BILL NUMBER: AB 2065	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Charles Calderon

                        FEBRUARY 18, 2010

   An act to amend Section 64 of the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2065, as introduced, Charles Calderon. Property taxation.
   Existing law requires the Franchise Tax Board to include specified
questions on the income tax returns of specified entities regarding
changes in ownership of the real property owned by the entity and
requires the Franchise Tax Board to notify the State Board of
Equalization if an entity responds affirmatively to these questions.
   This bill would make technical, nonsubstantive changes to that
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 64 of the Revenue and Taxation Code is amended
to read:
   64.  (a) Except as provided in subdivision (i) of Section 61 and
subdivisions (c) and (d) of this section, the purchase or transfer of
ownership interests in legal entities, such as corporate stock or
partnership or limited liability company interests, shall not be
deemed to constitute a transfer of the real property of the legal
entity. This subdivision is applicable to the purchase or transfer of
ownership interests in a partnership without regard to whether it is
a continuing or a dissolved partnership.
   (b) Any corporate reorganization, where all of the corporations
involved are members of an affiliated group, and that qualifies as a
reorganization under Section 368 of the United States Internal
Revenue Code and that is accepted as a nontaxable event by similar
California statutes, or any transfer of real property among members
of an affiliated group, or any reorganization of farm credit
institutions pursuant to the federal Farm Credit Act of 1971 (Public
Law 92-181), as amended, shall not be a change of ownership. The
taxpayer shall furnish proof, under penalty of perjury, to the
assessor that the transfer meets the requirements of this
subdivision.
   For purposes of this subdivision, "affiliated group" means one or
more chains of corporations connected through stock ownership with a
common parent corporation if both of the following conditions are
met:
   (1) One hundred percent of the voting stock, exclusive of any
share owned by directors, of each of the corporations, except the
parent corporation, is owned by one or more of the other
corporations.
   (2) The common parent corporation owns, directly, 100 percent of
the voting stock, exclusive of any shares owned by directors, of at
least one of the other corporations.
   (c) (1) When a corporation, partnership, limited liability
company, other legal entity, or any other person obtains control
through direct or indirect ownership or control of more than 50
percent of the voting stock of any corporation, or obtains a majority
ownership interest in any partnership, limited liability company, or
other legal entity through the purchase or transfer of corporate
stock, partnership, or limited liability company interest, or
ownership interests in other legal entities, including any purchase
or transfer of 50 percent or less of the ownership interest through
which control or a majority ownership interest is obtained, the
purchase or transfer of that stock or other interest shall be a
change of ownership of the real property owned by the corporation,
partnership, limited liability company, or other legal entity in
which the controlling interest is obtained.
   (2) On or after January 1, 1996, when an owner of a majority
ownership interest in any partnership obtains all of the remaining
ownership interests in that partnership or otherwise becomes the sole
partner, the purchase or transfer of the minority interests, subject
to the appropriate application of the step-transaction doctrine,
shall not be a change in ownership of the real property owned by the
partnership.
   (d) If property is transferred on or after March 1, 1975, to a
legal entity in a transaction excluded from change in ownership by
paragraph (2) of subdivision (a) of Section 62, then the persons
holding ownership interests in that legal entity immediately after
the transfer shall be considered the "original coowners." Whenever
shares or other ownership interests representing cumulatively more
than 50 percent of the total interests in the entity are transferred
by any of the original coowners in one or more transactions, a change
in ownership of that real property owned by the legal entity shall
have occurred, and the property that was previously excluded from
change in ownership under the provisions of paragraph (2) of
subdivision (a) of Section 62 shall be reappraised.
   The date of reappraisal shall be the date of the transfer of the
ownership interest representing individually or cumulatively more
than 50 percent of the interests in the entity.
   A transfer of shares or other ownership interests that results in
a change in control of a corporation, partnership, limited liability
company, or any other legal entity is subject to reappraisal as
provided in subdivision (c) rather than this subdivision.
   (e) To assist in the  determination  
determining  of whether a change of ownership has occurred under
subdivisions (c) and (d), the Franchise Tax Board shall include a
question in substantially the following form on returns for
partnerships, banks, and corporations (except tax-exempt
organizations):

   If the corporation (or partnership or limited liability company)
owns real property in California, has cumulatively more than 50
percent of the voting stock (or more than 50 percent of total
interest in both partnership or limited liability company capital and
partnership or limited liability company profits) (1) been
transferred by the corporation (or partnership or limited liability
company) since March 1, 1975, or (2) been acquired by another legal
entity or person during the year? (See instructions.)

   If the entity answers "yes" to (1) or (2) in the above question,
 then  the Franchise Tax Board shall furnish the
names and addresses of that entity and of the stock or partnership or
limited liability company ownership interest transferees to the
State Board of Equalization.