Published: 2015-07-09
Key Benefits:
This part is known and may be cited as the “Personal Income Tax Law.”
(Repealed and added by Stats. 1955, Ch. 939.)
Except where the context otherwise requires, the definitions given in this chapter govern the construction of this part.
(Repealed and added by Stats. 1955, Ch. 939.)
“Franchise Tax Board” means the Franchise Tax Board described in Part 10, Division 3, Title 2 of the Government Code. “Board” means the State Board of Equalization.
(Repealed and added by Stats. 1955, Ch. 939.)
“Taxpayer” includes any individual, fiduciary, estate, or trust subject to any tax imposed by this part or any partnership.
(Amended by Stats. 1996, Ch. 952, Sec. 2. Effective January 1, 1997.)
“Individual” means a natural person.
(Repealed and added by Stats. 1955, Ch. 939.)
“Fiduciary” means a guardian, trustee, executor, administrator, receiver, conservator, or any person, whether individual or corporate, acting in any fiduciary capacity for any person, estate or trust.
(Repealed and added by Stats. 1955, Ch. 939.)
“Person” includes individuals, fiduciaries, partnerships, limited liability companies, and corporations.
(Amended by Stats. 1994, Ch. 1200, Sec. 51. Effective September 30, 1994.)
“Partnership” includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this part, a trust or estate or a corporation.
“Partner” includes a member in such a syndicate, group, pool, joint venture, or organization.
A person shall be recognized as a partner for income purposes if he owns a capital interest in a partnership in which capital is a material income-producing factor, whether or not such interest was derived by purchase or gift from any other person.
(Repealed and added by Stats. 1955, Ch. 939.)
Section 7704 of the Internal Revenue Code, relating to certain publicly traded partnerships treated as corporations, shall apply, except as otherwise provided.
(a) Section 7704(a) of the Internal Revenue Code shall not apply to an electing 1987 partnership, as defined in Section 23038.5, which is subject to the tax imposed by Section 23038.5.
(b) The amendment made to this section by Chapter 611 of the Statutes of 1997 shall apply to taxable years beginning on or after January 1, 1998.
(c) Section 7704(d) of the Internal Revenue Code, relating to qualifying income, shall apply, except as otherwise provided, without regard to taxable year to the same extent as applicable for federal income tax purposes.
(d) The amendment to this section by the act amending this subdivision shall apply to taxable years beginning on or after January 1, 2010.
(Amended by Stats. 2010, Ch. 14, Sec. 1. Effective January 1, 2011. Applicable from January 1, 2010, as provided in subd. (d).)
“Corporation” includes joint stock companies or associations (including nonprofit associations that perform services, borrow money or own property, and business trusts or other business entities taxable as a corporation under regulations of the Franchise Tax Board) and insurance companies. “Corporation” also includes a trust organized and operated exclusively for purposes contained in Section 23701d.
(Amended by Stats. 1997, Ch. 608, Sec. 1. Effective October 3, 1997.)
“Taxable year” means the calendar year or the fiscal year upon the basis of which the taxable income is computed under this part. If no fiscal year has been established, “taxable year” means the calendar year.
“Taxable year” means, in the case of a return made for a fractional part of a year under this part or under regulations prescribed by the Franchise Tax Board, the period for which the return is made.
(Repealed and added by Stats. 1955, Ch. 939.)
“Fiscal year” means an accounting period of 12 months ending on the last day of any month other than December.
(Repealed and added by Stats. 1955, Ch. 939.)
“Paid or incurred” and “paid or accrued” shall be construed according to the method of accounting upon the basis of which the taxable income is computed under this part.
(Repealed and added by Stats. 1955, Ch. 939.)
(a) “Resident” includes:
(1) Every individual who is in this state for other than a temporary or transitory purpose.
(2) Every individual domiciled in this state who is outside the state for a temporary or transitory purpose.
(b) Any individual (and spouse) who is domiciled in this state shall be considered outside this state for a temporary or transitory purpose while that individual:
(1) Holds an elective office of the government of the United States, or
(2) Is employed on the staff of an elective officer in the legislative branch of the government of the United States as described in paragraph (1), or
(3) Holds an appointive office in the executive branch of the government of the United States (other than the armed forces of the United States or career appointees in the United States Foreign Service) if the appointment to that office was by the President of the United States and subject to confirmation by the Senate of the United States and whose tenure of office is at the pleasure of the President of the United States.
(c) Any individual who is a resident of this state continues to be a resident even though temporarily absent from the state.
(d) For any taxable year beginning on or after January 1, 1994, any individual domiciled in this state who is absent from the state for an uninterrupted period of at least 546 consecutive days under an employment-related contract shall be considered outside this state for other than a temporary or transitory purpose.
(1)For purposes of this subdivision, returns to this state, totaling in the aggregate not more than 45 days during a taxable year, shall be disregarded.
(2)This subdivision shall not apply to any individual, including any spouse described in paragraph (3), who has income from stocks, bonds, notes, or other intangible personal property in excess of two hundred thousand dollars ($200,000) in any taxable year in which the employment-related contract is in effect. In the case of an individual who is married, this paragraph shall be applied to the income of each spouse separately.
(3)Any spouse who is absent from the state for an uninterrupted period of at least 546 consecutive days to accompany a spouse who, under this subdivision, is considered outside this state for other than a temporary or transitory purpose shall, for purposes of this subdivision, also be considered outside this state for other than a temporary or transitory purpose.
(4) This subdivision shall not apply to any individual if the principal purpose of the individual’s absence from this state is to avoid any tax imposed by this part.
(Amended by Stats. 1994, Ch. 1243, Sec. 4. Effective September 30, 1994.)
“Nonresident” means every individual other than a resident.
(Repealed and added by Stats. 1955, Ch. 939.)
For purposes of Part 10.2 (commencing with Section 18401) and this part, the term “part-year resident” means a taxpayer who meets both of the following conditions during the same taxable year.
(a) Is a resident of this state during a portion of the taxable year.
(b) Is a nonresident of this state during a portion of the taxable year.
(Added by Stats. 2001, Ch. 920, Sec. 1. Effective January 1, 2002.)
Every individual who spends in the aggregate more than nine months of the taxable year within this State shall be presumed to be a resident. The presumption may be overcome by satisfactory evidence that the individual is in the State for a temporary or transitory purpose.
(Repealed and added by Stats. 1955, Ch. 939.)
“United States,” when used in a geographical sense, includes the states, the District of Columbia, and the possessions of the United States.
(Amended by Stats. 1961, Ch. 537.)
“State” includes the District of Columbia, and the possessions of the United States.
(Amended by Stats. 1961, Ch. 537.)
“Foreign country” means any jurisdiction other than one embraced within the United States.
(Repealed and added by Stats. 1955, Ch. 939.)
“Trade or business” includes the performance of the functions of a public office.
(Repealed and added by Stats. 1955, Ch. 939.)
For purposes of this part, the term “substituted basis property” has the same meaning given that term by Section 7701(a)(42) of the Internal Revenue Code.
(Added by Stats. 1987, Ch. 1138, Sec. 5. Effective September 25, 1987. Applicable to taxable years beginning on or after January 1, 1987, by Sec. 189 of Ch. 1138.)
For purposes of this part, the term “transferred basis property” has the same meaning given that term by Section 7701(a)(43) of the Internal Revenue Code, except that reference to Subtitle A shall instead be a reference to this part.
(Added by Stats. 1987, Ch. 1138, Sec. 6. Effective September 25, 1987. Applicable to taxable years beginning on or after January 1, 1987, by Sec. 189 of Ch. 1138.)
For purposes of this part, the term “exchanged basis property” has the same meaning given that term by Section 7701(a)(44) of the Internal Revenue Code, except that reference to Subtitle A shall instead be a reference to this part.
(Added by Stats. 1987, Ch. 1138, Sec. 7. Effective September 25, 1987. Applicable to taxable years beginning on or after January 1, 1987, by Sec. 189 of Ch. 1138.)
For purposes of this part, the term “nonrecognition transaction” has the same meaning given that term by Section 7701(a)(45) of the Internal Revenue Code, except that reference to Subtitle A shall instead be a reference to this part.
(Added by Stats. 1987, Ch. 1138, Sec. 8. Effective September 25, 1987. Applicable to taxable years beginning on or after January 1, 1987, by Sec. 189 of Ch. 1138.)
For purposes of this part, in determining the amount of gain or loss (or deemed gain or loss) with respect to any property, Section 7701(g) of the Internal Revenue Code, relating to nonrecourse indebtedness, applies, except as otherwise provided.
(Amended by Stats. 2003, Ch. 185, Sec. 5. Effective January 1, 2004.)
For purposes of this part:
(a) Section 7702 of the Internal Revenue Code, relating to life insurance contracts, shall apply, except as otherwise provided.
(b) Section 7702A of the Internal Revenue Code, relating to modified endowment contract defined, shall apply, except as otherwise provided.
(c) (1) Section 7702B of the Internal Revenue Code, relating to treatment of qualified long-term care insurance, shall apply, except as otherwise provided.
(2) The amendments made by Section 844 of the Pension Protection Act of 2006 (Public Law 109-280) to Section 7702B of the Internal Revenue Code shall not apply.
(Amended by Stats. 2010, Ch. 14, Sec. 2. Effective January 1, 2011.)
Section 7701(a)(46) of the Internal Revenue Code, relating to determination of whether there is a collective bargaining agreement, shall apply, except as otherwise provided.
(Amended by Stats. 1993, Ch. 877, Sec. 2. Effective October 6, 1993.)
Section 7701(e) of the Internal Revenue Code, relating to treatment of certain contracts for providing services, etc., shall apply, except as otherwise provided.
(Amended by Stats. 1993, Ch. 877, Sec. 3. Effective October 6, 1993.)
For purposes of this part, the term “domestic building and loan association” has the same meaning given that term by Section 7701(a)(19) of the Internal Revenue Code.
(Added by Stats. 1987, Ch. 1138, Sec. 9. Effective September 25, 1987. Applicable to taxable years beginning on or after January 1, 1987, by Sec. 189 of Ch. 1138.)
Section 7701(h) of the Internal Revenue Code, relating to motor vehicle operating leases, applies, except as otherwise provided.
(Amended by Stats. 2003, Ch. 185, Sec. 6. Effective January 1, 2004.)
Section 7701(a)(20) of the Internal Revenue Code, relating to definition of “employee,” shall apply, except as otherwise provided.
(Amended by Stats. 1993, Ch. 877, Sec. 5. Effective October 6, 1993.)
Section 7701(k) of the Internal Revenue Code, relating to treatment of certain amounts paid to charity, shall apply, except as otherwise provided.
(Amended by Stats. 1993, Ch. 877, Sec. 6. Effective October 6, 1993.)
(a) Section 7701(n) of the Internal Revenue Code, relating to convention or association of churches, shall apply, except as otherwise provided.
(b) The phrase “this part” shall be substituted for “this title” in Section 7701(n) of the Internal Revenue Code.
(Added by Stats. 2010, Ch. 14, Sec. 3. Effective January 1, 2011.)
As used in this part, if the husband and wife therein referred to are divorced, wherever appropriate to the meaning of this part, the term “wife” shall be read “former wife” and the term “husband” shall be read “former husband.” If the payments described in this part are made by or on behalf of the wife or former wife to the husband or former husband instead of vice versa, wherever appropriate to the meaning of this part, the term “husband” shall be read “wife” and the term “wife” shall be read “husband.”
(Added by Stats. 1955, Ch. 939.)
Section 7703 of the Internal Revenue Code, relating to determination of marital status, shall apply, except as otherwise provided.
(Amended by Stats. 1993, Ch. 877, Sec. 7. Effective October 6, 1993.)
(a) (1) For purposes of this part, the domestic partner of the taxpayer shall be treated as the spouse of the taxpayer for purposes of applying only Sections 105(b), 106(a), 162(l), 162(n), and 213(a) of the Internal Revenue Code and for purposes of determining whether an individual is the taxpayer’s “dependent” or “member of their family” as these terms are used in those sections.
(2) This subdivision shall apply to each taxable year beginning on or after January 1, 2002.
(b) (1) Except as otherwise provided, the domestic partner or former domestic partner of a taxpayer shall be treated as the spouse or former spouse of that taxpayer for purposes of applying provisions of this part, Part 10.2 (commencing with Section 18401), Part 10.7 (commencing with Section 21001), and Part 11 (commencing with Section 23001), and for purposes of applying provisions of the Internal Revenue Code that are applicable for purposes of this part, Part 10.2, Part 10.7, or Part 11.
(2) A domestic partner shall not be treated as the spouse of a taxpayer as required by paragraph (1) in the following circumstances:
(A) Where the treatment would result in the classification of a business entity for purposes of this part, Part 10.2, or Part 11 that would be different than the classification of that business entity for federal income tax purposes.
(B) Where the treatment required by paragraph (1) would result in disqualification for federal income tax purposes of a plan that otherwise qualifies under Section 401(a) of the Internal Revenue Code.
(C) Where the treatment would result in a tax-favored account that would not be qualified as a tax-favored account for federal income tax purposes. For purposes of this subparagraph, “tax-favored account” means an individual account, plan, or arrangement that is exempt from income tax under Chapter 1 of the Internal Revenue Code, including an individual retirement account, as described in Section 408 of the Internal Revenue Code, an Archer MSA, as described in Section 220 of the Internal Revenue Code, a qualified tuition program, as described in Section 529 of the Internal Revenue Code, and a Coverdell education savings account, as described in Section 530 of the Internal Revenue Code.
(3) The amendments made by the act adding this subdivision shall be operative for each taxable year beginning on or after January 1, 2007.
(c) For purposes of this section, the term “domestic partner” means an individual partner in a domestic partner relationship within the meaning of Section 297 of the Family Code.
(Amended by Stats. 2007, Ch. 426, Sec. 1. Effective October 10, 2007. Applicable to taxable years beginning on or after January 1, 2007, pursuant to paragraph (3) of new subdivision (b).)
The term “military or naval forces of the United States” and the term “armed forces of the United States” each includes all regular and reserve components of the uniformed services which are subject to the jurisdicition of the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, or the Secretary of the Air Force, and each term also includes the Coast Guard. The members of such forces include commissioned officers and personnel below the grade of commissioned officers in such forces.
(Added by Stats. 1955, Ch. 939.)
The term “counsel for the Franchise Tax Board,” and “Franchise Tax Counsel” as used in this part, means attorney or attorneys appointed or employed by the Franchise Tax Board and acting subject to the approval and under the supervision of the Attorney General.
(Added by Stats. 1955, Ch. 939.)
The term “Personal Income Tax Law of 1954,” means Part 10 of Division 2 of the Revenue and Taxation Code as enacted by the Statutes 1943, Chapter 659, and as subsequently amended, including all amendments enacted prior to January 1, 1955.
(Added by Stats. 1955, Ch. 939.)
(a) (1) Unless otherwise specifically provided, the terms “Internal Revenue Code,” “Internal Revenue Code of 1954,” or “Internal Revenue Code of 1986,” for purposes of this part, mean Title 26 of the United States Code, including all amendments thereto as enacted on the specified date for the applicable taxable year as follows:
Taxable Year | Specified Date of |
(A) For taxable years beginning on or after | |
January 1, 1983, and on or before December | |
31, 1983 ........................ | January 15, 1983 |
(B) For taxable years beginning on or after | |
January 1, 1984, and on or before December | |
31, 1984 ........................ | January 1, 1984 |
(C) For taxable years beginning on or after | |
January 1, 1985, and on or before December | |
31, 1985 ........................ | January 1, 1985 |
(D) For taxable years beginning on or after | |
January 1, 1986, and on or before December | |
31, 1986 ........................ | January 1, 1986 |
(E) For taxable years beginning on or after | |
January 1, 1987, and on or before December | |
31, 1988 ........................ | January 1, 1987 |
(F) For taxable years beginning on or after | |
January 1, 1989, and on or before December | |
31, 1989 ........................ | January 1, 1989 |
(G) For taxable years beginning on or after | |
January 1, 1990, and on or before December | |
31, 1990 ........................ | January 1, 1990 |
(H) For taxable years beginning on or after | |
January 1, 1991, and on or before December | |
31, 1991 ........................ | January 1, 1991 |
(I) For taxable years beginning on or after | |
January 1, 1992, and on or before December | |
31, 1992 ........................ | January 1, 1992 |
(J) For taxable years beginning on or after | |
January 1, 1993, and on or before December | |
31, 1996 ........................ | January 1, 1993 |
(K) For taxable years beginning on or after | |
January 1, 1997, and on or before December | |
31, 1997 ........................ | January 1, 1997 |
(L) For taxable years beginning on or after | |
January 1, 1998, and on or before December | |
31, 2001 ........................ | January 1, 1998 |
(M) For taxable years beginning on or after | |
January 1, 2002, and on or before December | |
31, 2004 ........................ | January 1, 2001 |
(N) For taxable years beginning on or after | |
January 1, 2005, and on or before December | |
31, 2009 ........................ | January 1, 2005 |
(O) For taxable years beginning on or after | |
January 1, 2010 ........................ | January 1, 2009 |
(2) (A) Unless otherwise specifically provided, for federal laws enacted on or after January 1, 1987, and on or before the specified date for the taxable year, uncodified provisions that relate to provisions of the Internal Revenue Code that are incorporated for purposes of this part shall be applicable to the same taxable years as the incorporated provisions.
(B) In the case where Section 901 of the Economic Growth and Tax Relief Act of 2001 (Public Law 107-16) applies to any provision of the Internal Revenue Code that is incorporated for purposes of this part, Section 901 of the Economic Growth and Tax Relief Act of 2001 shall apply for purposes of this part in the same manner and to the same taxable years as it applies for federal income tax purposes.
(3) Subtitle G (Tax Technical Corrections) and Part I of Subtitle H (Repeal of Expired or Obsolete Provisions) of the Revenue Reconciliation Act of 1990 (Public Law 101-508) modified numerous provisions of the Internal Revenue Code and provisions of prior federal acts, some of which are incorporated by reference into this part. Unless otherwise provided, the provisions described in the preceding sentence, to the extent that they modify provisions that are incorporated into this part, are declaratory of existing law and shall be applied in the same manner and for the same periods as specified in the Revenue Reconciliation Act of 1990.
(b) Unless otherwise specifically provided, when applying any provision of the Internal Revenue Code for purposes of this part, a reference to any of the following is not applicable for purposes of this part:
(1) Except as provided in Chapter 4.5 (commencing with Section 23800) of Part 11 of Division 2, an electing small business corporation, as defined in Section 1361(b) of the Internal Revenue Code.
(2) Domestic international sales corporations (DISC), as defined in Section 992(a) of the Internal Revenue Code.
(3) A personal holding company, as defined in Section 542 of the Internal Revenue Code.
(4) A foreign personal holding company, as defined in Section 552 of the Internal Revenue Code.
(5) A foreign investment company, as defined in Section 1246(b) of the Internal Revenue Code.
(6) A foreign trust, as defined in Section 679 of the Internal Revenue Code.
(7) Foreign income taxes and foreign income tax credits.
(8) Section 911 of the Internal Revenue Code, relating to citizens or residents of the United States living abroad.
(9) A foreign corporation, except that Section 367 of the Internal Revenue Code shall be applicable.
(10) Federal tax credits and carryovers of federal tax credits.
(11) Nonresident aliens.
(12) Deduction for personal exemptions, as provided in Section 151 of the Internal Revenue Code.
(13) The tax on generation-skipping transfers imposed by Section 2601 of the Internal Revenue Code.
(14) The tax, relating to estates, imposed by Section 2001 or 2101 of the Internal Revenue Code.
(c) (1) The provisions contained in Sections 41 to 44, inclusive, and Section 172 of the Tax Reform Act of 1984 (Public Law 98-369), relating to treatment of debt instruments, is not applicable for taxable years beginning before January 1, 1987.
(2) The provisions contained in Public Law 99-121, relating to the treatment of debt instruments, is not applicable for taxable years beginning before January 1, 1987.
(3) For each taxable year beginning on or after January 1, 1987, the provisions referred to by paragraphs (1) and (2) shall be applicable for purposes of this part in the same manner and with respect to the same obligations as the federal provisions, except as otherwise provided in this part.
(d) When applying the Internal Revenue Code for purposes of this part, regulations promulgated in final form or issued as temporary regulations by “the secretary” shall be applicable as regulations under this part to the extent that they do not conflict with this part or with regulations issued by the Franchise Tax Board.
(e) Whenever this part allows a taxpayer to make an election, the following rules shall apply:
(1) A proper election filed with the Internal Revenue Service in accordance with the Internal Revenue Code or regulations issued by “the secretary” shall be deemed to be a proper election for purposes of this part, unless otherwise provided in this part or in regulations issued by the Franchise Tax Board.
(2) A copy of that election shall be furnished to the Franchise Tax Board upon request.
(3) (A) Except as provided in subparagraph (B), in order to obtain treatment other than that elected for federal purposes, a separate election shall be filed at the time and in the manner required by the Franchise Tax Board.
(B) (i) If a taxpayer makes a proper election for federal income tax purposes prior to the time that taxpayer becomes subject to the tax imposed under this part or Part 11 (commencing with Section 23001), that taxpayer is deemed to have made the same election for purposes of the tax imposed by this part, Part 10.2 (commencing with Section 18401), and Part 11 (commencing with Section 23001), as applicable, and that taxpayer may not make a separate election for California tax purposes unless that separate election is expressly authorized by this part, Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001), or by regulations issued by the Franchise Tax Board.
(ii) If a taxpayer has not made a proper election for federal income tax purposes prior to the time that taxpayer becomes subject to tax under this part or Part 11 (commencing with Section 23001), that taxpayer may not make a separate California election for purposes of this part, Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001), unless that separate election is expressly authorized by this part, Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001), or by regulations issued by the Franchise Tax Board.
(iii) This subparagraph applies only to the extent that the provisions of the Internal Revenue Code or the regulation issued by “the secretary” authorizing an election for federal income tax purposes apply for purposes of this part, Part 10.2 (commencing with Section 18401) or Part 11 (commencing with Section 23001).
(f) Whenever this part allows or requires a taxpayer to file an application or seek consent, the rules set forth in subdivision (e) shall be applicable with respect to that application or consent.
(g) When applying the Internal Revenue Code for purposes of determining the statute of limitations under this part, any reference to a period of three years shall be modified to read four years for purposes of this part.
(h) When applying, for purposes of this part, any section of the Internal Revenue Code or any applicable regulation thereunder, all of the following shall apply:
(1) References to “adjusted gross income” shall mean the amount computed in accordance with Section 17072, except as provided in paragraph (2).
(2) (A) Except as provided in subparagraph (B), references to “adjusted gross income” for purposes of computing limitations based upon adjusted gross income, shall mean the amount required to be shown as adjusted gross income on the federal tax return for the same taxable year.
(B) In the case of registered domestic partners and former registered domestic partners, adjusted gross income, for the purposes of computing limitations based upon adjusted gross income, shall mean the adjusted gross income on a federal tax return computed as if the registered domestic partner or former registered domestic partner was treated as a spouse or former spouse, respectively, for federal income tax purposes, and used the same filing status that was used on the state tax return for the same taxable year.
(3) Any reference to “subtitle” or “chapter” shall mean this part.
(4) The provisions of Section 7806 of the Internal Revenue Code, relating to construction of title, shall apply.
(5) Any provision of the Internal Revenue Code that becomes operative on or after the specified date for that taxable year shall become operative on the same date for purposes of this part.
(6) Any provision of the Internal Revenue Code that becomes inoperative on or after the specified date for that taxable year shall become inoperative on the same date for purposes of this part.
(7) Due account shall be made for differences in federal and state terminology, effective dates, substitution of “Franchise Tax Board” for “secretary” when appropriate, and other obvious differences.
(8) Except as otherwise provided, any reference to Section 501 of the Internal Revenue Code shall be interpreted to also refer to Section 23701.
(i) Any reference to a specific provision of the Internal Revenue Code shall include modifications of that provision, if any, in this part.
(Amended by Stats. 2010, Ch. 14, Sec. 4. Effective January 1, 2011.)
This part applies to the taxable income of taxpayers received or accrued on or after January 1, l935.
(Added by Stats. 1955, Ch. 939.)
The provisions of this code insofar as they are substantially the same as existing statutory provisions relating to the same subject matter shall be construed as restatements and continuations thereof, and not as new enactments.
(Added by Stats. 1955, Ch. 939.)
The repeal of any provision of the Personal Income Tax Law shall not affect any act done or any right accruing or accrued, or any suit or proceeding had or commenced in any civil cause, before such repeal; but all rights and liabilities under such law shall continue, and may be enforced in the same manner, as if such repeal had not been made.
(Amended by Stats. 1991, Ch. 117, Sec. 9. Effective July 16, 1991.)
(a) The enactment of the act adding this section to the code shall not deprive any taxpayer of any carryover of a credit, excess contribution, or loss to which that taxpayer was entitled under this part, including all amendments enacted prior to January 1, 1987.
(b) The carryover of the credit, excess contribution, or loss shall be allowed to be carried forward under the act adding this section to the code for the same period of time as the taxpayer would have been entitled to carry that item forward under prior law.
(c) For purposes of applying the provisions of the act adding this section to the code, the basis or recomputed basis of any asset acquired prior to January 1, 1987, shall be determined under the law at the time the asset was acquired and any adjustments to basis shall be computed as follows:
(1) Any adjustments to basis for taxable years beginning prior to January 1, 1987, shall be computed under applicable provisions of this part, including all amendments enacted prior to January 1, 1987; and
(2) Any adjustments to basis for taxable years beginning on or after January 1, 1987, shall be computed under the applicable provisions of the act adding this section to the code.
(Added by Stats. 1987, Ch. 1138, Sec. 14. Effective September 25, 1987. Applicable to taxable years beginning on or after January 1, 1987, by Sec. 189 of Ch. 1138.)
For the purpose of applying the Personal Income Tax Law of 1954 or the Personal Income Tax Law as herein enacted to any period, any reference in either such law to another provision of the Personal Income Tax Law of 1954 or the Personal Income Tax Law as herein enacted which is not then applicable to such period shall be deemed a reference to the corresponding provision of the other law which is then applicable to such period.
(Added by Stats. 1955, Ch. 939.)
Any provision of this part which refers to the application of any portion of this part to a prior period (or which depends upon the application to a prior period of any portion of this part) shall, when appropriate and consistent with the purpose of such provision, be deemed to refer to (or depend upon the application of) the corresponding provision of Part 10 of Division 2 of the Revenue and Taxation Code or of such other Personal Income Tax Laws as were applicable to the prior period.
(Added by Stats. 1955, Ch. 939.)
Division, part, chapter, article, section and subsection headings contained herein shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning, or intent of the provisions of this part.
(Added by Stats. 1955, Ch. 939.)
If any chapter, article, section, subsection, clause, sentence or phrase of this part which is reasonably separable from the remaining portions of this part, or the application thereof to any person, taxpayer or circumstance, is for any reason determined unconstitutional, such determination shall not affect the remainder of this part, nor, will the application of any such provision to other persons, taxpayers or circumstances, be affected thereby.
(Added by Stats. 1955, Ch. 939.)
Unless otherwise specifically provided therein, the provisions of any act:
(a) That affect the imposition or computation of taxes, additions to tax, penalties, or the allowance of credits against the tax, shall be applied to taxable years beginning on or after January 1 of the year in which the act takes effect.
(b) That otherwise affect the provisions of this part shall be applied on and after the date the act takes effect.
(Amended (as amended by Stats. 1993, Ch. 31) by Stats. 1993, Ch. 877, Sec. 7.1. Effective October 6, 1993. Operative January 1, 1994, by Sec. 102 of Ch. 877.)
The term “withholding agent” means any person required to deduct and withhold any tax under Section 18662.
(Amended by Stats. 1993, Ch. 31, Sec. 2. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)
Unless expressly otherwise provided in this part, any notice may be given by first class mail postage prepaid.
(Added by Stats. 1972, Ch. 1237.)
Provisions in other codes or general law statutes which are related to this part include all of the following:
(a) Chapter 20.6 (commencing with Section 9891) of Division 3 of the Business and Professions Code, relating to tax preparers.
(b) Part 10.2 (commencing with Section 18401), relating to the administration of franchise and income tax laws.
(c) Part 10.5 (commencing with Section 20501), relating to the Property Tax Assistance and Postponement Law.
(d) Part 10.7 (commencing with Section 21001), relating to the Taxpayers’ Bill of Rights.
(e) Part 11 (commencing with Section 23001), relating to the Corporation Tax Law.
(f) Sections 15700 to 15702.1, inclusive, of the Government Code, relating to the Franchise Tax Board.
(Amended by Stats. 2001, Ch. 543, Sec. 4. Effective January 1, 2002.)
(a) For purposes of this part, unless expressly otherwise provided, for taxable years beginning before January 1, 1984, references to the California Consumer Price Index shall mean the California Consumer Price Index for All Urban Consumers (old series).
(b) For taxable years beginning on or after January 1, 1984, references to the California Consumer Price Index shall mean the California Consumer Price Index for All Urban Consumers as modified for rental equivalence homeownership (new series).
(Amended by Stats. 1983, Ch. 323, Sec. 82.5. Effective July 1, 1983.)
(a) Notwithstanding any provision in this part to the contrary, for the purposes of computing tax credits, the term “net tax” means the tax imposed under either Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to lump-sum distributions) less the credits allowed by Section 17054 (relating to personal exemption credits) and any amount imposed under paragraph (1) of subdivision (d) and paragraph (1) of subdivision (e) of Section 17560. Notwithstanding the preceding sentence, the “net tax” shall not be less than the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions), if any. Credits shall be allowed against “net tax” in the following order:
(1) Credits that do not contain carryover or refundable provisions, except those described in paragraphs (4) and (5).
(2) Credits that contain carryover provisions but do not contain refundable provisions, except for those that are allowed to reduce “net tax” below the tentative minimum tax, as defined by Section 17062.
(3) Credits that contain both carryover and refundable provisions.
(4) The minimum tax credit allowed by Section 17063 (relating to the alternative minimum tax).
(5) Credits that are allowed to reduce “net tax” below the tentative minimum tax, as defined by Section 17062.
(6) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001).
(7) Credits that contain refundable provisions but do not contain carryover provisions.
The order within each paragraph shall be determined by the Franchise Tax Board.
(b) Notwithstanding the provisions of Sections 17061 (relating to refunds pursuant to the Unemployment Insurance Code) and 19002 (relating to tax withholding), the credits provided in those sections shall be allowed in the order provided in paragraph (6) of subdivision (a).
(c) (1) Notwithstanding any other provision of this part, no tax credit shall reduce the tax imposed under Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to the separate tax on lump-sum distributions) below the tentative minimum tax, as defined by Section 17062, except the following credits:
(A) The credit allowed by Section 17052.2 (relating to teacher retention tax credit).
(B) The credit allowed by former Section 17052.4 (relating to solar energy).
(C) The credit allowed by former Section 17052.5 (relating to solar energy, repealed on January 1, 1987).
(D) The credit allowed by former Section 17052.5 (relating to solar energy, repealed on December 1, 1994).
(E) The credit allowed by Section 17052.12 (relating to research expenses).
(F) The credit allowed by former Section 17052.13 (relating to sales and use tax credit).
(G) The credit allowed by former Section 17052.15 (relating to Los Angeles Revitalization Zone sales tax credit).
(H) The credit allowed by Section 17052.25 (relating to the adoption costs credit).
(I) The credit allowed by Section 17053.5 (relating to the renter’s credit).
(J) The credit allowed by former Section 17053.8 (relating to enterprise zone hiring credit).
(K) The credit allowed by former Section 17053.10 (relating to Los Angeles Revitalization Zone hiring credit).
(L) The credit allowed by former Section 17053.11 (relating to program area hiring credit).
(M) For each taxable year beginning on or after January 1, 1994, the credit allowed by former Section 17053.17 (relating to Los Angeles Revitalization Zone hiring credit).
(N) The credit allowed by Section 17053.33 (relating to targeted tax area sales or use tax credit).
(O) The credit allowed by Section 17053.34 (relating to targeted tax area hiring credit).
(P) The credit allowed by Section 17053.49 (relating to qualified property).
(Q) The credit allowed by Section 17053.70 (relating to enterprise zone sales or use tax credit).
(R) The credit allowed by Section 17053.74 (relating to enterprise zone hiring credit).
(S) The credit allowed by Section 17054 (relating to credits for personal exemption).
(T) The credit allowed by Section 17054.5 (relating to the credits for a qualified joint custody head of household and a qualified taxpayer with a dependent parent).
(U) The credit allowed by Section 17054.7 (relating to the credit for a senior head of household).
(V) The credit allowed by former Section 17057 (relating to clinical testing expenses).
(W) The credit allowed by Section 17058 (relating to low-income housing).
(X) For taxable years beginning on or after January 1, 2014, the credit allowed by Section 17059.2 (relating to GO-Biz California Competes Credit).
(Y) The credit allowed by Section 17061 (relating to refunds pursuant to the Unemployment Insurance Code).
(Z) Credits for taxes paid to other states allowed by Chapter 12 (commencing with Section 18001).
(AA) The credit allowed by Section 19002 (relating to tax withholding).
(AB) For taxable years beginning on or after January 1, 2014, the credit allowed by Section 17053.86 (relating to the College Access Tax Credit Fund).
(AC) For taxable years beginning on or after January 1, 2017, the credit allowed by Section 17053.87 (relating to the College Access Tax Credit Fund).
(2) Any credit that is partially or totally denied under paragraph (1) shall be allowed to be carried over and applied to the net tax in succeeding taxable years, if the provisions relating to that credit include a provision to allow a carryover when that credit exceeds the net tax.
(d) Unless otherwise provided, any remaining carryover of a credit allowed by a section that has been repealed or made inoperative shall continue to be allowed to be carried over under the provisions of that section as it read immediately prior to being repealed or becoming inoperative.
(e) (1) Unless otherwise provided, if two or more taxpayers (other than husband and wife) share in costs that would be eligible for a tax credit allowed under this part, each taxpayer shall be eligible to receive the tax credit in proportion to his or her respective share of the costs paid or incurred.
(2) In the case of a partnership, the credit shall be allocated among the partners pursuant to a written partnership agreement in accordance with Section 704 of the Internal Revenue Code, relating to partner’s distributive share.
(3) In the case of a husband and wife who file separate returns, the credit may be taken by either or equally divided between them.
(f) Unless otherwise provided, in the case of a partnership, any credit allowed by this part shall be computed at the partnership level, and any limitation on the expenses qualifying for the credit or limitation upon the amount of the credit shall be applied to the partnership and to each partner.
(g) (1) With respect to any taxpayer that directly or indirectly owns an interest in a business entity that is disregarded for tax purposes pursuant to Section 23038 and any regulations thereunder, the amount of any credit or credit carryforward allowable for any taxable year attributable to the disregarded business entity shall be limited in accordance with paragraphs (2) and (3).
(2) The amount of any credit otherwise allowed under this part, including any credit carryover from prior years, that may be applied to reduce the taxpayer’s “net tax,” as defined in subdivision (a), for the taxable year shall be limited to an amount equal to the excess of the taxpayer’s regular tax (as defined in Section 17062), determined by including income attributable to the disregarded business entity that generated the credit or credit carryover, over the taxpayer’s regular tax (as defined in Section 17062), determined by excluding the income attributable to that disregarded business entity. No credit shall be allowed if the taxpayer’s regular tax (as defined in Section 17062), determined by including the income attributable to the disregarded business entity, is less than the taxpayer’s regular tax (as defined in Section 17062), determined by excluding the income attributable to the disregarded business entity.
(3) If the amount of a credit allowed pursuant to the section establishing the credit exceeds the amount allowable under this subdivision in any taxable year, the excess amount may be carried over to subsequent taxable years pursuant to subdivisions (c) and (d).
(h) (1) Unless otherwise specifically provided, in the case of a taxpayer that is a partner or shareholder of an eligible pass-thru entity described in paragraph (2), any credit passed through to the taxpayer in the taxpayer’s first taxable year beginning on or after the date the credit is no longer operative may be claimed by the taxpayer in that taxable year, notwithstanding the repeal of the statute authorizing the credit prior to the close of that taxable year.
(2) For purposes of this subdivision, “eligible pass-thru entity” means any partnership or “S” corporation that files its return on a fiscal year basis pursuant to Section 18566, and that is entitled to a credit pursuant to this part for the taxable year that begins during the last year the credit is operative.
(3) This subdivision shall apply to credits that become inoperative on or after the operative date of the act adding this subdivision.
(Amended by Stats. 2015, Ch. 22, Sec. 27. Effective June 24, 2015.)
Notwithstanding Section 17039 or any other provision in this part to the contrary, the credit allowed by Section 17053.30 (relating to natural heritage) may reduce the tax imposed under Section 17041 or 17048 plus the tax imposed under Section 17504 (relating to the separate tax lump-sum distributions) below the tentative minimum tax, as defined by Section 17062, but only after allowance of the credit allowed by Section 17063.
(Added by Stats. 2000, Ch. 113, Sec. 2. Effective July 10, 2000.)
(a) Notwithstanding any provision of this part or Part 10.2 (commencing with Section 18401) to the contrary, for each taxable year beginning on or after January 1, 2008, and before January 1, 2010, the total of all business credits otherwise allowable under any credit under any provision of Chapter 2 (commencing with Section 17041), including the carryover of any business credit under a former provision of that chapter, for the taxable year shall not reduce the “net tax” (as defined in Section 17039) below the applicable amount.
(b) For purposes of this section, “business credit” means a credit allowable under any provision of Chapter 2 (commencing with Section 17041) other than the following credits:
(1) The credit allowed by Section 17052.6 (relating to credit for household and dependent care).
(2) The credit allowed by Section 17052.25 (relating to credit for adoption costs).
(3) The credit allowed by Section 17053.5 (relating to renter’s tax credit).
(4) The credit allowed by Section 17053.80 (relating to full time employment hiring credit).
(5) The credit allowed by Section 17054 (relating to credit for personal exemption).
(6) The credit allowed by Section 17054.5 (relating to credit for qualified joint custody head of household and a qualified taxpayer with a dependent parent).
(7) The credit allowed by Section 17054.7 (relating to credit for senior head of household).
(8) The credit allowed by Section 17061 (relating to refunds pursuant to the Unemployment Insurance Code).
(c) For purposes of this section, the “applicable amount” shall be equal to 50 percent of the “net tax” (as defined in Section 17039) before application of any credits.
(d) The amount of any credit otherwise allowable for the taxable year under Section 17039 that is not allowed due to application of this section shall remain a credit carryover amount under this part.
(e) The carryover period for any credit that is not allowed due to the application of this section shall be increased by the number of taxable years the credit (or any portion thereof) was not allowed.
(f) Notwithstanding anything to the contrary in this part or Part 10.2 (commencing with Section 18401) the credits listed in subdivision (b) shall be required to be applied before any business credits, as limited by subdivision (a), are applied.
(g) The provisions of this section shall not apply to a taxpayer with net business income of less than five hundred thousand dollars ($500,000) for the taxable year. For purposes of this subdivision, business income means:
(1) Income from a trade or business, whether conducted by the taxpayer or by a pasthrough entity owned directly or indirectly by the taxpayer. For purposes of this paragraph, the term “passthrough entity” means a partnership or an “S” corporation.
(2) Income from rental activity.
(3) Income attributable to a farming business.
(Amended by Stats. 2009, 3rd Ex. Sess., Ch. 17, Sec. 2. Effective February 20, 2009.)
