Bill Text: CA AB1276 | 2011-2012 | Regular Session | Amended


Bill Title: Income taxes: deductions: punitive damages.

Status: (Introduced - Dead) 2012-01-30 - Read third time. Refused passage. (Ayes 50. Noes 26. Page 3634.). [AB1276 Detail]

Download: California-2011-AB1276-Amended.html
BILL NUMBER: AB 1276	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 31, 2011

INTRODUCED BY   Assembly Member Feuer

                        FEBRUARY 18, 2011

   An act to  amend Section 24343.2 of   add
Sections 17226 and 24343.4 to  the Revenue and Taxation Code,
relating to taxation  , to take effect immediately, tax levy
 .



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1276, as amended, Feuer.  Net income: deduction:
nondiscrimination.  Income taxes: deductions: punitive
damages.  
   The Personal Income Tax Law and the Corporation Tax Law allow
various deductions in computing the income that is subject to the
taxes imposed by those laws. Both laws allow a deduction for ordinary
and necessary business expenses, including a deduction for amounts
paid or incurred for specified types of punitive damages.  
   This bill, for taxable years beginning on or after January 1,
2012, would, under both laws, disallow the deduction for amounts paid
or incurred for punitive damages, as provided.  
   This bill would constitute a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.  
   This bill would take effect immediately as a tax levy. 

   The Corporation Tax Law prohibits deductions for a club, as
defined, that restricts membership or the use of its services or
facilities on the basis of ancestry or other characteristics, as
specified.  
   The bill would make a technical, nonsubstantive change to this
provision. 
   Vote:  majority   2/3  . Appropriation:
no. Fiscal committee:  no   yes  .
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 17226 is added to the 
 Revenue and Taxation Code   , to read:  
   17226.  For taxable years beginning on or after January 1, 2012, a
deduction shall not be allowed for any amount paid or incurred for
punitive damages in connection with any judgment in, or settlement
of, any action. 
   SEC. 2.    Section 24343.4 is added to the  
Revenue and Taxation Code   , to read:  
   24343.4.  For taxable years beginning on or after January 1, 2012,
a deduction shall not be allowed for any amount paid or incurred for
punitive damages in connection with any judgment in, or settlement
of, any action. 
   SEC. 3.    This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  
  SECTION 1.    Section 24343.2 of the Revenue and
Taxation Code is amended to read:
   24343.2.  Whereas, the people of the State of California desire to
promote and achieve tax equity and fairness among all the state's
residents and further desire to conform to the public policy of
nondiscrimination, the Legislature hereby enacts the following for
these reasons and for no other purpose:
   (a) No deduction shall be allowed under Section 24343 for expenses
incurred by a taxpayer with respect to expenditures made at, or
payments made to, a club which restricts membership or the use of its
services or facilities on the basis of ancestry or any
characteristic listed or defined in Section 11135 of the Government
Code.
   (b) A club described in subdivision (a) holding an alcoholic
beverage license pursuant to Division 9 (commencing with Section
23000) of the Business and Professions Code, except a club holding an
alcoholic beverage license pursuant to Section 23425 thereof, shall
provide on each receipt furnished to a taxpayer a printed statement
as follows:
   "The expenditures covered by this receipt are nondeductible for
state income tax purposes or franchise tax purposes."
   (c) For purposes of this section:
   (1) "Expenses" means those expenses otherwise deductible under
Section 24343, except for subdivision (a), and includes, but is not
limited to, club membership dues and assessments, food and beverage
expenses, expenses for services furnished by the club, and
reimbursements or salary adjustments to officers or employees for any
of the preceding expenses.
   (2) "Club" means a club as defined in Division 9 (commencing with
Section 23000) of the Business and Professions Code, except a club as
defined in Section 23425 thereof. 
       
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