BILL ANALYSIS                                                                                                                                                                                                    

           AB 759
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          CORRECTED - August 24, 2010, per consultant.
          AB 759 (Ma)
          As Amended August 18, 2010
          Majority vote
          |ASSEMBLY:  |     |9May 28, 2009)  |SENATE: |31-2 |(August 23,    |
          |           |     |                |        |     |2010)          |
                                     (vote not relevant)

          Original Committee Reference:    B. P. & C.P.  

           SUMMARY  :  Makes substantive changes to the California Taxpayer  
          and Shareholder Protection Act of 2003 (Act) by revising the  
          definition of an "expatriate corporation" to allow certain  
          foreign incorporated entities to contract with the state. 

           The Senate amendments  delete the Assembly version of this bill,  
          and instead:

          1)Revise the definition of an "expatriate corporation" for  
            purposes of Act (Chapter 1 (commencing with Section 10286) of  
            Part 2 of Division 2 of the Public Contract Code) to provide  
            that a foreign incorporated entity is not considered to be an  
            "expatriate corporation" if all of the following requirements  
            are met:

             a)   The foreign incorporate entity, or any predecessor, was  
               originally established in connection with a transaction  
               between unrelated publicly traded corporations; 

             b)   Immediately after the transaction, not more than 70% of  
               that entity's stock is held by former shareholders of any  
               domestic corporation that was a party to such transaction; 

             c)   The transaction, or series of related transactions, that  
               originally established the foreign incorporated entity, or  
               any predecessor, was a taxable transaction for any United  
               States (U.S.) shareholders of any domestic corporation that  
               was a party to such transaction; and, 


           AB 759
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             d)   The foreign country in which the entity is organized has  
               a comprehensive income tax treaty with the U.S. and the  
               entity is considered a resident of the foreign country for  
               purposes of that treaty. 

          2)State that if a foreign incorporated entity qualifies for the  
            exemption, then any successor corporation resulting from a  
            corporate reorganization, as defined in Internal Revenue Code  
            (IRC) Section 368, or a transaction satisfying the  
            requirements of IRC Section 351, is not considered to be an  
            "expatriate corporation."  The successor must be organized in  
            a foreign country that has a comprehensive tax treaty with the  
            U.S. and be considered a resident of that country for purposes  
            of the treaty.

          3)Clarify the intent of the Legislature to prohibit a state  
            agency from entering into any contract with an expatriate  
            corporation located in a foreign jurisdiction that does not  
            have an income tax treaty with the United States. 

           AS PASSED BY THE ASSEMBLY  , this bill included architectural,  
          engineering, and information technology contracts in existing  
          reporting requirements on the participation levels of businesses  
          that include the owner's race, ethnicity, and gender in state  

           FISCAL EFFECT  :  Unknown

           COMMENTS  :  This bill was substantially amended in the Senate and  
          the Assembly-approved provisions of this bill were deleted.   
          This bill, as amended in the Senate is inconsistent with  
          Assembly actions.  

           Analysis Prepared by  :  Oksana Jaffe / REV. & TAX. / (916)  

          FN: 0006338