BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Lois Wolk, Chair
AB 1580 - Committee on Revenue and Taxation
Amended: June 26, 2009
Hearing: July 8, 2009 Fiscal:
SUMMARY: Conforms State Law to Certain Provisions of Federal
Law as of January 1, 2009
EXISTING LAW provides modified conformity of state's
Revenue and Taxation Code to the Internal Revenue Code and
specified public laws.
THIS BILL conforms California law to many of the federal
income tax law changes made over the past two years by changing
the specified date in statute from January 1, 2005 (existing
law), to January 1, 2009 (this bill), for taxable years
beginning on or after January 1, 2009. In addition, the bill
makes numerous changes to specifically not conform to or modify
certain items in the IRC. The following tables, provided by
FTB, list the following:
Federal Act sections that impact provisions of the
Personal Income Tax Law (PITL), Administration of
Franchise and Income Tax Law (AFITL), and Corporation Tax
Law (CTL),
Beginning page numbers in FTB's annual report where
that provision is discussed, and
Changes under this bill--whether AB 1580 conforms or
does not conform to that provision. (Note that
conformity decisions that require modification are listed
in the conform column.)
2005 Conformity Decisions
These tables contain only items for which a conformity decision
was necessary.
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| |
| Table 3 - ETIA of 2005 (PL 109-58) |
| |
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| |FTB's 2005 | Decision |
| | Annual | |
| | Report | |
| | Page No. | |
| | | |
| | | |
---------------------------------------------------------------------
|------+---------------------------------+-----------+-------+-------|
| Act | Provisions | |Conform| Not |
|Sectio| | | |Conform|
| n | | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1308 |Electric Transmission Property | 38 | PIT | CORP |
| |Treated As 15-year Property | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1309 |Expansion of Amortization For | 40 | X | |
| |Certain Atmospheric Pollution | | | |
| |Control Facilities In Connection | | | |
| |With Plants First Placed in | | | |
| |Service after 1975 | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1310 |Modification to Special Rules | 41 | X | |
| |For Nuclear Decommissioning Cost | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1323 |Temporary Expensing for | 50 | | X |
| |Equipment Used in Refining | | | |
| |Liquids Fuels | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1324 |Pass Through to Owners of | 54 | | X |
| |Deduction for Capital Costs | | | |
| |Incurred By Small Refiner | | | |
| |Cooperatives in Complying With | | | |
| |EPA Sulfur Regulations | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1325 |Natural Gas Distribution Lines | 57 | PIT | CORP |
| |Treated As 15-Year Property | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1326 |Natural Gas Gathering Lines | 59 | PIT | CORP |
| |Treated As 7-Year Property | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1328 |Determination of Small Refiner | 67 | X | |
| |Exception to Oil Depletion | | | |
| |Deduction | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1329 |Amortization of Geological and | 68 | | X |
| |Geophysical Expenditures | | | |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1331 |Energy Efficient Commercial | 71 | | X |
| |Buildings Deduction | | | |
| | | | | |
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| 1351 |Expansion of Research Credit | 101 | | X |
| | | | | |
|------+---------------------------------+-----------+-------+-------|
| 1363 |Modification of Recapture Rules | 107 | X | |
| |for Amortizable Section 197 | | | |
| |Intangibles | | | |
| | | | | |
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| |
| Table 5 - GO Zone Act of 2005 (PL 109-135) |
| |
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| |FTB's 2005 | Decision |
| | Annual | |
| | Report | |
| | Page No. | |
| | | |
| | | |
----------------------------------------------------------------------
|------+----------------------------------+-----------+-------+-------|
| Act | Provisions | |Conform| Not |
|Sectio| | | |Conform|
| n | | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|101-F |Expensing for Certain Demolition | 182 | | X |
| |and Clean-up Costs | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|101-O |Treatment of Public Utility | 203 | | X |
| |Disaster Losses | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
| 303 |Modification of Effective Date of | 253 | X | |
| |Exception from Suspension Rules | | | |
| |for Certain Listed and Reportable | | | |
| |Transactions | | | |
| | | | | |
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| 305 |Disclosures of Certain Tax Return | 256 | | X |
| |Information | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|401-42|Tax Technical Provisions | 261 | X | |
| 3 | | | | |
| | | | | |
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2006 Conformity Decisions
These tables contain only items for which a conformity decision
was necessary.
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| |
| Table 1 - TIPRA of 2005 (PL 109-222) |
| |
| |
| |
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| |FTB's 2006 |Decision |
| | Annual | |
| | Report | |
| | Page No. | |
| | | |
| | | |
----------------------------------------------------------------------
|------+----------------------------------+-----------+-------+-------|
| Act | Provisions | |Conform| Not |
|Sectio| | | |Conform|
| n | | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|Title |OTHER PROVISIONS | | | |
|II | | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|201 |Clarification of Taxation of | 23 | X | |
| |Certain Settlement Funds | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|202 |Modification of Active Business | 25 | X | |
| |Definition under Section 355 | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|204 |Capital Gains Treatment for | 31 | X | |
| |Certain Self-Created Musical | | | |
| |Works | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|207 |Amortization of Expenses Incurred | 38 | X | |
| |in Creating or Acquiring Music or | | | |
| |Music Copyrights | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|209 |Modification of Treatment of | 43 | X | |
| |Loans to Qualified Continuing | | | |
| |Care Facilities | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|Title |REVENUE OFFSET PROVISIONS | | | |
|V | | | | |
| | | | | |
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|501 |Application of Earnings Stripping | 50 | X | |
| |Rules to Partners Which are | | | |
| |Corporations | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|503 |5-Year Amortization of Geological | 53 | |X |
| |and Geophysical Expenditures for | | | |
| |Certain Major Integrated Oil | | | |
| |Companies | | | |
| | | | | |
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| |
| Table 1 - TIPRA of 2005 (PL 109-222) |
| |
| |
| |
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|------+----------------------------------+-----------+-------+-------|
|507 |Section 355 Not to Apply to | 65 | X | |
| |Distributions Involving | | | |
| |Disqualified Investment Companies | | | |
| | | | | |
|------+----------------------------------+-----------+-------+-------|
|510 |Increase in Age of Minor Children | 75 | X | |
| |Whose Unearned Income is Taxed as | | | |
| |if Parent's Income | | | |
| | | | | |
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| Table 4 - Pension Protection Act of 2006 (PPA) (PL 109-280) |
| |
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----------------------------------------------------------------------
| |FTB's 2006 | Decision |
| | Annual | |
| | Report | |
| | Page No. | |
| | | |
| | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
| Act | Provisions | |Conform| Not |
|Sectio| | | |Conform |
| n | | | | |
| | | | | |
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----------------------------------------------------------------------
|Title |REFORM OF FUNDING FOR | |
| I |SELF-EMPLOYED DEFINED BENEFIT | |
| |PENSION PLANS | |
| | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
| 112 |Minimum Funding Standards; | 103 | X | |
| |Funding Rules for Single-Employer | | | |
| |Defined Benefit Pension Plans | | | |
| | | | | |
|------+----------------------------------+-----------+-------+--------|
| 113 |Benefit Limitations Under | 125 | X | |
| |Single-Employer Plans | | | |
| | | | | |
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----------------------------------------------------------------------
|Title |FUNDING RULES FOR MULTIEMPLOYER | |
| II |DEFINED BENEFIT PENSION PLANS | |
| | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
| 211 |Funding Rules for Multiemployer | 143 | X | |
| |Defined Benefit Plans | | | |
| | | | | |
----------------------------------------------------------------------
| 212 |Additional Funding Rules for | 151 | X | |
| |Multiemployer Plans in Endangered | | | |
| |or Critical Status | | | |
| | | | | |
|------+----------------------------------+-----------+-------+--------|
| 221 |Sunset of Additional Funding | 177 | X | |
| |Rules | | | |
| | | | | |
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----------------------------------------------------------------------
|Title |PENSION RELATED REVENUE | |
| VIII |PROVISIONS | |
| | | |
|------+----------------------------------+----------------------------|
|Subtit|Improvements in Portability, | |
| le C |Distributions, and Contribution | |
| |Rules | |
| | | |
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----------------------------------------------------------------------
| 827 |Penalty-Free Withdrawals from | 290 | X | |
| |Retirement Plans for Individuals | | | |
| |Called to Active Duty for at | | | |
| |Least 179 Days | | | |
| | | | | |
----------------------------------------------------------------------
| 828 |Waiver of 10% Early Withdrawal | 293 | X | |
| |Penalty Tax on Certain | | | |
| |Distributions of Pension Plans | | | |
| |for Public Safety Employees | | | |
| | | | | |
----------------------------------------------------------------------
| 831 |Allowance of Additional IRA | 298 | X | |
| |Payments in Certain Bankruptcy | | | |
| |Cases | | | |
| | | | | |
|------+----------------------------------+-----------+-------+--------|
| 833 |Inflation Indexing of Gross | 301 | X | |
| |Income Limitations on Certain | | | |
| |Retirement Savings Incentives | | | |
| | | | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
|Subtit|Health and Medical Benefits | |
| le D | | |
| | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
| 844 |Treatment of Annuity and Life | 315 | | X |
| |Insurance Contracts with a | | | |
| |Long-Term Care Insurance Feature | | | |
| | | | | |
----------------------------------------------------------------------
|Subtit|Other Provisions | | | |
| le F | | | | |
| | | | | |
----------------------------------------------------------------------
| 863 |Treatment of Death Benefits from | 335 | X | |
| |Corporate-Owned Life Insurance | | | |
| | | | | |
----------------------------------------------------------------------
| 866 |Exemption of Income from | 345 | X | |
| |Leveraged Real Estate Held by | | | |
| |Church Plans | | | |
| | | | | |
|------+----------------------------------+-----------+-------+--------|
| 868 |Gratuitous Transfer for Benefits | 348 | X | |
| |of Employees | | | |
| | | | | |
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----------------------------------------------------------------------
|Title |PROVISIONS RELATING TO EXEMPT | |
| XII |ORGANIZATIONS | |
| | | |
----------------------------------------------------------------------
|Subtit|Reforming Exempt Organizations | |
| le B | | |
| | | |
|------+----------------------------------+----------------------------|
| Part |General Reforms | |
| 1 | | |
| | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
| 1211 |Reporting on Certain Acquisitions | 429 | X | |
| |of Interests on Insurance | | | |
| |Contracts in Which Certain Exempt | | | |
| |Organizations Hold an Interest | | | |
| | | | | |
----------------------------------------------------------------------
| 1213 |Reform of Charitable | 437 | X | |
| |Contributions of Certain | | | |
| |Easements in Registered Historic | | | |
| |Districts and Reduced Deduction | | | |
| |for Portion of Qualified | | | |
| |Conservation Contribution | | | |
| |Attributable to Rehabilitation | | | |
| |Credit | | | |
| | | | | |
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| 1214 |Charitable Contributions for | 443 | X | |
| |Taxidermy Property | | | |
| | | | | |
----------------------------------------------------------------------
| 1215 |Recapture of Tax Benefit for | 446 | X | |
| |Charitable Contributions of | | | |
| |Exempt Use Property Not Used for | | | |
| |an Exempt Use | | | |
| | | | | |
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| 1216 |Limitation of Deduction for | 451 | X | |
| |Charitable Contributions of | | | |
| |Clothing and Household Items | | | |
| | | | | |
----------------------------------------------------------------------
| 1217 |Modification of Recordkeeping | 455 | X | |
| |Requirements for Certain | | | |
| |Charitable Contributions | | | |
| | | | | |
----------------------------------------------------------------------
| 1218 |Contributions of Fractional | 457 | X | |
| |Interests in Tangible Personal | | | |
| |Property | | | |
| | | | | |
----------------------------------------------------------------------
| 1219 |Provisions Relating to | 460 | X | |
| |Substantial and Gross | | | |
| |Overstatements of Valuations | | | |
| | | | | |
----------------------------------------------------------------------
| 1220 |Additional Standards for Credit | 465 | X | |
| |Counseling Organizations | | | |
| | | | | |
----------------------------------------------------------------------
| 1222 |Definition of Convention or | 479 | X | |
| |Association of Churches | | | |
| | | | | |
|------+----------------------------------+-----------+-------+--------|
| 1223 |Notification Requirement for | 481 | X | |
| |Entities Not Currently Required | | | |
| |to File | | | |
| | | | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
| Part |Improved Accountability of Donor | |
| 2 |Advised Funds | |
| | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
|1231-1|Excise Taxes Relating to Donor | 492 | | X |
| 235 |Advised Funds, Excess Benefit | | | |
| |Transactions Involving Donor | | | |
| |Advised Funds and Sponsoring | | | |
| |Organizations, Excess Business | | | |
| |Holdings of Donor Advised Funds, | | | |
| |Returns of, and Application for | | | |
| |Recognition by Sponsoring | | | |
| |Organizations | | | |
| | | | | |
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----------------------------------------------------------------------
| Part |Improved Accountability of | |
| 3 |Supporting Organizations | |
| | | |
----------------------------------------------------------------------
----------------------------------------------------------------------
|1241-1|Requirements for Supporting | 510 | |X |
| 245 |Organizations, Excess Benefit | | | |
| |Transactions Involving Supporting | | | |
| |Organizations, Excess Business | | | |
| |Holding of Supporting | | | |
| |Organizations, Treatment of | | | |
| |Amounts Paid to Supporting | | | |
| |Organizations by Private | | | |
| |Foundations, and Returns of | | | |
| |Supporting Organizations | | | |
| | | | | |
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| |
| Table 5 - TRHCA of 2006 (PL 109-432) |
| |
| |
| |
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| | FTB's Annual | Decision |
| | Report Page | |
| | No. | |
| | | |
| | | |
| | | |
----------------------------------------------------------------------
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| Act | Provisions | |Conform| Not |
|Sectio| | | |Conform|
| n | | | | |
| | | | | |
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---------------------------------------------------------------------
|Divisi|Extension and Expansion of | |
| on A |Certain Tax Relief Provisions | |
| |and Other Tax Provisions | |
| | | |
|------+------------------------------+-------------------------------|
|Title |EXTENSION AND MODIFICATION OF | |
| I |CERTAIN PROVISIONS | |
| | | |
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| 104 |Extension and Modification of | 538 | | X |
| |Research Credit | | | |
| | | | | |
|------+------------------------------+---------------+-------+-------|
| 122B |Disclosure of Return | 577 | | X |
| |Information Regarding | | | |
| |Terrorist Activity | | | |
| | | | | |
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|Title |ENERGY TAX PROVISIONS | |
| II | | |
| | | |
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|------+------------------------------+---------------+-------+-------|
| 204 |Deduction for Energy | 589 | | X |
| |Efficient Commercial | | | |
| |Buildings | | | |
| | | | | |
|------+------------------------------+---------------+-------+-------|
| 209 |Special Depreciation | 597 | | X |
| |Allowance for Cellulosic | | | |
| |Biomass Ethanol Plant | | | |
| |Property | | | |
| | | | | |
|------+------------------------------+---------------+-------+-------|
|Title | OTHER PROVISIONS | | | |
| IV | | | | |
| | | | | |
|------+------------------------------+---------------+-------+-------|
| 402 |Credit for Prior Year Minimum | 616 | | X |
| |Tax Liability Made Refundable | | | |
| |After Period of Years | | | |
| | | | | |
|------+------------------------------+---------------+-------+-------|
| 404 |Partial Expensing for Advance | 620 | | X |
| |Mine Safety Equipment | | | |
| | | | | |
|------+------------------------------+---------------+-------+-------|
| 406 |Whistleblower Reforms | 624 | | X |
| | | | | |
|------+------------------------------+---------------+-------+-------|
| 407 |Frivolous Tax Submissions | 626 | X | |
| | | | | |
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| 409 |Clarification of Taxation of | 629 | X | |
| |Certain Settlement Funds Made | | | |
| |Permanent - Effective in | | | |
| |Taxable Year 2011. | | | |
| | | | | |
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| 410 |Modification of Active | 630 | X | |
| |Business Definition Under | | | |
| |Section 355 Made Permanent - | | | |
| |Effective in Taxable Year | | | |
| |2011. | | | |
| | | | | |
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| 412 |Capital Gains Treatment for | 635 | X | |
| |Certain Self-Created Musical | | | |
| |Works Made Permanent | | | |
| | | | | |
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| 417 |Exclusion of Gain from Sale | 648 | X | |
| |of Principal Residence by | | | |
| |Certain Employees of the | | | |
| |Intelligence Community | | | |
| | | | | |
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| 418 |Sale of Property by Judicial | 650 | X | |
| |Officers | | | |
| | | | | |
---------------------------------------------------------------------
| 424 |Modification of Excise Tax on | 661 | | X |
| |Unrelated Business Taxable | | | |
| |Income of Charitable | | | |
| |Remainder Trusts | | | |
| | | | | |
---------------------------------------------------------------------
| 425 |Loans to Qualified Continuing | 662 | X | |
| |Care Facilities Made | | | |
| |Permanent - Effective in | | | |
| |Taxable Year 2011 | | | |
| | | | | |
|------+------------------------------+---------------+-------+-------|
| 426 |Technical Corrections | 664 | X | |
| | | | | |
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2007 Conformity Decisions
These tables contain only items for which a conformity decision
was necessary.
------------------------------------------------------------------- ------------------------------------------------------------------ -------------------------------------------------------------------
------------------------------------------------------------------- ------------------------------------------------------------------- --------------------------------------------------------------------
------------------------------------------------------------------- ------------------------------------------------------------------- --------------------------------------------------------------------
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| |
| |
| Table 4 - The Mortgage Forgiveness Debt Relief Act (MFDRA) (PL |
| 110-142) |
| |
| |
| |
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| | |FTB's 2007 | Decision |
| | | Annual | |
| | | Report | |
| | | Page No. | |
| | | | |
-------------------------------------------------------------------
|------+--------------------------+-----------+-----------+---------|
| Act |Provisions | | Conform | Not |
|Sectio| | | | Conform |
| n | | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
|1 - 2 |Exclusion of discharge of | 66 | SB 1055 | |
| |principal residence | |(2007/2008)| |
| |indebtedness | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 3 |Extension of deduction | 68 | | X |
| |for private mortgage | | | |
| |insurance | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 4 |Change in tests to | 70 | X | |
| |qualify as cooperative | | | |
| |housing corporation | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 5 |Exclusion from income for | 71 | X | |
| |benefits provided to | | | |
| |volunteer EMS and | | | |
| |firefighters | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 6 |Modify the prohibition | 74 | X | |
| |against full-time | | | |
| |students from qualifying | | | |
| |for LIHTC unit | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 7 |Allow surviving spouse to | 76 | X | |
| |exclude from gross income | | | |
| |up to $500,000 of the | | | |
| |gain from sale of | | | |
| |principal residence if | | | |
| |the sale occurs within 2 | | | |
| |years of the death of the | | | |
| |spouse | | | |
| | | | | |
-------------------------------------------------------------------
| 8 |Increase penalty for | 77 | X | |
| |failure to file | | | |
| |partnership returns | | (20% of | |
| | | | federal | |
| | | | penalty) | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 9 |Impose a penalty for | 79 | X | |
| |failure to file S | | | |
| |corporation returns | | (20% of | |
| | | | federal | |
| | | | penalty) | |
| | | | | |
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| |
| |
| Table 6 - The Tax Technical Corrections Act of 2007 (PL 110-172) |
| |
| |
| |
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| | |FTB's 2007 | Decision |
| | | Annual | |
| | | Report | |
| | | Page No. | |
| | | | |
-------------------------------------------------------------------
------------------------------------------------------------------
| | | | Conform | Not |
| | | | |Conform |
| | | | | |
|------+--------------------------+-----------+-----------+--------|
| |The Tax Technical | 85 | X | |
| |Correction Act of 2007 | | | |
| |(TTCA) | | | |
| | | | | |
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2008 Conformity Decisions
These tables contain only items for which a conformity decision
was necessary.
-------------------------------------------------------------------
| |
| |
| Table 2 - Heartland, Habitat, Harvest, and Horticulture Act of |
| 2008 (HHHHA)(PL 110-246) |
| |
| |
| |
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| | |FTB's 2008 | Decision |
| | | Annual | |
| | | Report | |
| | | Page No. | |
| | | | |
-------------------------------------------------------------------
|------+--------------------------+-----------+-----------+---------|
| Act |Provisions | | Conform | Not |
|Sectio| | | | Conform |
| n | | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
|15302 |Two-Year Extension of | 17 | X | |
| |Special Rule Encouraging | | | |
| |Contributions of Capital | | | |
| |Gain Real Property For | | | |
| |Conservation Purposes | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
|15303 |Deduction for Endangered | 21 | X | |
| |Species | | | |
| | | | | |
| |Recovery Expenditures | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
|15344 |Three Year Depreciation | 46 | PIT | CORP |
| |for Race Horses | | | |
| | | | | |
| |That are Two Years Old or | | | |
| |Younger | | | |
| | | | | |
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|15351 |Limitation of Excess Farm | 52 | | X |
| |Losses of Certain | | | |
| |Taxpayer | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
|15353 |Information Reporting for | 56 | X | |
| |Commodity Credit | | | |
| |Corporation Transactions | | | |
| | | | | |
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| |
| |
| Table 3 - Heroes Earnings Assistance and Relief Tax Act of 2008 |
| (HEARTA)(PL 110-245) |
| |
-------------------------------------------------------------------
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| | |FTB's 2008 | Decision |
| | | Annual | |
| | | Report | |
| | | Page No. | |
| | | | |
-------------------------------------------------------------------
|------+--------------------------+-----------+-----------+---------|
| Act |Provisions | | Conform | Not |
|Sectio| | | | Conform |
| n | | | | |
| | | | | |
-------------------------------------------------------------------
| 107 |Distribution from | 75 | X | |
| |Retirement Plans to | | | |
| |Individuals Called to | | | |
| |Active Duty | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 109 |Contributions of Military | 78 | X | |
| |Death Gratuities to Roth | | | |
| |IRAs and Education | | | |
| |Savings Accounts | | | |
| | | | | |
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| Table 3 - Heroes Earnings Assistance and Relief Tax Act of 2008 |
| (HEARTA)(PL 110-245) |
| |
| |
| |
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| 110 |Suspension of 5-Year | 82 | X | |
| |Period during Service | | | |
| |with the Peace Corps | | | |
| | | | | |
-------------------------------------------------------------------
| 112 |State Payments to Service | 86 | X | |
| |Members Treated as | | | |
| |Qualified Military | | | |
| |Benefits | | | |
| | | | | |
-------------------------------------------------------------------
| 113 |Permanent Exclusion of | 87 | X | |
| |Gain from Sale of a | | | |
| |Principal Residence by | | | |
| |Certain Employees of the | | | |
| |Intelligence Community | | | |
| | | | | |
-------------------------------------------------------------------
| 114 |Special Disposition Rules | 89 | X | |
| |for Unused Benefits in | | | |
| |Health Flexible Spending | | | |
| |Arrangements of | | | |
| |Individuals Called to | | | |
| |Active Duty | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 303 |Increase in Minimum | 108 | X | |
| |Penalty on Failure to | | | |
| | | | | |
| |File a Return of Tax | | | |
| | | | | |
-------------------------------------------------------------------
-------------------------------------------------------------------
| |
| |
| Table 4 - Housing and Economic Recovery Act of 2008 (HERA)(PL |
| 110-289) |
| |
| |
| |
-------------------------------------------------------------------
-------------------------------------------------------------------
| | |FTB's 2008 | Decision |
| | | Annual | |
| | | Report | |
| | | Page No. | |
| | | | |
-------------------------------------------------------------------
|------+--------------------------+-----------+-----------+---------|
| Act |Provisions | | Conform | Not |
|Sectio| | | | Conform |
| n | | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
|3001-3|Various Housing Tax | 111 | X | |
| 005 |Incentives Related to the | | | |
| |Low-Income Housing Tax | | | |
| |Credit | | | |
| | | | | |
-------------------------------------------------------------------
| 3091 |Returns relating to | 182 | X | |
| |Payments made in | | | |
| |Settlement of Payment | | | |
| |Card and Third-Party | | | |
| |Network Transactions | | | |
| | | | | |
|------+--------------------------+-----------+-----------+---------|
| 3092 |Gain from Sale of | 185 | X | |
| |Principal Residence | | | |
| |Allocated to Nonqualified | | | |
| |Use Not Excluded from | | | |
| |Income | | | |
| | | | | |
-------------------------------------------------------------------
-------------------------------------------------------------------
| |
| |
| Table 5 - Hubbard Act of 2008 (PL 110-317) |
| |
| |
| |
-------------------------------------------------------------------
-------------------------------------------------------------------
| | |FTB's 2008 |Decision |
| | | Annual | |
| | | Report | |
| | | Page No. | |
| | | | |
-------------------------------------------------------------------
-------------------------------------------------------------------
| Act |Provisions | | Conform | Not |
|Section | | | | Conform |
| | | | | |
|--------+------------------------+-----------+-----------+---------|
| 9 |Repeal of Dollar | 194 | X | |
| |Limitation on | | | |
| |Contributions to | | | |
| |Funeral Trusts | | | |
| | | | | |
-------------------------------------------------------------------
-------------------------------------------------------------------
| |
| |
| Table 6 - Emergency Economic Stabilization Act of 2008 (EESA)(PL |
| 110-343) |
| |
| |
| |
-------------------------------------------------------------------
-------------------------------------------------------------------
| | | FTB's | Decision |
| | | 2008 | |
| | | Annual | |
| | | Report | |
| | | Page No. | |
| | | | |
-------------------------------------------------------------------
------------------------------------------------------------------
| Act |Provisions | | Conform | Not |
|Section | | | | Conform |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division A, Title III - Tax Provisions |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 301 |Gain or Loss from Sale | 195 | | X |
| |or Exchange of Certain | | | |
| |Preferred Stock | | | |
| | | | | |
------------------------------------------------------------------
| 302 |Special Rules for Tax | 198 | X | |
| |Treatment of Executive | | | |
| |Compensation of | | | |
| |Employers Participating | | | |
| |in the Troubled Assets | | | |
| |Relief Program | | | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 303 |Extension of Exclusion | 208 | X | |
| |of Income from | | | |
| |Discharge of Qualified | | | |
| |Principal Residence | | | |
| |Indebtedness | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division B, Title I, Subtitle B - Carbon Mitigation and Coal |
|Provisions |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 116 |Certain Income and | 243 | X | |
| |Gains Relating to | | | |
| |Industrial Source | | | |
| |Carbon Dioxide Treated | | | |
| |as Qualifying Income | | | |
| |for Publicly Traded | | | |
| |Partnerships | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division B, Title II - Energy Production Incentives |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 201 |Inclusion of Cellulosic | 245 | | X |
| |Biofuel in Bonus | | | |
| |Depreciation for | | | |
| |Biomass Ethanol Plant | | | |
| |Property | | | |
| | | | | |
------------------------------------------------------------------
| 208 |Certain Income and | 266 | X | |
| |Gains Relating to | | | |
| |Alcohol Fuels and | | | |
| |Mixtures, Biodiesel | | | |
| |Fuels and Mixtures, and | | | |
| |Alternative Fuels and | | | |
| |Mixtures Treated as | | | |
| |Qualifying Income for | | | |
| |Publicly Traded | | | |
| |Partnerships | | | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 209 |Extension and | 268 | | X |
| |Modification of | | | |
| |Election to Expense | | | |
| |Certain Refineries | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division B, Title III - Energy Conservation and Efficiency |
|Provisions |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 303 |Energy Efficient | 281 | | X |
| |Commercial Buildings | | | |
| |Deduction | | | |
| | | | | |
------------------------------------------------------------------
| 306 |Accelerated Recovery | 289 | PIT | CORP |
| |Period for Depreciation | | | |
| |of Smart Meters and | | | |
| |Smart Grid Systems | | | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 308 |Special Depreciation | 293 | | X |
| |Allowance for Certain | | | |
| |Reuse and Recycling | | | |
| |Property | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division C, Title II - Extension of Individual Tax Provisions |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 204 |Additional Standard | 323 | | X |
| |Deduction for Real | | | |
| |Property Taxes for | | | |
| |Nonitemizers | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division C, Title III - Extension of Business Tax Provisions |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 301 |Extension and | 335 | | X |
| |Modification of | | | |
| | | | | |
| |Research Credit | | | |
| | | | | |
------------------------------------------------------------------
| 305 |Extension of 15-Year | 350 | | X |
| |Straight-Line Cost | | | |
| |Recovery for Qualified | | | |
| |Leasehold Improvements | | | |
| |and Qualified | | | |
| |Restaurant | | | |
| |Improvements; 15-Year | | | |
| |Straight Line | | | |
| | | | | |
| |Cost Recovery for | | | |
| |Certain Improvements | | | |
| | | | | |
| |to Retail Space | | | |
| | | | | |
------------------------------------------------------------------
| 306 |Modification of Tax | 354 | X | |
| |Treatment of Certain | | | |
| |Payments to Controlling | | | |
| |Exempt Organizations | | | |
| | | | | |
------------------------------------------------------------------
| 307 |Basis Adjustment to | 356 | X | |
| |Stock of S Corporations | | | |
| |Making Charitable | | | |
| |Contributions of | | | |
| |Property | | | |
| | | | | |
------------------------------------------------------------------
| 311 |Extension of Election | 363 | | X |
| |to Expense Advanced | | | |
| |Safety Mine Equipment | | | |
| | | | | |
------------------------------------------------------------------
| 317 |Seven-Year Cost | 376 | PIT | CORP |
| |Recovery Period for | | | |
| |Motorsports Racing | | | |
| |Track Facility | | | |
| | | | | |
------------------------------------------------------------------
| 323 |Enhanced Charitable | 386 | X | |
| |Deductions for | | | |
| |Contributions of Food | | | |
| |Inventory | | | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 324 |Extension of Enhanced | 388 | X | |
| |Charitable Deduction | | | |
| |for Contributions of | | | |
| |Book Inventory | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division C, Title IV - Extension of Tax Administration |
|Provisions |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 402 |Permanent Authority for | 392 | | X |
| |Disclosure of | | | |
| |Information Relating to | | | |
| |Terrorists Activities | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division C, Title V, Subtitle A - General Provisions |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 505 |Certain Farming | 401 | PIT | CORP |
| |Business Machinery and | | | |
| |Equipment Treated as | | | |
| |5-Year Property | | | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 506 |Modification of Penalty | 403 | X | |
| |on Understatement of | | | |
| |Taxpayer's Liability by | | | |
| |Tax Return Preparer | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division C, Title VII, Subtitle A - Heartland and Hurricane |
|Ike Disaster Relief |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 703 |Reporting Requirements | 409 | X | |
| |Relating to Disaster | | | |
| |Relief Contributions | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division C, Title VII, Subtitle B - National Disaster Relief |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 706 |Losses Attributable to | 411 | | X |
| |Federally Declared | | | |
| |Disasters | | | |
| | | | | |
------------------------------------------------------------------
| 707 |Expensing of Qualified | 413 | | X |
| |Disaster Expenses | | | |
| | | | | |
------------------------------------------------------------------
| 708 |Net Operating Losses | 417 | | X |
| |Attributable to | | | |
| |Federally Declared | | | |
| |Disasters | | | |
| | | | | |
------------------------------------------------------------------
| 710 |Special Depreciation | 425 | | X |
| |Allowance for Qualified | | | |
| |Disaster Property | | | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 711 |Increased Expensing for | 429 | | X |
| |Qualified Disaster | | | |
| |Assistance Property | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
|EESA Division C, Title VIII - Spending Reductions and Appropriate |
|Revenue Raisers for New Tax Policy Relief |
| |
-------------------------------------------------------------------
------------------------------------------------------------------
| 801 |Nonqualified Deferred | 431 | | X |
| |Compensation from | | | |
| |Certain Tax Indifferent | | | |
| |Parties | | | |
| | | | | |
------------------------------------------------------------------
-------------------------------------------------------------------
| |
| |
| Table 7 - Worker, Retiree, and Employer Recovery Act of 2008 |
| (WRERA)(PL 110-458) |
| |
| |
| |
-------------------------------------------------------------------
|--------+------------------------+----------+-----------+---------|
| | | FTB's | Decision | |
| | | 2008 | | |
| | | Annual | | |
| | | Report | | |
| | | Page No. | | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| Act |Provisions | | Conform | Not |
|Section | | | |Conform |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 124 |Treatment of Certain | 457 | X | |
| |Reimbursements from | | | |
| |Governmental Plans for | | | |
| |Medical Care | | | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 127 |Modification of Penalty | 462 | X | |
| |for Failure to File | | | |
| |Partnership Returns | | (20% of | |
| | | | the | |
| | | | federal | |
| | | | penalty) | |
| | | | | |
|--------+------------------------+----------+-----------+---------|
| 128 |Modification of Penalty | 464 | X | |
| |for Failure to File S | | | |
| |Corporation Returns | | (20% of | |
| | | | the | |
| | | | federal | |
| | | | penalty) | |
| | | | | |
------------------------------------------------------------------
FISCAL EFFECT:
According to FTB, AB 1580 has the following impact on state
revenues.
------------------------------------------------------------------- --------------------------------------------------------------------
COMMENTS:
A. Purpose of the Bill
According to the author's office, "the purpose of the bill
is to conform to numerous changes in federal law to simplify the
preparation of California income tax returns."
B. Don't Say You Love Me, Show Me You Love Me
California last conformed to changes in federal law in 2005
(AB 115, Klehs). Since then, the Legislature has not conformed
state tax law to federal law for several reasons. One is
because federal changes cost too much, and unlike the Federal
government, California cannot neither print nor borrow money to
subsidize its budget, with estimates showing that the U.S.
Treasury will have to borrow for approximately one-third of
total federal outlays in the next fiscal year. Therefore, the
Legislature must ostensibly make tradeoffs when considering
conformity to federal tax laws which do not trigger significant
fiscal concerns in Congress. In other instances, certain
federal changes have undesirable policy outcomes which the state
tax code should not encourage, such as Health Savings Accounts.
Last year, the conformity bill resulted in a net tax increase,
triggering the 2/3 vote requirement, and the measure did not
advance from the Senate Floor because it failed to secure 27
Senate votes (AB 1561, Calderon). The Legislature continues to
struggle with tax conformity, despite repeated and loud calls
from tax practitioners, who find preparing returns and
dispensing advice more and more complex as federal and state tax
laws drift further apart over time. AB 1580 is the most recent
attempt to ease the hardship on taxpayers and practitioners by
bringing the two tax codes closer together.
C. Conspicuously Absent
Congress recently provided that on and after May 25, 2007,
taxpayers filing an erroneous claim for refund may face a
penalty equal to 20% of the disallowed amount of the claim,
unless the taxpayer shows a reasonable basis for the refund.
The penalty does not apply to any part of the disallowed amount
of the claim that relates to the earned income credit (EITC) or
on which the accuracy-related or fraud penalties are charged.
Last year, when the Committee approved AB 1561, it included
conformity to this penalty. Soon after, the Author deleted the
item. This year, the Author elected not to include conformity
to the penalty in AB 1580; however, a consistent theme in the
California tax world is that taxpayers here take aggressive tax
positions because measures that enact penalties always result in
significantly more revenue than expected, such as tax amnesty,
the voluntary compliance initiative for abusive tax shelters,
and the corporate understatement penalty, which yielded $2.7
billion this year despite an initial estimate of just over $1
billion. With taxpayers petitioning FTB for hundreds of
millions of dollars in refund claims each year, failing to
conform to this item may encourage California taxpayers to
continue to make tenuous refund claims, especially since the IRS
and many other states apply the penalty.
Opponents of the penalty assert that terms in the penalty
are undefined, that the penalty disproportionately punishes
taxpayers compared to the amount of noncompliance, and that no
reasonable cause exception exists, among other arguments.
Given the effectiveness of previously enacted penalties,
and the exemption for individuals with EITC claims or subject to
other penalties, what is the compelling reason for California
not to conform with this penalty? Taxpayers are clearly
engaging in aggressive tax planning, if not evasion, given the
revenues collected under previous penalty schema. The Committee
may wish to consider including conformity to this penalty as the
measure awaits action on the Committee's suspense file.
D. Mortgage Debt
Last year, the Legislature approved SB 1055 (Machado),
which provided modified conformity to the Mortgage Forgiveness
Debt Relief Act (MFDRA) for discharge of mortgage indebtedness
in the 2007 and 2008 tax years. This year, the Committee held
SB 97 (Calderon) which extended modified conformity to discharge
of mortgage indebtedness in the 2009 and 2010 tax years, and the
Assembly Revenue and Taxation Committee held AB 111 (Niello),
which provided full conformity to MFDRA. Because of conformity
to federal mortgage debt is reasonably inexpensive, and affects
individuals who likely must leave their homes with neither cash
nor equity, the Committee may wish to consider including
mortgage debt forgiveness conformity as the measure awaits
action on the Committee's suspense file.
E. Insurance Policies
The Committee will also hear AB 104 (Calderon) at its July
8, 2009 hearing. That measure conforms California Law to a
previously enacted federal law which waives the 10% penalty to
early withdrawals on certain distributions of pension plans.
Support and Opposition
Support:None received
Oppose:None received
---------------------------------
Consultant: Colin Grinnell