BILL NUMBER: SB 1544	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 2, 2012

INTRODUCED BY   Senator Hernandez

                        FEBRUARY 24, 2012

   An act to add Sections  17207.9 and 24347.11 
 17207.12 and 24347.12  to the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1544, as amended, Hernandez. Income taxes: disaster losses:
 County of Los Angeles   Counties of Los Angeles
and San Bernardino  . 
   The Personal Income Tax Law and the Corporation Tax Law allow
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, 2013, to be carrybacks to each of the
preceding 2 taxable years, as provided. Existing law disallows the
deduction for net operating losses and net operating loss carryovers
in the 2008 to 2011, inclusive, taxable years for a taxpayer with
over a specified amount of business income 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 the
taxpayer would have had if the disallowance for those taxable years
had not occurred.  
   Existing law disallows net operating loss carrybacks for any net
operating losses attributable to taxable years beginning before
January 1, 2013, but would allow net operating losses attributable to
taxable years beginning on or after January 1, 2013, to be
carrybacks to each of the preceding 2 taxable years, as provided.
 
   This bill would conform to a specified section of the Internal
Revenue Code regarding disaster losses, which would authorize a
taxpayer to make an election to claim a deduction for any losses
sustained in the Counties of Los Angeles and San Bernardino as a
result of the severe winds that occurred in November 2011 on the tax
return for the preceding year, as provided. This bill would provide
that any provision of law that suspends, defers, reduces, or
otherwise diminishes the deduction of a net operating loss does not
apply to a net operating loss attributable to those severe winds that
occurred in November 2011 in the Counties of Los Angeles and San
Bernardino.  
   The Personal Income Tax Law and the Corporation Tax Law provide
for the carryover to specified taxable years of specified losses
sustained as a result of certain disasters occurring in California in
an area determined by the President of the United States to warrant
specified federal assistance, or proclaimed by the Governor to be in
a state of emergency. Those laws also allow 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.  
   This bill would extend these provisions to losses sustained in the
County of Los Angeles as a result of the severe winds that occurred
in November 2011. This bill would authorize a taxpayer to make an
election to claim a deduction for those losses on the tax return for
the preceding year, in lieu of any other deductions authorized under
those laws, including deductions for net operating losses. 
   This bill would make a legislative finding and declaration
relating to the statewide public purpose served by the bill.
   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 17207.12 is added to the 
 Revenue and Taxation Code   , to read:  
   17207.12.  (a) Section 165(i) of the Internal Revenue Code shall
be applicable to any losses sustained in the Counties of Los Angeles
and San Bernardino as a result of the severe winds that occurred in
November 2011.
   (b) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return,
determined with regard to extension, for the taxable year in which
the disaster occurred.
   (c) Unless specifically provided otherwise, any law that suspends,
defers, reduces, or otherwise diminishes the deduction of a net
operating loss shall not apply to a net operating loss attributable
to the loss described in subdivision (a). 
   SEC. 2.    Section 24347.12 is added to the 
 Revenue and Taxation Code   , to read:  
   24347.12.  (a) Section 165(i) of the Internal Revenue Code shall
be applicable to any losses sustained in the Counties of Los Angeles
and San Bernardino as a result of the severe winds that occurred in
November 2011.
   (b) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return,
determined with regard to extension, for the taxable year in which
the disaster occurred.
   (c) Unless specifically provided otherwise, any law that suspends,
defers, reduces, or otherwise diminishes the deduction of a net
operating loss shall not apply to a net operating loss attributable
to the loss described in subdivision (a).  
  SECTION 1.    Section 17207.9 is added to the
Revenue and Taxation Code, to read:
   17207.9.  (a) Upon the election of a taxpayer, in lieu of any
other deduction allowable under this part, an excess disaster loss,
as defined in subdivision (c), shall be carried to other taxable
years as provided in subdivision (b), with respect to losses
sustained in the County of Los Angeles as a result of the severe
winds that occurred in November 2011.
   (b) (1) In the case of any loss allowed under Section 165(c) of
the Internal Revenue Code, relating to limitation of losses of
individuals, any excess disaster loss shall be carried forward to
each of the five taxable years following the taxable year for which
the loss is claimed. However, if there is any excess disaster loss
remaining after the five-year period, then the applicable percentage,
as set forth in paragraph (1) of subdivision (b) of Section
17276.20, of that excess disaster loss shall be carried forward to
each of the next 10 taxable years.
   (2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the adjusted taxable income for each of
the prior taxable years to which that excess disaster loss is
carried.
   (c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code which exceeds the
adjusted taxable income of the year of loss or, if the election under
Section 165(i) of the Internal Revenue Code is made, the adjusted
taxable income of the year preceding the loss.
   (d) This section and Section 165(i) of the Internal Revenue Code
shall be applicable to any of the losses listed in subdivision (a)
sustained in any county or city in this state which was proclaimed by
the Governor to be in a state of disaster.
   (e) Losses allowable under this section shall not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code if an election is made to take the
deduction allowable under this section.
   (f) For purposes of this section, "adjusted taxable income" shall
be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.
   (g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.  
  SEC. 2.    Section 24347.11 is added to the
Revenue and Taxation Code, to read:
   24347.11.  (a) Upon the election of a taxpayer, in lieu of any
other deduction allowable under this part, an excess disaster loss,
as defined in subdivision (c), shall be carried to other taxable
years as provided in subdivision (b), with respect to losses
sustained in the County of Los Angeles as a result of the severe
winds that occurred in November 2011.
   (b) (1) In the case of any loss allowed under Section 165 of the
Internal Revenue Code, relating to losses, any excess disaster loss
shall be carried forward to each of the five taxable years following
the taxable year for which the loss is claimed. However, if there is
any excess disaster loss remaining after the five-year period, then
the applicable percentage, as set forth in paragraph (1) of
subdivision (b) of Section 24416.20, of that excess disaster loss
shall be carried forward to each of the next 10 taxable years.
   (2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the net income for each of the prior
taxable years to which that excess disaster loss is carried.
   (c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code, which exceeds the net
income of the year of loss or, if the election under Section 165(i)
of the Internal Revenue Code is made, the net income of the year
preceding the loss.
   (d) This section and Section 165(i) of the Internal Revenue Code
shall be applicable to any of the losses listed in subdivision (a)
sustained in any county or city in this state which was proclaimed by
the Governor to be in a state of disaster.
   (e) Any corporation subject to Section 25101 or 25101.15 that has
disaster losses pursuant to this section shall determine the excess
disaster loss to be carried to other taxable years under the
principles specified in Section 25108 relating to net operating
losses.
   (f) Losses allowable under this section shall not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code if an election is made to take the
deduction allowable under this section.
   (g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred. 
  SEC. 3.  The Legislature finds and declares that this act fulfills
a statewide public purpose because all of the following:
   (a) On December 9, 2011, the Governor of California made a finding
that conditions of extreme peril to public health and safety to
persons and property existed due to the severe  storms
  winds  occurring in November 2011 in the 
County   Counties  of Los Angeles  and San
Bernardino  and proclaimed a state of emergency to exist within
 that county   those counties  , thus
qualifying affected persons for various forms of governmental
assistance and relief.
   (b) This act is consistent with, and supplements, the proclaimed
disaster assistance and relief by providing necessary tax relief to
the affected jurisdiction and persons to allow them to maintain
essential basic services and repair damage to, and restore, their
homes and businesses.
  SEC. 4.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.