Amended in Assembly June 16, 2015

Amended in Senate March 4, 2015

Senate BillNo. 35


Introduced by Senator Wolk

(Principal coauthor: Assembly Member Dodd)

December 1, 2014


An act to addbegin insert and repealend insert Sections 17207.14 and 24347.14begin delete toend deletebegin insert ofend insert the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 35, as amended, Wolk. Income and corporation taxes: deductions: disaster relief.

The Personal Income Tax Law and the Corporation Tax Law provide for a deduction of specified losses sustained as a result of disasters occurring in California in an area determined by the President of the United States to warrant specified federal assistance or, for other disasters for which a specific law has been enacted, proclaimed by the Governor to be in a state of emergency. Those laws allow a taxpayer to elect to deduct those disaster losses on the return for the taxable year preceding the taxable year in which the disaster occurred, filed by a specified date. Existing law also allows individual and corporate taxpayers to utilize net operating losses and carryovers and carrybacks of those losses for purposes of offsetting their individual and corporate tax liabilities. Existing law, for net operating losses incurred in taxable years beginning on or after January 1, 2013, allows net operating losses to be carrybacks to each of the preceding 2 taxable years, as provided, but varies the amount of carryback allowed for net operating losses attributed to specified taxable years.

This bill would, for taxable years beginning on or after January 1, 2014,begin insert and before January 1, 2024,end insert extend the provisions relating to disaster losses to losses in any city, county, or city and county that is proclaimed by the Governor to be in a state of emergency and would extend the time during which a taxpayer may claim the deduction. This bill would additionally provide that any law that suspends, defers, reduces, or otherwise diminishes the deduction of a net operating loss, other than those variations already imposed in existing law, shall not apply to a net operating loss attributable to these specified disaster losses.

This bill would make a legislative finding and declaration relating to the statewide public purpose served by the bill.

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:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertThe Legislature finds and declares:end insert

begin insert

2(a) On August 24, 2014, the Governor of California proclaimed
3a state of emergency due to the South Napa Earthquake that
4occurred in August 2014, within the Counties of Napa, Solano,
5and Sonoma, thus qualifying affected persons for various forms
6of governmental assistance and relief.

end insert
begin insert

7(b) On September 11, 2014, the President of the United States
8made a Major Disaster Declaration for the Counties of Napa and
9Solano due to the South Napa Earthquake, thus qualifying affected
10persons to file an amended return to deduct a disaster loss in the
11taxable year prior to the loss year.

end insert
begin insert

12(c) This act is consistent with, and supplements, the proclaimed
13disaster assistance and relief by providing necessary tax relief to
14persons in the affected jurisdictions by allowing them to maintain
15essential basic services and repair damage to, and restore, their
16homes and businesses.

end insert
begin insert

17(d) The Legislature has enacted identical treatment for almost
18every significant disaster that has occurred in California for the
19last 25 years.

end insert
20

begin deleteSECTION 1.end delete
21begin insertSEC. 2.end insert  

Section 17207.14 is added to the Revenue and Taxation
22Code
, to read:

P3    1

17207.14.  

(a) For taxable years beginning on or after January
21, 2014,begin insert and before January 1, 2024,end insert Section 165(i) of the Internal
3Revenue Code, relating to disaster losses, shall be applicable to
4any loss sustained as a result of any disaster occurring in any city,
5county, or city and county in this state that is proclaimed by the
6Governor to be in a state of emergency.

7(b) (1) For losses described in subdivision (a), the election
8under Section 165(i) of the Internal Revenue Code, relating to
9disaster losses, may be made on a return or amended return filed
10on or before the due date of the return, determined with regard to
11any extension of time for filing the return, for the taxable year in
12which the disaster occurred.

13(2) Notwithstanding Section 18572, this subdivision shall apply
14to any loss described in subdivision (a).

15(c) Unless specifically provided otherwise, any law, other than
16Section 17276.20, that suspends, defers, reduces, or otherwise
17diminishes the deduction of a net operating loss shall not apply to
18a net operating loss attributable to the loss described in subdivision
19(a).

begin insert

20(d) This section shall remain in effect only until December 1,
212024, and as of that date is repealed.

end insert
22

begin deleteSEC. 2.end delete
23begin insertSEC. 3.end insert  

Section 24347.14 is added to the Revenue and Taxation
24Code
, to read:

25

24347.14.  

(a) For taxable years beginning on or after January
261, 2014,begin insert and before January 1, 2024,end insert Section 165(i) of the Internal
27Revenue Code, relating to disaster losses, shall be applicable to
28any loss sustained as a result of any disaster occurring in any city,
29county, or city and county in this state that is proclaimed by the
30Governor to be in a state of emergency.

31(b) (1) For losses described in subdivision (a), the election
32under Section 165(i) of the Internal Revenue Code, relating to
33disaster losses, may be made on a return or amended return filed
34on or before the due date of the return, determined with regard to
35any extension of time for filing the return, for the taxable year in
36which the disaster occurred.

37(2) Notwithstanding Section 18572, this subdivision shall apply
38to any loss described in subdivision (a).

39(c) Unless specifically provided otherwise, any law, other than
40Section 24416.20, that suspends, defers, reduces, or otherwise
P4    1diminishes the deduction of a net operating loss shall not apply to
2a net operating loss attributable to the loss described in subdivision
3(a).

begin insert

4(d) This section shall remain in effect only until December 1,
52024, and as of that date is repealed.

end insert
6

begin deleteSEC. 3.end delete
7begin insertSEC. 4.end insert  

The Legislature finds and declares that this act fulfills
8a statewide public purpose because it is consistent with, and
9supplements, the proclaimed disaster assistance and relief by
10providing necessary tax relief to persons in the affected
11jurisdictions by allowing them to maintain essential basic services
12and repair damage to, and restore, their homes and businesses.

13

begin deleteSEC. 4.end delete
14begin insertSEC. 5.end insert  

This act provides for a tax levy within the meaning of
15Article IV of the Constitution and shall go into immediate effect.



O

    97