BILL NUMBER: AB 1999 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 19, 2014
AMENDED IN SENATE AUGUST 5, 2014
AMENDED IN SENATE JULY 2, 2014
AMENDED IN ASSEMBLY MAY 15, 2014
AMENDED IN ASSEMBLY APRIL 30, 2014
AMENDED IN ASSEMBLY APRIL 1, 2014
INTRODUCED BY Assembly Member Atkins
FEBRUARY 20, 2014
An act to amend Section 23036 of, and to add
and repeal Sections 38.10, 17053.91, and 23686.1 of, the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1999, as amended, Atkins. Personal income and corporation
taxes: credits: rehabilitation.
The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws.
This bill would allow to a taxpayer that receives a tax
credit reservation a credit against those taxes for each
taxable year beginning on or after January 1, 2015, and before
January 1, 2023, in an amount, determined in modified conformity with
a specified section of the Internal Revenue Code, for rehabilitation
of certified historic structures. This bill would provide for a 20%
credit, or 25% credit, of qualified rehabilitation expenditures if
the structure meets specified criteria, for rehabilitation of a
certified historic structure within the state to be reserved and
allocated by the Governor's Office of Business and Economic
Development, which shall consult with the Office of Historic
Preservation, as provided. The aggregate amount of credit would be
$80,000,000 $50,000,000 per calendar
year, $10,000,000 of which is set aside for rehabilitation
projects with qualified rehabilitation expenditures of less than
$1,000,000, as specified. This bill would require the
Legislative Analyst to, on an annual basis, collaborate with the
Governor's Office of Business and Economic Development to review the
tax credit, as provided.
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. (a) The Legislature finds and declares that California'
s historic buildings are an important asset to communities throughout
the state, and that the preservation and restoration of these
buildings is important to enhancing civic pride, increasing tourism,
and maintaining vibrant neighborhoods.
(b) The Legislature further finds and declares all of the
following:
(1) The federal Historic Preservation Tax Incentives program,
currently available to California's income producing historic
properties, has generated nearly $1.5 billion in investment during
the last 10 years.
(2) While 35 states have similar state tax credits or incentives
for historic preservation, no such incentive exists in California.
(3) States that have partnered a state incentive with the federal
Historic Preservation Tax Incentive have reaped significant economic
development benefits, including construction and building industry
job creation, increased state tax revenues through increased
employment and wages, increased local property tax revenues through
increased property values, and increased local tax revenues through
sales taxes and heritage tourism.
(4) Over the last 10 years, California has had 129 projects
qualify for the federal Historic Preservation Tax Incentives program.
These projects have been located in 20 different counties.
(5) As California communities continue to adjust and adapt to the
dissolution of redevelopment agencies, proven tools are still needed
to incentivize economic development and revitalize economically
distressed areas.
SEC. 2. Section 38.10 is added to the Revenue and Taxation Code,
to read:
38.10. (a) The Legislative Analyst shall, on an annual basis
beginning January 1, 2016, collaborate with the Governor's Office of
Business and Economic Development to review the effectiveness of the
tax credits allowed by Sections 17053.86 and 23686
17053.91 and 23686.1 . The review shall include, but is
not limited to, an analysis of the demand for the tax credit, the
types and uses of projects receiving the tax credit, the jobs created
by the use of the tax credits, and the economic impact of the tax
credits.
(b) This section shall remain in effect only until January 1,
2024, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2024, deletes or extends
that date.
SEC. 3. Section 17053.91 is added to the Revenue and Taxation
Code, to read:
17053.91. For each taxable year beginning on or after January 1,
2015, and before January 1, 2023, there shall be allowed as
to a taxpayer who receives a tax credit reservation
a credit against the "net tax," as defined in Section 17039, an
amount determined in accordance with Section 47 of the Internal
Revenue Code, except as follows:
(a) (1) In lieu of the percentages specified in Section 47(a) of
the Internal Revenue Code, except as provided in paragraph (2), the
applicable percentage shall be 20 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure.
(2) The applicable percentage shall be 25 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure if that certified historic structure meets one of the
following criteria:
(A) The rehabilitated structure is located on federal surplus
property, if obtained by a local agency under Section 54142 of the
Government Code, on surplus state real property, as defined by
Section 11011.1 of the Government Code, or on surplus land, as
defined by subdivision (b) of Section 54221 of the Government Code.
(B) The rehabilitated structure includes affordable housing for
lower-income households, as defined by Section 50079.5 of the Health
and Safety Code.
(C) The structure is located in a designated census tract, as
defined in paragraph (7) of subdivision (b) of Section 17053.73.
(D) The structure is a part of a military base reuse authority
established pursuant to Title 7.86 (commencing with Section 67800) of
the Government Code.
(E) The structure is a transit-oriented development that is a
higher-density, mixed-use development within a walking distance of
one-half mile of a transit station.
(3) The credit shall be allowed for qualified rehabilitation
expenditures for an owner-occupied residence determined by the
Governor's Office of Business and Economic Development and the Office
of Historic Preservation to have a public benefit in the year of
completion in the amounts specified in paragraphs (1) and (2), as
applicable, for those qualified rehabilitation expenditure
amounts that are equal to or more than five thousand dollars
($5,000) but do not exceed twenty-five thousand dollars ($25,000).
A taxpayer shall only be allowed a credit pursuant to this
paragraph once every 10 taxable years.
(4) Section 47(c)(1)(C) of the Internal Revenue Code is modified
so that only the 24-month period shall apply.
(b) For purposes of this section, the following definitions shall
apply:
(1) "Certified historic structure" has the same meaning as defined
in Section 47(c)(3), 47(c)(3) of the
Internal Revenue Code, Code and
additionally means a structure in this state that is listed
below on the California Register of Historical
Resources.
(2) "Owner-occupied residence" means a building that will
be owned and occupied by an individual tax payer, who has a
household income of two hundred thousand dollars ($200,000) or less,
as the taxpayer's principal residence has the same
meaning as that term is defined in Section 163(h)(4) of the Internal
Revenue Code, that will be owned and occupied by an individual
taxpayer who has a modified adjusted gross income, as defined by
Section 62 of the Internal Revenue Code, of two hundred thousand
dollars ($200,000) or less, as the taxpayer's principal residence or
will be after the rehabilitation of the residence .
(3) (A) "Qualified rehabilitation expenditure" has the same
meaning as that term is defined in Section 47(c) of the Internal
Revenue Code, except that qualified rehabilitation expenditures may
include expenditures in connection with the rehabilitation of a
building without regard to whether any portion of the building is or
is reasonably expected to be tax-exempt use property.
(B) "Qualified rehabilitation expenditure" also means
rehabilitation expenditures incurred by the taxpayer with respect to
an owner-occupied principal residence for the rehabilitation of the
exterior of the building or rehabilitation necessary for the
functioning of the home, including, but not limited to,
rehabilitation of the electrical, plumbing, or foundation of the
principal residence.
(c) (1) To be eligible for the credit allowed by this section, a
taxpayer shall request a tax credit reservation from the Governor's
Office of Business and Economic Development, in the form and manner
prescribed by the Governor's Office of Business and Economic
Development.
(2) To obtain a tax credit reservation, the taxpayer shall provide
necessary information, as determined by the Governor's Office of
Business and Economic Development.
(3) A tax credit reservation provided to a taxpayer shall not
constitute a determination by the Governor's Office of Business and
Economic Development with respect to any of the requirements of this
section regarding a taxpayer's eligibility for the credit authorized
by this section.
(4) If a taxpayer receives a tax credit reservation but
rehabilitation has not commenced within 18 months of the issuance of
the tax credit reservation, the tax credit reservation shall be
forfeited and the credit amount associated with the tax credit
reservation shall be treated as an unused allocation tax credit
amount.
(c)
(d) A deduction shall not be allowed under this part
for any expense for which a credit is allowed by this section.
(d)
(e) If a credit is allowed under this section with
respect to any property, the basis of that property shall be reduced
by the amount of the credit allowed.
(e)
(f) In the case where the credit allowed by this
section exceeds the "net tax," the excess may be carried over to
reduce the "net tax" in the following year, and the seven succeeding
years if necessary, until the credit is exhausted.
(f)
(g) For purposes of this section, the Governor's Office
of Business and Economic Development shall do the following:
(1) On and after January 1, 2015, and before January 1, 2023,
reserve and allocate tax credits to applicants.
(2) Establish a procedure for applicants to file with the Governor'
s Office of Business and Economic Development a written application,
on a form jointly prescribed by that office and the Office of
Historic Preservation for the allocation
reservation of the tax credit.
(3) Establish criteria consistent with the requirements of this
section, for allocating reserving tax
credits. A taxpayer shall not receive a tax credit reservation
unless the following criteria are met. Criteria shall include,
but are not limited to, the following:
(A) The number of jobs created by the rehabilitation project, both
during and after the rehabilitation of the structure.
(B) The expected increase in state and local tax revenues derived
from the rehabilitation project, including those from increased wages
and property taxes.
(C) Any additional incentives or contributions included in the
rehabilitation project from federal, state, or local governments.
(D) For the qualified rehabilitation expenditures with respect to
an owner-occupied principal residence, the rehabilitation has a
public benefit, as determined jointly with the Office of Historic
Preservation.
(4) Determine and designate, in consultation with the Office of
Historic Preservation, applicants that meet the requirements of this
section to ensure that the rehabilitation project upholds
historical values in terms of architectural and aesthetic standards
meets the Secretary of the Interior's Standards for
Rehabilitation, as found in Part 67 of Title 36 of the Code of
Federal Regulations .
(5) Process and approve, or reject, all tax credit
reservation applications.
(6) (A) Subject to the annual cap
established as provided in subdivision (g),
(h), allocate an aggregate amount of credits under this section
and Section 23686.1, and allocate any carryover of unallocated
credits from prior years.
(B) A taxpayer shall be allocated a tax credit pursuant to the
taxpayer's tax credit reservation upon receipt by the Governor's
Office of Business and Economic Development of a cost certification
for the qualified rehabilitation expenditures. For projects with
qualified rehabilitation expenditures in excess of two hundred fifty
thousand dollars ($250,000), the cost certification shall be issued
by a licensed certified public accountant.
(7) Certify tax credits allocated to taxpayers.
(8) Provide the Franchise Tax Board an annual list of the
taxpayers that were allocated a credit pursuant to this section and
Section 23686 23686.1 , including each
taxpayer's taxpayer identification number, and the amount allocated
to each taxpayer.
(g)
(h) (1) The aggregate amount of
credits that may be allocated in any calendar year pursuant to this
section and Section 23686 23686.1 shall
be an amount equal to the sum of all of the following:
(1)
(A) Eighty Fifty million
dollars ($80,000,000) ($50,000,000) in
tax credits for the 2015 calendar year and each calendar year
thereafter, through and including the 2022 calendar year.
(2)
(B) The unused allocation tax credit amount, if any,
for the preceding calendar year.
(2) Notwithstanding the foregoing, the Governor's Office of
Business and Economic Development shall set aside ten million dollars
($10,000,000) of tax credits each calendar year for taxpayers with
qualified rehabilitation expenditures of less than one million
dollars ($1,000,000). To the extent that this amount is not fully
reserved in any calendar year, the unused portion shall become
available for reservation to other taxpayers.
(h)
(i) In the case of any application for tax credits by
an entity treated as a partnership or "S" corporation for income tax
purposes:
(1) (A) Credits awarded to a partnership shall be allocated to the
partners of that partnership in accordance with the partnership
agreement, regardless of how the federal historic rehabilitation tax
credit with respect to the project is allocated to the partners, or
whether the allocation of the credit under the terms of the
partnership agreement has substantial economic effect, within the
meaning of Section 704(b) of the Internal Revenue Code.
(B) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner's partnership interest made
prior to the expiration of the tax credit recapture period for the
project described in subparagraph (A) shall not be allowed in the
taxable year in which the sale or other disposition occurs, but shall
instead be deferred until, and treated as if, it occurred in the
first taxable year immediately following the taxable year in which
the tax credit recapture period expires for the project described in
subparagraph (A). The credits awarded to a partnership shall be
allocated to the partners of that partnership in accordance with the
partnership agreement.
(2) Credits awarded to an "S" corporation shall be allocated among
the shareholders of that "S" corporation pro rata in accordance with
their respective pro rata shares, determined in accordance with
Subchapter S of Chapter 1 of the Internal Revenue Code and the
regulations promulgated thereunder.
(i)
(j) Section 183 of the Internal Revenue Code shall not
apply with respect to the credit allowed by this section.
(j)
(k) For purposes of this section, the provisions of
subsection (a) of Section 50 of the Internal Revenue Code shall
apply.
(l) Notwithstanding any other provision of this part, a credit
allowed pursuant to this section may reduce the tax imposed under
Section 17041 or 17048 plus the tax imposed under Section 17504,
relating to the separate tax on lump-sum distributions, below the
tentative minimum tax.
(m) This section shall remain in effect regardless of the
expiration or repeal of Section 47 of the Internal Revenue Code,
relating to rehabilitation credit.
(k)
(n) The Governor's Office of Business and Economic
Development may adopt a reasonable fee in an amount sufficient to
cover the expenses incurred by the Governor's Office of Business and
Economic Development and the Office of Historic Preservation in
fulfilling the responsibilities described in paragraphs (4) and (5)
of subdivision (f) (g) and paragraphs
(4) and (5) of subdivision (f) (g) of
Section 23686 23686.1 .
(l)
(o) This section shall remain in effect only until
December 1, 2023, and as of that date is repealed.
SEC. 4. Section 23036 of the Revenue and
Taxation Code is amended to read:
23036. (a) (1) The term "tax" includes any of the following:
(A) The tax imposed under Chapter 2 (commencing with Section
23101).
(B) The tax imposed under Chapter 3 (commencing with Section
23501).
(C) The tax on unrelated business taxable income, imposed under
Section 23731.
(D) The tax on "S" corporations imposed under Section 23802.
(2) The term "tax" does not include any amount imposed under
paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of
subdivision (f) of Section 24667.
(b) For purposes of Article 5 (commencing with Section 18661) of
Chapter 2, Article 3 (commencing with Section 19031) of Chapter 4,
Article 6 (commencing with Section 19101) of Chapter 4, and Chapter 7
(commencing with Section 19501) of Part 10.2, and for purposes of
Sections 18601, 19001, and 19005, the term "tax" also includes all of
the following:
(1) The tax on limited partnerships, imposed under Section 17935,
the tax on limited liability companies, imposed under Section 17941,
and the tax on registered limited liability partnerships and foreign
limited liability partnerships imposed under Section 17948.
(2) The alternative minimum tax imposed under Chapter 2.5
(commencing with Section 23400).
(3) The tax on built-in gains of "S" corporations, imposed under
Section 23809.
(4) The tax on excess passive investment income of "S"
corporations, imposed under Section 23811.
(c) Notwithstanding any other provision of this part, credits are
allowed against the "tax" in the following order:
(1) Credits that do not contain carryover provisions.
(2) Credits that, when the credit exceeds the "tax," allow the
excess to be carried over to offset the "tax" in succeeding taxable
years, except for those credits that are allowed to reduce the "tax"
below the tentative minimum tax, as defined by Section 23455. The
order of credits within this paragraph shall be determined by the
Franchise Tax Board.
(3) The minimum tax credit allowed by Section 23453.
(4) Credits that are allowed to reduce the "tax" below the
tentative minimum tax, as defined by Section 23455.
(5) Credits for taxes withheld under Section 18662.
(d) Notwithstanding any other provision of this part, each of the
following applies:
(1) A credit may not reduce the "tax" below the tentative minimum
tax (as defined by paragraph (1) of subdivision (a) of Section
23455), except the following credits:
(A) The credit allowed by former Section 23601 (relating to solar
energy).
(B) The credit allowed by former Section 23601.4 (relating to
solar energy).
(C) The credit allowed by former Section 23601.5 (relating to
solar energy).
(D) The credit allowed by Section 23609 (relating to research
expenditures).
(E) The credit allowed by former Section 23609.5 (relating to
clinical testing expenses).
(F) The credit allowed by Section 23610.5 (relating to low-income
housing).
(G) The credit allowed by former Section 23612 (relating to sales
and use tax credit).
(H) The credit allowed by Section 23612.2 (relating to enterprise
zone sales or use tax credit).
(I) The credit allowed by former Section 23612.6 (relating to Los
Angeles Revitalization Zone sales tax credit).
(J) The credit allowed by former Section 23622 (relating to
enterprise zone hiring credit).
(K) The credit allowed by Section 23622.7 (relating to enterprise
zone hiring credit).
(L) The credit allowed by former Section 23623 (relating to
program area hiring credit).
(M) The credit allowed by former Section 23623.5 (relating to Los
Angeles Revitalization Zone hiring credit).
(N) The credit allowed by former Section 23625 (relating to Los
Angeles Revitalization Zone hiring credit).
(O) The credit allowed by Section 23633 (relating to targeted tax
area sales or use tax credit).
(P) The credit allowed by Section 23634 (relating to targeted tax
area hiring credit).
(Q) The credit allowed by former Section 23649 (relating to
qualified property).
(R) For taxable years beginning on or after January 1, 2011, the
credit allowed by Section 23685 (relating to qualified motion
pictures).
(S) The credit allowed by Section 23686.1 (relating to credits for
rehabilitation of certified historic structures).
(2) A credit against the tax may not reduce the minimum franchise
tax imposed under Chapter 2 (commencing with Section 23101).
(e) Any credit which is partially or totally denied under
subdivision (d) is allowed to be carried over to reduce the "tax" in
the following year, and succeeding years if necessary, if the
provisions relating to that credit include a provision to allow a
carryover of the unused portion of that credit.
(f) Unless otherwise provided, any remaining carryover from a
credit that has been repealed or made inoperative is allowed to be
carried over under the provisions of that section as it read
immediately prior to being repealed or becoming inoperative.
(g) Unless otherwise provided, if two or more taxpayers share in
costs that would be eligible for a tax credit allowed under this
part, each taxpayer is eligible to receive the tax credit in
proportion to his or her respective share of the costs paid or
incurred.
(h) Unless otherwise provided, in the case of an "S" corporation,
any credit allowed by this part is computed at the "S" corporation
level, and any limitation on the expenses qualifying for the credit
or limitation upon the amount of the credit applies to the "S"
corporation and to each shareholder.
(i) (1) With respect to any taxpayer that directly or indirectly
owns an interest in a business entity that is disregarded for tax
purposes pursuant to Section 23038 and any regulations thereunder,
the amount of any credit or credit carryforward allowable for any
taxable year attributable to the disregarded business entity is
limited in accordance with paragraphs (2) and (3).
(2) The amount of any credit otherwise allowed under this part,
including any credit carryover from prior years, that may be applied
to reduce the taxpayer's "tax," as defined in subdivision (a), for
the taxable year is limited to an amount equal to the excess of the
taxpayer's regular tax (as defined in Section 23455), determined by
including income attributable to the disregarded business entity that
generated the credit or credit carryover, over the taxpayer's
regular tax (as defined in Section 23455), determined by excluding
the income attributable to that disregarded business entity. A credit
is not allowed if the taxpayer's regular tax (as defined in Section
23455), determined by including the income attributable to the
disregarded business entity is less than the taxpayer's regular tax
(as defined in Section 23455), determined by excluding the income
attributable to the disregarded business entity.
(3) If the amount of a credit allowed pursuant to the section
establishing the credit exceeds the amount allowable under this
subdivision in any taxable year, the excess amount may be carried
over to subsequent taxable years pursuant to subdivisions (d), (e),
and (f).
(j) (1) Unless otherwise specifically provided, in the case of a
taxpayer that is a partner or shareholder of an eligible pass-thru
entity described in paragraph (2), any credit passed through to the
taxpayer in the taxpayer's first taxable year beginning on or after
the date the credit is no longer operative may be claimed by the
taxpayer in that taxable year, notwithstanding the repeal of the
statute authorizing the credit prior to the close of that taxable
year.
(2) For purposes of this subdivision, "eligible pass-thru entity"
means any partnership or "S" corporation that files its return on a
fiscal year basis pursuant to Section 18566, and that is entitled to
a credit pursuant to this part for the taxable year that begins
during the last year a credit is operative.
(3) This subdivision applies to credits that become inoperative on
or after the operative date of the act adding this subdivision.
SEC. 5. SEC. 4. Section 23686.1 is
added to the Revenue and Taxation Code, to read:
23686.1. For each taxable year beginning on or after January 1,
2015, and before January 1, 2023, there shall be allowed as
to a taxpayer that receives a tax credit reservation
a credit against the "tax," as defined in Section 23036, an
amount determined in accordance with Section 47 of the Internal
Revenue Code, except as follows:
(a) (1) In lieu of the percentages specified in Section 47(a) of
the Internal Revenue Code, except as provided in paragraph (2), the
applicable percentage shall be 20 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure.
(2) The applicable percentage shall be 25 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure if that certified historic structure meets one
of the following criteria:
(A) The rehabilitated structure is located on federal surplus
property, if obtained by a local agency under Section 54142 of the
Government Code, on surplus state real property, as defined by
Section 11011.1 of the Government Code, or on surplus land, as
defined by subdivision (b) of Section 54221 of the Government Code.
(B) The rehabilitated structure includes affordable housing for
lower-income households, as defined by Section 50079.5 of the Health
and Safety Code.
(C) The structure is located in a designated census tract, as
defined in paragraph (7) of subdivision (b) of Section 17053.73.
(D)
The structure is a part of a military base reuse authority
established pursuant to Title 7.86 (commencing with Section 67800) of
the Government Code.
(E) The structure is a transit-oriented development that is a
higher-density, mixed-use development within a walking distance of
one-half mile of a transit station.
(b) For purposes of this section, the following definitions
shall apply:
(1) "Certified historic structure" has the same meaning as defined
in Section 47(c)(3) of the Internal Revenue Code and additionally
means a structure in this state that is listed on the California
Register of Historical Resources.
(2) "Qualified rehabilitation expenditure" has the same meaning as
that term is defined in Section 47(c) of the Internal Revenue Code,
except that qualified rehabilitation expenditures may include
expenditures in connection with the rehabilitation of a building
without regard to whether any portion of the building is or is
reasonably expected to be tax exempt use property.
(c) (1) To be eligible for the credit allowed by this section, a
taxpayer shall request a tax credit reservation from the Governor's
Office of Business and Economic Development, in the form and manner
prescribed by the Governor's Office of Business and Economic
Development.
(2) To obtain a tax credit reservation, the taxpayer shall provide
necessary information, as determined by the Governor's Office of
Business and Economic Development.
(3) A tax credit reservation provided to a taxpayer shall not
constitute a determination by the Governor's Office of Business and
Economic Development with respect to any of the requirements of this
section regarding a taxpayer's eligibility for the credit authorized
by this section.
(4) If a taxpayer receives a tax credit reservation but
rehabilitation has not commenced within 18 months of the issuance of
the tax credit reservation, the tax credit reservation shall be
forfeited and the credit amount associated with the tax credit
reservation shall be treated as an unused allocation tax credit
amount.
(c)
(d) A deduction shall not be allowed under this part
for any cost expense for which a credit
is allowed by this section.
(d)
(e) If a credit is allowed under this section with
respect to any property, the basis of that property shall be reduced
by the amount of the credit allowed.
(e)
(f) In the case where the credit allowed by this
section exceeds the "tax," the excess may be carried over to reduce
the "tax" in the following year, and the seven succeeding years if
necessary, until the credit is exhausted.
(f)
(g) For purposes of this section, the Governor's Office
of Business and Economic Development shall do the following:
(1) On and after January 1, 2015, and before January 1, 2023,
reserve and allocate tax credits to applicants.
(2) Establish a procedure for applicants to file with the Governor'
s Office of Business and Economic Development a written application,
on a form jointly prescribed by that office and the Office of
Historic Preservation for the allocation
reservation of the tax credit.
(3) Establish criteria consistent with the requirements of this
section, for allocating reserving tax
credits. A taxpayer shall not receive a tax credit reservation
unless the following criteria are met. Criteria shall include,
but are not limited to, the following:
(A) The number of jobs created by the rehabilitation project, both
during and after the rehabilitation of the structure.
(B) The expected increase in state and local tax revenues derived
from the rehabilitation project, including those from increased wages
and property taxes.
(C) Any additional incentives or contributions included in the
rehabilitation project from federal, state, or local governments.
(4) Determine and designate, in consultation with the Office of
Historic Preservation, applicants that meet the requirements of this
section to ensure that the rehabilitation project upholds
historical values in terms of architectural and aesthetic standards
meets the Secretary of the Interior's
Standards for Rehabilitation, as found in Part 67 of Title 36 of the
Code of Federal Regulations .
(5) Process and approve, or reject, all tax credit
reservation applications.
(6) (A) Subject to the annual cap
established as provided in subdivision (g),
(h), allocate an aggregate amount of credits under this section
and Section 17053.86 17053.91 , and
allocate any carryover of unallocated credits from prior years.
(B) A taxpayer shall be allocated a tax credit pursuant to the
taxpayer's tax credit reservation upon receipt by the Governor's
Office of Business and Economic Development of a cost certification
for the qualified rehabilitation expenditures. For projects with
qualified rehabilitation expenditures in excess of two hundred fifty
thousand dollars ($250,000), the cost certification shall be issued
by a licensed certified public accountant.
(7) Certify tax credits allocated to taxpayers.
(8) Provide the Franchise Tax Board an annual list of the
taxpayers that were allocated a credit pursuant to this section and
Section 17053.86, 17053.91 including
each taxpayer's taxpayer identification number, and the amount
allocated to each taxpayer.
(g)
(h) (1) The aggregate amount of
credits that may be allocated in any calendar year pursuant to this
section and Section 17053.91 shall be an amount equal to the sum of
all of the following:
(1)
(A) Eighty Fifty million
dollars ($80,000,000) ($50,000,000) in
tax credits for the 2015 calendar year and each calendar year
thereafter, through and including the 2022 calendar year.
(2)
(B) The unused allocation tax credit amount, if any,
for the preceding calendar year.
(2) Notwithstanding the foregoing, the Governor's Office of
Business and Economic Development shall set aside ten million dollars
($10,000,000) of tax credits each calendar year for taxpayers with
qualified rehabilitation expenditures of less than one million
dollars ($1,000,000). To the extent that this amount is not fully
reserved in any calendar year, the unused portion shall become
available for reservation to other taxpayers.
(h)
(i) In the case of any application for tax credits by
an entity treated as a partnership or "S" corporation for income tax
purposes:
(1) (A) Credits awarded to a partnership shall be allocated to the
partners of that partnership in accordance with the partnership
agreement, regardless of how the federal historic rehabilitation tax
credit with respect to the project is allocated to the partners, or
whether the allocation of the credit under the terms of the
partnership agreement has substantial economic effect, within the
meaning of Section 704(b) of the Internal Revenue Code.
(B) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner's partnership interest made
prior to the expiration of the tax credit recapture period for the
project described in subparagraph (A) shall not be allowed in the
taxable year in which the sale or other disposition occurs, but shall
instead be deferred until, and treated as if, it occurred in the
first taxable year immediately following the taxable year in which
the tax credit recapture period expires for the project described in
subparagraph (A). The credits awarded to a partnership shall be
allocated to the partners of that partnership in accordance with the
partnership agreement.
(2) Credits awarded to an "S" corporation shall be allocated among
the shareholders of that "S" corporation pro rata in accordance with
their respective pro rata shares, determined in accordance with
Subchapter S of Chapter 1 of the Internal Revenue Code and the
regulations promulgated thereunder.
(i)
(j) Section 183 of the Internal Revenue Code shall not
apply with respect to the credit allowed by this section.
(j)
(k) For purposes of this section, the provisions of
subsection (a) of Section 50 of the Internal Revenue Code shall
apply.
(l) Notwithstanding any other provision of this part, a credit
allowed pursuant to this section may reduce the "tax" below the
tentative minimum tax, as defined by paragraph (1) of subdivision (a)
of Section 23455.
(m) This section shall remain in effect regardless of the
expiration or repeal of Section 47 of the Internal Revenue Code,
relating to rehabilitation credit.
(k)
(n) The Governor's Office of Business and Economic
Development may adopt a reasonable fee in an amount sufficient to
cover the expenses incurred by the Governor's Office of Business and
Economic Development and the Office of Historic Preservation in
fulfilling the responsibilities described in paragraphs (4) and (5)
of subdivision (f) (g) and paragraphs
(4) and (5) of subdivision (f) (g) of
Section 17053.91.
(l)
(o) This section shall remain in effect only until
December 1, 2023, and as of that date is repealed.
SEC. 6. SEC. 5. This act provides
for a tax levy within the meaning of Article IV of the Constitution
and shall go into immediate effect.