Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 154


Introduced by Assembly Member Ting

January 16, 2015


begin deleteAn act to amend Section 23037 of the Revenue and Taxation Code, relating to taxation. end deletebegin insertAn act to amend Sections 17024.5, 17088, 17144, 17215, 18155, 19141.5, 19164, 19167, 19172, 19172.5, 19183, 19772, 23701i, 24307, 24427, 24439, 24870, 24871, and 24990.5 of, to add Sections 17240, 17241, 17323, 19131.5, 24454, and 24459 to, and to repeal Sections 17131.7, 17131.12, 17131.14, 17134.1, 17201.1, 17280.1, 17322.1, 24452.1, and 24871.1 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 154, as amended, Ting. begin deleteCorporation Tax Law. end deletebegin insertTaxation: federal conformity.end insert

begin insert

Under the Personal Income Tax Law and the Corporation Tax Law, various provisions of the federal Internal Revenue Code, as enacted as of a specified date, are referenced in various sections of the Revenue and Taxation Code. Those laws provide that for taxable years beginning on or after January 1, 2010, the specified date of those referenced Internal Revenue Code sections is January 1, 2009, unless otherwise specifically provided. Existing law requires, for any introduced bill that proposes changes in any of those dates, that the Franchise Tax Board prepare a complete analysis of the bill that describes all changes to state law that will automatically occur by reference to federal law as of the changed date. It further requires the Franchise Tax Board to immediately update and supplement that analysis upon any amendment to the bill, and requires that analysis be made available to the public and be submitted to the Legislature for publication in the daily journal of each house of the Legislature.

end insert
begin insert

This bill would change the specified date of those referenced Internal Revenue Code sections to January 1, 2015, for taxable years beginning on or after January 1, 2015, and thereby would make numerous substantive changes to both the Personal Income Tax Law and the Corporation Tax Law with respect to those areas of preexisting conformity that are subject to changes under federal laws enacted after January 1, 2009, and that have not been, or are not being, excepted or modified. This bill would make certain other changes in federal income tax laws applicable, with specified exceptions and modifications, and make specified supplemental, technical, or clarifying changes for purposes of the Personal Income Tax Law or the Corporation Tax Law, or both, or the administration of those laws, with respect to, among other things, tax credits, tax on specified distributions from Archer MSAs, income exclusions, reporting requirements, qualified tuition program investment direction, disclosure of information with respect to foreign financial assets, redemptions by foreign subsidiaries, listed property, and penalty amounts related to the failure to file specified returns or include specified information on returns.

end insert
begin insert

This bill would also specify various dates on which specified provisions apply and repeal obsolete provisions.

end insert
begin insert

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature.

end insert
begin insert

This bill would take effect immediately as a tax levy.

end insert
begin delete

The Corporation Tax Law defines a taxpayer as any person that is subject to the corporation franchise tax, alternative minimum tax, or corporation income tax.

end delete
begin delete

This bill would make a technical, nonsubstantive change to that provision.

end delete

Vote: begin deletemajority end deletebegin insert23end insert. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 17024.5 of the end insertbegin insertRevenue and Taxation
2Code
end insert
begin insert is amended to read:end insert

P3    1

17024.5.  

(a) (1) Unless otherwise specifically provided, the
2terms “Internal Revenue Code,” “Internal Revenue Code of 1954,”
3or “Internal Revenue Code of 1986,” for purposes of this part,
4mean Title 26 of the United States Code, including all amendments
5thereto as enacted on the specified date for the applicable taxable
6year as follows:


7

 

Taxable Year

Specified Date of
Internal Revenue
Code Sections

(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, 2010begin insert, and on or before December end insert

 
begin insert

31, 2014   

end insert

January 1, 2009

begin insert

(P) For taxable years beginning on or after

end insert
 
begin insert

January 1, 2015   

end insert
begin insert

January 1, 2015

end insert
P4   19

 

20(2) (A) Unless otherwise specifically provided, for federal laws
21enacted on or after January 1, 1987, and on or before the specified
22date for the taxable year, uncodified provisions that relate to
23provisions of the Internal Revenue Code that are incorporated for
24purposes of this part shall be applicable to the same taxable years
25as the incorporated provisions.

26(B) In the case where Section 901 of the Economic Growth and
27Tax Relief Act of 2001 (Public Law 107-16) applies to any
28provision of the Internal Revenue Code that is incorporated for
29purposes of this part, Section 901 of the Economic Growth and
30Tax Relief Act of 2001 shall apply for purposes of this part in the
31same manner and to the same taxable years as it applies for federal
32income tax purposes.

33(3) Subtitle G (Tax Technical Corrections) and Part I of Subtitle
34H (Repeal of Expired or Obsolete Provisions) of the Revenue
35Reconciliation Act of 1990 (Public Law 101-508) modified
36numerous provisions of the Internal Revenue Code and provisions
37of prior federal acts, some of which are incorporated by reference
38into this part. Unless otherwise provided, the provisions described
39in the preceding sentence, to the extent that they modify provisions
40that are incorporated into this part, are declaratory of existing law
P5    1and shall be applied in the same manner and for the same periods
2as specified in the Revenue Reconciliation Act of 1990.

3(b) Unless otherwise specifically provided, when applying any
4provision of the Internal Revenue Code for purposes of this part,
5a reference to any of the following is not applicable for purposes
6of this part:

7(1) Except as provided in Chapter 4.5 (commencing with Section
823800) of Part 11 of Division 2, an electing small business
9corporation, as defined in Section 1361(b) of the Internal Revenue
10Code.

11(2) Domestic international sales corporations (DISC), as defined
12in Section 992(a) of the Internal Revenue Code.

13(3) A personal holding company, as defined in Section 542 of
14the Internal Revenue Code.

15(4) A foreign personal holding company, as defined in Section
16552 of the Internal Revenue Code.

17(5) A foreign investment company, as defined in Section 1246(b)
18of the Internal Revenue Code.

19(6) A foreign trust, as defined in Section 679 of the Internal
20Revenue Code.

21(7) Foreign income taxes and foreign income tax credits.

22(8) Section 911 of the Internal Revenue Code, relating to citizens
23or residents of the United States living abroad.

24(9) A foreign corporation, except that Section 367 of the Internal
25Revenue Code shall be applicable.

26(10) Federal tax credits and carryovers of federal tax credits.

27(11) Nonresident aliens.

28(12) Deduction for personal exemptions, as provided in Section
29151 of the Internal Revenue Code.

30(13) The tax on generation-skipping transfers imposed by
31Section 2601 of the Internal Revenue Code.

32(14) The tax, relating to estates, imposed by Section 2001 or
332101 of the Internal Revenue Code.

34(c) (1) The provisions contained in Sections 41 to 44, inclusive,
35and Section 172 of the Tax Reform Act of 1984 (Public Law
3698-369), relating to treatment of debt instruments, is not applicable
37for taxable years beginning before January 1, 1987.

38(2) The provisions contained in Public Law 99-121, relating to
39the treatment of debt instruments, is not applicable for taxable
40years beginning before January 1, 1987.

P6    1(3) For each taxable year beginning on or after January 1, 1987,
2the provisions referred to by paragraphs (1) and (2) shall be
3applicable for purposes of this part in the same manner and with
4respect to the same obligations as the federal provisions, except
5as otherwise provided in this part.

6(d) When applying the Internal Revenue Code for purposes of
7this part, regulations promulgated in final form or issued as
8temporary regulations by “the secretary” shall be applicable as
9regulations under this part to the extent that they do not conflict
10with this part or with regulations issued by the Franchise Tax
11Board.

12(e) Whenever this part allows a taxpayer to make an election,
13the following rules shall apply:

14(1) A proper election filed with the Internal Revenue Service
15in accordance with the Internal Revenue Code or regulations issued
16by “the secretary” shall be deemed to be a proper election for
17purposes of this part, unless otherwise provided in this part or in
18regulations issued by the Franchise Tax Board.

19(2) A copy of that election shall be furnished to the Franchise
20Tax Board upon request.

21(3) (A) Except as provided in subparagraph (B), in order to
22obtain treatment other than that elected for federal purposes, a
23separate election shall be filed at the time and in the manner
24required by the Franchise Tax Board.

25(B) (i) If a taxpayer makes a proper election for federal income
26tax purposes prior to the time that taxpayer becomes subject to the
27tax imposed under this part or Part 11 (commencing with Section
2823001), that taxpayer is deemed to have made the same election
29for purposes of the tax imposed by this part, Part 10.2 (commencing
30with Section 18401), and Part 11 (commencing with Section
3123001), as applicable, and that taxpayer may not make a separate
32election for California tax purposes unless that separate election
33is expressly authorized by this part, Part 10.2 (commencing with
34Section 18401), or Part 11 (commencing with Section 23001), or
35by regulations issued by the Franchise Tax Board.

36(ii) If a taxpayer has not made a proper election for federal
37income tax purposes prior to the time that taxpayer becomes subject
38to tax under this part or Part 11 (commencing with Section 23001),
39that taxpayer may not make a separate California election for
40purposes of this part, Part 10.2 (commencing with Section 18401),
P7    1or Part 11 (commencing with Section 23001), unless that separate
2election is expressly authorized by this part, Part 10.2 (commencing
3with Section 18401), or Part 11 (commencing with Section 23001),
4or by regulations issued by the Franchise Tax Board.

5(iii) This subparagraph applies only to the extent that the
6provisions of the Internal Revenue Code or the regulation issued
7by “the secretary” authorizing an election for federal income tax
8purposes apply for purposes of this part, Part 10.2 (commencing
9with Section 18401) or Part 11 (commencing with Section 23001).

10(f) Whenever this part allows or requires a taxpayer to file an
11application or seek consent, the rules set forth in subdivision (e)
12shall be applicable with respect to that application or consent.

13(g) When applying the Internal Revenue Code for purposes of
14determining the statute of limitations under this part, any reference
15to a period of three years shall be modified to read four years for
16purposes of this part.

17(h) When applying, for purposes of this part, any section of the
18Internal Revenue Code or any applicable regulation thereunder,
19all of the following shall apply:

20(1) References to “adjusted gross income” shall mean the
21amount computed in accordance with Section 17072, except as
22provided in paragraph (2).

23(2) (A) Except as provided in subparagraph (B), references to
24“adjusted gross income” for purposes of computing limitations
25based upon adjusted gross income, shall mean the amount required
26to be shown as adjusted gross income on the federal tax return for
27the same taxable year.

28(B) In the case of registered domestic partners and former
29registered domestic partners, adjusted gross income, for the
30purposes of computing limitations based upon adjusted gross
31income, shall mean the adjusted gross income on a federal tax
32 return computed as if the registered domestic partner or former
33registered domestic partner was treated as a spouse or former
34spouse, respectively, for federal income tax purposes, and used
35the same filing status that was used on the state tax return for the
36same taxable year.

37(3) Any reference to “subtitle” or “chapter” shall mean this part.

38(4) The provisions of Section 7806 of the Internal Revenue
39Code, relating to construction of title, shall apply.

P8    1(5) Any provision of the Internal Revenue Code that becomes
2operative on or after the specified date for that taxable year shall
3become operative on the same date for purposes of this part.

4(6) Any provision of the Internal Revenue Code that becomes
5inoperative on or after the specified date for that taxable year shall
6become inoperative on the same date for purposes of this part.

7(7) Due account shall be made for differences in federal and
8state terminology, effective dates, substitution of “Franchise Tax
9Board” for “secretary” when appropriate, and other obvious
10differences.

11(8) Except as otherwise provided, any reference to Section 501
12of the Internal Revenue Code shall be interpreted to also refer to
13Section 23701.

14(i) Any reference to a specific provision of the Internal Revenue
15Code shall include modifications of that provision, if any, in this
16part.

17begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 17088 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
18amended to read:end insert

19

17088.  

(a) begin delete(1)end deletebegin deleteend deleteSubchapter M of Chapter 1 of Subtitle A of the
20Internal Revenue Code, relating to regulated investment companies
21and real estate investment trusts, shall apply, except as otherwise
22provided.

begin delete

23(2) Part 1 of Subchapter M of Chapter 1 of Subtitle A of the
24Internal Revenue Code, relating to regulated investment companies,
25as amended by the Regulated Investment Company Modernization
26Act of 2010 (Public Law 111-325), shall apply, except as otherwise
27provided.

end delete

28(b) Section 17145 shall apply in lieu of Section 852(b)(5) of the
29Internal Revenue Code, relating to exempt-interest dividends.

30(c) (1) Section 852(b)(3)(D) of the Internal Revenue Code,
31relating to treatment by shareholders of undistributed capital gains,
32shall not apply.

33(2) Section 852(g)(1)(A) of the Internal Revenue Code is
34modified by substituting the phrase “subdivision (a) of Section
3517145” for the phrase “the first sentence of subsection (b)(5)”
36contained therein.

begin delete end deletebegin delete

37(d) (1) Except as provided in paragraph (2), the amendments
38made to this section by the act adding this paragraph shall apply
39to taxable years beginning on or after December 23, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

P9    1(2) (A) Section 851 of the Internal Revenue Code, relating to
2definition of regulated investment company, as amended by Section
3201 of the Regulated Investment Company Modernization Act of
42010 (Public Law 111-325), and Section 852(b)(2)(G) of the
5Internal Revenue Code, as amended by Section 201 of the
6Regulated Investment Company Modernization Act of 2010 (Public
7Law 111-325), shall apply to taxable years with respect to which
8the due date (determined with regard to any extensions) of the
9return of tax for such taxable year is on or after December 23,
102010.

end delete
begin delete end deletebegin delete end deletebegin delete

11(B) Section 852(b)(4) of the Internal Revenue Code, relating to
12loss on sale or exchange of stock held six months or less, as
13amended by Section 309 of the Regulated Investment Company
14Modernization Act of 2010 (Public Law 111-325), shall apply to
15losses incurred on shares of stock for which the taxpayer’s holding
16period begins on or after December 23, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

17(C) Section 852(f)(1)(C) of the Internal Revenue Code, as
18amended by Section 502 of the Regulated Investment Company
19Modernization Act of 2010 (Public Law 111-325), shall apply to
20charges incurred in taxable years beginning on or after December
2123, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

22(D) Section 855(a) of the Internal Revenue Code, relating to
23general rule, as amended by Section 304 of the Regulated
24Investment Company Modernization Act of 2010 (Public Law
25111-325), shall apply to distributions in taxable years beginning
26on or after December 23, 2010.

end delete
begin delete end delete
27begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 17131.7 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
28repealed.end insert

begin delete
29

17131.7.  

(a) Section 105(b) of the Internal Revenue Code,
30relating to amounts expended for medical care, as amended by
31Section 1004(d)(1) of the Health Care and Education Reconciliation
32Act of 2010 (Public Law 111-152), shall apply, except as otherwise
33provided.

34(b) This section shall apply in the same manner and to the same
35periods as the federal amendments referred to in subdivision (a)
36apply for federal purposes, except as otherwise provided.

end delete
37begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 17131.12 of the end insertbegin insertRevenue and Taxation Codeend insert
38begin insert is repealed.end insert

begin delete
39

17131.12.  

(a) Section 139D of the Internal Revenue Code,
40relating to Indian health care benefits, as added by Section 9021
P10   1of the Patient Protection and Affordable Care Act (Public Law
2111-148), shall apply, except as otherwise provided.

3(b) This section shall apply to benefits and coverage provided
4after March 23, 2010.

5(c) This section shall not be construed to create an inference
6with respect to the exclusion from gross income of either of the
7following:

8(1) Benefits provided by an Indian tribe or tribal organization
9that are not within the scope of this section.

10(2) Benefits provided prior to the effective date of the act adding
11this section.

end delete
12begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 17131.14 of the end insertbegin insertRevenue and Taxation Codeend insert
13begin insert is repealed.end insert

begin delete
14

17131.14.  

(a) For taxable years beginning on or after January
151, 2011, Section 125(j) of the Internal Revenue Code, relating to
16simple cafeteria plans for small businesses, as added by Section
179022 of the federal Patient Protection and Affordable Care Act
18(P.L. 111-148), shall apply, except as otherwise provided.

19(b) For taxable years beginning on or after January 1, 2014,
20Section 125(f) of the Internal Revenue Code, relating to qualified
21benefits defined, as amended by Section 1515 of the federal Patient
22Protection and Affordable Care Act (P.L. 111-148), shall apply,
23except as otherwise provided.

end delete
24begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 17134.1 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
25repealed.end insert

begin delete
26

17134.1.  

For taxable years beginning on or after January 1,
272010, Section 108(f)(4) of the Internal Revenue Code, relating to
28payments under the National Health Service Corps loan repayment
29program and certain state loan repayment programs, as amended
30by Section 10908 of the Patient Protection and Affordable Care
31Act (Public Law 111-148), shall apply, except as otherwise
32provided.

end delete
33begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 17144 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
34amended to read:end insert

35

17144.  

(a) Section 108(b)(2)(B) of the Internal Revenue Code,
36relating to general business credit, is modified by substituting “this
37part” in lieu of “Section 38 (relating to general business credit).”

38(b) Section 108(b)(2)(G) of the Internal Revenue Code, relating
39to foreign tax credit carryovers, shall not apply.

P11   1(c) Section 108(b)(3)(B) of the Internal Revenue Code, relating
2to credit carryover reduction, is modified by substituting “11.1
3cents” in lieu of “3313 cents” in each place in which it appears. In
4the case where more than one credit is allowable under this part,
5the credits shall be reduced on a pro rata basis.

6(d) Section 108(g)(3)(B) of the Internal Revenue Code, relating
7to adjusted tax attributes, is modified by substituting “($9)” in lieu
8of “($3).”

9(e) (1) If a taxpayer makes an election for federal income tax
10purposes under Section 108(c) of the Internal Revenue Code,
11relating to treatment of discharge of qualified real property business
12indebtedness, a separate election shall not be allowed under
13paragraph (3) of subdivision (e) of Section 17024.5 and the federal
14election shall be binding for purposes of this part.

15(2) If a taxpayer has not made an election for federal income
16tax purposes under Section 108(c) of the Internal Revenue Code,
17relating to treatment of discharge of qualified real property business
18indebtedness, then the taxpayer shall not be allowed to make that
19election for purposes of this part.

begin insert

20(f) Section 108(i) of the Internal Revenue Code, relating to
21deferral and ratable inclusion of income arising from business
22indebtedness discharged by the reacquisition of a debt instrument,
23shall not apply.

end insert
24begin insert

begin insertSEC. 8.end insert  

end insert

begin insertSection 17201.1 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
25repealed.end insert

begin delete
26

17201.1.  

(a) Section 162(l)(1) of the Internal Revenue Code,
27relating to allowance of deduction, as amended by Section
281004(d)(2) of the Health Care and Education Reconciliation Act
29of 2010 (Public Law 111-152), shall apply, except as otherwise
30provided.

31(b) Section 162(l)(2)(B) of the Internal Revenue Code, relating
32to other coverage, as amended by Section 1004(d)(3) of the Health
33Care and Education Reconciliation Act of 2010 (Public Law
34111-152), shall apply, except as otherwise provided.

35(c) This section shall apply in the same manner and to the same
36periods as the federal amendments referred to in subdivision (a)
37or subdivision (b), respectively, apply for federal purposes, except
38as otherwise provided.

end delete
39begin insert

begin insertSEC. 9.end insert  

end insert

begin insertSection 17215 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
40amended to read:end insert

P12   1

17215.  

(a) Section 220(a) of the Internal Revenue Code,
2relating to deduction allowed, is modified to provide that the
3amount allowed as a deduction shall be an amount equal to the
4amount allowed to that individual as a deduction under Section
5220 of the Internal Revenue Code, relating to medical savings
6accounts, on the federal income tax return filed for the same taxable
7year by that individual.

8(b) Section 220(f)(4) of the Internal Revenue Code, relating to
9additional tax on distributions not used for qualified medical
10expenses, is modified by substitutingbegin delete “10end deletebegin insert “12.5end insert percent” in lieu
11ofbegin delete “15 percent.”end deletebegin insert “20 percent.”end insert

begin insert

12(c) The amendments made to this section by the act adding this
13subdivision shall apply to disbursements made during taxable
14years beginning on or after January 1, 2016.

end insert
15begin insert

begin insertSEC. 10.end insert  

end insert

begin insertSection 17240 is added to the end insertbegin insertRevenue and Taxation
16Code
end insert
begin insert, to read:end insert

begin insert
17

begin insert17240.end insert  

The fee imposed by Section 9008 of the Patient
18Protection and Affordable Care Act (Public Law 111-148), shall
19not be considered a tax described in Section 275(a)(6) of the
20Internal Revenue Code.

end insert
21begin insert

begin insertSEC. 11.end insert  

end insert

begin insertSection 17241 is added to the end insertbegin insertRevenue and Taxation
22Code
end insert
begin insert, to read:end insert

begin insert
23

begin insert17241.end insert  

(a) Section 213(a) of the Internal Revenue Code,
24relating to allowance of deduction, is modified by substituting “7.5
25percent” for “10 percent.”

26(b) Section 213(f) of the Internal Revenue Code, relating to
27special rule for 2013, 2014, 2015, and 2016, shall not apply.

end insert
28begin insert

begin insertSEC. 12.end insert  

end insert

begin insertSection 17280.1 of the end insertbegin insertRevenue and Taxation Codeend insert
29begin insert is repealed.end insert

begin delete
30

17280.1.  

(a) Section 267(f)(3) of the Internal Revenue Code,
31relating to loss deferral rules not to apply in certain cases, as
32amended by Section 306 of the Regulated Investment Company
33Modernization Act of 2010 (Public Law 111-325), shall apply,
34except as otherwise provided.

35(b) This section shall apply to distributions on or after December
3623, 2010.

end delete
37begin insert

begin insertSEC. 13.end insert  

end insert

begin insertSection 17322.1 of the end insertbegin insertRevenue and Taxation Codeend insert
38begin insert is repealed.end insert

begin delete
39

17322.1.  

(a) Section 302 of the Internal Revenue Code, relating
40to distributions in redemption of stock, as amended by Section 306
P13   1of the Regulated Investment Company Modernization Act of 2010
2(Public Law 111-325), shall apply, except as otherwise provided.

3(b) Section 316 of the Internal Revenue Code, relating to
4dividend defined, as amended by Section 305 of the Regulated
5Investment Company Modernization Act of 2010 (Public Law
6111-325), shall apply, except as otherwise provided.

7(c) (1) Subdivision (a) shall apply to distributions on or after
8December 23, 2010.

9(2) Subdivision (b) shall apply to distributions made in taxable
10years beginning on or after December 23, 2010.

end delete
11begin insert

begin insertSEC. 14.end insert  

end insert

begin insertSection 17323 is added to the end insertbegin insertRevenue and Taxation
12Code
end insert
begin insert, to read:end insert

begin insert
13

begin insert17323.end insert  

Section 382(n) of the Internal Revenue Code, relating
14to special rule for certain ownership changes, shall not apply.

end insert
15begin insert

begin insertSEC. 15.end insert  

end insert

begin insertSection 18155 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
16amended to read:end insert

17

18155.  

begin delete(a)end deletebegin deleteend deleteA deduction shall not be allowed for capital loss
18carrybacks provided by Section 1212 of the Internal Revenue Code,
19relating to capital loss carrybacks and carryovers.

begin delete

20(b) Section 1212(a)(1)(C) of the Internal Revenue Code, as
21amended by Section 101 of the Regulated Investment Company
22Modernization Act of 2010 (Public Law 111-325), shall apply,
23except as otherwise provided.

end delete
begin delete end deletebegin delete

24(c) Section 1212(a)(3) of the Internal Revenue Code, relating
25to regulated investment companies, as amended by Section 101
26of the Regulated Investment Company Modernization Act of 2010
27(Public Law 111-325), shall apply, except as otherwise provided.

end delete
begin delete end deletebegin delete end deletebegin delete

28(d) Section 1222(10) of the Internal Revenue Code, relating to
29net capital loss, as amended by Section 101 of the Regulated
30Investment Company Modernization Act of 2010 (Public Law
31111-325), shall apply, except as otherwise provided.

end delete
begin delete end deletebegin delete end deletebegin delete

32(e) (1) Except as provided in paragraph (2), the amendments
33made to this section by the act adding this paragraph shall apply
34to net capital losses for taxable years beginning on or after
35December 23, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

36(2) Section 1212(a)(3)(B) of the Internal Revenue Code, relating
37to coordination with general rule, as added by Section 101 of the
38Regulated Investment Company Modernization Act of 2010 (Public
39Law 111-325), shall apply to taxable years beginning on or after
40December 23, 2010.

end delete
begin delete end delete
P14   1begin insert

begin insertSEC. 16.end insert  

end insert

begin insertSection 19131.5 is added to the end insertbegin insertRevenue and Taxation
2Code
end insert
begin insert, to read:end insert

begin insert
3

begin insert19131.5.end insert  

(a) Section 6164 of the Internal Revenue Code,
4relating to extension of time for payment of taxes by corporations
5expecting carrybacks, shall apply, except as otherwise provided.

6(b) (1) Section 6164 of the Internal Revenue Code is modified
7by substituting the phrase “Secretary or the Franchise Tax Board”
8for the word “Secretary” in each place it appears.

9(2) Section 6164(a) of the Internal Revenue Code is modified
10by substituting the phrase “Part 11 (commencing with Section
1123001)” in lieu of the phrase “subtitle A.”

12(3) Section 6164(b) of the Internal Revenue Code, relating to
13contents of statement, is modified by substituting the phrase
14“Section 24416.20” in lieu of the phrase “Section 172(b).”

15(4) Section 6164(d)(2) of the Internal Revenue Code is modified
16by substituting the phrase “Section 19307.5” in lieu of the phrase
17“Section 6411.”

18(5) Section 6164(h) of the Internal Revenue Code, relating to
19jeopardy, is modified as follows:

20(A) By substituting the phrase “he or the Franchise Tax Board”
21for the word “he” in each place it appears.

22(B) By substituting the phrase “him or the Franchise Tax
23Board” for the word “him” in each place it appears.

24(6) Section 6164(i) of the Internal Revenue Code, relating to
25consolidated returns, is modified by substituting the phrase
26 “combined report” in lieu of the phrase “consolidated return” in
27each place it appears.

end insert
28begin insert

begin insertSEC. 17.end insert  

end insert

begin insertSection 19141.5 of the end insertbegin insertRevenue and Taxation Codeend insert
29begin insert is amended to read:end insert

30

19141.5.  

(a) (1) Section 6038A of the Internal Revenue Code,
31relating to information with respect to certain foreign-owned
32corporations, shall apply.

33(2) A penalty shall be imposed under this part for failure to
34furnish information or maintain records and that penalty shall be
35determined in accordance with Section 6038A of the Internal
36Revenue Code.

37(3) Section 11314 of Public Law 101-508, relating to application
38of amendments made by Section 7403 of the Revenue
39Reconciliation Act of 1989 to taxable years beginning on or before
40July 10, 1989, shall apply.

P15   1(4) Section 6038A(e) of the Internal Revenue Code, relating to
2enforcement of requests for certain records, is modified as follows:

3(A) Each reference to Section 7602, 7603, or 7604 of the Internal
4Revenue Code shall instead refer to Section 19504.

5(B) Each reference to “summons” shall instead refer to
6“subpoena duces tecum.”

7(C) Section 6038A(e)(4)(C) of the Internal Revenue Code shall
8refer to “superior courts of the State of California for the Counties
9of Los Angeles, Sacramento, and San Diego, and for the City and
10County of San Francisco,” instead of “United States district court
11for the district in which the person (to whom the summons is
12issued) resides or is found.”

13(b) In the case of a corporation, each of the following shall
14apply:

15(1) Section 6038B of the Internal Revenue Code, relating to
16notice of certain transfers to foreign persons, shall apply, except
17as otherwise provided.

18(2) The information required to be filed with the Franchise Tax
19Board under this subdivision shall be a copy of the information
20required to be filed with the Internal Revenue Service.

21(3) (A) A penalty shall be imposed under this part for failure
22to furnish information and that penalty shall be determined in
23accordance with Section 6038B of the Internal Revenue Code,
24except as otherwise provided.

25(B) Subparagraph (A) shall not apply to any transfer described
26in Section 6038B(a)(1)(B) of the Internal Revenue Code.

27(c) (1) Section 6038C of the Internal Revenue Code, relating
28to information with respect to foreign corporations engaged in
29United States business, shall apply.

30(2) A penalty shall be imposed under this part for failure to
31furnish information or maintain records and that penalty shall be
32determined in accordance with Section 6038C of the Internal
33Revenue Code.

34(3) Section 6038C(d) of the Internal Revenue Code, relating to
35enforcement of requests for certain records, is modified as follows:

36(A) Each reference to Section 7602, 7603, or 7604 of the Internal
37Revenue Code shall instead refer to Section 19504.

38(B) Each reference to “summons” shall instead refer to
39“subpoena duces tecum.”

begin insert

P16   1(d) (1) Section 6038D of the Internal Revenue Code, relating
2to information with respect to foreign financial assets, shall apply.

end insert
begin insert

3(2) A penalty shall be imposed under this part for failure to
4furnish information and that penalty shall be determined in
5accordance with Section 6038D of the Internal Revenue Code.

end insert
begin delete

6(d)

end delete

7begin insert(e)end insert For purposes of this part, the information required to be filed
8with the Franchise Tax Board pursuant to this section shall be a
9copy of the information filed with the Internal Revenue Service.

begin delete

10(e)

end delete

11begin insert(f)end insert For purposes of this section, each of the following shall apply:

12(1) Section 7701(a)(4) of the Internal Revenue Code, relating
13to the term “domestic,” shall apply.

14(2) Section 7701(a)(5) of the Internal Revenue Code, relating
15to the term “foreign,” shall apply.

16(3) Section 7701(a)(30) of the Internal Revenue Code, relating
17to the term “United States person,” shall apply. However, the term
18“United States person” shall not include any corporation that is
19not subject to the tax imposed under Chapter 2 (commencing with
20Section 23101), Chapter 2.5 (commencing with Section 23400),
21or Chapter 3 (commencing with Section 23501), of Part 11.

begin insert

22(g) The amendments made to this section by the act adding this
23subdivision shall apply to taxable years beginning on or after
24January 1, 2016.

end insert
25begin insert

begin insertSEC. 18.end insert  

end insert

begin insertSection 19164 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
26amended to read:end insert

27

19164.  

(a) (1) (A) An accuracy-related penalty shall be
28imposed under this part and shall be determined in accordance
29with Section 6662 of the Internal Revenue Code, relating to
30imposition of accuracy-related penalty on underpayments,begin delete as
31amended by Section 1409(b) of the Health Care and Education
32Reconciliation Act of 2010 (Public Law 111-152),end delete
except as
33otherwise provided.

34(B) (i) Except for understatements relating to reportable
35transactions to which Section 19164.5 applies, in the case of any
36proposed deficiency assessment issued after the last date of the
37amnesty period specified in Chapter 9.1 (commencing with Section
3819730) for any taxable year beginning prior to January 1, 2003,
39the penalty specified in Section 6662(a) of the Internal Revenue
P17   1Code shall be computed by substituting “40 percent” for “20
2percent.”

3(ii) Clause (i) shall not apply to any taxable year of a taxpayer
4beginning prior to January 1, 2003, if, as of the start date of the
5amnesty program period specified in Section 19731, the taxpayer
6is then under audit by the Franchise Tax Board, or the taxpayer
7has filed a protest under Section 19041, or the taxpayer has filed
8an appeal under Section 19045, or the taxpayer is engaged in
9settlement negotiations under Section 19442, or the taxpayer has
10a pending judicial proceeding in any court of this state or in any
11federal court relating to the tax liability of the taxpayer for that
12taxable year.

13(2) With respect to corporations, this subdivisionbegin delete appliesend deletebegin insert shall
14applyend insert
to all of the following:

15(A) All taxable years beginning on or after January 1, 1990.

16(B) Any other taxable year for which an assessment is made
17after July 16, 1991.

18(C) For purposes of this section, references in Section 6662(e)
19of the Internal Revenue Code and the regulations thereunder,
20relating to treatment of an affiliated group that files a consolidated
21federal return, are modified to apply to those entities required to
22be included in a combined report under Section 25101 or 25110.
23For these purposes, entities included in a combined report pursuant
24to paragraph (4) or (6) of subdivision (a) of Section 25110 shall
25be considered only to the extent required to be included in the
26combined report.

27(3) Section 6662(d)(1)(B) of the Internal Revenue Code is
28modified to provide that in the case of a corporation, other than
29an “S” corporation, there is a substantial understatement of tax for
30any taxable year if the amount of the understatement for the taxable
31year exceeds the lesser of:

32(A) Ten percent of the tax required to be shown on the return
33for the taxable year (or, if greater, two thousand five hundred
34dollars ($2,500)).

35(B) Five million dollars ($5,000,000).

36(4) Section 6662(d)(2)(A) of the Internal Revenue Code is
37modified to additionally provide that the excess determined under
38Section 6662(d)(2)(A) of the Internal Revenue Code shall be
39determined without regard to items to which Section 19164.5
P18   1applies and without regard to items with respect to which a penalty
2is imposed by Section 19774.

3(5) The provisions of Sections 6662(e)(1) and 6662(h)(2) of the
4Internal Revenue Code shall apply to returns filed on or after
5January 1, 2010.

6(b) For purposes of Section 6662(d) of the Internal Revenue
7Code, Section 6664 of the Internal Revenue Code, Section
86694(a)(1) of the Internal Revenue Code, and this part, the
9Franchise Tax Board may prescribe a list of positions for which
10the Franchise Tax Board believes there is not substantial authority
11or there is no reasonable belief that the tax treatment is more likely
12than not the proper tax treatment. That list (and any revisions
13thereof) shall be published through the use of Franchise Tax Board
14Notices or other published positions. In addition, the “listed
15transactions” identified and published pursuant to the preceding
16sentence shall be published on thebegin delete Internetend delete Web site of the
17Franchise Tax Board.

18(c) A fraud penalty shall be imposed under this part and shall
19be determined in accordance with Section 6663 of the Internal
20Revenue Code, relating to imposition of fraud penalty, except as
21otherwise provided.

22(d) (1) Section 6664 of the Internal Revenue Code, relating to
23definitions and special rules,begin delete applies,end deletebegin insert shall apply,end insert except as
24otherwise provided.

25(2) Sectionbegin delete 6664(c)(2)end deletebegin insert 6664(c)(3)end insert of the Internal Revenue Code
26begin delete appliesend deletebegin insert shall applyend insert to returns filed on or after January 1, 2010.

27(3) Sectionbegin delete 6664(c)(3)end deletebegin insert 6664(c)(4)end insert of the Internal Revenue Code
28begin delete appliesend deletebegin insert shall applyend insert to appraisals prepared with respect to returns
29or submissions filed on or after January 1, 2010.

30(e) Except for purposes of subdivision (e) of Section 19774,
31Section 6662(b)(6) of the Internal Revenue Codebegin delete doesend deletebegin insert shallend insert not
32apply.

33(f) Except for purposes of subdivision (e) of Section 19774,
34Section 6662(i) of the Internal Revenue Code, relating to increase
35in penalty in case of nondisclosed noneconomic substance
36transactions,begin delete doesend deletebegin insert shallend insert not apply.

37(g) Section 6665 of the Internal Revenue Code, relating to
38applicable rules, shall apply, except as otherwise provided.

P19   1(h) The amendments made to this section bybegin delete the act adding this
2subdivisionend delete
begin insert Chapter 14 of the Statutes of 2011 shallend insert apply to
3notices mailed on or after January 1, 2012.

4begin insert

begin insertSEC. 19.end insert  

end insert

begin insertSection 19167 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
5amended to read:end insert

6

19167.  

A penalty shall be imposed under this section for any
7of the following:

8(a) In accordance with Section 6695(a) of the Internal Revenue
9Code,begin delete forend deletebegin insert relating toend insert failure to furnish a copybegin delete of the returnend delete tobegin delete theend delete
10 taxpayer, as required by Section 18625begin insert, except as otherwise
11providedend insert
.

12(b) In accordance with Section 6695(c) of the Internal Revenue
13Code,begin delete forend deletebegin insert relating toend insert failure to furnishbegin delete anend delete identifying number, as
14required by Section 18624begin insert, except as otherwise providedend insert.

15(c) In accordance with Section 6695(d) of the Internal Revenue
16Code,begin delete forend deletebegin insert relating toend insert failure to retain a copy or list, as required by
17 Section 18625 or for failure to retain an electronic filing
18declaration, as required by Section 18621.5begin insert, except as otherwise
19providedend insert
.

begin insert

20(d) Section 6695(h) of the Internal Revenue Code, relating to
21adjustment for inflation, shall not apply.

end insert
begin delete

22(d)

end delete

23begin insert(e)end insert Failure to register as a tax preparer with the California Tax
24Education Council, as required by Section 22253 of the Business
25and Professions Code, unless it is shown that the failure was due
26to reasonable cause and not due to willful neglect.

27(1) The amount of the penalty under this subdivision for the
28first failure to register is two thousand five hundred dollars
29($2,500). This penalty shall be waived if proof of registration is
30provided to the Franchise Tax Board within 90 days from the date
31notice of the penalty is mailed to the tax preparer.

32(2) The amount of the penalty under this subdivision for a failure
33to register, other than the first failure to register, is five thousand
34dollars ($5,000).

begin delete

35(e)

end delete

36begin insert(f)end insert The Franchise Tax Board shall not impose the penalties
37authorized by subdivisionbegin delete (d)end deletebegin insert (e)end insert until either one of the following
38has occurred:

39(1) Commencing January 1, 2006, and continuing each year
40thereafter, there is an appropriation in the Franchise Tax Board’s
P20   1annual budget to fund the costs associated with the penalty
2authorized by subdivisionbegin delete (d)end deletebegin insert (e)end insert.

3(2) (A) An agreement has been executed between the California
4Tax Education Council and the Franchise Tax Board that provides
5that an amount equal to all first year costs associated with the
6penalty authorized by subdivisionbegin delete (d)end deletebegin insert (e)end insert shall be received by the
7Franchise Tax Board. For purposes of this subparagraph, first year
8costs include, but are not limited to, costs associated with the
9development of processes or systems changes, if necessary, and
10labor.

11(B) An agreement has been executed between the California
12Tax Education Council and the Franchise Tax Board that provides
13that the annual costs incurred by the Franchise Tax Board
14associated with the penalty authorized by subdivisionbegin delete (d)end deletebegin insert (e)end insert shall
15be reimbursed by the California Tax Education Council to the
16Franchise Tax Board.

17(C) Pursuant to the agreement described in subparagraph (A),
18the Franchise Tax Board has received an amount equal to the first
19year costs described in that subparagraph.

20begin insert

begin insertSEC. 20.end insert  

end insert

begin insertSection 19172 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
21amended to read:end insert

22

19172.  

(a) In addition to the penalty imposed by Section 19706
23(relating to willful failure to file return, supply information, or pay
24tax), if any partnership required to file a return under Section 18633
25or 18633.5 for any taxable year does either of the following:

26(1) Fails to file the return at the time prescribed therefor
27(determined with regard to any extension of time for filing).

28(2) Files a return which fails to show the information required
29under Section 18633 or 18633.5, that partnership shall be liable
30for a penalty determined under subdivision (b) for each month (or
31fraction thereof) during which that failure continues (but not to
32exceed 12 months), unless it is shown that the failure is due to
33reasonable cause.

34(b) For purposes of subdivision (a), the amount determined
35under this subdivision for any month is the product of the
36following:

37(1) begin deleteEighteen dollars ($18), end deletebegin insertThirty-nine dollars ($39), end insertmultiplied
38by

39(2) The number of persons who were partners in the partnership
40during any part of the taxable year.

P21   1(c) The penalty imposed by subdivision (a) shall be assessed
2against the partnership.

3(d) Article 3 (commencing with Section 19031) of this chapter
4(relating to deficiency assessments) shall not apply with respect
5to the assessment or collection of any penalty imposed by
6subdivision (a).

7(e) The amendments made to this section bybegin delete the act adding this
8subdivisionend delete
begin insert Chapter 14 of the Statutes of 2010end insert shall apply to returns
9required to be filed afterbegin delete the effective date of the act adding this
10subdivisionend delete
begin insert January 1, 2011end insert.

begin insert

11(f) The amendments made to this section by the act adding this
12subdivision shall apply for taxable years beginning on or after
13January 1, 2016.

end insert
14begin insert

begin insertSEC. 21.end insert  

end insert

begin insertSection 19172.5 of the end insertbegin insertRevenue and Taxation Codeend insert
15begin insert is amended to read:end insert

16

19172.5.  

(a) In addition to the penalty imposed by Section
1719706, if any “S” corporation required to file a return under Section
1818601 for any taxable year fails to file the return at the time
19prescribed therefor (determined with regard to any extension of
20time for filing), or files a return that fails to show the information
21required under Section 18601, then that “S” corporation shall be
22liable for a penalty determined under subdivision (b) for each
23month (or fraction thereof) during which that failure continues
24(but not to exceed 12 months), unless that failure is due to
25reasonable cause.

26(b) (1) For purposes of subdivision (a), the amount determined
27under this subdivision for any month is the product of the
28following:

29(2) begin deleteEighteen end deletebegin insertThirty-nine end insertdollarsbegin delete ($18),end deletebegin insert ($39),end insert multiplied by the
30number of persons who were shareholders in the “S” corporation
31during any part of the taxable year.

32(c) The penalty imposed by subdivision (a) shall be assessed
33against the “S” corporation.

34(d) Article 3 (commencing with Section 19031), relating to
35deficiency assessments, shall not apply with respect to the
36assessment or collection of any penalty imposed by subdivision
37(a).

38(e) This section shall apply to returns required to be filed after
39begin delete the effective date of the act adding this section.end deletebegin insert January 1, 2011.end insert

begin insert

P22   1(f) The amendments made to this section by the act adding this
2subdivision shall apply to returns for taxable years beginning on
3or after January 1, 2016.

end insert
4begin insert

begin insertSEC. 22.end insert  

end insert

begin insertSection 19183 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
5amended to read:end insert

6

19183.  

(a) (1) A penalty shall be imposed for failure to file
7correct information returns, as required by this part, and that
8penalty shall be determined in accordance with Section 6721 of
9the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to failure to file correct
10information returns.end insert

11(2) Section 6721(e) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
12to penalty in case of intentional disregard,end insert
is modified to the extent
13that the reference to Section 6041A(b) of the Internal Revenue
14begin delete Codeend deletebegin insert Code, relating to direct sales of end insertbegin insert$5,000end insertbegin insert or more,end insert shall not
15apply.

begin insert

16(3) Section 6721(f)(1) of the Internal Revenue Code is modified
17to substitute the phrase “For each fifth calendar year beginning
18after 2014” for the phrase “In the case of any failure relating to
19a return required to be filed in a calendar year beginning after
202014.”

end insert

21(b) (1) A penalty shall be imposed for failure to furnish correct
22payee statements as required by this part, and that penalty shall be
23determined in accordance with Section 6722 of the Internal
24Revenuebegin delete Code.end deletebegin insert Code, relating to failure to furnish correct payee
25statements.end insert

26(2) Section 6722(c) of the Internal Revenuebegin delete Codeend deletebegin insert Code, relating
27to exception for de minimus failures,end insert
is modified to the extent that
28the references to Sections 6041A(b) and 6041A(e) of the Internal
29Revenuebegin delete Codeend deletebegin insert Code, relating to direct sales of end insertbegin insert$5,000end insertbegin insert or more,
30and statements to be furnished to persons with respect to whom
31information is required to be furnished,end insert
shall not apply.

begin insert

32(3) Section 6722(f)(1) of the Internal Revenue Code is modified
33to substitute the phrase “For each fifth calendar year beginning
34after 2014” for the phrase “In the case of any failure relating to
35a return required to be filed in a calendar year beginning after
362014.”

end insert

37(c) A penalty shall be imposed for failure to comply with other
38information reporting requirements under this part, and that penalty
39shall be determined in accordance with Section 6723 of the Internal
P23   1Revenuebegin delete Code.end deletebegin insert Code, relating to failure to comply with other
2information reporting requirements.end insert

3(d) (1) The provisions of Section 6724 of the Internal Revenue
4begin delete Codeend deletebegin insert Code,end insert relating tobegin delete waiver,end deletebegin insert waiver;end insert definitions, and special
5rules, shall apply, except as otherwise provided.

6(2) Section 6724(d)(1) of the Internal Revenuebegin delete Codeend deletebegin insert Code,
7relating to information return,end insert
is modified as follows:

8(A) The following references are substituted:

9(i) Subdivision (a) of Section 18640, in lieu of Section
106044(a)(1) of the Internal Revenue Code.

11(ii) Subdivision (a) of Section 18644, in lieu of Section 6050A(a)
12of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to reports.end insert

13(B) References to Sectionsbegin delete 4093(c)(4), 4093(e),end delete 4101(d),
146041(b), 6041A(b), 6045(d), 6051(d), and 6053(c)(1) of the Internal
15Revenue Code shall not apply.

16(C) The term “information return” shall also include both of the
17following:

18(i) The return required by paragraph (1) of subdivision (i) of
19Section 18662.

20(ii) The return required by subdivision (a) of Section 18631.7.

21(3) Section 6724(d)(2) of the Internal Revenuebegin delete Codeend deletebegin insert Code,
22relating to payee statement,end insert
is modified as follows:

23(A) The following references are substituted:

24(i) Subdivision (b) of Section 18640, in lieu of Section 6044(e)
25of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to statements to be
26furnished to persons with respect to whom information is required.end insert

27(ii) Subdivision (b) of Section 18644, in lieu of Section
286050A(b) of the Internal Revenuebegin delete Code.end deletebegin insert Code, relating to written
29statement.end insert

30(B) References to Sectionsbegin delete 4093(c)(4)(B),end delete 6031(b), 6037(b),
316041A(e), 6045(d), 6051(d), 6053(b), and 6053(c) of the Internal
32Revenue Code shall not apply.

33(C) The term “payee statement” shall also include the statement
34required by paragraph (2) of subdivision (i) of Section 18662.

35(e) In the case of each failure to provide a written explanation
36as required by Section 402(f) of the Internal Revenue Code,
37begin insert relating to written explanation to recipients of distributions eligible
38for rollover treatment,end insert
at the time prescribed therefor, unless it is
39shown that the failure is due to reasonable cause and not to willful
40neglect, there shall be paid, on notice and demand of the Franchise
P24   1Tax Board and in the same manner as tax, by the person failing to
2 provide that written explanation, an amount equal to ten dollars
3($10) for each failure, but the total amount imposed on that person
4for all those failures during any calendar year shall not exceed five
5thousand dollars ($5,000).

6(f) Any penalty imposed by this part shall be paid on notice and
7demand by the Franchise Tax Board and in the same manner as
8tax.

begin insert

9(g) The amendments made to this section by the act adding this
10subdivision shall apply to information returns required to be filed
11on or after January 1, 2016.

end insert
12begin insert

begin insertSEC. 23.end insert  

end insert

begin insertSection 19772 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
13amended to read:end insert

14

19772.  

(a) Section 6707A of the Internal Revenue Code,
15relating to penalty for failure to include reportable transactions
16information with a return, shall apply, except as otherwise
17provided.

begin delete

18(b) The penalty amounts in Section 6707A(b) of the Internal
19Revenue Code shall not apply, and in lieu thereof, the following
20shall apply:

21(1) Except as provided in paragraph (2), the amount of the
22penalty shall be fifteen thousand dollars ($15,000).

23(2) The amount of the penalty with respect to a listed transaction
24shall be thirty thousand dollars ($30,000).

end delete
begin insert

25(b) (1) Section 6707A(b)(1) of the Internal Revenue Code
26relating to amount of penalty is modified by substituting the phrase
27“or which would have resulted from such transaction if such
28transaction were respected for state tax purposes” for the phrase
29“or which would have resulted from such transaction if such
30transaction were respected for Federal tax purposes.”

end insert
begin insert

31(2) The penalty amounts in Section 6707A(b)(2)(A) of the
32Internal Revenue Code are modified by substituting “$30,000
33($15,000” for “$200,000 ($100,000.”

end insert
begin insert

34(3) The penalty amounts in Section 6707A(b)(2)(B) of the
35Internal Revenue Code are modified by substituting “$15,000
36($5,000” for “$50,000 ($10,000.”

end insert
begin insert

37(4) The penalty amounts in Section 6707A(b)(3) of the Internal
38Revenue Code relating to minimum penalty are modified by
39substituting “$2,500 ($1,250” for “$10,000 ($5,000.”

end insert

P25   1(c) (1) Section 6707A(c)(1) of the Internal Revenue Code
2begin insert relating to reportable transactionend insert is modified to include reportable
3transactions within the meaning of paragraph (3) of subdivision
4(a) of Section 18407.

5(2) Section 6707A(c)(2) of the Internal Revenue Codebegin insert relating
6to listed transactionend insert
is modified to include listed transactions within
7the meaning of paragraph (4) of subdivision (a) of Section 18407.

8(d) The penalty under this section only applies to taxpayers with
9taxable income greater than two hundred thousand dollars
10($200,000).

11(e) Section 6707A(e) of the Internal Revenue Code, relating to
12a penalty reported to the Securities and Exchange Commission,
13shall not apply.

14(f) Section 6707A(d) of the Internal Revenue Code, relating to
15begin delete theend delete authority to rescindbegin delete aend delete penalty, shall not apply, and in lieu
16thereof, the following shall apply:

17(1) The Chief Counsel of the Franchise Tax Board may rescind
18all or any portion of any penalty imposed by this section with
19respect to any violation if all of the following apply:

20(A) The violation is with respect to a reportable transaction
21other than a listed transaction.

22(B) The person on whom the penalty is imposed has a history
23of complying with the requirements of this part and Part 10
24(commencing with Section 17001) or Part 11 (commencing with
25Section 23001).

26(C) It is shown that the violation is due to an unintentional
27mistake of fact.

28(D) Imposing the penalty would be against equity and good
29conscience.

30(E) Rescinding the penalty would promote compliance with the
31requirements of this part and Part 10 (commencing with Section
3217001) or Part 11 (commencing with Section 23001) and effective
33tax administration.

34(2) The exercise of authority under paragraph (1) shall be at the
35sole discretion of the Chief Counsel of the Franchise Tax Board
36and may not be delegated.

37(3) Notwithstanding any other law or rule of law, any
38determination under this subdivision may not be reviewed in any
39administrative or judicial proceeding.

P26   1(g) Article 3 (commencing with Section 19031) of Chapter 4
2(relating to deficiency assessments) shall not apply with respect
3to the assessment or collection of any penalty imposed under this
4section.

5(h) The penalty imposed by this section is in addition to any
6penalty imposed under Part 10 (commencing with Section 17001),
7Part 11 (commencing with Section 23001), or this part.

begin insert

8(i) The amendments made to this section by the act adding this
9subdivision shall apply to penalties assessed on or after January
101, 2016.

end insert
11begin insert

begin insertSEC. 24.end insert  

end insert

begin insertSection 23701i of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
12amended to read:end insert

13

23701i.  

begin delete(a)end deletebegin deleteend deleteA voluntary employees’ beneficiary association
14described in Section 501(c)(9) of the Internal Revenuebegin delete Code, as
15amended by Section 1004(d)(4) of the Health Care and Education
16Reconciliation Act of 2010 (Public Law 111-152).end delete
begin insert Code.end insert

begin delete

17(b) The amendments made to this section by the act adding this
18subdivision shall apply in the same manner and to the same periods
19as the federal amendments referred to in subdivision (a) apply for
20federal purposes.

end delete
21begin insert

begin insertSEC. 25.end insert  

end insert

begin insertSection 24307 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
22amended to read:end insert

23

24307.  

(a) Section 108 of the Internal Revenue Code, relating
24to income from discharge of indebtedness, shall apply, except as
25otherwise provided.

26(b) Section 108(b)(2)(B) of the Internal Revenue Code, relating
27to general business credit, is modified by substituting “this part”
28in lieu of “Section 38 (relating to general business credit).”

29(c) Section 108(b)(2)(G) of the Internal Revenue Code, relating
30to foreign tax credit carryovers, shall not apply.

31(d) Section 108(b)(3)(B) of the Internal Revenue Code, relating
32to credit carryover reduction, is modified by substituting “11.1
33cents” in lieu of “3313 cents” in each place in which it appears. In
34the case where more than one credit is allowable under this part,
35the credits shall be reduced on a pro rata basis.

36(e) Section 108(g)(3)(B) of the Internal Revenue Code, relating
37to adjusted tax attributes, is modified by substituting “$9” in lieu
38of “$3.”

39(f) (1) The amendments to Section 108 of the Internal Revenue
40Code made by Section 13150 of the Revenue Reconciliation Act
P27   1of 1993 (Public Law 103-66), relating to exclusion from gross
2income for income from discharge of qualified real property
3business indebtedness, shall apply to discharges occurring on or
4after January 1, 1996, in taxable years beginning on or after January
51, 1996.

6(2) If a taxpayer makes an election for federal income tax
7purposes under Section 108(c) of the Internal Revenue Code,
8relating to treatment of discharge of qualified real property business
9indebtedness, a separate election shall not be allowed under
10paragraph (3) of subdivision (e) of Section 23051.5 and the federal
11election shall be binding for purposes of this part.

12(3) If a taxpayer has not made an election for federal income
13tax purposes under Section 108(c) of the Internal Revenue Code,
14relating to treatment of discharge of qualified real property business
15indebtedness, then the taxpayer shall not be allowed to make that
16election for purposes of this part.

17(g) The amendments to Section 108 of the Internal Revenue
18Code made by Section 13226 of the Revenue Reconciliation Act
19of 1993 (Public Law 103-66), relating to modifications of discharge
20of indebtedness provisions, shall apply to discharges occurring on
21or after January 1, 1996, in taxable years beginning on or after
22January 1, 1996.

23(h) The amendments made to Section 108(d)(7)(A) of the
24Internal Revenue Code, relating to certain provisions to be applied
25at the corporate level by Section 402 of the Job Creation and
26Worker Assistance Act of 2002 (Public Law 107-147), shall apply
27to discharges of indebtedness after December 31, 2001, in taxable
28years ending after that date. This subdivision shall not apply to
29any discharge of indebtedness made before March 1, 2002, pursuant
30to a plan of reorganization filed with a bankruptcy court on or
31before October 11, 2001.

begin insert

32(i) Section 108(i) of the Internal Revenue Code, relating to
33deferral and ratable inclusion of income arising from business
34indebtedness discharged by the reacquisition of a debt instrument,
35shall not apply.

end insert
36begin insert

begin insertSEC. 26.end insert  

end insert

begin insertSection 24427 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
37amended to read:end insert

38

24427.  

begin delete(a)end deletebegin deleteend deleteSection 267 of the Internal Revenue Code, relating
39to losses, expenses, and interest with respect to transactions
P28   1between related taxpayers, shall apply, except as otherwise
2provided.

begin delete

3(b) Section 267(f)(3) of the Internal Revenue Code, relating to
4loss deferral rules not to apply in certain cases, as amended by
5Section 306 of the Regulated Investment Company Modernization
6Act of 2010 (Public Law 111-325), shall apply, except as otherwise
7provided.

end delete
begin delete end deletebegin delete

8(c) The amendments made to this section by the act adding this
9subdivision shall apply to distributions on or after December 23,
102010.

end delete
begin delete end delete
11begin insert

begin insertSEC. 27.end insert  

end insert

begin insertSection 24439 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
12amended to read:end insert

13

24439.  

(a) No deduction shall be allowed to the issuing
14corporation for any premium paid or incurred upon the repurchase
15of a bond, debenture, note, or certificate or other evidence of
16indebtedness which is convertible into the stock of the issuing
17corporation, or a corporation inbegin delete control of, orend deletebegin insert the same
18parent-subsidiaryend insert
controlledbegin delete by,end deletebegin insert group, withinend insert thebegin insert meaning of
19Section 1563(a)(1) of the Internal Revenue Code, relating to
20parent-subsidiary controlled group, as theend insert
issuing corporation, to
21the extent the repurchase price exceeds an amount equal to the
22adjusted issue price plus a normal call premium on bonds or other
23evidences of indebtedness which are not convertible. The preceding
24sentence shall not apply to the extent that the corporation can
25demonstrate to the satisfaction of the Franchise Tax Board that
26such excess is attributable to the cost of borrowing and is not
27attributable to the conversion feature.

begin delete

28(b) (1) The

end delete

29begin insert (b)end insertbegin insertend insertbegin insertFor purposes of subdivision (a), theend insert adjusted issue price is
30the issuebegin delete price (asend deletebegin insert price, asend insert defined in Sections 1273(b) and 1274
31of the Internal Revenuebegin delete Code)end deletebegin insert Code,end insert increased by any amount of
32discount deducted before repurchase, or, in the case of bonds or
33other evidences of indebtedness issued after February 28, 1913,
34decreased by any amount of premium included in gross income
35before repurchase by the issuing corporation.

begin delete end deletebegin delete

36(2) The term “control” has the meaning assigned to such term
37by Section 24564.

end delete
begin delete end delete

38(c) The provisions of this section shall not apply to a convertible
39bond or other convertible evidence of indebtedness repurchased
40pursuant to a binding obligation incurred on or before April 22,
P29   11969, to repurchase such bond or other evidence of indebtedness
2at a specified call premium, but no inference shall be drawn from
3the fact that this section does not apply to the repurchase of such
4convertible bond or other convertible evidence of indebtedness.

begin insert

5(d) The amendments made to this section by the act adding this
6subdivision shall apply to repurchases on or after January 1, 2015.

end insert
7begin insert

begin insertSEC. 28.end insert  

end insert

begin insertSection 24452.1 of the end insertbegin insertRevenue and Taxation Codeend insert
8begin insert is repealed.end insert

begin delete
9

24452.1.  

(a) Section 302 of the Internal Revenue Code, relating
10to distributions in redemption of stock, as amended by Section 306
11of the Regulated Investment Company Modernization Act of 2010
12(Public Law 111-325), shall apply, except as otherwise provided.

13(b) Section 316 of the Internal Revenue Code, relating to
14dividend defined, as amended by Section 305 of the Regulated
15Investment Company Modernization Act of 2010 (Public Law
16111-325), shall apply, except as otherwise provided.

17(c) (1) Subdivision (a) shall apply to distributions on or after
18December 23, 2010.

19(2) Subdivision (b) shall apply to distributions made in taxable
20years beginning on or after December 23, 2010.

end delete
21begin insert

begin insertSEC. 29.end insert  

end insert

begin insertSection 24454 is added to the end insertbegin insertRevenue and Taxation
22Code
end insert
begin insert, to read:end insert

begin insert
23

begin insert24454.end insert  

Section 304(b)(5)(B) of the Internal Revenue Code,
24relating to special rule in case of foreign acquiring corporation,
25shall apply to acquisitions on or after January 1, 2015.

end insert
26begin insert

begin insertSEC. 30.end insert  

end insert

begin insertSection 24459 is added to the end insertbegin insertRevenue and Taxation
27Code
end insert
begin insert, to read:end insert

begin insert
28

begin insert24459.end insert  

Section 382(n) of the Internal Revenue Code, relating
29to special rule for certain ownership changes, shall not apply.

end insert
30begin insert

begin insertSEC. 31.end insert  

end insert

begin insertSection 24870 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
31amended to read:end insert

32

24870.  

begin delete(a)end deletebegin deleteend deletebegin delete(1)end deletebegin deleteend deleteSubchapter M of Chapter 1 of Subtitle A of the
33Internal Revenue Code, relating to regulated investment companies
34and real estate investment trusts, shall apply, except as otherwise
35provided in this part.

begin delete

36(2) Part 1 of Subchapter M of Chapter 1 of Subtitle A of the
37Internal Revenue Code, relating to regulated investment companies,
38as amended by the Regulated Investment Company Modernization
39Act of 2010 (Public Law 111-325), shall apply, except as otherwise
40provided.

end delete
begin delete end deletebegin delete

P30   1(b) (1) Except as provided in paragraph (2), the amendments
2made to this section by the act adding this paragraph shall apply
3to taxable years beginning on or after December 23, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

4(2) (A) Section 851 of the Internal Revenue Code, relating to
5definition of regulated investment company, as amended by Section
6201 of the Regulated Investment Company Modernization Act of
72010 (Public Law 111-325), and Section 852(b)(2)(G) of the
8Internal Revenue Code, as amended by Section 201 of the
9Regulated Investment Company Modernization Act of 2010 (Public
10Law 111-325), shall apply to taxable years with respect to which
11the due date (determined with regard to any extensions) of the
12return of tax for such taxable year is on or after December 23,
132010.

end delete
begin delete end deletebegin delete end deletebegin delete

14(B) Section 852(b)(4) of the Internal Revenue Code, relating to
15loss on sale or exchange of stock held six months or less, as
16amended by Section 309 of the Regulated Investment Company
17Modernization Act of 2010 (Public Law 111-325), shall apply to
18losses incurred on shares of stock for which the taxpayer’s holding
19period begins on or after December 23, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

20(C) Section 852(f)(1)(C) of the Internal Revenue Code, as
21amended by Section 502 of the Regulated Investment Company
22Modernization Act of 2010 (Public Law 111-325), shall apply to
23charges incurred in taxable years beginning on or after December
2423, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

25(D) Section 855(a) of the Internal Revenue Code, relating to
26general rule, as amended by Section 304 of the Regulated
27Investment Company Modernization Act of 2010 (Public Law
28111-325), shall apply to distributions in taxable years beginning
29on or after December 23, 2010.

end delete
begin delete end delete
30begin insert

begin insertSEC. 32.end insert  

end insert

begin insertSection 24871 of the end insertbegin insertRevenue and Taxation Codeend insertbegin insert is
31amended to read:end insert

32

24871.  

(a) (1) Section 852(b)(1) of the Internal Revenue Code,
33relating to imposition of tax on regulated investment companies,
34begin delete doesend deletebegin insert shallend insert not apply.

35(2) Every regulated investment company shall be subject to the
36taxes imposed under Chapter 2 (commencing with Section 23101)
37and Chapter 3 (commencing with Section 23501), except that its
38“net income” shall be equal to its “investment company income,”
39as defined in subdivision (b).

P31   1(3) (A) Section 851(d)(2)(C)(i)(I) of the Internal Revenue Code
2is modified by substituting “$12,500” for “$50,000.”

3(B) Section 851(d)(2)(C)(i)(II) of the Internal Revenue Code is
4modified by substituting the phrase “the rate of tax specified in
5Section 23151” for the phrase “the highest rate of tax specified in
6section 11” contained therein.

7(C) Section 851(d)(2)(C)(iii) of the Internal Revenue Code,
8relating to administrative provisions, is modified by substituting
9the phrase “Article 3 of Part 10.2 (commencing with Section
1019031), a tax imposed by this subparagraph shall be treated as a
11tax with respect to which the deficiency procedures of such article
12apply” for the phrase “subtitle F, a tax imposed by this
13subparagraph shall be treated as an excise tax with respect to which
14the deficiency procedures of such subtitle apply” contained therein.

15(D) Section 851(i)(2) of the Internal Revenue Code, relating to
16imposition of tax on failures, shall not apply.

17(b) “Investment company income” means investment company
18taxable income, as defined in Section 852(b)(2) of the Internal
19Revenue Code, modified as follows:

20(1) Section 852(b)(2)(A) of the Internal Revenue Code, relating
21to an exclusion for net capital gain, does not apply.

22(2) Section 852(b)(2)(B) of the Internal Revenue Code, relating
23to net operating losses, is modified to deny the deduction allowed
24under Sections 24416 and 24416.1, in lieu of denying the deduction
25allowed by Section 172 of the Internal Revenue Code.

26(3) In lieu of the provision of Section 852(b)(2)(C) of the
27Internal Revenue Code, relating to special deductions for
28corporations, no deduction shall be allowed under Sections 24402,
2924406, 24410, and 25106.

30(4) begin delete(A)end deletebegin deleteend deleteThe deduction for dividends paid, under Section
31852(b)(2)(D) of the Internal Revenue Code, is modified to allow
32capital gain dividends and exempt interest dividends (to the extent
33that interest is included in gross income under this part) to be
34included in the computation of the deduction.

begin delete end deletebegin delete

35(B) For purposes of this paragraph, Section 562(c) of the Internal
36Revenue Code, relating to preferential dividends, as amended by
37Section 307 of the Regulated Investment Company Modernization
38Act of 2010 (Public Law 111-325), shall apply.

end delete
begin delete end delete

39(c) Section 852(b)(3)(A) of the Internal Revenue Code, relating
40tobegin delete capital gains, doesend deletebegin insert imposition of tax, shallend insert not apply.

P32   1(d) (1) Section 852(b)(5) of the Internal Revenue Code, relating
2to exempt-interest dividends, is modified by substituting the phrase
3“that, when held by an individual, the interest therefrom is exempt
4from taxation by this state” for the phrase “described in section
5103(a)” contained therein.

6(2) Section 852(b)(5)(A)(iv)(V) of the Internal Revenue Code,
7relating to exempt interest, is modified by substituting the phrase
8“on obligations that, if held by an individual, is exempt from
9taxation by this state, over the amounts disallowed as deductions
10under subdivision (b) of Section 24360 or Section 24425” for the
11phrase “excludable from gross income under section 103(a) over
12the amounts disallowed as deductions under sections 265 and
13171(a)(2)” contained therein.

14(3) Section 852(b)(5)(B) of the Internal Revenue Code, relating
15to treatment of exempt-interest dividends by shareholders,begin delete doesend delete
16begin insert shallend insert not apply.

17(e) Section 854 of the Internal Revenue Code, relating to
18limitations applicable to dividends received from regulated
19investment companies, is modified to refer to Sections 24402,
2024406, 24410, and 25106, in lieu of Section 243 of the Internal
21Revenue Code.

22(f) Section 852(g)(1)(A) of the Internal Revenue Code is
23modified by substituting the phrase “subdivision (a) of Section
2417145” for the phrase “the first sentence of subsection (b)(5)”
25contained therein.

begin delete end deletebegin delete

26(g) (1) Except as provided in paragraphs (2) and (3), the
27amendments made to this section by the act adding this subdivision
28shall apply to taxable years with respect to which the due date
29(determined with regard to any extensions) of the return of tax for
30such taxable year is on or after December 23, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

31(2) Subparagraph (B) of paragraph (4) of subdivision (b) shall
32apply to distributions in taxable years beginning on or after
33December 23, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

34(3) Subdivision (f) shall apply to taxable years beginning on or
35after December 23, 2010.

end delete
begin delete end delete
36begin insert

begin insertSEC. 33.end insert  

end insert

begin insertSection 24871.1 of the end insertbegin insertRevenue and Taxation Codeend insert
37begin insert is repealed.end insert

begin delete
38

24871.1.  

(a) Section 860(f)(2)(B) of the Internal Revenue
39Code, as amended by Section 301 of the Regulated Investment
P33   1Company Modernization Act of 2010 (Public Law 111-325), shall
2apply, except as otherwise provided.

3(b) This section shall apply to taxable years beginning on or
4after December 23, 2010.

end delete
5begin insert

begin insertSEC. 34.end insert  

end insert

begin insertSection 24990.5 of the end insertbegin insertRevenue and Taxation Codeend insert
6begin insert is amended to read:end insert

7

24990.5.  

(a) Section 1201 of the Internal Revenue Code,
8relating to alternative tax for corporations, shall not be applicable.

9(b)  The provisions of Section 1212 of the Internal Revenue
10Code, relating to capital loss carrybacks and carryovers,begin insert are
11modifiedend insert
asbegin delete amended by Section 101 of the Regulated Investment
12Company Modernization Act of 2010 (Public Law 111-325), shall
13apply, except as otherwise provided.end delete
begin insert follows:end insert

14(1) Section 1212(a)(1)(A) of the Internal Revenue Code, relating
15to capital loss carrybacks, shall not apply.

16(2) Section 1212(a)(4) of the Internal Revenue Code, relating
17to special rules on carrybacks, shall not apply.

18(3) Sections 1212(b) and 1212(c) of the Internal Revenue Code,
19relating to other taxpayers and carryback of losses from Section
201256 contracts to offset prior gains from such contracts,
21respectively, shall not apply.

begin delete end deletebegin delete

22(c) Section 1222(10) of the Internal Revenue Code, relating to
23net capital loss, as amended by Section 101 of the Regulated
24Investment Company Modernization Act of 2010 (Public Law
25111-325), shall apply, except as otherwise provided.

end delete
begin delete end deletebegin delete end deletebegin delete

26(d) (1) Except as provided in paragraph (2), the amendments
27made to this section by the act adding this paragraph shall apply
28to net capital losses for taxable years beginning on or after
29December 23, 2010.

end delete
begin delete end deletebegin delete end deletebegin delete

30(2) Section 1212(a)(3)(B) of the Internal Revenue Code, relating
31to coordination with general rule, as added by Section 101 of the
32Regulated Investment Company Modernization Act of 2010 (Public
33Law 111-325), shall apply to taxable years beginning on or after
34December 23, 2010.

end delete
begin delete end delete
35begin insert

begin insertSEC. 35.end insert  

end insert
begin insert

(a) Except as otherwise provided, the provisions of
36this act shall apply to taxable years beginning on or after January
371, 2015.

end insert
begin insert

38(b) Sections 201 to 221, inclusive, of the Tax Technical
39Corrections Act of 2014 (Title II of Division A of Public Law
40113-295), enacted numerous technical corrections and
P34   1clarifications to provisions of the Internal Revenue Code, including
2technical corrections and clarifications relating to the American
3Taxpayer Relief Act of 2012 (Public Law 112-240), the Middle
4Class Tax Relief and Job Creation Act of 2012 (Public Law
5112-96), the FAA Modernization and Reform Act of 2012 (Title
6IX of Public Law 112-95), the Regulated Investment Company
7Modernization Act of 2010 (Public Law 111-325), the Tax Relief,
8Unemployment Insurance Reauthorization, and Job Creation Act
9of 2010 (Public Law 111-312), the Creating Small Business Jobs
10Act of 2010 (Title II of Public Law 111-240), the Hiring Incentives
11to Restore Employment Act (Public Law 111-147), the American
12Recovery and Reinvestment Tax Act of 2009 (Public Law 111-5),
13the Economic Stimulus Act of 2008 (Division A of Public Law
14110-343), the Energy Improvement and Extension Act of 2008
15(Division B of Public Law 110-343), the Tax Extenders and
16Alternative Minimum Tax Relief Act of 2008 (Division C of Public
17Law 110-343), the Housing Assistance Tax Act of 2008 (Division
18C of Public Law 110-289), the Heroes Earnings Assistance and
19Relief Tax Act of 2008 (Public Law 110-245), the Tax Technical
20Corrections Act of 2007 (Public Law 110-172), the Tax Relief and
21Health Care Act of 2006 (Public Law 109-432), the Safe,
22Accountable, Flexible, Efficient Transportation Equity Act of 2005:
23A Legacy for Users (Public Law 109-59), the Energy Tax Incentives
24Act of 2005 (Title XIII of Public Law 109-58), and the American
25Jobs Creation Act of 2004 (Public Law 108-357), some of which
26are incorporated by reference into Part 10 (commencing with
27Section 17001), Part 10.2 (commencing with Section 18401), and
28Part 11 (commencing with Section 23001) of Division 2 of the
29Revenue and Taxation Code. Unless otherwise provided, the
30technical corrections described in the preceding sentence, to the
31extent that they correct provisions that are incorporated by
32reference into the Revenue and Taxation Code, are declaratory of
33existing law and shall be applied in the same manner and for the
34same periods as specified for federal purposes, or if later, the
35specified date of incorporation.

end insert
36begin insert

begin insertSEC. 36.end insert  

end insert
begin insert

It is the intent of the Legislature to confirm the validity
37and ongoing effect of Senate Bill No. 401 of the 2009-10 Regular
38Session.

end insert
39begin insert

begin insertSEC. 37.end insert  

end insert
begin insert

This act provides for a tax levy within the meaning
40of Article IV of the Constitution and shall go into immediate effect.

end insert
begin deleteP35   1

SECTION 1.  

Section 23037 of the Revenue and Taxation Code
2 is amended to read:

3

23037.  

“Taxpayer” means a person subject to the tax imposed
4under Chapter 2 (commencing with Section 23101), Chapter 2.5
5(commencing with Section 23400), or Chapter 3 (commencing
6with Section 23501).

end delete


O

    98