Amended in Senate June 25, 2014

Amended in Senate May 29, 2014

Amended in Senate July 3, 2013

Amended in Assembly May 24, 2013

Amended in Assembly May 8, 2013

Amended in Assembly April 24, 2013

Amended in Assembly April 16, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 922

Introduced by Assembly Member Maienschein

February 22, 2013

An act to add Sections begin delete 17207.9, 17207.13, 24347.13, and 24347.14 end delete begin insert 17207.13 and 24347.13 end insert to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 922, as amended, Maienschein. Income taxes: deductions: disaster relief: County of San Diego.

The Personal Income Tax Law and the Corporation Tax Law provide for begin insert a deduction and end insert 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 begin insert or proclaimed by the Governor to be in a state of emergency end insert . begin insert Those laws further allow end insert begin insert a taxpayer to elect to deduct those disaster losses on the return for the taxable year preceding the taxable year in which the disaster occurred. end insert

This bill would extend these provisions to losses sustained in the County of San Diego as a result of the wildfires that occurred in May 2014 begin insert for which the Governor proclaimed a state emergency end insert . begin delete 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. end delete

begin delete

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 provides a carryover period of 20 years and allows net operating losses to be carrybacks to each of the preceding 2 taxable years, as provided.

end delete begin delete

This bill would authorize a taxpayer to make an election to claim a deduction for any losses sustained in the County of San Diego as a result of the wildfires that occurred in May 2014 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 wildfires that occurred in May 2014 in the County of San Diego.

end delete

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:

begin delete

SECTION 1.  

Section 17207.9 is added to the Revenue and
Taxation Code, to read:

17207.9.  

(a) 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
San Diego as a result of the wildfires that occurred in May 2014.

(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 15 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.

(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.

end delete

begin delete SEC. 2. end delete
begin insert SECTION 1. end insert   

Section 17207.13 is added to the Revenue and
Taxation Code, to read:

17207.13.  

(a) Section 165(i) of the Internal Revenue Code
shall be applicable to any losses sustained in the County of San
Diego as a result of the wildfires that occurred in May 2014.

(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).

begin delete SEC. 3. end delete
begin insert SEC. 2. end insert   

Section 24347.13 is added to the Revenue and Taxation
Code, to read:

24347.13.  

(a) Section 165(i) of the Internal Revenue Code
shall be applicable to any losses sustained in the County of San
Diego as a result of the wildfires that occurred in May 2014.

(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).

begin delete

SEC. 4.  

Section 24347.14 is added to the Revenue and Taxation
Code, to read:

24347.14.  

(a) 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
San Diego as a result of the wildfires that occurred in May 2014.

(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 15 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.

(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.

end delete

begin delete SEC. 5. end delete
begin insert SEC. 3. end insert   

The Legislature finds and declares that this act fulfills
a statewide public purpose because all of the following:

(a) On May 14, 2014, the Governor of California made a finding
that conditions of extreme peril to public health and safety to
persons and property exist due to the wildfires occurring in May
2014 in the County of San Diego and proclaimed a state of
emergency to exist within that county, 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.

begin delete SEC. 6. end delete
begin insert SEC. 4. end insert   

This act provides for a tax levy within the meaning
of Article IV of the Constitution and shall go into immediate effect.