AB 2771, as introduced, Irwin. Personal income taxes: credits: taxes paid to another state.
The Personal Income Tax Law provides a credit against the taxes imposed by that law to residents for specified taxes paid to another state on income derived from sources within that state. Existing law determines that income by applying the nonresident sourcing rules for determining income from sources within California, including the single sales factor apportionment formula.
This bill would provide that California’s single sales factor apportionment formula, and the regulations issued thereunder, shall not be applied in lieu of another state’s apportionment rules when determining income derived from sources in that state.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2⁄3. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 18001 of the Revenue and Taxation Code
2 is amended to read:
(a) Subject to the following conditions, residents shall
4be allowed a credit against the “net tax” (as defined by Section
517039) for net income taxes imposed by and paid to another state
6(not including any preference, alternative, or minimum tax
7comparable to the tax imposed by Section 17062) on income
8taxable under this part:
9(1) The credit shall be allowed only for taxes paid to the other
10state (not including any preference, alternative, or minimum tax
11comparable to the tax imposed by Section 17062) on income
12derived from sources within that state which is taxable under its
13laws irrespective of the residence or domicile of the recipient.
14This paragraph shall not apply to residents
to whom subdivision
15(b) of Section 17014 applies.
16(2) The credit shall not be allowed if the other state allows
17residents of this state a credit against the taxes imposed by that
18state (not including any preference, alternative, or minimum tax
19comparable to the tax imposed by Section 17062) for “net tax” (as
20defined by Section 17039) paid or payable under this part.
21(3) The credit shall not exceed the proportion of the “net tax”
22(as defined by Section 17039) payable under this part as the income
23subject to tax in the other state (not including any preference,
24alternative, or minimum tax comparable to the tax imposed by
25Section 17062) and also taxable under this part bears to the
26taxpayer’s entire income upon which the “net tax” (as defined by
27Section 17039) is imposed by this part.
28(4) No credit shall be allowed
under this section for any tax
29imposed by Section 17062.
30(b) For purposes of this section, the amount of “net income
31taxes” paid to another state shall include the taxpayer’s pro rata
32share of any taxes on, or according to, or measured by, income or
33profits paid or accrued, which were paid by an S corporation, as
34provided by Section 18006.
35(c) For purposes of this section, “income derived from sources
36within that state” shall be determined by applying the nonresident
37sourcing rules for determining income from sources within this
38state, as specified in Chapter 11 (commencing with Section 17951),
P3 1and the regulationsbegin delete thereunder.end deletebegin insert thereunder, except that the
2apportionment rules in Sections 25128 to 25139, inclusive,
and
3the regulations thereunder, shall not be applied in lieu of that
4other state’s apportionment rules.end insert
This act is an urgency statute necessary for the
6immediate preservation of the public peace, health, or safety within
7the meaning of Article IV of the Constitution and shall go into
8immediate effect. The facts constituting the necessity are:
9In order to reduce the burden of filing tax returns and to increase
10ease of compliance with existing tax laws, it is necessary that this
11act take effect immediately.
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