Bill Text: CA AB1778 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Income taxes: annual tax: limited liability company: exemption.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Introduced - Dead) 2014-06-25 - In committee: Set, second hearing. Hearing canceled at the request of author. [AB1778 Detail]

Download: California-2013-AB1778-Amended.html

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BILL NUMBER: AB 1778	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 1, 2014

INTRODUCED BY   Assembly Member Allen

                        FEBRUARY 18, 2014

   An act to amend Section  241   17941  of
the Revenue and Taxation Code, relating to  taxation
  taxation, to take effect immediately, tax levy  .


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1778, as amended, Allen.  Property taxation: exempt
property.   Corporation taxes: minimum annual tax:
limited liability company: exemption. 
   Existing law generally imposes an annual minimum franchise tax of
$800, except as provided, on every limited liability company doing
business in this state or registered in this state, as specified.
Existing law defines the term "limited liability company," for
purposes of the payment of the annual minimum franchise tax, to
exclude a limited liability company that is exempt from the payment
of the tax and certain fees under other existing law.  
   This bill would also exclude from that definition a limited
liability company that is formed for the exclusive purpose of
acquiring and holding title to intangible personal property
constituting equity or debt interests, or both, in a single other
corporation, limited liability company, or partnership, collecting
income therefrom, and turning over the entire amount thereof, less
expenses, to its members, thereby exempting such an entity from that
minimum tax.  
   This bill would take effect immediately as a tax levy. 

   Existing law exempts from property taxation the first $50,000
worth of hand tools that are owned and supplied by an employee as a
condition of employment.  
   This bill would make technical, nonsubstantive changes to this
provision. 
   Vote: majority. 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 17941 of the   Revenue
and Taxation Code   is amended to read: 
   17941.  (a) For each taxable year beginning on or after January 1,
1997, a limited liability company doing business in this 
state (as   state, as  defined in Section 
23101)   23101,  shall pay annually to this state a
tax for the privilege of doing business in this state in an amount
equal to the applicable amount specified in subdivision (d) of
Section 23153 for the taxable year.
   (b) (1) In addition to any limited liability company that is doing
business in this state and is therefore subject to the tax imposed
by subdivision (a), for each taxable year beginning on or after
January 1, 1997, a limited liability company shall pay annually the
tax prescribed in subdivision (a) if articles of organization have
been accepted, or a certificate of registration has been issued, by
the office of the Secretary of State. The tax shall be paid for each
taxable year, or part thereof, until a certificate of cancellation of
registration or of articles of organization is filed on behalf of
the limited liability company with the office of the Secretary of
State.
   (2) If a taxpayer files a return with the Franchise Tax Board that
is designated as its final return, the Franchise Tax Board shall
notify the taxpayer that the annual tax shall continue to be due
annually until a certificate of dissolution is filed with the
Secretary of State pursuant to Section 17707.08 of the Corporations
Code or a certificate of cancellation is filed with the Secretary of
State pursuant to Section 17708.06 of the Corporations Code.
   (c) The tax assessed under this section shall be due and payable
on or before the 15th day of the fourth month of the taxable year.
   (d) For purposes of this section, "limited liability company"
means an organization, other than  a   the
following: 
    (1)     A  limited liability company
that is exempt from the tax and fees imposed under this chapter
pursuant to Section 23701h or Section 23701x, that is formed by one
or more persons under the law of this state, any other country, or
any other state, as a "limited liability company" and that is not
taxable as a corporation for California tax purposes. 
   (2) A limited liability company that is formed for the exclusive
purpose of acquiring and holding title to intangible personal
property constituting equity or debt interests, or both, in a single
other corporation, limited liability company, or partnership,
collecting income therefrom, and turning over the entire amount
thereof, less expenses, to its members. 
   (e) Notwithstanding anything in this section to the contrary, if
the office of the Secretary of State files a certificate of
cancellation pursuant to Section 17707.02 of the Corporations Code
for any limited liability company, then paragraph (1) of subdivision
(f) of Section 23153 shall apply to that limited liability company as
if the limited liability company were properly treated as a
corporation for that limited purpose only, and paragraph (2) of
subdivision (f) of Section 23153 shall not apply. Nothing in this
subdivision entitles a limited liability company to receive a
reimbursement for any annual taxes or fees already paid.
   (f) (1) Notwithstanding any provision of this section to the
contrary, a limited liability company that is a small business solely
owned by a deployed member of the United States Armed Forces shall
not be subject to the tax imposed under this section for any taxable
year the owner is deployed and the limited liability company operates
at a loss or ceases operation.
   (2) The Franchise Tax Board may promulgate regulations as
necessary or appropriate to carry out the purposes of this
subdivision, including a definition for "ceases operation."
   (3) For the purposes of this subdivision, all of the following
definitions apply:
   (A) "Deployed" means being called to active duty or active service
during a period when a Presidential Executive order specifies that
the United States is engaged in combat or homeland defense. "Deployed"
does not include either of the following:
   (i) Temporary duty for the sole purpose of training or processing.

   (ii) A permanent change of station.
   (B) "Operates at a loss" means a limited liability company's
expenses exceed its receipts.
   (C) "Small business" means a limited liability company with total
income from all sources derived from, or attributable, to the state
of two hundred fifty thousand dollars ($250,000) or less.
   (4) This subdivision shall become inoperative for taxable years
beginning on or after January 1, 2018.
   SEC. 2.    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 241 of the Revenue and
Taxation Code is amended to read:
   241.  (a) The first fifty thousand dollars ($50,000) of personal
property that consists of hand tools owned and supplied by an
employee that are required as a condition of that employee's
employment are exempt from taxation.
   (b) For purposes of this section:
   (1) "Hand tools" means hand-held implements and equipment,
including hand-held power tools, of which any one may be transported
to and from the workplace and which are necessary for the ordinary
and regular performance of the employee's work, and also means the
appropriate storage containers used to store those implements and
that equipment.
   (2) "Hand tools owned and supplied by an employee" means only
those hand tools that are either owned by the employee prior to the
employment or are acquired and paid for by the employee during the
employment, that the employee will continue to own after termination
of the employment.
   (3) "Employee" means an individual who is employed by an employer
that directly or indirectly supervises that person and exercises
control over the wages and working conditions of individual workers.
"Employee" does not include a self-employed individual or an
independent contractor.