" means the amount
of tax imposed under Chapter 2 (commencing with Section 23101) or
Chapter 3 (commencing with Section 23501) or Article 2 (commencing
with Section 23731) of Chapter 4, but does not include any amount
imposed under paragraph (1) of subdivision (e) of Section 24667 or
paragraph (2) of subdivision (f) of Section 24667.
(2) The tax specified in paragraph (1) shall be the amount
determined prior to reduction by any credits against the tax.
(d) The rate of 7 percent prescribed in subdivision (a) shall be
6.65 percent for any taxable year beginning on or after January 1,
1997. The change in rate provided in this subdivision shall be made
without proration otherwise required by Section 24251.
23455.5. Section 55(e) of the Internal Revenue Code, relating to
exemption for small corporations, shall not apply.
23456. For purposes of this part, Section 56 of the Internal
Revenue Code is modified as follows:
(a) (1) Section 56(a)(2) of the Internal Revenue Code, relating to
mining exploration and development costs, shall apply only to
expenses incurred during taxable years beginning on or after January
1, 1988.
(2) Section 56(a)(5) of the Internal Revenue Code, relating to
pollution control facilities, shall apply only to amounts allowable
as a deduction under Section 24372.3.
(3) (A) Section 56(a)(6) of the Internal Revenue Code, as in
effect on January 1, 1997, relating to installment sales of certain
property, shall not apply to payments received in taxable years
beginning on or after January 1, 1997, with respect to dispositions
occurring in taxable years beginning after December 31, 1987.
(B) This paragraph shall not apply to any taxable year beginning
on or after January 1, 1998.
(b) For purposes of applying Section 56(d) of the Internal Revenue
Code, all references to "December 31, 1986," are modified to read
"December 31, 1987," and all references to "January 1, 1987," are
modified to read "January 1, 1988."
(c) Section 56(d)(1) of the Internal Revenue Code is modified to
include the provisions of Section 25108.
(d) For each taxable year beginning on or after January 1, 1988,
and before January 1, 1990, Section 56(f)(2)(E) of the Internal
Revenue Code, as it read during that period, is modified to refer to
both of the following:
(1) Cooperatives under Section 24404 in lieu of the deduction
allowed under Section 1382(b) of the Internal Revenue Code.
(2) Credit unions under Section 24405 as though the deduction
allowed under Section 1382(b) of the Internal Revenue Code applied to
credit unions.
(e) Section 56(g) of the Internal Revenue Code, relating to
adjustments based on adjusted current earnings, is modified to
provide that for corporations whose income is determined under
Chapter 17 (commencing with Section 25101), adjusted current earnings
shall be allocated and apportioned in the same manner as net income
is allocated and apportioned for purposes of the regular tax. In
addition, each of the following shall apply:
(1) Sections 56(g)(1)(A) and 56(g)(3) of the Internal Revenue Code
are modified to provide that the term "adjusted current earnings"
means the sum of the adjusted current earnings of that corporation
apportionable to this state and the adjusted current earnings
allocable to this state.
(2) Section 56(g)(1)(B) of the Internal Revenue Code is modified
to provide that the term "alternative minimum taxable income" means
the sum of the alternative minimum taxable income of that corporation
apportionable to this state and the alternative minimum taxable
income allocable to this state.
(f) Section 56(g)(4)(A) of the Internal Revenue Code is modified
to provide the following:
(1) In the case of any property placed in service on or after
January 1, 1981, and prior to January 1, 1987, other than residential
rental property for which an election was made under former Section
24349.5, the amount allowable as depreciation or amortization with
respect to that property shall be the same amount that would have
been allowable for the taxable year had the taxpayer depreciated the
property under the straight line method for each taxable year of the
useful life (determined without regard to Section 24354.2) for which
the taxpayer has held the property.
(2) In the case of any property placed in service on or after
January 1, 1987, and prior to January 1, 1990, other than residential
rental property for which an election was made under former Section
24349.5, the amount allowable as depreciation or amortization with
respect to that property shall be determined by each of the
following:
(A) Taking into account the adjusted basis of that property (as
determined for purposes of computing alternative minimum taxable
income) as of the close of the last taxable year beginning before
January 1, 1990.
(B) Using the straight line method over the remainder of the
recovery period applicable to that property under the alternative
system of Section 168(g) of the Internal Revenue Code.
(3) The amendments made to paragraph (2) by the act adding this
paragraph shall apply to taxable years beginning on or after January
1, 1990.
(4) The last sentence of Section 56(g)(4)(A)(i) of the Internal
Revenue Code, shall not apply to taxable years beginning before
January 1, 1998.
(g) (1) Section 56(g)(4)(C) of the Internal Revenue Code, relating
to disallowance of items not deductible in computing earnings and
profits, shall be modified as follows:
(A) (i) A deduction shall be allowed for amounts allowable as a
deduction for purposes of the regular tax under Sections 24402,
24410, 24411, and 25106.
(ii) For each taxable year beginning on or after January 1, 1990,
a deduction shall be allowed for amounts allowable as a deduction to
a credit union for purposes of the regular tax under Section 24405.
(B) Section 56(g)(4)(C)(ii) of the Internal Revenue Code, relating
to special rule for certain dividends, shall not be applicable.
(C) Section 56(g)(4)(C)(iii) of the Internal Revenue Code,
relating to treatment of taxes on dividends from 936 corporations,
shall not be applicable.
(D) Section 56(g)(4)(C)(iv) of the Internal Revenue Code, relating
to special rule for certain dividends received by certain
cooperatives, shall not be applicable.
(2) Section 56(g)(4)(D)(ii) of the Internal Revenue Code is
modified to specify that Sections 24364 and 24407 shall not apply to
expenditures paid or incurred in taxable years beginning on or after
January 1, 1990.
(3) With respect to corporations that are not subject to the tax
imposed under Chapter 2 (commencing with Section 23101), the amount
of interest income included in the adjusted current earnings shall
not exceed the amount of interest income included for purposes of the
regular tax.
(4) Appropriate adjustments shall be made to limit deductions from
adjusted current earnings for interest expense in accordance with
the provisions of Sections 24344 and 24425.
(h) The provisions of Section 56(d)(3), relating to net operating
loss attributable to federally declared disasters, shall not apply.
23456.5. The amendments to Section 56 of the Internal Revenue Code
by Section 4(1) of Public Law 106-519, regarding adjustments in
computing alternative minimum tax income relating to the exclusion
under Section 114 of the Internal Revenue Code, shall not apply.
23456.5. The amendments to Section 56 of the Internal Revenue Code
by Section 4(1) of Public Law 106-519, regarding adjustments in
computing alternative minimum tax income relating to the exclusion
under Section 114 of the Internal Revenue Code, shall not apply.
23457. For purposes of this part, Section 57 of the Internal
Revenue Code is modified as follows:
(a) Section 57(a)(5) of the Internal Revenue Code, relating to
tax-exempt interest, shall not be applicable.
(b) Section 57(a)(6) of the Internal Revenue Code, relating to
accelerated depreciation or amortization on certain property placed
in service before January 1, 1987, is modified to read: With respect
to each property as described in Section 1250(c) of the Internal
Revenue Code as that provision read on April 1, 1970, the amount by
which the deduction allowable for the taxable year for exhaustion,
wear, tear, obsolescence, or amortization exceeds the depreciation
deduction that would have been allowable for the taxable year, had
the taxpayer depreciated the property under the straight line method
for each taxable year of its useful life (determined without regard
to Section 24354.2 or 24381) for which the taxpayer has held the
property.
23459. For purposes of this part, the provisions of Section 59 of
the Internal Revenue Code are modified as follows:
(a) Section 59(a) of the Internal Revenue Code, relating to the
alternative minimum tax foreign tax credit, shall not be applicable.
(b) Section 59(b) of the Internal Revenue Code, relating to income
eligible for the credit under Section 936 of the Internal Revenue
Code, shall not be applicable.
(c) Subparagraphs (A), (B), and (C) of Section 59(e)(2) of the
Internal Revenue Code, relating to qualified expenditures, are
modified to refer to:
(1) Section 24364, in lieu of the deduction under Section 173 of
the Internal Revenue Code.
(2) Section 24423, in lieu of the deduction under Section 263(c)
of the Internal Revenue Code.
23400. (a) Part VI of Subchapter A of Chapter 1 of Subtitle A of
the Internal Revenue Code, relating to alternative minimum tax, shall
apply, except as otherwise provided.
(b) A corporation electing under Chapter 4.5 (commencing with
Section 23800) to be treated as an "S corporation" shall not be
subject to the tax imposed by this chapter.
23453. (a) There shall be allowed as a credit against the regular
tax (as defined by subdivision (c) of Section 23455), for any taxable
year, an amount equal to the minimum tax credit for that taxable
year.
(b) For purposes of subdivision (a), the minimum tax credit shall
be determined in accordance with Section 53 of the Internal Revenue
Code, except as otherwise provided in this part.
(c) For purposes of this chapter, the amount determined under
Section 53(c)(1) of the Internal Revenue Code shall be the regular
tax as defined by subdivision (c) of Section 23455, reduced by the
sum of the credits allowable under this part other than any credit
which reduces the tax below the tentative minimum tax, as defined by
Section 23455.
23455. For purposes of this part, Section 55 of the Internal
Revenue Code is modified as follows:
(a) Section 55(b)(1) of the Internal Revenue Code, relating to
tentative minimum tax, is modified by requiring the tentative minimum
tax for the taxable year to be imposed as follows:
(1) With respect to corporations subject to tax under Chapter 2
(commencing with Section 23101), other than banks or financial
corporations, according to or measured by net income, for the
privilege of doing business within this state, at a rate of 7 percent
upon the basis of so much of the alternative minimum taxable income
for the taxable year as exceeds the exemption amount.
(2) With respect to corporations subject to tax under Chapter 3
(commencing with Section 23501), on net income from sources within
this state, at a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income for the taxable year as exceeds
the exemption amount.
(3) With respect to organizations or trusts subject to tax under
Article 2 (commencing with Section 23731) of Chapter 4, on the
unrelated business income from sources within this state, at a rate
of 7 percent upon the basis of so much of the alternative taxable
income for the taxable year as exceeds the exemption amount.
(4) With respect to banks subject to tax under Section 23181,
according to or measured by net income, for the privilege of doing
business within this state, in an amount equal to the sum of the
following:
(A) At a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income as exceeds the exemption amount.
(B) At the rate determined under Section 23186, less the rate
prescribed by Section 23151, upon the basis of net income for the
taxable year.
(5) With respect to financial corporations subject to tax under
Section 23183, according to or measured by net income, for the
privilege of doing business within this state, in an amount equal to
the sum of the following:
(A) At a rate of 7 percent upon the basis of so much of the
alternative minimum taxable income as exceeds the exemption amount.
(B) At the rate determined under Section 23186, less the rate
prescribed by Section 23151, upon the basis of net income for the
taxable year.
(b) Section 55(b)(2) of the Internal Revenue Code, relating to the
definition of alternative minimum taxable income, is modified as
follows:
(1) For corporations whose net income is determined under Chapter
17 (commencing with Section 25101), alternative minimum taxable
income shall be allocated and apportioned in the same manner as net
income is allocated and apportioned for purposes of the regular tax.
(2) With respect to taxpayers subject to Article 4 (commencing
with Section 23221) of Chapter 2, Article 4 (commencing with Section
23221) to Article 9 (commencing with Section 23361), inclusive, shall
apply to the tax imposed by this section except that Section 23221
shall not apply.
(3) For purposes of computing the alternative minimum tax for
taxable years in which a taxpayer commenced doing business,
dissolves, withdraws, or ceases doing business, Sections 18601,
23151, 23151.1, 23151.2, 23181, 23183, 23183.1, 23183.2, 23201 to
23204, inclusive, 23222 to 23224.5, inclusive, 23282, 23332.5, and
23504 shall be applied with due regard for the rate and alternative
minimum taxable income prescribed by this chapter.
(c) Section 55(c) of the Internal Revenue Code, relating to the
definition of regular tax, is modified to read:
(1) For purposes of this chapter, "regular tax" means the amount
of tax imposed under Chapter 2 (commencing with Section 23101) or
Chapter 3 (commencing with Section 23501) or Article 2 (commencing
with Section 23731) of Chapter 4, but does not include any amount
imposed under paragraph (1) of subdivision (e) of Section 24667 or
paragraph (2) of subdivision (f) of Section 24667.
(2) The tax specified in paragraph (1) shall be the amount
determined prior to reduction by any credits against the tax.
(d) The rate of 7 percent prescribed in subdivision (a) shall be
6.65 percent for any taxable year beginning on or after January 1,
1997. The change in rate provided in this subdivision shall be made
without proration otherwise required by Section 24251.
23455.5. Section 55(e) of the Internal Revenue Code, relating to
exemption for small corporations, shall not apply.
23456. For purposes of this part, Section 56 of the Internal
Revenue Code is modified as follows:
(a) (1) Section 56(a)(2) of the Internal Revenue Code, relating to
mining exploration and development costs, shall apply only to
expenses incurred during taxable years beginning on or after January
1, 1988.
(2) Section 56(a)(5) of the Internal Revenue Code, relating to
pollution control facilities, shall apply only to amounts allowable
as a deduction under Section 24372.3.
(3) (A) Section 56(a)(6) of the Internal Revenue Code, as in
effect on January 1, 1997, relating to installment sales of certain
property, shall not apply to payments received in taxable years
beginning on or after January 1, 1997, with respect to dispositions
occurring in taxable years beginning after December 31, 1987.
(B) This paragraph shall not apply to any taxable year beginning
on or after January 1, 1998.
(b) For purposes of applying Section 56(d) of the Internal Revenue
Code, all references to "December 31, 1986," are modified to read
"December 31, 1987," and all references to "January 1, 1987," are
modified to read "January 1, 1988."
(c) Section 56(d)(1) of the Internal Revenue Code is modified to
include the provisions of Section 25108.
(d) For each taxable year beginning on or after January 1, 1988,
and before January 1, 1990, Section 56(f)(2)(E) of the Internal
Revenue Code, as it read during that period, is modified to refer to
both of the following:
(1) Cooperatives under Section 24404 in lieu of the deduction
allowed under Section 1382(b) of the Internal Revenue Code.
(2) Credit unions under Section 24405 as though the deduction
allowed under Section 1382(b) of the Internal Revenue Code applied to
credit unions.
(e) Section 56(g) of the Internal Revenue Code, relating to
adjustments based on adjusted current earnings, is modified to
provide that for corporations whose income is determined under
Chapter 17 (commencing with Section 25101), adjusted current earnings
shall be allocated and apportioned in the same manner as net income
is allocated and apportioned for purposes of the regular tax. In
addition, each of the following shall apply:
(1) Sections 56(g)(1)(A) and 56(g)(3) of the Internal Revenue Code
are modified to provide that the term "adjusted current earnings"
means the sum of the adjusted current earnings of that corporation
apportionable to this state and the adjusted current earnings
allocable to this state.
(2) Section 56(g)(1)(B) of the Internal Revenue Code is modified
to provide that the term "alternative minimum taxable income" means
the sum of the alternative minimum taxable income of that corporation
apportionable to this state and the alternative minimum taxable
income allocable to this state.
(f) Section 56(g)(4)(A) of the Internal Revenue Code is modified
to provide the following:
(1) In the case of any property placed in service on or after
January 1, 1981, and prior to January 1, 1987, other than residential
rental property for which an election was made under former Section
24349.5, the amount allowable as depreciation or amortization with
respect to that property shall be the same amount that would have
been allowable for the taxable year had the taxpayer depreciated the
property under the straight line method for each taxable year of the
useful life (determined without regard to Section 24354.2) for which
the taxpayer has held the property.
(2) In the case of any property placed in service on or after
January 1, 1987, and prior to January 1, 1990, other than residential
rental property for which an election was made under former Section
24349.5, the amount allowable as depreciation or amortization with
respect to that property shall be determined by each of the
following:
(A) Taking into account the adjusted basis of that property (as
determined for purposes of computing alternative minimum taxable
income) as of the close of the last taxable year beginning before
January 1, 1990.
(B) Using the straight line method over the remainder of the
recovery period applicable to that property under the alternative
system of Section 168(g) of the Internal Revenue Code.
(3) The amendments made to paragraph (2) by the act adding this
paragraph shall apply to taxable years beginning on or after January
1, 1990.
(4) The last sentence of Section 56(g)(4)(A)(i) of the Internal
Revenue Code, shall not apply to taxable years beginning before
January 1, 1998.
(g) (1) Section 56(g)(4)(C) of the Internal Revenue Code, relating
to disallowance of items not deductible in computing earnings and
profits, shall be modified as follows:
(A) (i) A deduction shall be allowed for amounts allowable as a
deduction for purposes of the regular tax under Sections 24402,
24410, 24411, and 25106.
(ii) For each taxable year beginning on or after January 1, 1990,
a deduction shall be allowed for amounts allowable as a deduction to
a credit union for purposes of the regular tax under Section 24405.
(B) Section 56(g)(4)(C)(ii) of the Internal Revenue Code, relating
to special rule for certain dividends, shall not be applicable.
(C) Section 56(g)(4)(C)(iii) of the Internal Revenue Code,
relating to treatment of taxes on dividends from 936 corporations,
shall not be applicable.
(D) Section 56(g)(4)(C)(iv) of the Internal Revenue Code, relating
to special rule for certain dividends received by certain
cooperatives, shall not be applicable.
(2) Section 56(g)(4)(D)(ii) of the Internal Revenue Code is
modified to specify that Sections 24364 and 24407 shall not apply to
expenditures paid or incurred in taxable years beginning on or after
January 1, 1990.
(3) With respect to corporations that are not subject to the tax
imposed under Chapter 2 (commencing with Section 23101), the amount
of interest income included in the adjusted current earnings shall
not exceed the amount of interest income included for purposes of the
regular tax.
(4) Appropriate adjustments shall be made to limit deductions from
adjusted current earnings for interest expense in accordance with
the provisions of Sections 24344 and 24425.
(h) The provisions of Section 56(d)(3), relating to net operating
loss attributable to federally declared disasters, shall not apply.
23456.5. The amendments to Section 56 of the Internal Revenue Code
by Section 4(1) of Public Law 106-519, regarding adjustments in
computing alternative minimum tax income relating to the exclusion
under Section 114 of the Internal Revenue Code, shall not apply.
23456.5. The amendments to Section 56 of the Internal Revenue Code
by Section 4(1) of Public Law 106-519, regarding adjustments in
computing alternative minimum tax income relating to the exclusion
under Section 114 of the Internal Revenue Code, shall not apply.
23457. For purposes of this part, Section 57 of the Internal
Revenue Code is modified as follows:
(a) Section 57(a)(5) of the Internal Revenue Code, relating to
tax-exempt interest, shall not be applicable.
(b) Section 57(a)(6) of the Internal Revenue Code, relating to
accelerated depreciation or amortization on certain property placed
in service before January 1, 1987, is modified to read: With respect
to each property as described in Section 1250(c) of the Internal
Revenue Code as that provision read on April 1, 1970, the amount by
which the deduction allowable for the taxable year for exhaustion,
wear, tear, obsolescence, or amortization exceeds the depreciation
deduction that would have been allowable for the taxable year, had
the taxpayer depreciated the property under the straight line method
for each taxable year of its useful life (determined without regard
to Section 24354.2 or 24381) for which the taxpayer has held the
property.
23459. For purposes of this part, the provisions of Section 59 of
the Internal Revenue Code are modified as follows:
(a) Section 59(a) of the Internal Revenue Code, relating to the
alternative minimum tax foreign tax credit, shall not be applicable.
(b) Section 59(b) of the Internal Revenue Code, relating to income
eligible for the credit under Section 936 of the Internal Revenue
Code, shall not be applicable.
(c) Subparagraphs (A), (B), and (C) of Section 59(e)(2) of the
Internal Revenue Code, relating to qualified expenditures, are
modified to refer to:
(1) Section 24364, in lieu of the deduction under Section 173 of
the Internal Revenue Code.
(2) Section 24423, in lieu of the deduction under Section 263(c)
of the Internal Revenue Code.
