BILL NUMBER: AB 1370	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Members Hayashi, Mullin, and Lieber

                        FEBRUARY 23, 2007

   An act to add Sections 17276.8 and 24416.8 to the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1370, as introduced, Hayashi. Income and corporation taxes: net
operating losses.
   The Personal Income Tax Law and the Corporation Tax Law allow a
deduction for specified portions of net operating losses that, in
general, are allowed to be carried forward for specified periods.
Those laws allow a carryforward of 100% of net operating losses for
any taxable year beginning on or after January 1, 1997, in the case
of a taxpayer who operates a new business with respect to losses
incurred during the first 3 taxable years of operating the new
business, if certain conditions are met. For purposes of those laws,
new business includes any taxpayer that is engaged in
biopharmaceutical and other biotechnology activities, as defined.
   This bill would, under both laws, for taxable years beginning on
and after January 1, 2008, allow those losses to be carried forward
for the 20-year period following the year in which the net operating
loss was deducted.
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 17276.8 is added to the Revenue and Taxation
Code, to read:
   17276.8.  (a) Notwithstanding Section 17276, a qualified taxpayer
may elect to take the deduction provided by Section 172 of the
Internal Revenue Code, with the exception that net operating loss
carrybacks shall not be allowed.
   (b) For purposes of this section "qualified taxpayer" means a
taxpayer that is engaged in biopharmaceutical business activities or
other biotechnology business activities that are described in Codes
325411 to 325414, inclusive, and 541710 of the North American
Industry Classification System (NAICS) published by the United States
Census Bureau, 2002 edition, and as further amended, and that has
not received regulatory approval for any product from the United
States Food and Drug Administration.
   (c) The election to compute the net operating loss under this
section shall be made in a statement attached to the original return,
timely filed for the year in which the net operating loss is
incurred.
   (d) This section shall only apply to net operating losses incurred
by a qualified taxpayer as a net operating loss that occurred during
the taxable year beginning on or after January 1, 2008.
  SEC. 2.  Section 24416.8 is added to the Revenue and Taxation Code,
to read:
   24416.8.  (a) Notwithstanding Section 24416, a qualified taxpayer
may elect to take the deduction provided by Section 172 of the
Internal Revenue Code, with the exception that net operating loss
carrybacks shall not be allowed.
   (b) For purposes of this section "qualified taxpayer" means a
taxpayer that is engaged in biopharmaceutical business activities or
other biotechnology business activities that are described in Codes
325411 to 325414, inclusive, and 541710 of the North American
Industry Classification System (NAICS) published by the United States
Census Bureau, 2002 edition, and as further amended, and that has
not received regulatory approval for any product from the United
States Food and Drug Administration.
   (c) The election to compute the net operating loss under this
section shall be made in a statement attached to the original return,
timely filed for the year in which the net operating loss is
incurred.
   (d) This section shall only apply to net operating losses incurred
by a qualified taxpayer as a net operating loss that occurred during
the taxable year beginning on or after January 1, 2008.
  SEC. 3.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.