Bill Text: CA AB2715 | 2019-2020 | Regular Session | Introduced
Bill Title: California Competitiveness and Innovation Act.
Spectrum: Partisan Bill (Republican 5-0)
Status: (Introduced - Dead) 2020-04-24 - Referred to Com. on REV. & TAX. [AB2715 Detail]
Download: California-2019-AB2715-Introduced.html
CALIFORNIA LEGISLATURE—
2019–2020 REGULAR SESSION
Assembly Bill
No. 2715
| Introduced by Assembly Member Fong (Coauthors: Assembly Members Diep, Mathis, and Voepel) (Coauthor: Senator Dahle) |
February 20, 2020 |
An act to amend Sections 218, 17041, 17053.5, 23151, 23151.1, 23151.2, 23153, 23221, and 23282 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 2715, as introduced, Fong.
California Competitiveness and Innovation Act.
(1) Existing property tax law provides, pursuant to the authority of a specified provision of the California Constitution, for a homeowners’ exemption in the amount of $7,000 of the full value of a “dwelling,” as defined, and authorizes the Legislature to increase this exemption.
This bill, beginning with the lien date for the 2021–22 fiscal year, would increase the homeowners’ exemption from $7,000 to $14,000 of the full value of a dwelling. This bill, for the 2022–23 fiscal year and for each fiscal year thereafter, would also require the county assessor to adjust the amount of the homeowners’ exemption by the percentage change in the House Price Index for California for the first 3 quarters of the prior calendar year, as specified.
(2) The Personal Income Tax
Law imposes taxes based upon taxable income of individuals, estates, and trusts, at specified rates.
This bill, for taxable years beginning on or after January 1, 2020, would revise the personal income tax rates and the amounts of income those rates are imposed upon, as provided.
(3) The California Constitution requires the Legislature, whenever it increases the homeowners’ property tax exemption, to provide a comparable increase in benefits to qualified renters. The Personal Income Tax Law authorizes various credits against the taxes imposed by that law, including a credit for qualified renters in the amount of $120 for spouses filing joint returns, heads of household, and surviving spouses if adjusted gross income is $50,000 or less, and in the amount of $60 for other individuals if adjusted gross income is $25,000 or less. Existing law requires the Franchise Tax Board to
annually adjust for inflation these adjusted gross income amounts.
This bill, for taxable years beginning on and after January 1, 2021, would increase this credit for a qualified renter to $240 for spouses filing joint returns, heads of household, and surviving spouses if adjusted gross income is $50,000 or less, as adjusted for inflation, and to an amount equal to $120 for other individuals if adjusted gross income is $25,000 or less, as adjusted for inflation. The bill, for taxable years beginning on or after January 1, 2022, would also require the Franchise Tax Board to annually adjust for inflation, based upon the California Consumer Price Index, the amount of these credits. The bill would also make nonsubstantive changes to the renters’ credit.
(4) The Corporation Tax Law generally imposes a franchise tax on corporations doing business within the limits of this state, including a minimum franchise
tax on specified corporations, as provided.
This bill would, for taxable years ending before January 1, 2021, eliminate the minimum franchise tax and make related technical amendments.
(5) Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.
This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.
(6) This bill would take effect immediately as a tax levy.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
This act shall be known, and may be cited, as the California Competitiveness and Innovation Act.SEC. 2.
Section 218 of the Revenue and Taxation Code is amended to read:218.
(a) The homeowners’ property tax exemption is in the amount of the assessed value of the dwelling specified in this section, as authorized by subdivision (k) of Section 3 of Article XIII of the(1) Seven thousand dollars ($7,000) of the full value of the
dwelling through the 2020–21 fiscal year.
(2) (A) Beginning with the lien date for the 2021–22 fiscal year, fourteen thousand dollars ($14,000) of the full value of the dwelling.
(B) Beginning with the lien date for the 2022–23 fiscal year and for each fiscal year thereafter, the assessor shall adjust the exemption amount of the prior fiscal year by the percentage change, rounded to the nearest one-thousandth of 1 percent, in the House Price Index for California for the first three quarters of the prior calendar year, as determined by the federal Housing Finance Agency.
(b) (1) The exemption does not extend to property that is rented, vacant, under construction on the lien date, or that is a vacation or secondary home of the owner or
owners, nor does it apply to property on which an owner receives the veteran’s exemption.
(2) Notwithstanding paragraph (1), if a person receiving the exemption is not occupying the dwelling on the lien date because the dwelling was damaged in a misfortune or calamity, the person shall be deemed to occupy that same dwelling as his or her their principal place of residence on the lien date, provided the person’s absence from the dwelling is temporary and the person intends to return to the dwelling when possible to do so. Except as provided in paragraph (3), when a dwelling has been totally destroyed, and thus no dwelling exists on the lien date, the exemption provided by this section shall not be applicable until the structure has been replaced and is
occupied as a dwelling.
(3) A dwelling that was totally destroyed in a disaster for which the Governor proclaimed a state of emergency, that qualified for the exemption provided by this section prior to the commencement date of the disaster and that has not changed ownership since the commencement date of the disaster, shall be deemed occupied by the person receiving the exemption on the lien date provided the person intends to reconstruct a dwelling on the property and occupy the dwelling as his or her their principal place of residence when it is possible to do so.
(c) For purposes of this section, all of the following apply:
(1) “Owner” includes a person purchasing the dwelling under a contract of sale or who holds shares or membership in a cooperative housing corporation, which holding is a requisite to the exclusive right of occupancy of a dwelling.
(2) (A) “Dwelling” means a building, structure, or other shelter constituting a place of abode, whether real property or personal property, and any land on which it may be situated. A two-dwelling unit shall be considered as two separate single-family dwellings.
(B) “Dwelling” includes the following:
(i) A single-family dwelling occupied by an owner thereof as his or her their
principal place of residence on the lien date.
(ii) A multiple-dwelling unit occupied by an owner thereof on the lien date as his or her their principal place of residence.
(iii) A condominium occupied by an owner thereof as his or her
their principal place of residence on the lien date.
(iv) Premises occupied by the owner of shares or a membership interest in a cooperative housing corporation, as defined in subdivision (i) of Section 61, as his or her their principal place of residence on the lien date. Each exemption allowed pursuant to this subdivision shall be deducted from the total assessed valuation of the cooperative housing corporation. The exemption shall be taken into account in apportioning property taxes among owners of share or membership interests in the cooperative housing corporations so as to benefit those owners who qualify for the exemption.
(d) The exemption
provided for in subdivision (k) of Section 3 of Article XIII of the California Constitution shall first be applied to the building, structure, or other shelter and the excess, if any, shall be applied to any land on which it may be located.
SEC. 3.
Section 17041 of the Revenue and Taxation Code is amended to read:17041.
(a) (1) There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident, except the head of a household as defined in Section 17042, taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year as if the resident were a resident of this state for the entire taxable year and for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions:If the taxable income is: | The tax is: |
Not over $3,650
........................
| 1% of the taxable income |
Over $3,650 but not over $8,650
........................
| $36.50 plus 2% of the excess over $3,650 |
Over $8,650 but not over $13,650
........................
| $136.50 plus 4% of the excess over $8,650 |
Over $13,650 but not over $18,950
........................
| $336.50 plus 6% of the excess over $13,650 |
Over $18,950 but not over $23,950
........................
| $654.50 plus 8% of the excess over $18,950 |
Over $23,950
........................
| $1,054.50 plus 9.3% of the excess over $23,950 |
(2) (A) For taxable years beginning on or after January 1, 2009,
and before January 1, 2011, the percentages specified in the table in paragraph (1) shall be increased by adding 0.25 percent to each percentage. 2020, the income tax brackets and rates set forth in paragraph (1) shall be replaced with the following:
If the taxable income is: | The tax is: |
Not over $7,850
........................
| 0% of the taxable income |
Over $7,850 but not over $18,610
........................
| $0 plus 1% of the excess over $7,850 |
Over $18,610 but not over $29,372
........................
| $107.60 plus 2% of the excess over $18,610 |
Over $29,372 but not over $40,773
........................
| $322.84 plus 4% of the excess over $29,372 |
Over $40,733 but not over $51,530
........................
| $787.28 plus 6% of the excess over $40,733 |
Over $51,530 but not over $250,000
........................
| $1,432.70 plus 8% of the excess over $51,530 |
(B) (i) Except as provided in clause (ii), the income tax brackets specified in this paragraph shall be recomputed, as otherwise provided in subdivision (h), only for taxable years beginning on or after January 1, 2021.
(ii) The two-hundred-fifty-thousand dollar ($250,000) income tax bracket ceiling under subparagraph (A) shall be that amount as recomputed pursuant to subparagraph (B) of paragraph (2) of subdivision (f) of Section 36 of Article XIII of the California Constitution.
(3) For taxable years beginning on or after January 1, 2031, for taxable income that was subject to the tax rates established by paragraph (2) of subdivision (f) of Section 36 of Article XIII of the California Constitution, the tax rate is 8 percent.
(b) (1) There shall be imposed for each taxable year upon the taxable income of every nonresident or part-year resident, except the head of a household as defined in Section 17042, a tax as calculated in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by multiplying the “taxable income of a nonresident or part-year resident,” as defined in subdivision (i), by a rate (expressed as a percentage) equal to the tax computed under subdivision (a) on the entire taxable income of the nonresident or part-year resident as if the nonresident or part-year resident were a resident of this state for the taxable year and as if the nonresident or part-year resident were a resident of this state for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions, divided by the amount of that income.
(c) (1) There shall be imposed for each taxable year upon the entire taxable income of every resident of this state who is not a part-year resident for that taxable year, when the resident is the head of a household, as defined in Section 17042, taxes in the following amounts and at the following rates upon the amount of taxable income computed for the taxable year as if the resident were a resident of the state for the entire taxable year and for all prior taxable years for carryover items, deferred income, suspended losses, or suspended deductions:
If the taxable income is: | The tax is: |
Not over $7,300
........................
| 1% of the taxable income |
Over $7,300 but not over $17,300
........................
| $73 plus 2% of the excess over $7,300 |
Over $17,300 but not over $22,300
........................
| $273 plus 4% of the excess over $17,300 |
Over $22,300 but not over $27,600
........................
| $473 plus 6% of the excess over $22,300 |
Over $27,600 but not over $32,600
........................
| $791 plus 8% of the excess over $27,600 |
Over
$32,600
........................
| $1,191 plus 9.3% of the excess over $32,600 |
(2) (A) For taxable years beginning on or after January 1, 2009, and before January 1, 2011, the percentages specified in the table in paragraph (1) shall be increased by adding 0.25 percent to each percentage. 2020, the income tax brackets and rates set forth in paragraph (1) shall be replaced with the
following:
If the taxable income is:
........................
| The tax is: |
Not over $15,710
........................
| 0% of the taxable income |
Over $15,710 but not over $37,221
........................
| $0 plus 1% of the excess over $15,710 |
Over $37,221 but not over $47,982
........................
| $215.11 plus 2% of the excess over $37,221 |
Over $47,982 but not over $59,383
........................
| $430.33 plus 4% of the excess over $47,982 |
Over $59,383 but not over $70,142
........................
| $886.37 plus 6% of the excess over $59,383 |
Over $70,142 but not over $340,000
........................
| $1,531.91 plus 8% of the excess over $70,142 |
(B) (i) Except as provided in subclause (ii), the income tax brackets specified in this paragraph shall be recomputed, as otherwise provided in subdivision (h), only for taxable years beginning on or after January 1, 2021.
(ii) The three-hundred-forty-thousand dollar ($340,000) income tax bracket ceiling shall be that amount as recomputed pursuant to subparagraph (B) of paragraph (3) of subdivision (f) of Section 36 of Article XIII of the
California Constitution.
(3) For taxable years beginning on or after January 1, 2031, for taxable income that was subject to the tax rates established by paragraph (3) of subdivision (f) of Section 36 of Article XIII of the California Constitution, the tax rate is 8 percent.
(d) (1) There shall be imposed for each taxable year upon the taxable income of every nonresident or part-year resident when the nonresident or part-year resident is the head of a household, as defined in Section 17042, a tax as calculated in paragraph (2).
(2) The tax imposed under paragraph (1) shall be calculated by multiplying the “taxable income of a nonresident or part-year resident,” as defined in subdivision (i), by a rate (expressed as a percentage) equal to the tax computed under subdivision (c) on the entire taxable
income of the nonresident or part-year resident as if the nonresident or part-year resident were a resident of this state for the taxable year and as if the nonresident or part-year resident were a resident of this state for all prior taxable years for any carryover items, deferred income, suspended losses, or suspended deductions, divided by the amount of that income.
(e) There shall be imposed for each taxable year upon the taxable income of every estate, trust, or common trust fund taxes equal to the amount computed under subdivision (a) for an individual having the same amount of taxable income.
(f) The tax imposed by this part is not a surtax.
(g) (1) Section 1(g) of the Internal Revenue Code, relating to certain unearned income of children taxed as if parent’s income, shall apply, except
as otherwise provided.
(2) Section 1(g)(7)(B)(ii)(II) of the Internal Revenue Code is modified, for purposes of this part, by substituting “1 percent” for “10 percent.”
(h) For each taxable year beginning on or after January 1, 1988, and before January 1, 2020, and for each taxable year beginning on or after January 1, 2021, the Franchise Tax Board shall recompute the income tax brackets prescribed in subdivisions (a) and (c). That computation shall be made as follows:
(1) The California Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current
calendar year, no later than August 1 of the current calendar year.
(2) The Franchise Tax Board shall do both of the following:
(A) Compute an inflation adjustment factor by adding 100 percent to the percentage change figure that is furnished pursuant to paragraph (1) and dividing the result by 100.
(B) Multiply the preceding taxable year income tax brackets by the inflation adjustment factor determined in subparagraph (A) and round off the resulting products to the nearest one dollar ($1).
(i) (1) For purposes of this part, the term “taxable income of a nonresident or part-year resident” includes each of the following:
(A) For any part of the taxable year during
which the taxpayer was a resident of this state (as defined by Section 17014), all items of gross income and all deductions, regardless of source.
(B) For any part of the taxable year during which the taxpayer was not a resident of this state, gross income and deductions derived from sources within this state, determined in accordance with Article 9 of Chapter 3 (commencing with Section 17301) and Chapter 11 (commencing with Section 17951).
(2) For purposes of computing “taxable income of a nonresident or part-year resident” under paragraph (1), the amount of any net operating loss sustained in any taxable year during any part of which the taxpayer was not a resident of this state shall be limited to the sum of the following:
(A) The amount of the loss attributable to the part of the taxable year in which the
taxpayer was a resident.
(B) The amount of the loss which, during the part of the taxable year the taxpayer is not a resident, is attributable to California source income and deductions allowable in arriving at taxable income of a nonresident or part-year resident.
(3) For purposes of computing “taxable income of a nonresident or part-year resident” under paragraph (1), any carryover items, deferred income, suspended losses, or suspended deductions shall only be includable or allowable to the extent that the carryover item, deferred income, suspended loss, or suspended deduction was derived from sources within this state, calculated as if the nonresident or part-year resident, for the portion of the year he or she was
they were a nonresident, had been a nonresident for all prior years.
SEC. 4.
Section 17053.5 of the Revenue and Taxation Code is amended to read:17053.5.
(a) (1) For a qualified renter, there shall be allowed a credit against the renter’s “net tax,” as defined in Section 17039. The amount of the credit shall be as follows:(A) (i) For spouses filing joint returns, heads of household, and surviving spouses, as defined in Section 17046, the credit shall be equal to one hundred twenty dollars ($120) if adjusted gross income is fifty thousand dollars ($50,000) or less.
(ii) For taxable years beginning on or after January 1, 2021, the credit shall be equal to two hundred forty dollars ($240) for taxpayers described in clause (i). For taxable years beginning on or after January 1, 2022, the Franchise Tax Board shall adjust the amount of the credit as provided by subdivision (j).
(B) (i) For other individuals, the credit shall be equal to sixty dollars ($60) if adjusted gross income is twenty-five thousand dollars ($25,000) or less.
(ii) For taxable
years beginning on or after January 1, 2021, the credit shall be equal to one hundred twenty dollars ($120) for taxpayers described in clause (i). For taxable years beginning on or after January 1, 2022, the Franchise Tax Board shall adjust the amount of the credit as provided by subdivision (j).
(2) Except as provided in subdivision (b), spouses shall receive but one credit under this section. If the spouses file separate returns, the credit may be taken by either or equally divided between them, except as follows:
(A) If one spouse was a resident for the entire taxable year and the other spouse was a nonresident for part or all of the taxable year, the resident spouse shall be allowed one-half the credit allowed to married persons and the nonresident spouse shall be permitted one-half the credit allowed to married persons, prorated as provided in
subdivision (e).
(B) If both spouses were nonresidents for part of the taxable year, the credit allowed to married persons shall be divided equally between them subject to the proration provided in subdivision (e).
(b) For spouses, if each spouse maintained a separate place of residence and resided in this state during the entire taxable year, each spouse will be allowed one-half the full credit allowed to married persons provided in subdivision (a).
(c) For purposes of this section, a “qualified renter” means an individual who satisfies both of the following:
(1) Was a resident of this state, as defined in Section 17014.
(2) Rented and occupied premises in this state which constituted the
individual’s principal place of residence during at least 50 percent of the taxable year.
(d) “Qualified renter” does not include any of the following:
(1) An individual who for more than 50 percent of the taxable year rented and occupied premises that were exempt from property taxes, except that an individual, otherwise qualified, is deemed a qualified renter if the individual or the individual’s landlord pays possessory interest taxes, or the owner of those premises makes payments in lieu of property taxes that are substantially equivalent to property taxes paid on properties of comparable market value.
(2) An individual whose principal place of residence for more than 50 percent of the taxable year is with another
any other person who claimed that individual as a dependent for income tax purposes.
(3) An individual who has been granted or whose spouse has been granted the homeowners’ property tax exemption during the taxable year. This paragraph does not apply to an individual whose spouse has been granted the homeowners’ property tax exemption if each spouse maintained a separate residence for the entire taxable year.
(e) An otherwise qualified renter who is a nonresident for any portion of the taxable year shall claim the credits set forth in subdivision (a) at the rate of one-twelfth of those credits for each full month that individual resided within this state during the taxable year.
(f) A person claiming the credit provided in this section shall, as part of that claim, and under
penalty of perjury, furnish that information as the Franchise Tax Board prescribes on a form supplied by the board.
(g) The credit provided in this section shall be claimed on returns in the form as the Franchise Tax Board may from time to time prescribe.
(h) For purposes of this section, “premises” means a house or a dwelling unit used to provide living accommodations in a building or structure and the land incidental thereto, but does not include land only, unless the dwelling unit is a mobilehome. The credit is not allowed for any taxable year for the rental of land upon which a mobilehome is located if the mobilehome has been granted a homeowners’ exemption under Section 218 in that year.
(i) This section shall become operative on January 1, 1998, and applies to any taxable year beginning on or after January 1,
1998.
(j) For each taxable year beginning on or after January 1, 1999, the Franchise Tax Board shall recompute the adjusted gross income amounts set forth in subdivision (a). The computation For each taxable year beginning on or after January 1, 2022, the Franchise Tax Board shall also recompute the amount of the credit set forth in subdivision (a). These computations shall be made as follows:
(1) The Department of Industrial Relations shall transmit annually to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current year, no later than August 1 of the current calendar year.
(2) The Franchise Tax Board shall compute an inflation adjustment factor by adding 100 percent to the that portion of the percentage change figure which is furnished pursuant to paragraph (1) and dividing the result by 100.
(3) The Franchise Tax Board shall multiply the amount in subparagraph (B) of amounts in paragraph (1) of subdivision (a) for the preceding taxable year by the inflation adjustment factor determined in
paragraph (2), and round off the resulting products to the nearest one dollar ($1).
(4) In computing the amounts pursuant to this subdivision, the amounts provided in subparagraph (A) of paragraph (1) of subdivision (a) shall be twice the amount provided in subparagraph (B) of paragraph (1) of subdivision (a).
SEC. 5.
Section 23151 of the Revenue and Taxation Code is amended to read:23151.
(a) With the exception of banks and financial corporations, every corporation doing business within the limits of this state and not expressly exempted from taxation by the provisions of the Constitution of this state or by this part, shall annually pay to the state, for the privilege of exercising its corporate franchises within this state, a tax according to or measured by its net income, to be computed at the rate of 7.6 percent upon the basis of its net income for the next preceding income year, or if(b) For calendar or fiscal years ending after June 30, 1973, the rate of tax shall be 9 percent instead of 7.6 percent as provided by subdivision (a).
(c) For calendar or fiscal years ending in 1980 to 1986, inclusive, the rate of tax shall be 9.6 percent.
(d) For calendar or fiscal years ending in 1987 to 1996, inclusive, and for any income year beginning before January 1, 1997, the tax rate shall be 9.3 percent.
(e) For any income year beginning on or after January 1, 1997, and before the income year identified in subparagraph (A) of paragraph (1) of subdivision (f), the tax rate shall be 8.84 percent. The change in rate provided in this subdivision shall be made without proration otherwise required by Section 24251.
(f) (1) For the first taxable year beginning on or after January 1, 2000, the tax imposed under this section shall be the sum of both of the following:
(A) A tax according to or measured by net income, to be computed at the rate of 8.84 percent upon the basis of the net income for the next preceding income year, but but, for taxable income before January 1, 2021, not less than the minimum tax specified in Section 23153.
(B) A tax according to or measured by net income, to be computed at the rate of 8.84 percent upon the basis of the net income for the first taxable year beginning on or after January 1, 2000, but
but, for taxable income before January 1, 2021, not less than the minimum tax specified in Section 23153.
(2) Except as provided in paragraph (1), for taxable years beginning on or after January 1, 2000, the tax imposed under this section shall be a tax according to or measured by net income, to be computed at the rate of 8.84 percent upon the basis of the net income for that taxable year, but but, for taxable income before January 1, 2021, not less than the minimum tax specified in Section 23153.
SEC. 6.
Section 23151.1 of the Revenue and Taxation Code is amended to read:23151.1.
Notwithstanding Section 23151, every corporation (except banks and financial corporations) doing business within the limits of this state and not exempted from taxation by the provisions of the Constitution of this state or by this part, shall annually pay to the state for the privilege of exercising its corporate franchises within this state, a tax determined as follows:(a) With respect to corporations, other than those described in subdivision (b), which commence doing business within the state after December 31, 1971, and before January 1, 2000, the tax for the taxable year of commencement, whether or not for 12 full months, shall be the minimum franchise tax prescribed in Section 23153.
(b) If after December 31, 1972, a corporation commences to do business and ceases doing business in the same taxable year, the tax for that taxable year shall be according to or measured by its net income for the year, to be computed at the rate prescribed in Section 23151.
(c) (1) With respect to taxable years beginning after December 31, 1972, and before January 1, 2000, other than the year of commencement described in subdivision (a) or (b) or the year of cessation described in subdivision (d), the tax for that taxable year shall be according to or measured by its net income for the next preceding taxable year, to be computed at the rate prescribed in Section 23151.
(2) With respect to taxable years beginning on or after January 1, 2000, (other than the first taxable year beginning on or after that date), the tax for the taxable year
(including the taxable year of commencement and the taxable year of cessation) shall be according to or measured by its net income for the taxable year to be computed at the rate prescribed in Section 23151.
(d) With respect to corporations which cease doing business in a taxable year beginning after December 31, 1972, and before January 1, 2000, other than those described in subdivision (b), the tax for the taxable year of cessation shall be:
(1) According to or measured by its net income for the next preceding taxable year, to be computed at the rate prescribed in Section 23151, plus
(2) According to or measured by its net income for the taxable year during which the corporation ceased doing business, to be computed at the rate prescribed in Section 23151.
SEC. 7.
Section 23151.2 of the Revenue and Taxation Code is amended to read:23151.2.
Notwithstanding Section 23151, every corporation (except banks and financial corporations) not exempted from taxation by the provisions of the Constitution of this state or by this part which dissolves or withdraws, shall pay a tax for its taxable year of dissolution or withdrawal according to or measured by its net income for the taxable year in which it ceased doing business, unless that income has previously been included in the measure of tax for any taxable year, to be computed at the rate prescribed in Section 23151 for its taxable year of dissolution or withdrawal.SEC. 8.
Section 23153 of the Revenue and Taxation Code is amended to read:23153.
(a)(b) Unless expressly exempted by this part or the California Constitution, subdivision (a) shall apply to each of
the following:
(1) Every corporation that is incorporated under the laws of this state.
(2) Every corporation that is qualified to transact intrastate business in this state pursuant to Chapter 21 (commencing with Section 2100) of Division 1 of Title 1 of the Corporations Code.
(3) Every corporation that is doing business in this state.
(c) The following entities are not subject to the minimum franchise tax specified in this section:
(1) Credit unions.
(2) Nonprofit cooperative associations organized pursuant to Chapter 1 (commencing with Section 54001) of Division 20 of the Food and Agricultural Code that have been issued
the certificate of the board of supervisors prepared pursuant to Section 54042 of the Food and Agricultural Code. The association shall be exempt from the minimum franchise tax for five consecutive taxable years, commencing with the first taxable year for which the certificate is issued pursuant to subdivision (b) of Section 54042 of the Food and Agricultural Code. This paragraph only applies to nonprofit cooperative associations organized on or after January 1, 1994.
(d) (1) Except as provided in paragraph (2), paragraph (1) of subdivision (f) of Section 23151, paragraph (1) of subdivision (f) of Section 23181, and paragraph (1) of subdivision (c) of Section 23183, corporations subject to the minimum franchise tax shall pay annually to the state a minimum franchise tax of eight hundred dollars ($800).
(2) The minimum franchise tax shall be twenty-five
dollars ($25) for each of the following:
(A) A corporation formed under the laws of this state whose principal business when formed was gold mining, which is inactive and has not done business within the limits of the state since 1950.
(B) A corporation formed under the laws of this state whose principal business when formed was quicksilver mining, which is inactive and has not done business within the limits of the state since 1971, or has been inactive for a period of 24 consecutive months or more.
(3) For purposes of paragraph (2), a corporation shall not be considered to have done business if it engages in business other than mining.
(e) Notwithstanding subdivision (a), for taxable years beginning on or after January 1, 1999, and before January 1,
2000, every “qualified new corporation” shall pay annually to the state a minimum franchise tax of five hundred dollars ($500) for the second taxable year. This subdivision shall apply to any corporation that is a qualified new corporation and is incorporated on or after January 1, 1999, and before January 1, 2000.
(1) The determination of the gross receipts of a corporation, for purposes of this subdivision, shall be made by including the gross receipts of each member of the commonly controlled group, as defined in Section 25105, of which the corporation is a member.
(2) “Gross receipts, less returns and allowances reportable to this state,” means the sum of the gross receipts from the production of business income, as defined in subdivision (a) of Section 25120, and the gross receipts from the production of nonbusiness income, as defined in subdivision (d) of Section 25120.
(3) “Qualified new corporation” means a corporation that is incorporated under the laws of this state or has qualified to transact intrastate business in this state, that begins business operations at or after the time of its incorporation and that reasonably estimates that it will have gross receipts, less returns and allowances, reportable to this state for the taxable year of one million dollars ($1,000,000) or less. “Qualified new corporation” does not include any corporation that began business operations as a sole proprietorship, a partnership, or any other form of business entity prior to its incorporation. This subdivision shall not apply to any corporation that reorganizes solely for the purpose of reducing its minimum franchise tax.
(4) This subdivision shall not apply to limited partnerships, as defined in Section 17935, limited liability companies, as defined in Section
17941, limited liability partnerships, as described in Section 17948, charitable organizations, as described in Section 23703, regulated investment companies, as defined in Section 851 of the Internal Revenue Code, real estate investment trusts, as defined in Section 856 of the Internal Revenue Code, real estate mortgage investment conduits, as defined in Section 860D of the Internal Revenue Code, qualified Subchapter S subsidiaries, as defined in Section 1361(b)(3) of the Internal Revenue Code, or to the formation of any subsidiary corporation, to the extent applicable.
(5) For any taxable year beginning on or after January 1, 1999, and before January 1, 2000, if a corporation has qualified to pay five hundred dollars ($500) for the second taxable year under this subdivision, but in its second taxable year, the corporation’s gross receipts, as determined under paragraphs (1) and (2), exceed one million dollars ($1,000,000), an additional tax
in the amount equal to three hundred dollars ($300) for the second taxable year shall be due and payable by the corporation on the due date of its return, without regard to extension, for that year.
(f) (1) Notwithstanding subdivision (a), every corporation that incorporates or qualifies to do business in this state on or after January 1, 2000, shall not be subject to the minimum franchise tax for its first taxable year.
(2) This subdivision shall not apply to limited partnerships, as defined in Section 17935, limited liability companies, as defined in Section 17941, limited liability partnerships, as described in Section 17948, charitable organizations, as described in Section 23703, regulated investment companies, as defined in Section 851 of the Internal Revenue Code, real estate investment trusts, as defined in Section 856 of the Internal Revenue Code,
real estate mortgage investment conduits, as defined in Section 860D of the Internal Revenue Code, and qualified Subchapter S subsidiaries, as defined in Section 1361(b)(3) of the Internal Revenue Code, to the extent applicable.
(3) This subdivision shall not apply to any corporation that reorganizes solely for the purpose of avoiding payment of its minimum franchise tax.
(g) Notwithstanding subdivision (a), a domestic corporation, as defined in Section 167 of the Corporations Code, that files a certificate of dissolution in the office of the Secretary of State pursuant to subdivision (b) of Section 1905 of the Corporations Code, prior to its amendment by the act amending this subdivision, and that does not thereafter do business shall not be subject to the minimum franchise tax for taxable years beginning on or after the date of that filing.
(h) The minimum franchise tax imposed by paragraph (1) of subdivision (d) shall not be increased by the Legislature by more than 10 percent during any calendar year.
(i) (1) Notwithstanding subdivision (a), for taxable years beginning on or after January 1, 2020, a corporation that is a small business solely owned by a deployed member of the United States Armed Forces shall not be subject to the minimum franchise tax for any taxable year the owner is deployed and the corporation operates at a loss or ceases operation.
(2) The Franchise Tax Board may promulgate regulations as necessary or appropriate to carry out the purposes of this subdivision, including a definition for “ceases operation.”
(3) For the purposes of this subdivision,
all of the following definitions apply:
(A) “Deployed” means being called to active duty or active service during a period when a Presidential Executive order specifies that the United States is engaged in combat or homeland defense. “Deployed” does not include either of the following:
(i) Temporary duty for the sole purpose of training or processing.
(ii) A permanent change of station.
(B) “Operates at a loss” means negative net income as defined in Section 24341.
(C) “Small business” means a corporation with total income from all sources derived from, or attributable to, the state of two hundred fifty thousand dollars ($250,000) or less.
(4) This subdivision shall become inoperative for taxable years beginning on or after January 1, 2030.
(j) The amendments by the act adding this subdivision shall apply only to the corporate minimum franchise tax rate.
SEC. 9.
Section 23221 of the Revenue and Taxation Code is amended to read:23221.
(a)(b) This section shall become operative and apply beginning on or after January 1, 2001.
SEC. 10.
Section 23282 of the Revenue and Taxation Code is amended to read:23282.
(a) The tax imposed upon any taxpayer which has suffered the suspension or forfeiture provided in Section 23301, and which revives in any taxable year other than the taxable year in which suspension or forfeiture occurred, shall be computed in the same manner as provided in Sections 23222 to 23224, inclusive, relative to the computation of taxes upon taxpayers commencing to do business for the first time after incorporation or qualification. In addition to the taxes, penalties, and interest specified in Section 23305, such taxpayer shall prepay a tax in an amount equal to the minimum tax provided for in Section 23153 as a condition precedent to the issuance of a certificate of revivor.(b) After December 31, 1971, and before
January 1, 2000, the tax imposed upon any taxpayer which has suffered the suspension or forfeiture provided in Section 23301, and which revives in any taxable year other than the taxable year in which suspension or forfeiture occurred, shall be—
(1) In the case of a taxpayer which was doing business in the year next preceding the year in which revivor took place, computed upon the basis of the net income for that next preceding income year,
(2) In the case of a taxpayer which resumed doing business in the year of revivor, computed upon the basis of the net income for the year in which it ceased doing business, unless such income is or has otherwise been subject to tax,
tax.
(3)In the case of a taxpayer which first commences to do business in the year of revivor, the minimum tax provided in Section 23153,
(4)In no event less than the minimum tax provided in Section 23153.
In addition to the taxes, penalties, and interest specified in Section 23305, such taxpayer shall prepay the minimum tax imposed by this subdivision as a condition precedent to the issuance of a certificate of revivor.
(c) After December 31, 1999, the tax imposed upon any taxpayer that has suffered the suspension or forfeiture provided in Section 23301, and that revives in any taxable year other than the taxable year in which suspension or forfeiture occurred, shall be computed upon the basis of the net income for the taxable year in which it revives, but in no event less than the minimum tax provided in Section 23153. revives.
