BILL NUMBER: SB 1176 CHAPTERED 10/08/93 BILL TEXT CHAPTER 946 FILED WITH SECRETARY OF STATE OCTOBER 8, 1993 APPROVED BY GOVERNOR OCTOBER 8, 1993 PASSED THE ASSEMBLY SEPTEMBER 7, 1993 PASSED THE SENATE JUNE 1, 1993 INTRODUCED BY Senator Kopp MARCH 5, 1993 An act to amend Section 25128 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGEST SB 1176, Kopp. Bank and corporation taxes: unitary businesses. The existing Bank and Corporation Tax Law imposes taxes measured by income and, in the case of a business with income derived from or attributable to sources both within and without this state, the income is apportioned between this state and the other states and foreign countries for tax purposes in accordance with a specified formula based on the property, payroll, and sales within and without this state. Pursuant to that formula all business income of the taxpayer is apportioned to this state by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is 3. The sales factor is a fraction, the numerator of which is the total sales of the taxpayer in this state during the income year, and the denominator of which is the total sales of the taxpayer everywhere during the income year. This bill would provide, instead, that all business income of the taxpayer shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus twice the sales factor, and the denominator of which is 4, except that all the business income of a taxpayer with more than 50% of its gross business receipts derived from extractive or agricultural business activities, as defined, shall be apportioned to this state by multiplying the business income by a fraction the numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is 3. The bill would take effect immediately as a tax levy. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 25128 of the Revenue and Taxation Code is amended to read: 25128. (a) Notwithstanding Section 38006, all business income shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus twice the sales factor, and the denominator of which is four, except as provided in subdivision (b). (b) If a taxpayer has more than 50 percent of its "gross business receipts" derived from conducting an extractive or agricultural business activity, all the business income of the taxpayer shall be apportioned to this state by multiplying the business income by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is three. (c) For purposes of this section: (1) "Gross business receipts" means gross receipts derived in the production of business income subject to apportionment. (2) "Agricultural business activity" means activities relating to any stock, dairy, poultry, fruit, furbearing animal, or truck farm, plantation, ranch, nursery, or range. "Agricultural business activity" also includes activities relating to cultivating the soil or raising or harvesting any agricultural or horticultural commodity, including, but not limited to, the raising, shearing, feeding, caring for, training, or management of animals on a farm as well as the handling, drying, packing, grading, or storing on a farm any agricultural or horticultural commodity in its unmanufactured state, but only if the owner, tenant, or operator of the farm regularly produces more than one-half of the commodity so treated. (3) "Extractive business activity" means activities relating to the production, refining, or processing of oil, natural gas, or mineral ore. (4) In any case where the income and apportionment factors of two or more affiliated banks or corporations are required to be included in a combined report under Section 25101, the term "taxpayer" shall refer to all of those corporations. SEC. 2. This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.