Amended in Assembly May 16, 2016

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 begin insert and repeal end insert Section 23714 begin delete to end delete begin insert of end insert 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 provide that under the Corporation Tax Law, begin delete a regulated investment company that is a mutual fund investment management company owned by investors in the mutual funds that it serves end delete begin insert a mutual fund investment management company wholly owned by one or more regulated investment companies end insert begin insert and providing management services to the one or more regulated investment companies “at cost” end insert is not subject to begin delete tax. end delete begin insert tax, except as specified. end insert The bill would authorize the Franchise Tax Board to promulgate regulations as necessary or appropriate to carry out this provision. begin insert The bill would repeal these provisions on January 1, 2022. 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.  

(a) Notwithstanding any other law, begin delete a regulated
investment company, end delete begin insert a mutual fund investment management
company wholly owned by one or more regulated investment
companies, end insert as defined in Section 851 of the Internal Revenue Code,
relating to definition of regulated investment company, begin delete that is a
mutual fund investment management company owned by investors
in the mutual funds that it serves end delete begin insert and providing management
services to the one or more regulated investment companies “at
cost end insert begin insert ” end insert is exempt from the taxes imposed by this part, except as
provided in Article 2 (commencing with Section 23731).

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

begin insert

(c) This section shall be repealed on January 1, 2022.

end insert

SEC. 2.  

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