BILL NUMBER: AB 229	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JANUARY 4, 2010
	AMENDED IN ASSEMBLY  APRIL 14, 2009

INTRODUCED BY   Assembly Member Charles Calderon

                        FEBRUARY 5, 2009

    An act to amend Section 6396 of the Revenue and Taxation
Code, relating to taxation, to take effect immediately, tax levy.
  An act to amend Section 16361 of the Probate Code,
relating to the Uniform Principal and Income Act. 


	LEGISLATIVE COUNSEL'S DIGEST


   AB 229, as amended, Charles Calderon.  Sales tax: property
shipped outside the state.   Uniform Principal and
Income Act: trust administration: income and payments.  
   Existing law, the Uniform Principal and Income Act, requires a
trust to be administered with due regard to the respective interests
of defined income beneficiaries and remainder beneficiaries. The act
requires that a tax required to be paid by a trustee based on
receipts allocated to income be paid from income. The act requires
the trustee, in order to obtain an estate tax marital deduction for a
trust, to allocate a prescribed amount of a payment to income, in
accordance with certain requirements. The act further requires the
trustee of a trust that qualifies for, or has elected to qualify for,
the marital tax deduction, where the separate fund payer provides
documentation reflecting the internal income of the separate fund to
the trustee, to allocate the internal income of each separate fund
for the accounting period as if the separate fund were a trust
subject to the act, as provided, and to allocate the balance to the
principal.  
   The act provides that, if the separate fund payer does not provide
documentation reflecting the internal income of the separate fund to
the trustee, but the trustee can determine the value of the separate
fund, the internal income of the separate fund is deemed to equal 4%
of the fund's value, according to the most recent statement of value
preceding the beginning of the accounting period. The act further
provides that, in other instances where the separate fund payer does
not provide documentation reflecting the internal income of the
separate fund to the trustee, the internal income of the fund is
deemed to equal the product of the interest rate and the present
value of the expected future payments, as determined under a
specified federal tax law.  
   This bill would clarify that this latter provision applies where
the separate fund payer does not provide documentation reflecting the
internal income of the separate fund to the trustee and the trustee
cannot determine the value of the separate fund.  
   The Sales and Use Tax Law imposes a sales tax on a retailer
measured by the gross receipts from the retail sale in this state of
tangible personal property and a use tax on the storage, use, or
other consumption of tangible personal property in this state of
tangible personal property purchased from a retailer for storage,
use, or other consumption in this state. That law provides various
exemptions from those taxes, including an exemption from sales tax
for a sale of tangible personal property in this state, when the
contract of sale requires that property to be shipped, and it is
shipped, in a specified manner, to a point outside the state.
 
   Counties and cities are authorized to impose local sales and use
taxes in conformity with the Sales and Use Tax Law, and districts are
authorized to impose transactions and use taxes in conformity with
the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law
are incorporated into these taxes.  
   This bill would limit the exemption from sales tax, when the
contract of sale requires that the tangible personal property to be
shipped, and it is shipped, to another state, to any amount in excess
of the rate of the state sales tax imposed by the state of
destination.  
   This bill would take effect immediately as a tax levy. 
   Vote:  2/3   majority  . Appropriation:
no. Fiscal committee:  yes   no  .
State-mandated local program: no.


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

   SECTION 1.    Section 16361 of the   Probate
Code   is amended to read: 
   16361.  (a) For purposes of this section, the following terms have
the following meanings:
   (1) "Payment" means a payment that a trustee may receive over a
fixed number of years or during the life of an individual because of
services rendered or property transferred to the payer in exchange
for future payments. The term also includes a payment made in money
or property from the payer's general assets or from a separate fund
created by the payer. For purposes of subdivisions (d), (e), (f), and
(g), "payment" also includes any payment from a separate fund,
regardless of the reason for the payment.
   (2) "Separate fund" includes a private or commercial annuity, an
individual retirement account, and a pension, profit-sharing, stock
bonus, or stock ownership plan.
   (b) To the extent that any portion of the payment is characterized
by the payer as interest, a dividend, or a payment made in lieu of
interest or a dividend, a trustee shall allocate that portion of the
payment to income. The trustee shall allocate to principal the
balance of the payment.
   (c) If no part of a payment is characterized as interest, a
dividend, or an equivalent payment, and all or part of the payment is
required to be made, a trustee shall allocate to income 10 percent
of the part that is required to be made during the accounting period
and the balance to principal. If no part of a payment is required to
be made or the payment received is the entire amount to which the
trustee is entitled, the trustee shall allocate the entire payment to
principal. For purposes of this subdivision, a payment is not
"required to be made" to the extent that it is made because the
trustee exercises a right of withdrawal.
   (d) Subdivisions (f) and (g) shall apply, except as provided in
subdivision (e), and subdivisions (b) and (c) shall not apply, in
determining the allocation of a payment made from a separate fund to
either of the following:
   (1) A trust to which an election to qualify for a marital
deduction is made under Section 2056(b)(7) of the Internal Revenue
Code.
   (2) A trust that qualifies for the marital deduction under Section
2056(b)(5) of the Internal Revenue Code.
   (e) Subdivisions (d), (f), and (g) shall not apply if the series
of payments would, without the application of subdivision (d),
qualify for the marital deduction under Section 2056(b)(7)(C) of the
Internal Revenue Code.
   (f) If the separate fund payer provides documentation reflecting
the internal income of the separate fund to the trustee, the trustee
shall allocate the internal income of each separate fund for the
accounting period as if the separate fund were a trust subject to
this act. Upon request of the surviving spouse, the trustee shall
require that the person administering the separate fund distribute
this internal income to the trust. The trustee shall allocate a
payment from the separate fund to income to the extent of the
internal income of the separate fund and distribute that amount to
the surviving spouse. The trustee shall allocate the balance to
principal. Upon request of the surviving spouse, the trustee shall
allocate principal to income to the extent the internal income of the
separate fund exceeds payments made from the separate fund to the
trust during the accounting period.
   (g) If the separate fund payer does not provide documentation
reflecting the internal income of the separate fund to the trustee,
but the trustee can determine the value of the separate fund, the
internal income of the separate fund is deemed to equal 4 percent of
the fund's value, according to the most recent statement of value
preceding the beginning of the accounting period. If the separate
fund payer does not provide documentation reflecting the internal
income of the separate fund to the trustee  and the trustee
cannot determine the value of the separate fund,  the internal
income of the fund is deemed to equal the product of the interest
rate and the present value of the expected future payments, as
determined under Section 7520 of the Internal Revenue Code for the
month preceding the accounting period for which the computation is
made.
   (h) This section does not apply to a payment to which Section
16362 applies. 
  SECTION 1.    Section 6396 of the Revenue and
Taxation Code is amended to read:
   6396.  (a) There are exempted from the computation of the amount
of the sales tax the gross receipts from the sale of tangible
personal property which, pursuant to the contract of sale, is
required to be shipped and is shipped to a point in a foreign country
by the retailer by means of: (1) facilities operated by the
retailer, or (2) delivery by the retailer to a carrier, customs
broker, or forwarding agent, whether hired by the purchaser or not,
for shipment to the foreign point.
   (b) There are exempted from the computation of the amount of the
sales tax any amount that is in excess of the rate of the state sales
tax imposed by the state of destination for the gross receipts from
the sale of tangible personal property which, pursuant to the
contract of sale, is required to be shipped and is shipped to a point
outside this state and in another state by the retailer by means of:
(1) facilities operated by the retailer, or (2) delivery by the
retailer to a carrier, customs broker, or forwarding agent, whether
hired by the purchaser or not, for shipment to such out-of-state
point.
   (c) For purposes of this section, the term "carrier" shall mean a
person or firm engaged in the business of transporting for
compensation tangible personal property owned by other persons, and
includes both common and contract carriers. The term "forwarding
agent" shall mean a person or firm engaged in the business of
preparing property for shipment or arranging for its shipment.
 
  SEC. 2.    This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.