BILL NUMBER: SB 394	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Nguyen

                        FEBRUARY 25, 2015

   An act to amend Section 23663 of the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 394, as introduced, Nguyen. Corporate taxes: credits:
assignment.
   The Corporation Tax Law allows various credits against the taxes
imposed by that law. That law allows, for each taxable year beginning
on or after July 1, 2008, any credit that is an eligible credit, as
defined, to be assigned to any eligible assignee, as defined.
   This bill would make technical, 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 1.  Section 23663 of the Revenue and Taxation Code is
amended to read:
   23663.  (a) (1) Notwithstanding any other law  to the
contrary  , for each taxable year beginning on or after July
1, 2008, any credit allowed to a taxpayer under this chapter that is
an eligible credit may be assigned by that taxpayer to any eligible
assignee.
   (2) A credit assigned under paragraph (1) may  only
 be applied by the eligible assignee  only  against
the  "tax" (as  "tax," as  defined in
Section  23036)   23036,  of the eligible
assignee in a taxable year beginning on or after January 1, 2010.
   (3) Except as specifically provided in this section, following an
assignment of any eligible credit under this section, the eligible
assignee shall be treated as if it originally earned the assigned
credit.
   (b) For purposes of this section, the following definitions shall
apply:
   (1) "Affiliated corporation" means a corporation that is a member
of a commonly controlled group as defined in Section 25105.
   (2) "Eligible credit" shall mean:
   (A) Any credit earned by the taxpayer in a taxable year beginning
on or after July 1, 2008, or
   (B) Any credit earned in any taxable year beginning before July 1,
2008, that is eligible to be carried forward to the taxpayer's first
taxable year beginning on or after July 1, 2008, under the
provisions of this part.
   (3) "Eligible assignee" shall mean any affiliated corporation that
is properly treated as a member of the same combined reporting group
pursuant to Section 25101 or 25110 as the taxpayer assigning the
eligible credit as of:
   (A) In the case of credits earned in taxable years beginning
before July 1, 2008:
   (i) June 30, 2008, and
   (ii) The last day of the taxable year of the assigning taxpayer in
which the eligible credit is assigned.
   (B) In the case of credits earned in taxable years beginning on or
after July 1, 2008.
   (i) The last day of the first taxable year in which the credit was
allowed to the taxpayer, and
   (ii) The last day of the taxable year of the assigning taxpayer in
which the eligible credit is assigned.
   (c) (1) The election to assign any credit under subdivision (a)
shall be irrevocable once made, and shall be made by the taxpayer
allowed that credit on its original return for the taxable year in
which the assignment is made.
   (2) The taxpayer assigning any credit under this section shall
reduce the amount of its unused credit by the face amount of any
credit assigned under this section, and the amount of the assigned
credit shall not be available for application against the assigning
taxpayer's "tax" in any taxable year, nor shall it thereafter be
included in the amount of any credit carryover of the assigning
taxpayer.
   (3) The eligible assignee of any credit under this section may
apply all or any portion of the assigned credits against the "tax" of
the eligible assignee for the taxable year in which the assignment
occurs, or any subsequent taxable year, subject to any carryover
period limitations that apply to the assigned credit and also subject
to the limitation in paragraph (2) of subdivision (a).
   (4)  In no case may the   The  eligible
assignee  shall not  sell, otherwise transfer, or thereafter
assign the assigned credit to any other taxpayer.
   (d) (1)  No consideration   Consideration
 shall  not  be required to be paid by the eligible
assignee to the assigning taxpayer for assignment of any credit under
this section.
   (2) In the event that any consideration is paid by the eligible
assignee to the assigning taxpayer for the transfer of an eligible
credit under this section, then:
   (A)  No   A    deduction shall
 not  be allowed to the eligible assignee under this part
with respect to any amounts so paid, and
   (B)  No amounts   Any amount  so
received by the assigning taxpayer shall  not  be includable
in gross income under this part.
   (e) (1) The Franchise Tax Board shall specify the form and manner
in which the election required under this section shall be made, as
well as any necessary information that shall be required to be
provided by the taxpayer assigning the credit to the eligible
assignee.
   (2) Any taxpayer who assigns any credit under this section shall
report any information, in the form and manner specified by the
Franchise Tax Board, necessary to substantiate any credit assigned
under this section and verify the assignment and subsequent
application of any assigned credit.
   (3) Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code shall not apply to any
standard, criterion, procedure, determination, rule, notice, or
guideline established or issued by the Franchise Tax Board pursuant
to paragraphs (1) and (2).
   (4) The Franchise Tax Board may issue any  regulations
  regulation  necessary to implement the purposes
of this section, including any  regulations  
regulation  necessary to specify the treatment of any assignment
that does not comply with  the requirements of 
this section (including, for example,  where  
if  the taxpayer and eligible assignee are not properly treated
as members of the same combined reporting group on any of the dates
specified in paragraph (3) of subdivision (b).
   (f) (1) The taxpayer and the eligible assignee shall be jointly
and severally liable for any tax, addition to tax, or penalty that
results from the disallowance, in whole or in part, of any eligible
credit assigned under this section.
   (2)  Nothing in this   This  section
shall  not  limit the authority of the Franchise Tax Board
to audit either the assigning taxpayer or the eligible assignee with
respect to any eligible credit assigned under this section.
   (g) On or before June 30, 2013, the Franchise Tax Board shall
report to the Joint Legislative Budget Committee, the Legislative
Analyst, and the relevant policy committees of both houses on the
effects of this section. The report shall include, but need not be
limited to, the following:
   (1) An estimate of use of credits in the 2010 and 2011 taxable
years by eligible taxpayers.
   (2) An analysis of effect of this section on expanding business
activity in the state related to these credits.
   (3) An estimate of the resulting tax revenue loss to the state.
   (4) The report shall cover all credits covered in this section,
but focus on the credits related to research and development,
economic incentive areas, and low-income housing.