AB 406, as introduced, Brough. Corporation Tax Law: income: methods of accounting.
The Corporation Tax Law imposes taxes upon, or measured by, income. Existing law requires the taxpayer’s income to be computed under a method of accounting on the basis of which the taxpayer regularly computes its income in keeping its books and authorizes the taxpayer to use one of a specified accounting methods.
This bill would make nonsubstantive changes to this provision.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 24651 of the Revenue and Taxation Code
2 is amended to read:
(a) Income shall be computed under the method of
4accounting on the basis of which the taxpayer regularly computes
5its income in keeping its books.
6(b) If no method of accounting has been regularly used by the
7taxpayer, or if the method used does not clearly reflect income,
8the computation of income shall be made under such method as,
P2 1in the opinion of the Franchise Tax Board, does clearly reflect
2income.
3(c) Subject to subdivisions (a) and (b) and Section 24654, a
4taxpayer may compute income under any of the following methods
5ofbegin delete accounting--end deletebegin insert
accounting:end insert
6(1) The cash receipts and disbursementsbegin delete method;end deletebegin insert method.end insert
7(2) An accrualbegin delete method;end deletebegin insert method.end insert
8(3) Any other method permitted by thisbegin delete part; orend deletebegin insert part.end insert
9(4) Any
combination of the foregoing methods permitted under
10regulations prescribed by the Franchise Tax Board.
11(d) A taxpayer engaged in more than one trade or business maybegin insert,end insert
12
in computing income, use a different method of accounting for
13each trade or business.
14(e) Except as otherwise expressly provided in this part, a
15taxpayerbegin delete whoend deletebegin insert thatend insert changes the method of accounting on the basis
16of which it regularly computes its income in keeping its books
17shall, before computing its income under the new method, secure
18the consent of the Franchise Tax Board.
19(f) If the taxpayer does not file with the Franchise Tax Board a
20request to change the method of accounting, the absence of the
21consent of the Franchise Tax Board to a change in the method of
22accounting shall not be taken into account for either of the
23following:
24(1) To prevent the imposition of any penalty, or the addition of
25any amount to tax, under this part.
26(2) To diminish the amount of that penalty or addition to tax.
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