Amended in Assembly April 26, 2016

Amended in Assembly April 11, 2016

Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2490

Introduced by Assembly Member Gatto

February 19, 2016

An act to add Section 23714 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2490, as amended, Gatto. Corporation Tax Law: exemption: regulated investment company.

Existing law, the Corporation Tax Law, generally conforms to the federal income tax laws that apply to a regulated investment company and further provides that for purposes of the Corporation Tax Law, its “net income” is equal to its “investment company income.” Existing law exempts from tax under the Corporation Tax Law, various organizations including credit unions, fraternal societies, social welfare organizations, and labor organizations.

This bill would begin delete exempt from tax end delete begin insert provide that end insert under the Corporation Tax Law, a regulated investment company that is a mutual fund investment management company owned by investors in the mutual funds that it begin delete serves. end delete begin insert serves is not subject to tax. The bill would authorize the Franchise Tax Board to promulgate regulations as necessary or appropriate to carry out this provision. end insert

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 23714 is added to the Revenue and
Taxation Code, to read:

23714.  

begin insert (a) end insert begin insert   end insert Notwithstanding any other law, a regulated
investment company, as defined in Section 851 of the Internal
Revenue Code, relating to definition of regulated investment
company, that is a mutual fund investment management company
owned by begin delete the end delete investors begin delete of end delete begin insert in the end insert mutual begin delete fund end delete begin insert funds end insert that it begin delete serves. end delete

begin insert serves is exempt from the taxes imposed by this part, except as
provided in Article 2 (commencing with Section 23731). end insert

begin insert

(b) The Franchise Tax Board may promulgate regulations as
necessary or appropriate to carry out the purposes of this section.

end insert

SEC. 2.  

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