Amended in Senate June 17, 2014

Amended in Assembly January 6, 2014

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1172

Introduced by Assembly Member Bocanegra

February 22, 2013

begin delete An act to add and repeal Section 169.5 of the Revenue and Taxation Code, relating to taxation. end delete begin insert An act to repeal and add Section 17755 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 1172, as amended, Bocanegra. begin delete Property tax: portability study. end delete begin insert Income taxes: charitable remainder trusts. end insert

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The Personal Income Tax Law does not conform to specified provisions of federal law relating to the taxation of specified trusts. Existing law exempts from tax for the taxable year any charitable remainder annuity trust or charitable remainder unitrust unless that trust has unrelated business taxable income for the taxable year, in which case that trust shall be subject to tax, as provided.

end insert begin insert

This bill, for taxable years beginning on or after January 1, 2014, would conform, as modified, to the federal provisions for a charitable remainder annuity trust and a charitable remainder unitrust by providing that a trust shall remain tax-exempt, even if that trust has unrelated business taxable income, in which case that income shall be taxed as provided.

end insert begin insert

This bill would take effect immediately as a tax levy.

end insert begin delete

The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, “full cash value” is defined as the assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value” or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred. The California Constitution authorizes the Legislature to provide that a severely disabled person and a person over 55 years of age may transfer the base year value, as defined, of property that is eligible for the homeowners’ property tax exemption to a replacement dwelling that is of equal or lesser value located within the same county as the property from which the base year value is transferred, and if a county ordinance so providing has been adopted, to a replacement dwelling that is located in a different county.

end delete begin delete

This bill would require the California Research Bureau to provide the Legislature, on or before December 1, 2015, with a report regarding the revenue impact of Florida’s “Save Our Homes” portability law, which allows a homeowner to transfer the difference between market value and assessed value from one home to another, and the potential state and local revenue impacts of the enactment of a similar statute in California.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 17755 of the end insert begin insert Revenue and Taxation Code end insert
begin insert is repealed. end insert

begin delete

17755.  

Section 664(c) of the Internal Revenue Code, relating
to the taxation of trusts, shall not apply and, in lieu thereof, a
charitable remainder annuity trust and a charitable remainder
unitrust shall, for any taxable year, not be subject to any tax
imposed under this part, unless that trust, for the taxable year, has
unrelated business taxable income, within the meaning of Section
23732, determined as if Chapter 4 (commencing with Section
23701) of Part 11, applied to that trust.

end delete

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 17755 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

begin insert 17755. end insert   

For taxable years beginning on or after January 1,
2014, Section 664(c)(2) of the Internal Revenue Code, relating to
excise tax, shall not apply and, in lieu thereof, the unrelated
business taxable income, as defined in Section 23732, of every
charitable remainder annuity trust or charitable remainder unitrust
shall be subject to tax under Section 17651.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

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

end insert

begin delete

SECTION 1.  

Section 169.5 is added to the Revenue and
Taxation Code, to read:

169.5.  

(a) On or before December 1, 2015, the California
Research Bureau shall provide the Legislature with a report
regarding Florida’s “Save Our Homes” portability statute (Fla.
Stat. Sec. 193.155(8)), evaluating the impact of the statute on
Florida’s state and local revenue and the potential revenue impacts
upon California if a similar statute were enacted within the state.

(b) (1) A report to the Legislature pursuant to this section shall
be submitted in compliance with Section 9795 of the Government
Code.

(2) Pursuant to Section 10231.5 of the Government Code, this
section is repealed on December 1, 2019.

end delete