BILL NUMBER: AB 1645 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 20, 2014
INTRODUCED BY Assembly Member Alejo
FEBRUARY 11, 2014
An act to amend Section 2188.3 23153
of the Revenue and Taxation Code, relating to taxation , to
take effect immediately, tax levy .
LEGISLATIVE COUNSEL'S DIGEST
AB 1645, as amended, Alejo. Property taxation:
condominiums: assessment. Corporation taxes: minimum
franchise tax: exemption.
The Corporation Tax Law imposes taxes measured by income, as
specified. The Corporation Tax Law imposes a minimum franchise tax of
$800, except as provided, on every corporation incorporated in this
state, qualified to transact intrastate business in this state, or
doing business in this state, and a tax in an amount equal to the
minimum franchise tax on every limited liability company, limited
partnership, and limited liability partnership registered, qualified
to transact intrastate business, or doing business in this state, as
specified. Existing law exempts a corporation from the payment of the
minimum tax in its first taxable year.
This bill would exempt a corporation that incorporates or
qualifies to do business in this state on or after January 1, 2015,
from paying the minimum franchise tax for its second taxable year and
would exempt a limited liability company, limited partnership, and
limited liability partnership that registers, qualifies to transact
intrastate business, or is doing business in this state on or after
January 1, 2015, from paying the minimum franchise tax for its first
and second taxable year.
This bill would take effect immediately as a tax levy.
Existing property tax law requires real property to be assessed in
a specified manner when it has been divided into condominiums, as
defined.
This bill would make technical, nonsubstantive changes to that
provision.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 23153 of the Revenue
and Taxation Code is amended to read:
23153. (a) Every corporation described in subdivision (b) shall
be subject to the minimum franchise tax specified in subdivision (d)
from the earlier of the date of incorporation, qualification, or
commencing to do business within this state, until the effective date
of dissolution or withdrawal as provided in Section 23331 or, if
later, the date the corporation ceases to do business within the
limits of this state.
(b) Unless expressly exempted by this part or the California
Constitution, subdivision (a) shall apply to each of the following:
(1) Every corporation that is incorporated under the laws of this
state.
(2) Every corporation that is qualified to transact intrastate
business in this state pursuant to Chapter 21 (commencing with
Section 2100) of Division 1 of Title 1 of the Corporations Code.
(3) Every corporation that is doing business in this state.
(c) The following entities are not subject to the minimum
franchise tax specified in this section:
(1) Credit unions.
(2) Nonprofit cooperative associations organized pursuant to
Chapter 1 (commencing with Section 54001) of Division 20 of the Food
and Agricultural Code that have been issued the certificate of the
board of supervisors prepared pursuant to Section 54042 of the Food
and Agricultural Code. The association shall be exempt from the
minimum franchise tax for five consecutive taxable years, commencing
with the first taxable year for which the certificate is issued
pursuant to subdivision (b) of Section 54042 of the Food and
Agricultural Code. This paragraph only applies to nonprofit
cooperative associations organized on or after January 1, 1994.
(d) (1) Except as provided in paragraph (2), paragraph (1) of
subdivision (f) of Section 23151, paragraph (1) of subdivision (f) of
Section 23181, and paragraph (1) of subdivision (c) of Section
23183, corporations subject to the minimum franchise tax shall pay
annually to the state a minimum franchise tax of eight hundred
dollars ($800).
(2) The minimum franchise tax shall be twenty-five dollars ($25)
for each of the following:
(A) A corporation formed under the laws of this state whose
principal business when formed was gold mining, which is inactive and
has not done business within the limits of the state since 1950.
(B) A corporation formed under the laws of this state whose
principal business when formed was quicksilver mining, which is
inactive and has not done business within the limits of the state
since 1971, or has been inactive for a period of 24 consecutive
months or more.
(3) For purposes of paragraph (2), a corporation shall not be
considered to have done business if it engages in business other than
mining.
(e) Notwithstanding subdivision (a), for taxable years beginning
on or after January 1, 1999, and before January 1, 2000, every
"qualified new corporation" shall pay annually to the state a minimum
franchise tax of five hundred dollars ($500) for the second taxable
year. This subdivision shall apply to any corporation that is a
qualified new corporation and is incorporated on or after January 1,
1999, and before January 1, 2000.
(1) The determination of the gross receipts of a corporation, for
purposes of this subdivision, shall be made by including the gross
receipts of each member of the commonly controlled group, as defined
in Section 25105, of which the corporation is a member.
(2) "Gross receipts, less returns and allowances reportable to
this state," means the sum of the gross receipts from the production
of business income, as defined in subdivision (a) of Section 25120,
and the gross receipts from the production of nonbusiness income, as
defined in subdivision (d) of Section 25120.
(3) "Qualified new corporation" means a corporation that is
incorporated under the laws of this state or has qualified to
transact intrastate business in this state, that begins business
operations at or after the time of its incorporation and that
reasonably estimates that it will have gross receipts, less returns
and allowances, reportable to this state for the taxable year of one
million dollars ($1,000,000) or less. "Qualified new corporation"
does not include any corporation that began business operations as a
sole proprietorship, a partnership, or any other form of business
entity prior to its incorporation. This subdivision shall not apply
to any corporation that reorganizes solely for the purpose of
reducing its minimum franchise tax.
(4) This subdivision shall not apply to limited partnerships, as
defined in Section 17935, limited liability companies, as defined in
Section 17941, limited liability partnerships, as described in
Section 17948, charitable organizations, as described in Section
23703, regulated investment companies, as defined in Section 851 of
the Internal Revenue Code, real estate investment trusts, as defined
in Section 856 of the Internal Revenue Code, real estate mortgage
investment conduits, as defined in Section 860D of the Internal
Revenue Code, qualified Subchapter S subsidiaries, as defined in
Section 1361(b)(3) of the Internal Revenue Code, or to the formation
of any subsidiary corporation, to the extent applicable.
(5) For any taxable year beginning on or after January 1, 1999,
and before January 1, 2000, if a corporation has qualified to pay
five hundred dollars ($500) for the second taxable year under this
subdivision, but in its second taxable year, the corporation's gross
receipts, as determined under paragraphs (1) and (2), exceed one
million dollars ($1,000,000), an additional tax in the amount equal
to three hundred dollars ($300) for the second taxable year shall be
due and payable by the corporation on the due date of its return,
without regard to extension, for that year.
(f) (1) (A) Notwithstanding subdivision (a),
every corporation that incorporates or qualifies to do business in
this state on or after January 1, 2000, and before January 1,
2015, shall not be subject to the minimum franchise tax for its
first taxable year.
(2) This subdivision
(B) Subparagraph (A) shall not
apply to limited partnerships, as defined in Section 17935, limited
liability companies, as defined in Section 17941, limited liability
partnerships, as described in Section 17948, charitable
organizations corporations , as described in
Section 23703, regulated investment companies, as defined in Section
851 of the Internal Revenue Code, real estate investment trusts, as
defined in Section 856 of the Internal Revenue Code, real estate
mortgage investment conduits, as defined in Section 860D of the
Internal Revenue Code, and qualified Subchapter
subchapter S subsidiaries, as defined in Section 1361(b)
(3) of the Internal Revenue Code, to the extent applicable.
(2) (A) Notwithstanding subdivision (a), every corporation that
incorporates or qualifies to do business in this state on or after
January 1, 2015, shall not be subject to the minimum franchise tax
for its first and second taxable year.
(B) Subparagraph (A) shall not apply to charitable corporations,
as described in Section 23703, regulated investment companies, as
defined in Section 851 of the Internal Revenue Code, real estate
investment trusts, as defined in Section 856 of the Internal Revenue
Code, real estate mortgage investment conduits, as defined in Section
860D of the Internal Revenue Code, and qualified subchapter S
subsidiaries, as defined in Section 1361(b)(3) of the Internal
Revenue Code, to the extent applicable.
(3) This subdivision shall not apply to any corporation that
reorganizes solely for the purpose of avoiding payment of its minimum
franchise tax.
(g) Notwithstanding subdivision (a), a domestic corporation, as
defined in Section 167 of the Corporations Code, that files a
certificate of dissolution in the office of the Secretary of State
pursuant to subdivision (b) of Section 1905 of the Corporations Code,
prior to its amendment by the act amending this subdivision, and
that does not thereafter do business shall not be subject to the
minimum franchise tax for taxable years beginning on or after the
date of that filing.
(h) The minimum franchise tax imposed by paragraph (1) of
subdivision (d) shall not be increased by the Legislature by more
than 10 percent during any calendar year.
(i) (1) Notwithstanding subdivision (a), a corporation that is a
small business solely owned by a deployed member of the United States
Armed Forces shall not be subject to the minimum franchise tax for
any taxable year the owner is deployed and the corporation operates
at a loss or ceases operation.
(2) The Franchise Tax Board may promulgate regulations as
necessary or appropriate to carry out the purposes of this
subdivision, including a definition for "ceases operation."
(3) For the purposes of this subdivision, all of the following
definitions apply:
(A) "Deployed" means being called to active duty or active service
during a period when a Presidential Executive order specifies that
the United States is engaged in combat or homeland defense. "Deployed"
does not include either of the following:
(i) Temporary duty for the sole purpose of training or processing.
(ii) A permanent change of station.
(B) "Operates at a loss" means negative net income as defined in
Section 24341.
(C) "Small business" means a corporation with total income from
all sources derived from, or attributable, to the state of two
hundred fifty thousand dollars ($250,000) or less.
(4) This subdivision shall become inoperative for taxable years
beginning on or after January 1, 2018.
SEC. 2. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SECTION 1. Section 2188.3 of the Revenue and
Taxation Code is amended to read:
2188.3. Whenever real property has been divided into
condominiums, as defined in Section 783 of the Civil Code, both of
the following shall apply:
(a) Each condominium owned in fee shall be separately assessed to
the owner thereof, and the tax on each condominium shall constitute a
lien solely thereon.
(b) Each condominium not owned in fee shall be separately
assessed, as if it were owned in fee, to the owner of the condominium
or the owner of the fee or both (and the tax on each condominium
shall be a lien solely on the interest of the owner of the fee in the
real property included in the condominium and on the condominium),
if so agreed by the assessor in a writing of record; the agreement
shall be binding upon the assessor and his or her successors in
office with respect to the project so long as it continues to be
divided into condominiums in the same manner as that in effect when
the agreement was made.