Bill Text: CA AB1511 | 2009-2010 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Income taxes: net operating losses: credit sharing:
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2010-08-20 - From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on REV. & TAX. [AB1511 Detail]
Download: California-2009-AB1511-Amended.html
Bill Title: Income taxes: net operating losses: credit sharing:
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2010-08-20 - From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on REV. & TAX. [AB1511 Detail]
Download: California-2009-AB1511-Amended.html
BILL NUMBER: AB 1511 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 15, 2010
AMENDED IN ASSEMBLY APRIL 29, 2009
AMENDED IN ASSEMBLY APRIL 14, 2009
INTRODUCED BY Assembly Member De Leon
FEBRUARY 27, 2009
An act to add Article 6 (commencing with Section 32254.5)
to Chapter 2 of Part 19 of Division 1 of Title 1 of the Education
Code, relating to pupil safety. An act to amend
Sections 17276, 17276.9, 24416, and 24416.9 of, to add Sections
17276.11, 17276.12, 17276.13, 23663.1, 24416.11, 24416.12, 24416.13,
and 25128.7 to, and to repeal Sections 17276.10, 23663, 24416.10, and
25128.5 of, the Revenue and Taxation Code, relating to taxation, to
take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1511, as amended, De Leon. Pupil safety: interagency
strategies: school campus prosecutors. Income taxes:
net operating losses: credit sharing: single sales factor.
Existing law allows individual and corporate taxpayers to utilize
net operating losses and carryovers and carrybacks of those losses
for purposes of offsetting their individual and corporate tax
liabilities. Existing law, for net operating losses incurred in
taxable years beginning on or after January 1, 2008, provides a
carryover period of 20 years and allows net operating losses
attributable to taxable years beginning on or after January 1, 2011,
to be carrybacks to each of the preceding 2 taxable years. Existing
law disallows the deduction for net operating losses and net
operating loss carryovers in the 2008 and 2009 taxable years for a
taxpayer with business income of $500,000 or more and extends the
carryover period for those net operating losses, thus allowing the
taxpayer to have the same number of years to utilize the deduction as
it would have had if the disallowance for 2008 and 2009 had not
occurred.
This bill would disallow the use of net operating loss carrybacks
by individual and corporate taxpayers. This bill would also extend
the disallowance of the net operation loss deduction and carryovers,
and the carryover extension, to the 2010 and 2011 taxable years.
The Corporation Tax Law, for taxable years beginning on or after
January 1, 2008, allows a credit to be assigned to an eligible
assignee, as defined, for use by that assignee in a taxable year
beginning on or after January 1, 2010.
This bill would delay the use of the assigned credit by an
eligible assignee to taxable years beginning on or after January 1,
2012.
The Corporation Tax Law imposes taxes measured by income and, in
the case of a business with income derived from or attributable to
sources both within and without this state, apportions the business
income between this state and other states and foreign countries in
accordance with a specified 4-factor formula based on the property,
payroll, and sales within and without this state, except that in the
case of an apportioning trade or business that derives more than 50%
of its gross business receipts from conducting one or more qualified
business activities, as defined, business income is apportioned in
accordance with a specified 3-factor formula. Existing law, for
taxable years beginning on or after January 1, 2011, allows a
taxpayer required to apportion in accordance with the 4-factor
formula to make an annual election to have that business income
apportioned in accordance with a single sales factor formula.
This bill would eliminate the authorization for specified
taxpayers to elect to have business income apportioned in accordance
with a single sales factor formula and instead require those
taxpayers to apportion their income in accordance with a single sales
factor formula for taxable years beginning on or after January 1,
2012.
Under the Personal Income Tax Law and the Corporation Tax Law,
various provisions of the federal Internal Revenue Code, including
provisions relating to net operating losses, in the Revenue and
Taxation Code, Chapter 14 of the Statutes of 2010 would change that
specified date to January 1, 2010, for taxable years beginning on or
after that date.
This bill would add provisions relating to net operating losses
that would conform to the provisions in Chapter 14 of the Statutes of
2010, as provided.
This bill would result in a change in state taxes for the purpose
of increasing state revenues within the meaning of Section 3 of
Article XIII A of the California Constitution, and thus would
require for passage the approval of 2/3 of the membership of each
house of the Legislature.
This bill would take effect immediately as a tax levy.
Existing law, the Interagency School Safety Demonstration Act of
1985, states that the intent of the Legislature in enacting its
provisions is to encourage school districts, county offices of
education, law enforcement agencies, and agencies serving youth to
develop and implement interagency strategies, in-service training
programs, and activities that will, among other things, reduce school
crime and violence. Existing law establishes the School/Law
Enforcement Partnership and charges it with undertaking several
efforts intended to reduce school crime, as specified.
This bill would authorize a governing board of a school district
or county superintendent of schools to enter into a memorandum of
understanding with a prosecuting city attorney's office or district
attorney's office having filing jurisdiction over the school district
in order to facilitate the placement of one or more prosecutors on
one or more school district campuses in order to promote public
safety.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: no yes .
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17276 of the Revenue
and Taxation Code is amended to read:
17276. Except as provided in Sections 17276.1, 17276.2, 17276.4,
17276.5, 17276.6, and 17276.7, the deduction provided by Section 172
of the Internal Revenue Code, relating to a net operating loss
deduction, shall be modified as follows:
(a) (1) Net operating losses attributable to taxable years
beginning before January 1, 1987, shall not be allowed.
(2) A net operating loss shall not be carried forward to any
taxable year beginning before January 1, 1987.
(b) (1) Except as provided in paragraphs (2) and (3), the
provisions of Section 172(b)(2) of the Internal Revenue Code,
relating to the amount of carryovers, shall be modified so that the
applicable percentage of the entire amount of the net operating loss
for any taxable year shall be eligible for carryover to any
subsequent taxable year. For purposes of this subdivision, the
applicable percentage shall be:
(A) Fifty percent for any taxable year beginning before January 1,
2000.
(B) Fifty-five percent for any taxable year beginning on or after
January 1, 2000, and before January 1, 2002.
(C) Sixty percent for any taxable year beginning on or after
January 1, 2002, and before January 1, 2004.
(D) One hundred percent for any taxable year beginning on or after
January 1, 2004.
(2) In the case of a taxpayer who has a net operating loss in any
taxable year beginning on or after January 1, 1994, and who operates
a new business during that taxable year, each of the following shall
apply to each loss incurred during the first three taxable years of
operating the new business:
(A) If the net operating loss is equal to or less than the net
loss from the new business, 100 percent of the net operating loss
shall be carried forward as provided in subdivision (d).
(B) If the net operating loss is greater than the net loss from
the new business, the net operating loss shall be carried over as
follows:
(i) With respect to an amount equal to the net loss from the new
business, 100 percent of that amount shall be carried forward as
provided in subdivision (d).
(ii) With respect to the portion of the net operating loss that
exceeds the net loss from the new business, the applicable percentage
of that amount shall be carried forward as provided in subdivision
(d).
(C) For purposes of Section 172(b)(2) of the Internal Revenue
Code, the amount described in clause (ii) of subparagraph (B) shall
be absorbed before the amount described in clause (i) of subparagraph
(B).
(3) In the case of a taxpayer who has a net operating loss in any
taxable year beginning on or after January 1, 1994, and who operates
an eligible small business during that taxable year, each of the
following shall apply:
(A) If the net operating loss is equal to or less than the net
loss from the eligible small business, 100 percent of the net
operating loss shall be carried forward to the taxable years
specified in subdivision (d).
(B) If the net operating loss is greater than the net loss from
the eligible small business, the net operating loss shall be carried
over as follows:
(i) With respect to an amount equal to the net loss from the
eligible small business, 100 percent of that amount shall be carried
forward as provided in subdivision (d).
(ii) With respect to that portion of the net operating loss that
exceeds the net loss from the eligible small business, the applicable
percentage of that amount shall be carried forward as provided in
subdivision (d).
(C) For purposes of Section 172(b)(2) of the Internal Revenue
Code, the amount described in clause (ii) of subparagraph (B) shall
be absorbed before the amount described in clause (i) of subparagraph
(B).
(4) In the case of a taxpayer who has a net operating loss in a
taxable year beginning on or after January 1, 1994, and who operates
a business that qualifies as both a new business and an eligible
small business under this section, that business shall be treated as
a new business for the first three taxable years of the new business.
(5) In the case of a taxpayer who has a net operating loss in a
taxable year beginning on or after January 1, 1994, and who operates
more than one business, and more than one of those businesses
qualifies as either a new business or an eligible small business
under this section, paragraph (2) shall be applied first, except that
if there is any remaining portion of the net operating loss after
application of clause (i) of subparagraph (B) of that paragraph,
paragraph (3) shall be applied to the remaining portion of the net
operating loss as though that remaining portion of the net operating
loss constituted the entire net operating loss.
(6) For purposes of this section, the term "net loss" means the
amount of net loss after application of Sections 465 and 469 of the
Internal Revenue Code.
(c) Section 172(b)(1) of the Internal Revenue Code, relating to
net operating loss carrybacks and carryovers and the years to which
the loss may be carried, is modified as follows:
(1) Net operating loss carrybacks shall not be allowed for any net
operating losses attributable to taxable years beginning before
January 1, 2011.
(2) A net operating loss attributable to taxable years beginning
on or after January 1, 2011, shall be a net operating loss carryback
to each of the two taxable years preceding the taxable year of the
loss in lieu of the number of years provided therein.
(A) For a net operating loss attributable to a taxable year
beginning on or after January 1, 2011, and before January 1, 2012,
the amount of carryback to any taxable year shall not exceed 50
percent of the net operating loss.
(B) For a net operating loss attributable to a taxable year
beginning on or after January 1, 2012, and before January 1, 2013,
the amount of carryback to any taxable year shall not exceed 75
percent of the net operating loss.
(C) For a net operating loss attributable to a taxable year
beginning on or after January 1, 2013, the amount of carryback to any
taxable year shall not exceed 100 percent of the net operating loss.
(3) Notwithstanding paragraph (2), Section 172(b)(1)(B) of the
Internal Revenue Code, relating to special rules for REITs, and
Sections 172(b)(1)(E) and 172(h) of the Internal Revenue Code,
relating to corporate equity reduction interest loss, shall apply as
provided.
(4) A net operating loss carryback shall not be carried back to
any taxable year beginning before January 1, 2009.
(c) Net operating loss carrybacks shall not be allowed.
(d) (1) (A) For a net operating loss for any taxable year
beginning on or after January 1, 1987, and before January 1, 2000,
Section 172(b)(1)(A)(ii) of the Internal Revenue Code, relating to
years to which net operating losses may be carried, is modified to
substitute "five taxable years" in lieu of "20 taxable years" except
as otherwise provided in paragraphs (2) and (3).
(B) For a net operating loss for any taxable year beginning on or
after January 1, 2000, and before January 1, 2008,
Section 172(b)(1)(A)(ii) of the Internal Revenue Code, relating to
years to which net operating losses may be carried, is modified to
substitute "10 taxable years" in lieu of "20 taxable years."
(2) For any taxable year beginning before January 1, 2000, in the
case of a "new business," the "five taxable years" in paragraph (1)
shall be modified to read as follows:
(A) "Eight taxable years" for a net operating loss attributable to
the first taxable year of that new business.
(B) "Seven taxable years" for a net operating loss attributable to
the second taxable year of that new business.
(C) "Six taxable years" for a net operating loss attributable to
the third taxable year of that new business.
(3) For any carryover of a net operating loss for which a
deduction is denied by Section 17276.3, the carryover period
specified in this subdivision shall be extended as follows:
(A) By one year for a net operating loss attributable to taxable
years beginning in 1991.
(B) By two years for a net operating loss attributable to taxable
years beginning prior to January 1, 1991.
(4) The net operating loss attributable to taxable years beginning
on or after January 1, 1987, and before January 1, 1994, shall be a
net operating loss carryover to each of the 10 taxable years
following the year of the loss if it is incurred by a taxpayer that
is under the jurisdiction of the court in a Title 11 or similar case
at any time during the income year. The loss carryover provided in
the preceding sentence shall not apply to any loss incurred after the
date the taxpayer is no longer under the jurisdiction of the court
in a Title 11 or similar case.
(e) For purposes of this section:
(1) "Eligible small business" means any trade or business that has
gross receipts, less returns and allowances, of less than one
million dollars ($1,000,000) during the taxable year.
(2) Except as provided in subdivision (f), "new business" means
any trade or business activity that is first commenced in this state
on or after January 1, 1994.
(3) "Title 11 or similar case" shall have the same meaning as in
Section 368(a)(3) of the Internal Revenue Code.
(4) In the case of any trade or business activity conducted by a
partnership or "S" corporation paragraphs (1) and (2) shall be
applied to the partnership or "S" corporation.
(f) For purposes of this section, in determining whether a trade
or business activity qualifies as a new business under paragraph (2)
of subdivision (e), the following rules shall apply:
(1) In any case where a taxpayer purchases or otherwise acquires
all or any portion of the assets of an existing trade or business
(irrespective of the form of entity) that is doing business in this
state (within the meaning of Section 23101), the trade or business
thereafter conducted by the taxpayer (or any related person) shall
not be treated as a new business if the aggregate fair market value
of the acquired assets (including real, personal, tangible, and
intangible property) used by the taxpayer (or any related person) in
the conduct of its trade or business exceeds 20 percent of the
aggregate fair market value of the total assets of the trade or
business being conducted by the taxpayer (or any related person). For
purposes of this paragraph only, the following rules shall apply:
(A) The determination of the relative fair market values of the
acquired assets and the total assets shall be made as of the last day
of the first taxable year in which the taxpayer (or any related
person) first uses any of the acquired trade or business assets in
its business activity.
(B) Any acquired assets that constituted property described in
Section 1221(1) of the Internal Revenue Code in the hands of the
transferor shall not be treated as assets acquired from an existing
trade or business, unless those assets also constitute property
described in Section 1221(1) of the Internal Revenue Code in the
hands of the acquiring taxpayer (or related person).
(2) In any case where a taxpayer (or any related person) is
engaged in one or more trade or business activities in this state, or
has been engaged in one or more trade or business activities in this
state within the preceding 36 months ("prior trade or business
activity"), and thereafter commences an additional trade or business
activity in this state, the additional trade or business activity
shall only be treated as a new business if the additional trade or
business activity is classified under a different division of the
Standard Industrial Classification (SIC) Manual published by the
United States Office of Management and Budget, 1987 edition, than are
any of the taxpayer's (or any related person's) current or prior
trade or business activities.
(3) In any case where a taxpayer, including all related persons,
is engaged in trade or business activities wholly outside of this
state and the taxpayer first commences doing business in this state
(within the meaning of Section 23101) after December 31, 1993 (other
than by purchase or other acquisition described in paragraph (1)),
the trade or business activity shall be treated as a new business
under paragraph (2) of subdivision (e).
(4) In any case where the legal form under which a trade or
business activity is being conducted is changed, the change in form
shall be disregarded and the determination of whether the trade or
business activity is a new business shall be made by treating the
taxpayer as having purchased or otherwise acquired all or any portion
of the assets of an existing trade or business under the rules of
paragraph (1) of this subdivision.
(5) "Related person" shall mean any person that is related to the
taxpayer under either Section 267 or 318 of the Internal Revenue
Code.
(6) "Acquire" shall include any gift, inheritance, transfer
incident to divorce, or any other transfer, whether or not for
consideration.
(7) (A) For taxable years beginning on or after January 1, 1997,
the term "new business" shall include any taxpayer that is engaged in
biopharmaceutical activities or other biotechnology activities that
are described in Codes 2833 to 2836, inclusive, of the Standard
Industrial Classification (SIC) Manual published by the United States
Office of Management and Budget, 1987 edition, and as further
amended, and that has not received regulatory approval for any
product from the United States Food and Drug Administration.
(B) For purposes of this paragraph:
(i) "Biopharmaceutical activities" means those activities that use
organisms or materials derived from organisms, and their cellular,
subcellular, or molecular components, in order to provide
pharmaceutical products for human or animal therapeutics and
diagnostics. Biopharmaceutical activities make use of living
organisms to make commercial products, as opposed to pharmaceutical
activities that make use of chemical compounds to produce commercial
products.
(ii) "Other biotechnology activities" means activities consisting
of the application of recombinant DNA technology to produce
commercial products, as well as activities regarding pharmaceutical
delivery systems designed to provide a measure of control over the
rate, duration, and site of pharmaceutical delivery.
(g) In computing the modifications under Section 172(d)(2) of the
Internal Revenue Code, relating to capital gains and losses of
taxpayers other than corporations, the exclusion provided by Section
18152.5 shall not be allowed.
(h) Notwithstanding any provisions of this section to the
contrary, a deduction shall be allowed to a "qualified taxpayer" as
provided in Sections 17276.1, 17276.2, 17276.4, 17276.5, 17276.6, and
17276.7.
(i) The Franchise Tax Board may prescribe appropriate regulations
to carry out the purposes of this section, including any regulations
necessary to prevent the avoidance of the purposes of this section
through splitups, shell corporations, partnerships, tiered ownership
structures, or otherwise.
(j) The Franchise Tax Board may reclassify any net operating loss
carryover determined under either paragraph (2) or (3) of subdivision
(b) as a net operating loss carryover under paragraph (1) of
subdivision (b) upon a showing that the reclassification is necessary
to prevent evasion of the purposes of this section.
(k) Except as otherwise provided, the amendments made by Chapter
107 of the Statutes of 2000 shall apply to net operating losses for
taxable years beginning on or after January 1, 2000.
SEC. 2. Section 17276.9 of the Revenue
and Taxation Code is amended to read:
17276.9. (a) Notwithstanding Sections 17276, 17276.1, 17276.2,
17276.4, 17276.5, 17276.6, and 17276.7 of this code and Section 172
of the Internal Revenue Code, no net operating loss deduction shall
be allowed for any taxable year beginning on or after January 1,
2008, and before January 1, 2010.
(b) For any net operating loss or carryover of a net operating
loss for which a deduction is denied by subdivision (a), the
carryover period under Section 172 of the Internal Revenue Code shall
be extended as follows:
(1) By one year, for losses incurred in taxable years beginning on
or after January 1, 2008, and before January 1, 2009.
(2) By two years, for losses incurred in taxable years beginning
before January 1, 2008.
(c) Notwithstanding subdivision (a), a net operating loss
deduction shall be allowed for carryback of a net operating loss
attributable to a taxable year beginning on or after January 1, 2011.
(d)
(c) 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 passthrough 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.
SEC. 3. Section 17276.10 of the Revenue
and Taxation Code is repealed.
17276.10. Notwithstanding Section 17276.1, 17276.2, 17276.4,
17276.5, 17276.6, or 17276.7 to the contrary, a net operating loss
attributable to a taxable year beginning on or after January 1, 2008,
shall be a net operating carryover to each of the 20 taxable years
following the year of the loss, and a net operating loss attributable
to a taxable year beginning on or after January 1, 2011, shall also
be a net operating loss carryback to each of the two taxable years
preceding the taxable year of loss.
SEC. 4. Section 17276.11 is added to the
Revenue and Taxation Code , to read:
17276.11. (a) Notwithstanding Sections 17276, 17276.1, 17276.2,
17276.4, 17276.5, 17276.6, 17276.7, and 17276.9 of this code and
Section 172 of the Internal Revenue Code, no net operating loss
deduction shall be allowed for any taxable year beginning on or after
January 1, 2010, and before January 1, 2012.
(b) For any net operating loss or carryover of a net operating
loss for which a deduction is denied by subdivision (a), the
carryover period under Section 172 of the Internal Revenue Code shall
be extended as follows:
(1) By two years, for a total of four years pursuant to Section
17276.9 and this section, for losses incurred in taxable years
beginning before January 1, 2008.
(2) By one year, for a total of three years pursuant to Section
17276.9 and this section, for losses incurred in taxable years
beginning on or after January 1, 2008, and before January 1, 2009.
(3) By two years, for losses incurred in taxable years beginning
on or after January 1, 2009, and before January 1, 2010.
(4) By one year, for losses incurred in taxable years beginning on
or after January 1, 2010, and before January 1, 2011.
(c) 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 passthrough 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.
SEC. 5. Section 17276.12 is added to the
Revenue and Taxation Code , to read:
17276.12. Notwithstanding Section 17276, 17276.1, 17276.2,
17276.4, 17276.5, 17276.6, or 17276.7 to the contrary, a net
operating loss attributable to a taxable year beginning on or after
January 1, 2008, shall be a net operating carryover to each of the 20
taxable years following the year of the loss.
SEC. 6. Section 17276.13 is added to the
Revenue and Taxation Code , to read:
17276.13. (a) Notwithstanding any other law, in addition to the
modifications made by Section 17276, the deduction provided by
Section 172 of the Internal Revenue Code, relating to net operating
loss deduction, shall be modified for the purposes of this part as
follows:
(1) Section 172(b)(1)(J) of the Internal Revenue Code, relating to
certain losses attributable to federally declared disasters, shall
not apply.
(2) Section 172(j) of the Internal Revenue Code, relating to rules
relating to qualified disaster losses, shall not apply.
(b) This section shall apply to taxable years beginning on or
after January 1, 2010.
SEC. 7. Section 23663 of the Revenue
and Taxation Code is repealed.
23663. (a) (1) Notwithstanding any other law to the contrary, for
each taxable year beginning on or after July 1, 2008, any credit
allowed to a taxpayer under this chapter that is an "eligible credit
(within the meaning of paragraph (2) of subdivision (b)) may be
assigned by that taxpayer to any "eligible assignee" (within the
meaning of paragraph (3) of subdivision (b)).
(2) A credit assigned under paragraph (1) may only be applied by
the eligible assignee against the "tax" of the eligible assignee in a
taxable year beginning on or after January 1, 2010.
(3) Except as specifically provided in this section, following an
assignment of any eligible credit under this section, the eligible
assignee shall be treated as if it originally earned the assigned
credit.
(b) For purposes of this section, the following definitions shall
apply:
(1) "Affiliated corporation" means a corporation that is a member
of a commonly controlled group as defined in Section 25105.
(2) "Eligible credit" shall mean:
(A) Any credit earned by the taxpayer in a taxable year beginning
on or after July 1, 2008, or
(B) Any credit earned in any taxable year beginning before July 1,
2008, that is eligible to be carried forward to the taxpayer's first
taxable year beginning on or after July 1, 2008, under the
provisions of this part.
(3) "Eligible assignee" shall mean any affiliated corporation that
is properly treated as a member of the same combined reporting group
pursuant to Section 25101 or 25110 as the taxpayer assigning the
eligible credit as of:
(A) In the case of credits earned in taxable years beginning
before July 1, 2008:
(i) June 30, 2008, and
(ii) The last day of the taxable year of the assigning taxpayer in
which the eligible credit is assigned.
(B) In the case of credits earned in taxable years beginning on or
after July 1, 2008.
(i) The last day of the first taxable year in which the credit was
allowed to the taxpayer, and
(ii) The last day of the taxable year of the assigning taxpayer in
which the eligible credit is assigned.
(c) (1) The election to assign any credit under subdivision (a)
shall be irrevocable once made, and shall be made by the taxpayer
allowed that credit on its original return for the taxable year in
which the assignment is made.
(2) The taxpayer assigning any credit under this section shall
reduce the amount of its unused credit by the face amount of any
credit assigned under this section, and the amount of the assigned
credit shall not be available for application against the assigning
taxpayer's "tax" in any taxable year, nor shall it thereafter be
included in the amount of any credit carryover of the assigning
taxpayer.
(3) The eligible assignee of any credit under this section may
apply all or any portion of the assigned credits against the "tax"
(as defined in Section 23036) of the eligible assignee for the
taxable year in which the assignment occurs, or any subsequent
taxable year, subject to any carryover period limitations that apply
to the assigned credit and also subject to the limitation in
paragraph (2) of subdivision (a).
(4) In no case may the eligible assignee sell, otherwise transfer,
or thereafter assign the assigned credit to any other taxpayer.
(d) (1) No consideration shall be required to be paid by the
eligible assignee to the assigning taxpayer for assignment of any
credit under this section.
(2) In the event that any consideration is paid by the eligible
assignee to the assigning taxpayer for the transfer of an eligible
credit under this section, then:
(A) No deduction shall be allowed to the eligible assignee under
this part with respect to any amounts so paid, and
(B) No amounts so received by the assigning taxpayer shall be
includable in gross income under this part.
(e) (1) The Franchise Tax Board shall specify the form and manner
in which the election required under this section shall be made, as
well as any necessary information that shall be required to be
provided by the taxpayer assigning the credit to the eligible
assignee.
(2) Any taxpayer who assigns any credit under this section shall
report any information, in the form and manner specified by the
Franchise Tax Board, necessary to substantiate any credit assigned
under this section and verify the assignment and
subsequent application of any assigned
credit.
(3) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code shall not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraphs (1) and (2).
(4) The Franchise Tax Board may issue any regulations necessary to
implement the purposes of this section, including any regulations
necessary to specify the treatment of any assignment that does not
comply with the requirements of this section (including, for example,
where the taxpayer and eligible assignee are not properly treated as
members of the same combined reporting group on any of the dates
specified in paragraph (3) of subdivision (b).
(f) (1) The taxpayer and the eligible assignee shall be jointly
and severally liable for any tax, addition to tax, or penalty that
results from the disallowance, in whole or in part, of any eligible
credit assigned under this section.
(2) Nothing in this section shall limit the authority of the
Franchise Tax Board to audit either the assigning taxpayer or the
eligible assignee with respect to any eligible credit assigned under
this section.
(g) On or before June 30, 2013, the Franchise Tax Board shall
report to the Joint Legislative Budget Committee, the Legislative
Analyst, and the relevant policy committees of both houses on the
effects of this section. The report shall include, but need not be
limited to, the following:
(1) An estimate of use of credits in the 2010 and 2011 taxable
years by eligible taxpayers.
(2) An analysis of effect of this section on expanding business
activity in the state related to these credits.
(3) An estimate of the resulting tax revenue loss to the state.
(4) The report shall cover all credits covered in this section,
but focus on the credits related to research and development,
economic incentive areas, and low income housing.
SEC. 8. Section 23663.1 is added to the
Revenue and Taxation Code , to read:
23663.1. (a) (1) Notwithstanding any other law to the contrary,
for each taxable year beginning on or after July 1, 2008, any credit
allowed to a taxpayer under this chapter that is an "eligible credit
(within the meaning of paragraph (2) of subdivision (b)) may be
assigned by that taxpayer to any "eligible assignee" (within the
meaning of paragraph (3) of subdivision (b)).
(2) A credit assigned under paragraph (1) may only be applied by
the eligible assignee against the "tax" of the eligible assignee in a
taxable year beginning on or after January 1, 2012.
(3) Except as specifically provided in this section, following an
assignment of any eligible credit under this section, the eligible
assignee shall be treated as if it originally earned the assigned
credit.
(b) For purposes of this section, the following definitions shall
apply:
(1) "Affiliated corporation" means a corporation that is a member
of a commonly controlled group as defined in Section 25105.
(2) "Eligible credit" shall mean:
(A) Any credit earned by the taxpayer in a taxable year beginning
on or after July 1, 2008, or
(B) Any credit earned in any taxable year beginning before July 1,
2008, that is eligible to be carried forward to the taxpayer's first
taxable year beginning on or after July 1, 2008, under the
provisions of this part.
(3) "Eligible assignee" shall mean any affiliated corporation that
is properly treated as a member of the same combined reporting group
pursuant to Section 25101 or 25110 as the taxpayer assigning the
eligible credit as of:
(A) In the case of credits earned in taxable years beginning
before July 1, 2008:
(i) June 30, 2008, and
(ii) The last day of the taxable year of the assigning taxpayer in
which the eligible credit is assigned.
(B) In the case of credits earned in taxable years beginning on or
after July 1, 2008.
(i) The last day of the first taxable year in which the credit was
allowed to the taxpayer, and
(ii) The last day of the taxable year of the assigning taxpayer in
which the eligible credit is assigned.
(c) (1) The election to assign any credit under subdivision (a)
shall be irrevocable once made, and shall be made by the taxpayer
allowed that credit on its original return for the taxable year in
which the assignment is made.
(2) The taxpayer assigning any credit under this section shall
reduce the amount of its unused credit by the face amount of any
credit assigned under this section, and the amount of the assigned
credit shall not be available for application against the assigning
taxpayer's "tax" in any taxable year, nor shall it thereafter be
included in the amount of any credit carryover of the assigning
taxpayer.
(3) The eligible assignee of any credit under this section may
apply all or any portion of the assigned credits against the "tax"
(as defined in Section 23036) of the eligible assignee for the
taxable year in which the assignment occurs, or any subsequent
taxable year, subject to any carryover period limitations that apply
to the assigned credit and also subject to the limitation in
paragraph (2) of subdivision (a).
(4) In no case may the eligible assignee sell, otherwise transfer,
or thereafter assign the assigned credit to any other taxpayer.
(d) (1) No consideration shall be required to be paid by the
eligible assignee to the assigning taxpayer for assignment of any
credit under this section.
(2) In the event that any consideration is paid by the eligible
assignee to the assigning taxpayer for the transfer of an eligible
credit under this section, then:
(A) No deduction shall be allowed to the eligible assignee under
this part with respect to any amounts so paid, and
(B) No amounts so received by the assigning taxpayer shall be
includable in gross income under this part.
(e) (1) The Franchise Tax Board shall specify the form and manner
in which the election required under this section shall be made, as
well as any necessary information that shall be required to be
provided by the taxpayer assigning the credit to the eligible
assignee.
(2) Any taxpayer who assigns any credit under this section shall
report any information, in the form and manner specified by the
Franchise Tax Board, necessary to substantiate any credit assigned
under this section and verify the assignment and subsequent
application of any assigned credit.
(3) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code shall not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraphs (1) and (2).
(4) The Franchise Tax Board may issue any regulations necessary to
implement the purposes of this section, including any regulations
necessary to specify the treatment of any assignment that does not
comply with the requirements of this section, including, for example,
where the taxpayer and eligible assignee are not properly treated as
members of the same combined reporting group on any of the dates
specified in paragraph (3) of subdivision (b).
(f) (1) The taxpayer and the eligible assignee shall be jointly
and severally liable for any tax, addition to tax, or penalty that
results from the disallowance, in whole or in part, of any eligible
credit assigned under this section.
(2) Nothing in this section shall limit the authority of the
Franchise Tax Board to audit either the assigning taxpayer or the
eligible assignee with respect to any eligible credit assigned under
this section.
(g) On or before June 30, 2015, the Franchise Tax Board shall
report to the Joint Legislative Budget Committee, the Legislative
Analyst, and the relevant policy committees of both houses on the
effects of this section. The report shall include, but need not be
limited to, the following:
(1) An estimate of use of credits in the 2012 and 2013 taxable
years by eligible taxpayers.
(2) An analysis of effect of this section on expanding business
activity in the state related to these credits.
(3) An estimate of the resulting tax revenue loss to the state.
(4) The report shall cover all credits covered in this section,
but focus on the credits related to research and development,
economic incentive areas, and low income housing.
SEC. 9. Section 24416 of the Revenue
and Taxation Code is amended to read:
24416. Except as provided in Sections 24416.1, 24416.2, 24416.4,
24416.5, 24416.6, and 24416.7, a net operating loss deduction shall
be allowed in computing net income under Section 24341 and shall be
determined in accordance with Section 172 of the Internal Revenue
Code, except as otherwise provided.
(a) (1) Net operating losses attributable to taxable years
beginning before January 1, 1987, shall not be allowed.
(2) A net operating loss shall not be carried forward to any
taxable year beginning before January 1, 1987.
(b) (1) Except as provided in paragraphs (2) and (3), the
provisions of Section 172(b)(2) of the Internal Revenue Code,
relating to the amount of carryovers, shall be modified so that the
applicable percentage of the entire amount of the net operating loss
for any taxable year shall be eligible for carryover to any
subsequent taxable year. For purposes of this subdivision, the
applicable percentage shall be:
(A) Fifty percent for any taxable year beginning before January 1,
2000.
(B) Fifty-five percent for any taxable year beginning on or after
January 1, 2000, and before January 1, 2002.
(C) Sixty percent for any taxable year beginning on or after
January 1, 2002, and before January 1, 2004.
(D) One hundred percent for any taxable year beginning on or after
January 1, 2004.
(2) In the case of a taxpayer who has a net operating loss in any
taxable year beginning on or after January 1, 1994, and who operates
a new business during that taxable year, each of the following shall
apply to each loss incurred during the first three taxable years of
operating the new business:
(A) If the net operating loss is equal to or less than the net
loss from the new business, 100 percent of the net operating loss
shall be carried forward as provided in subdivision (e).
(B) If the net operating loss is greater than the net loss from
the new business, the net operating loss shall be carried over as
follows:
(i) With respect to an amount equal to the net loss from the new
business, 100 percent of that amount shall be carried forward as
provided in subdivision (e).
(ii) With respect to the portion of the net operating loss that
exceeds the net loss from the new business, the applicable percentage
of that amount shall be carried forward as provided in subdivision
(d).
(C) For purposes of Section 172(b)(2) of the Internal Revenue
Code, the amount described in clause (ii) of subparagraph (B) shall
be absorbed before the amount described in clause (i) of subparagraph
(B).
(3) In the case of a taxpayer who has a net operating loss in any
taxable year beginning on or after January 1, 1994, and who operates
an eligible small business during that taxable year, each of the
following shall apply:
(A) If the net operating loss is equal to or less than the net
loss from the eligible small business, 100 percent of the net
operating loss shall be carried forward to the taxable years
specified in paragraph (1) of subdivision (e).
(B) If the net operating loss is greater than the net loss from
the eligible small business, the net operating loss shall be carried
over as follows:
(i) With respect to an amount equal to the net loss from the
eligible small business, 100 percent of that amount shall be carried
forward as provided in subdivision (e).
(ii) With respect to that portion of the net operating loss that
exceeds the net loss from the eligible small business, the applicable
percentage of that amount shall be carried forward as provided in
subdivision (e).
(C) For purposes of Section 172(b)(2) of the Internal Revenue
Code, the amount described in clause (ii) of subparagraph (B) shall
be absorbed before the amount described in clause (i) of subparagraph
(B).
(4) In the case of a taxpayer who has a net operating loss in a
taxable year beginning on or after January 1, 1994, and who operates
a business that qualifies as both a new business and an eligible
small business under this section, that business shall be treated as
a new business for the first three taxable years of the new business.
(5) In the case of a taxpayer who has a net operating loss in a
taxable year beginning on or after January 1, 1994, and who operates
more than one business, and more than one of those businesses
qualifies as either a new business or an eligible small business
under this section, paragraph (2) shall be applied first, except that
if there is any remaining portion of the net operating loss after
application of clause (i) of subparagraph (B) of paragraph (2),
paragraph (3) shall be applied to the remaining portion of the net
operating loss as though that remaining portion of the net operating
loss constituted the entire net operating loss.
(6) For purposes of this section, "net loss" means the amount of
net loss after application of Sections 465 and 469 of the Internal
Revenue Code.
(c) For any taxable year in which the taxpayer has in effect a
water's-edge election under Section 25110, the deduction of a net
operating loss carryover shall be denied to the extent that the net
operating loss carryover was determined by taking into account the
income and factors of an affiliated corporation in a combined report
whose income and apportionment factors would not have been taken into
account if a water's-edge election under Section 25110 had been in
effect for the taxable year in which the loss was incurred.
(d) Section 172(b)(1) of the Internal Revenue Code, relating to
net operating loss carrybacks and carryovers and the years to which
the loss may be carried, is modified as follows:
(1) Net operating loss carrybacks shall not be allowed for any net
operating losses attributable to taxable years beginning before
January 1, 2011.
(2) A net operating loss attributable to taxable years beginning
on or after January 1, 2011, shall be a net operating loss carryback
to each of the two taxable years preceding the taxable year of the
loss in lieu of the number of years provided therein.
(A) For a net operating loss attributable to a taxable year
beginning on or after January 1, 2011, and before January 1, 2012,
the amount of carryback to any taxable year shall not exceed 50
percent of the net operating loss.
(B) For a net operating loss attributable to a taxable year
beginning on or after January 1, 2012, and before January 1, 2013,
the amount of carryback to any taxable year shall not exceed 75
percent of the net operating loss.
(C) For a net operating loss attributable to a taxable year
beginning on or after January 1, 2013, the amount of carryback to any
taxable year shall not exceed 100 percent of the net operating loss.
(3) Notwithstanding paragraph (2), Section 172(b)(1)(B) of the
Internal Revenue Code, relating to special rules for REITs, and
Sections 172(b)(1)(E) and 172(h) of the Internal Revenue Code,
relating to corporate equity reduction interest loss, shall apply as
provided.
(4) A net operating loss carryback shall not be carried back to
any taxable year beginning before January 1, 2009.
(d) Net operating loss carrybacks shall not allowed.
(e) (1) (A) For a net operating loss for any taxable year
beginning on or after January 1, 1987, and before January 1, 2000,
Section 172(b)(1)(A)(ii) of the Internal Revenue Code, relating to
years to which net operating losses may be carried, is modified to
substitute "five taxable years" in lieu of "20 years" except as
otherwise provided in paragraphs (2), (3), and (4).
(B) For a net operating loss for any income year beginning on or
after January 1, 2000, and before January 1, 2008,
Section 172(b)(1)(A)(ii) of the Internal Revenue Code, relating to
years to which net operating losses may be carried, is modified to
substitute "10 taxable years" in lieu of "20 taxable years."
(2) For any income year beginning before January 1, 2000, in the
case of a "new business," the "five taxable years" referred to in
paragraph (1) shall be modified to read as follows:
(A) "Eight taxable years" for a net operating loss attributable to
the first taxable year of that new business.
(B) "Seven taxable years" for a net operating loss attributable to
the second taxable year of that new business.
(C) "Six taxable years" for a net operating loss attributable to
the third taxable year of that new business.
(3) For any carryover of a net operating loss for which a
deduction is denied by Section 24416.3, the carryover period
specified in this subdivision shall be extended as follows:
(A) By one year for a net operating loss attributable to taxable
years beginning in 1991.
(B) By two years for a net operating loss attributable to taxable
years beginning prior to January 1, 1991.
(4) The net operating loss attributable to taxable years beginning
on or after January 1, 1987, and before January 1, 1994, shall be a
net operating loss carryover to each of the 10 taxable years
following the year of the loss if it is incurred by a corporation
that was either of the following:
(A) Under the jurisdiction of the court in a Title 11 or similar
case at any time prior to January 1, 1994. The loss carryover
provided in the preceding sentence shall not apply to any loss
incurred in an income year after the taxable year during which the
corporation is no longer under the jurisdiction of the court in a
Title 11 or similar case.
(B) In receipt of assets acquired in a transaction that qualifies
as a tax-free reorganization under Section 368(a)(1)(G) of the
Internal Revenue Code.
(f) For purposes of this section:
(1) "Eligible small business" means any trade or business that has
gross receipts, less returns and allowances, of less than one
million dollars ($1,000,000) during the income year.
(2) Except as provided in subdivision (g), "new business" means
any trade or business activity that is first commenced in this state
on or after January 1, 1994.
(3) "Title 11 or similar case" shall have the same meaning as in
Section 368(a)(3) of the Internal Revenue Code.
(4) In the case of any trade or business activity conducted by a
partnership or an "S corporation," paragraphs (1) and (2) shall be
applied to the partnership or "S corporation."
(g) For purposes of this section, in determining whether a trade
or business activity qualifies as a new business under paragraph (2)
of subdivision (e), the following rules shall apply:
(1) In any case where a taxpayer purchases or otherwise acquires
all or any portion of the assets of an existing trade or business
(irrespective of the form of entity) that is doing business in this
state (within the meaning of Section 23101), the trade or business
thereafter conducted by the taxpayer (or any related person) shall
not be treated as a new business if the aggregate fair market value
of the acquired assets (including real, personal, tangible, and
intangible property) used by the taxpayer (or any related person) in
the conduct of its trade or business exceeds 20 percent of the
aggregate fair market value of the total assets of the trade or
business being conducted by the taxpayer (or any related person). For
purposes of this paragraph only, the following rules shall apply:
(A) The determination of the relative fair market values of the
acquired assets and the total assets shall be made as of the last day
of the first taxable year in which the taxpayer (or any related
person) first uses any of the acquired trade or business assets in
its business activity.
(B) Any acquired assets that constituted property described in
Section 1221(1) of the Internal Revenue Code in the hands of the
transferor shall not be treated as assets acquired from an existing
trade or business, unless those assets also constitute property
described in Section 1221(1) of the Internal Revenue Code in the
hands of the acquiring taxpayer (or related person).
(2) In any case where a taxpayer (or any related person) is
engaged in one or more trade or business activities in this state, or
has been engaged in one or more trade or business activities in this
state within the preceding 36 months ("prior trade or business
activity"), and thereafter commences an additional trade or business
activity in this state, the additional trade or business activity
shall only be treated as a new business if the additional trade or
business activity is classified under a different division of the
Standard Industrial Classification (SIC) Manual published by the
United States Office of Management and Budget, 1987 edition, than are
any of the taxpayer's (or any related person's) current or prior
trade or business activities.
(3) In any case where a taxpayer, including all related persons,
is engaged in trade or business activities wholly outside of this
state and the taxpayer first commences doing business in this state
(within the meaning of Section 23101) after December 31, 1993 (other
than by purchase or other acquisition described in paragraph (1)),
the trade or business activity shall be treated as a new business
under paragraph (2) of subdivision (e).
(4) In any case where the legal form under which a trade or
business activity is being conducted is changed, the change in form
shall be disregarded and the determination of whether the trade or
business activity is a new business shall be made by treating the
taxpayer as having purchased or otherwise acquired all or any portion
of the assets of an existing trade or business under the rules of
paragraph (1) of this subdivision.
(5) "Related person" shall mean any person that is related to the
taxpayer under either Section 267 or 318 of the Internal Revenue
Code.
(6) "Acquire" shall include any transfer, whether or not for
consideration.
(7) (A) For taxable years beginning on or after January 1, 1997,
the term "new business" shall include any taxpayer that is engaged in
biopharmaceutical activities or other biotechnology activities that
are described in Codes 2833 to 2836, inclusive, of the Standard
Industrial Classification (SIC) Manual published by the United States
Office of Management and Budget, 1987 edition, and as further
amended, and that has not received regulatory approval for any
product from the United States Food and Drug Administration.
(B) For purposes of this paragraph:
(i) "Biopharmaceutical activities" means those activities that use
organisms or materials derived from organisms, and their cellular,
subcellular, or molecular components, in order to provide
pharmaceutical products for human or animal therapeutics and
diagnostics. Biopharmaceutical activities make use of living
organisms to make commercial products, as opposed to pharmaceutical
activities that make use of chemical compounds to produce commercial
products.
(ii) "Other biotechnology activities" means activities consisting
of the application of recombinant DNA technology to produce
commercial products, as well as activities regarding pharmaceutical
delivery systems designed to provide a measure of control over the
rate, duration, and site of pharmaceutical delivery.
(h) For purposes of corporations whose net income is determined
under Chapter 17 (commencing with Section 25101), Section 25108 shall
apply to each of the following:
(1) The amount of net operating loss incurred in any taxable year
that may be carried forward to another taxable year.
(2) The amount of any loss carry forward that may be deducted in
any taxable year.
(i) The provisions of Section 172(b)(1)(D) of the Internal Revenue
Code, relating to bad debt losses of commercial banks, shall not be
applicable.
(j) The Franchise Tax Board may prescribe appropriate regulations
to carry out the purposes of this section, including any regulations
necessary to prevent the avoidance of the purposes of this section
through splitups, shell corporations, partnerships, tiered ownership
structures, or otherwise.
(k) The Franchise Tax Board may reclassify any net operating loss
carryover determined under either paragraph (2) or (3) of subdivision
(b) as a net operating loss carryover under paragraph (1) of
subdivision (b) upon a showing that the reclassification is necessary
to prevent evasion of the purposes of this section.
( l ) Except as otherwise provided, the amendments made
by Chapter 107 of the Statutes of 2000 shall apply to net operating
losses for taxable years beginning on or after January 1, 2000.
SEC. 10. Section 24416.9 of the Revenue
and Taxation Code is amended to read:
24416.9. (a) Notwithstanding Sections 24416, 24416.1,
24416.2, 24416.4, 24416.5, 24416.6, and 24416.7 of this code and
Section 172 of the Internal Revenue Code, no net operating loss
deduction shall be allowed for any taxable year beginning on or after
January 1, 2008, and before January 1, 2010.
(b) For any net operating loss or carryover of a net operating
loss for which a deduction is denied by subdivision (a), the
carryover period under Section 172 of the Internal Revenue Code shall
be extended as follows:
(1) By one year, for losses incurred in taxable years beginning on
or after January 1, 2008, and before January 1, 2009.
(2) By two years, for losses incurred in taxable years beginning
before January 1, 2008.
(c) Notwithstanding subdivision (a), a net operating loss
deduction shall be allowed for carryback of a net operating loss
attributable to a taxable year beginning on or after January 1, 2011.
(d)
(c) The provisions of this section shall not apply to a
taxpayer with income subject to tax under this part of less than
five hundred thousand dollars ($500,000) for the taxable year.
SEC. 11. Section 24416.10 of the
Revenue and Taxation Code is repealed.
24416.10. Notwithstanding Section 24416.1, 24416.2, 24416.4,
24416.5, 24416.6, or 24416.7 to the contrary, a net operating loss
attributable to a taxable year beginning on or after January 1, 2008,
shall be a net operating carryover to each of the 20 taxable years
following the year of the loss, and a net operating loss attributable
to a taxable year beginning on or after January 1, 2011, shall also
be a net operating loss carryback to each of the two taxable years
preceding the taxable year of loss.
SEC. 12. Section 24416.11 is added to the
Revenue and Taxation Code , to read:
24416.11. (a) Notwithstanding Sections 24416, 24416.1, 24416.2,
24416.4, 24416.5, 24416.6, 24416.7, and 24416.9 of this code and
Section 172 of the Internal Revenue Code, no net operating loss
deduction shall be allowed for any taxable year beginning on or after
January 1, 2010, and before January 1, 2012.
(b) For any net operating loss or carryover of a net operating
loss for which a deduction is denied by subdivision (a), the
carryover period under Section 172 of the Internal Revenue Code shall
be extended as follows:
(1) By two years, for a total of four years pursuant to Section
24416.9 and this section, for losses incurred in taxable years
beginning before January 1, 2008.
(2) By two years, for a total of three years pursuant to Section
24416.9 and this section, for losses incurred in taxable years
beginning on or after January 1, 2008, and before January 1, 2009.
(3) By two years, for losses incurred in taxable years beginning
on or after January 1, 2009, and before January 1, 2010.
(4) By one year, for losses incurred in taxable years beginning on
or after January 1, 2010, and before January 1, 2011.
(c) The provisions of this section shall not apply to a taxpayer
with income subject to tax under this part of less than five hundred
thousand dollars ($500,000) for the taxable year.
SEC. 13. Section 24416.12 is added to the
Revenue and Taxation Code , to read:
24416.12. Notwithstanding Section 24416, 24416.1, 24416.2,
24416.4, 24416.5, 24416.6, or 24416.7 to the contrary, a net
operating loss attributable to a taxable year beginning on or after
January 1, 2008, shall be a net operating carryover to each of the 20
taxable years following the year of the loss.
SEC. 14. Section 24416.13 is added to the
Revenue and Taxation Code , to read:
24416.13. (a) Notwithstanding any other law, in addition to the
modifications made by Section 24416, the deduction provided by
Section 172 of the Internal Revenue Code, relating to net operating
loss deduction, shall be modified for the purposes of this part as
follows:
(1) Section 172(b)(1)(J) of the Internal Revenue Code, relating to
certain losses attributable to federally declared disasters, shall
not apply.
(2) Section 172(j) of the Internal Revenue Code, relating to rules
relating to qualified disaster losses, shall not apply.
(b) This section shall appear to taxable years beginning on or
after January 1, 2010.
SEC. 15. Section 25128.5 of the Revenue
and Taxation Code is repealed.
25128.5. (a) Notwithstanding Section 38006, for taxable years
beginning on or after January 1, 2011, any apportioning trade or
business, other than an apportioning trade or business described in
subdivision (b) of Section 25128, may make an irrevocable annual
election on an original timely filed return, in the manner and form
prescribed by the Franchise Tax Board to apportion its income in
accordance with this section, and not in accordance with Section
25128.
(b) Notwithstanding Section 38006, for taxable years beginning on
or after January 1, 2011, all business income of an apportioning
trade or business making an election described in subdivision (a)
shall be apportioned to this state by multiplying the business income
by the sales factor.
(c) The Franchise Tax Board is authorized to issue regulations
necessary or appropriate regarding the making of an election under
this section, including regulations that are consistent with rules
prescribed for making an election under Section 25113.
SEC. 16. Section 25128.7 is added to the
Revenue and Taxation Code , to read:
25128.7. (a) Notwithstanding Section 38006, for taxable years
beginning on or after January 1, 2012, any apportioning trade or
business, other than an apportioning trade or business described in
subdivision (b) of Section 25128, shall apportion its business income
in accordance with this section, and not in accordance with Section
25128.
(b) Notwithstanding Section 38006, for taxable years beginning on
or after January 1, 2012, all business income of an apportioning
trade or business described in subdivision (a) shall be apportioned
to this state by multiplying the business income by the sales factor.
(c) The Franchise Tax Board is authorized to issue regulations
necessary or appropriate regarding the administration of this
section.
(d) This section shall become operative on January 1, 2012.
SEC. 17. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SECTION 1. (a) The health, safety, and welfare
of the people of California depend upon the ability to provide a
proper education for our children. Unfortunately, children simply
cannot learn in an environment that is unsafe. Strong partnerships
between law enforcement, schools, and communities are essential in
ensuring that school campuses remain safe havens that are conducive
to learning and achievement instead of serving as recruitment centers
for gangs and criminal activity. Therefore, the purpose of this act
is to enable local municipalities, local school districts, and local
law enforcement to form these strong partnerships to better provide
for the safety and security of our children.
(b) It is the criminal prosecutor's responsibility to ensure that
children feel safe in and around schools so that they can focus on
learning, and it is the educator's responsibility to provide that
learning. Although the roles of schools and law enforcement agencies
differ, the Legislature finds that there are some significant areas
of commonality. First, both schools and law enforcement agencies are
responsible for the safety and well-being of pupils. Second, schools
represent the natural centers of our communities. Working within the
schools is a logical extension of law enforcement's responsibility
for public safety in the broader community. Third, both schools and
law enforcement agencies can play an important role in helping youth
become productive, law-abiding residents. With these complimentary
roles in mind, it is declared that the local prosecutor's office is
in an ideal position to work with the corresponding local school
district to implement strategies aimed at reversing conditions that
produce and perpetuate an unsafe school environment.
(c) A successful partnership between prosecutor and school
district has already proven successful under the toughest
circumstances. Markham Middle School, located in the Watts area of
South Los Angeles, had long been plagued by crime and gang violence.
The area surrounding the Markham campus was home to seven criminal
street gangs, and the school was widely considered to be among the
most dangerous within the Los Angeles Unified School District. In
February 2007, the Los Angeles City Attorney partnered with the Los
Angeles Unified School District to place a prosecutor on campus. From
the beginning, the city attorney's team understood that school
safety requires a broad-based effort by the entire community,
including educators, pupils, parents, law enforcement agencies,
businesses, and community-based organizations. At the end of the
first full academic year, without any change to the teaching or the
curriculum, the city attorney, the Los Angeles Unified School
District, the Los Angeles Police Department, and the Los Angeles
School Police Department observed that:
(1) Markham was significantly safer than at any point in recent
memory.
(2) Markham's pupil standardized test scores rose for the first
time in years, going from 519 to 542, beating the academic
performance index target set by the State Department of Education by
more than 55 percent.
(3) Markham's 8th grade graduation rate increased 14 percent from
the year before, going from 66 percent to 80 percent.
(d) The Markham Middle School Safety Prosecutor Program
demonstrated that a renewed dedication to pupils in the most
underserved schools can create an environment where crime decreases,
test scores rise, and pupils once again focus on learning. It is
therefore declared that this educator-prosecutor partnership is a
hopeful model for school safety reform, and its replication should be
encouraged in other jurisdictions.
SEC. 2. Article 6 (commencing with Section
32254.5) is added to Chapter 2 of Part 19 of Division 1 of Title 1 of
the Education Code, to read:
Article 6. Prosecutors on School Campuses
32254.5. (a) The governing board of a school district or a county
superintendent of schools may enter into a memorandum of
understanding (MOU) with a district attorney or prosecuting city
attorney having filing jurisdiction over the school district in order
to facilitate the placement of one or more prosecutors on one or
more school district campuses in order to promote public safety.
(b) Participation shall be at the option of each agency. A school
district, district attorney, or prosecuting city attorney shall not
be required by the other party to enter into the MOU.
(c) The two agencies shall work together to develop the terms and
conditions of the MOU. The MOU shall incorporate the conditions
described in this section, and provisions deemed by the agencies as
reasonably necessary to fulfill the purpose of school safety and to
ensure compliance with the MOU and this section. The MOU shall
include, but is not limited to, the following provisions:
(1) The time period for the agencies' participation in the school
safety program and the procedures for the placement of one or more
prosecutors directly onto one or more campuses under the jurisdiction
of the school district.
(2) The scope of work to be given to the prosecutor and how the
prosecutor is to work with the administration of the specific school.
(3) A procedure for funding the school safety program that
includes, but is not limited to, declarations that the agencies have
adequate funds available to provide for the costs that arise from
placing a prosecutor on a school campus.
(4) Performance measures to evaluate the effectiveness of the
school safety program, including, but not limited to, annual progress
reports.
(5) A statement that the primary purpose of the partnership is to
promote pupil safety and that the prosecutor shall attempt, whenever
possible, to prevent problems before they escalate.
(d) For purposes of this section:
(1) "Agency" means a governing board of a school district, a
county superintendent of schools, a district attorney, or a
prosecuting city attorney.
(2) "School safety program" means the placement of one or more
prosecutors on one or more local school district campuses in order to
promote public safety.
32254.6. Nothing in this article prohibits a governing board of a
school district or a county superintendent of schools from adopting
an alternative model of collaboration.
