Bill Text: CA AB692 | 2009-2010 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Income and corporation taxes: federal tax conformity.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Vetoed) 2010-01-14 - Consideration of Governor's veto stricken from file. [AB692 Detail]
Download: California-2009-AB692-Amended.html
Bill Title: Income and corporation taxes: federal tax conformity.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Vetoed) 2010-01-14 - Consideration of Governor's veto stricken from file. [AB692 Detail]
Download: California-2009-AB692-Amended.html
BILL NUMBER: AB 692 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 4, 2009
AMENDED IN ASSEMBLY APRIL 2, 2009
INTRODUCED BY Assembly Member Charles Calderon
FEBRUARY 26, 2009
An act to amend Section 19503 Sections
17024.5 and 23051.5 of the Revenue and Taxation Code, relating
to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 692, as amended, Charles Calderon. Taxation: corporate
reorganizations: built-in losses.
The Corporation Tax Law, in specified conformity to federal income
tax laws, imposes certain limitations on the use of built-in losses
in conjunction with corporate reorganizations.
This bill would clarify that a specified federal administrative
notice relating to those limitations does not apply for purposes of
California law. This bill would also clarify the Franchise
Tax Board's authority to promulgate regulations relating to
applicability of specified federal income tax
interpretations.
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. (a) The
Legislature finds and declares the following:
(1)
(a) The Personal Income Tax Law (Part 10 (commencing
with Section 17001) of Division 2 of the Revenue and Taxation Code)
and the Corporation Tax Law (Part 11 (commencing with Section 23001)
of Division 2 of the Revenue and Taxation Code) provide for specified
conformity to various referenced provisions of the federal Internal
Revenue Code, as enacted as of a specified date.
(2)
(b) Those laws provide that for taxable years beginning
on or after January 1, 2005, the conformity date specified in
California law for those referenced Internal Revenue Code sections is
January 1, 2005, except as otherwise specifically provided.
(3)
(c) Included among the federal provisions conformed to
as enacted as of January 1, 2005, are the provisions of Section 382
of the Internal Revenue Code, relating to limitations on net
operating loss carryforwards and certain built-in losses following
ownership change.
(4)
(d) As enacted as of January 1, 2005, Section 382 of
the Internal Revenue Code applied to financial institutions, and
Section 382 included no specific authority for regulatory actions by
the Internal Revenue Service or the Department of the Treasury to
exempt banks or other financial institutions from its provisions.
(5) On October 20, 2008,
(e) On September 30, the Internal
Revenue Service issued Notice 2008-83, 2008-42 I.R.B. 905, stating
that "[f]or purposes of section 382(h), any deduction properly
allowed after an ownership change (as defined in section 382(g)) to a
bank with respect to losses on loans or bad debts (including any
deduction for a reasonable addition to a reserve for bad debts) shall
not be treated as a built-in loss or a deduction that is
attributable to periods before the change date."
(6)
(f) Notice 2008-83, which precludes the application of
provisions of Section 382 of the Internal Revenue Code to financial
institutions, constitutes a substantive change to the application of
Section 382 of the Internal Revenue Code, as enacted as of January 1,
2005.
(7)
(g) This state conformed to Section 382 of the Internal
Revenue Code, as enacted as of January 1, 2005, but the Legislature'
s action in conforming to Section 382 of the Internal Revenue Code
did not contemplate the substantive change in application of these
provisions set forth in Notice 2008-83.
(8) (A)
(h) (1) Section 1261
of the American Recovery and Reinvestment Act of 2009 (Public Law
111-5), which was signed by President Barack Obama on February 17,
2009, made the following congressional findings:
(i)
(A) The delegation of authority to the Secretary of the
Treasury under Section 382(m) of the Internal Revenue Code of 1986
does not authorize the secretary to provide exemptions or special
rules that are restricted to particular industries or classes of
taxpayers.
(ii)
(B) Internal Revenue Service Notice 2008-83 is
inconsistent with the congressional intent in enacting such Section
382(m).
(iii)
(C) The legal authority to prescribe Internal Revenue
Service Notice 2008-83 is doubtful.
(iv)
(D) However, as taxpayers should generally be able to
rely on guidance issued by the Secretary of the Treasury, legislation
is necessary to clarify the force and effect of Internal Revenue
Service Notice 2008-83 and restore the proper application under the
Internal Revenue Code of 1986 of the limitation on built-in losses
following an ownership change of a bank.
(B)
(2) Based on these congressional findings, Section 1261
limits the force and effect of Internal Revenue Code Notice 2008-83
to the period commencing with the date the notice was issued and
ending on January 16, 2009, as provided.
(C)
(3) The congressional findings provide additional
confirmation that California did not, and should not, conform to the
substantive changes to Section 382 of the Internal Revenue Code that
were attempted to be made by Internal Revenue Service Notice 2008-83.
(b) Inasmuch as the Legislature has determined that the changes
set forth in Notice 2008-83 are inconsistent with, and in conflict
with, the intent of the Legislature in conforming with Section 382 of
the Internal Revenue Code, the Legislature makes the following
finding and directs the Franchise Tax Board to apply it for purposes
of the Personal Income Tax Law and the Corporation Tax Law:
(1) Notice 2008-83, relating to application of Section 382(h) of
the Internal Revenue Code to banks, and any other administrative
guidance issued by the Internal Revenue Service after October 20,
2008, and any federal Treasury regulations promulgated after October
20, 2008, which have the same or similar effect regarding the
application of Section 382 of the Internal Revenue Code to banks,
shall not apply for purposes of the Personal Income Tax Law and the
Corporation Tax Law.
(2) Paragraph (1) shall apply to the same taxable periods to which
any federal guidance described in that subdivision is applicable.
SEC. 2. Section 19503 of the Revenue and
Taxation Code is amended to read:
19503. (a) The Franchise Tax Board shall prescribe all rules and
regulations necessary for the enforcement of Part 10 (commencing with
Section 17001), Part 10.7 (commencing with Section 21001), Part 11
(commencing with Section 23001), and this part and may prescribe the
extent to which any ruling (including any judicial decision or any
administrative determination other than by regulation) shall be
applied without retroactive effect.
(b) (1) Except as otherwise provided in this subdivision, no
regulation relating to Part 10 (commencing with Section 17001), Part
10.7 (commencing with Section 21001), Part 11 (commencing with
Section 23001), or this part shall apply to any taxable year ending
before the date on which any notice substantially describing the
expected contents of any regulation is issued to the public.
(2) Paragraph (1) shall not apply to either of the following:
(A) Regulations issued within 24 months of the date of the
enactment of the statutory provision to which the regulation relates.
(B) Regulations issued within 24 months of the date that temporary
or final federal regulations with respect to statutory provisions to
which California conforms are filed with the Federal Register.
(3) The Franchise Tax Board may provide that any regulation may
take effect or apply retroactively to prevent abuse.
(4) The Franchise Tax Board may provide that any regulation may
apply retroactively to correct a procedural defect in the issuance of
any prior regulation.
(5) The limitation of paragraph (1) shall not apply to any
regulation relating to the Franchise Tax Board's policies, practices,
or procedures.
(6) The limitation of paragraph (1) may be superseded by a
legislative grant of authority to the Franchise Tax Board to
prescribe the effective date with respect to any regulation.
(7) The Franchise Tax Board may provide for any taxpayer to elect
to apply any regulation before the dates specified in paragraph (1).
(8) The Franchise Tax Board may provide that any federal income
tax regulation, rule, notice, or other federal interpretation of
federal income tax laws shall not apply in both of the following
circumstances:
(A) The legal authority of the federal interpretation is doubtful.
(B) Automatic conformity to the federal interpretation may
infringe on the Legislature's authority to make laws involving
significant policy issues.
(c) The amendments made by the act adding this subdivision are
operative with respect to regulations which relate to California
statutory provisions enacted on or after January 1, 1998.
SEC. 2. Section 17024.5 of the Revenue
and Taxation Code is amended to read:
17024.5. (a) (1) Unless otherwise specifically provided, the
terms "Internal Revenue Code," "Internal Revenue Code of 1954," or
"Internal Revenue Code of 1986," for purposes of this part, mean
Title 26 of the United States Code, including all amendments thereto
as enacted on the specified date for the applicable taxable year as
follows:
Specified Date
of
Internal
Revenue
Taxable Year Code Sections
(A) For taxable years
beginning on or after
January 1, 1983, and on or
before December
31, 1983....................... January 15, 1983
(B) For taxable years
beginning on or after
January 1, 1984, and on or
before December
31, 1984....................... January 1, 1984
(C) For taxable years
beginning on or after
January 1, 1985, and on or
before December
31, 1985....................... January 1, 1985
(D) For taxable years
beginning on or after
January 1, 1986, and on or
before December
31, 1986....................... January 1, 1986
(E) For taxable years
beginning on or after
January 1, 1987, and on or
before December
31, 1988....................... January 1, 1987
(F) For taxable years
beginning on or after
January 1, 1989, and on or
before December
31, 1989....................... January 1, 1989
(G) For taxable years
beginning on or after
January 1, 1990, and on or
before December
31, 1990....................... January 1, 1990
(H) For taxable years
beginning on or after
January 1, 1991, and on or
before December
31, 1991....................... January 1, 1991
(I) For taxable years
beginning on or after
January 1, 1992, and on or
before December
31, 1992....................... January 1, 1992
(J) For taxable years
beginning on or after
January 1, 1993, and on or
before December
31, 1996....................... January 1, 1993
(K) For taxable years
beginning on or after
January 1, 1997, and on or
before December
31, 1997....................... January 1, 1997
(L) For taxable years
beginning on or after
January 1, 1998, and on or
before December
31, 2001....................... January 1, 1998
(M) For taxable years
beginning on or after
January 1, 2002, and on or
before December
31, 2004....................... January 1, 2001
(N) For taxable years
beginning on or after
January 1, 2005................ January 1, 2005
(2) (A) Unless otherwise specifically provided, for federal laws
enacted on or after January 1, 1987, and on or before the specified
date for the taxable year, uncodified provisions that relate to
provisions of the Internal Revenue Code that are incorporated for
purposes of this part shall be applicable to the same taxable years
as the incorporated provisions.
(B) In the case where Section 901 of the Economic Growth and Tax
Relief Act of 2001 (Public Law 107-16) applies to any provision of
the Internal Revenue Code that is incorporated for purposes of this
part, Section 901 of the Economic Growth and Tax Relief Act of 2001
shall apply for purposes of this part in the same manner and to the
same taxable years as it applies for federal income tax purposes.
(3) Subtitle G (Tax Technical Corrections) and Part I of Subtitle
H (Repeal of Expired or Obsolete Provisions) of the Revenue
Reconciliation Act of 1990 (Public Law 101-508) modified numerous
provisions of the Internal Revenue Code and provisions of prior
federal acts, some of which are incorporated by reference into this
part. Unless otherwise provided, the provisions described in the
preceding sentence, to the extent that they modify provisions that
are incorporated into this part, are declaratory of existing law and
shall be applied in the same manner and for the same periods as
specified in the Revenue Reconciliation Act of 1990.
(b) Unless otherwise specifically provided, when applying any
provision of the Internal Revenue Code for purposes of this part, a
reference to any of the following is not applicable for purposes of
this part:
(1) Except as provided in Chapter 4.5 (commencing with Section
23800) of Part 11 of Division 2, an electing small business
corporation, as defined in Section 1361(b) of the Internal Revenue
Code.
(2) Domestic international sales corporations (DISC), as defined
in Section 992(a) of the Internal Revenue Code.
(3) A personal holding company, as defined in Section 542 of the
Internal Revenue Code.
(4) A foreign personal holding company, as defined in Section 552
of the Internal Revenue Code.
(5) A foreign investment company, as defined in Section 1246(b) of
the Internal Revenue Code.
(6) A foreign trust, as defined in Section 679 of the Internal
Revenue Code.
(7) Foreign income taxes and foreign income tax credits.
(8) Section 911 of the Internal Revenue Code, relating to United
States citizens living abroad.
(9) A foreign corporation, except that Section 367 of the Internal
Revenue Code shall be applicable.
(10) Federal tax credits and carryovers of federal tax credits.
(11) Nonresident aliens.
(12) Deduction for personal exemptions, as provided in Section 151
of the Internal Revenue Code.
(13) The tax on generation-skipping transfers imposed by Section
2601 of the Internal Revenue Code.
(14) The tax, relating to estates, imposed by Section 2001 or 2101
of the Internal Revenue Code.
(c) (1) The provisions contained in Sections 41 to 44, inclusive,
and Section 172 of the Tax Reform Act of 1984 (Public Law 98-369),
relating to treatment of debt instruments, is not applicable for
taxable years beginning before January 1, 1987.
(2) The provisions contained in Public Law 99-121, relating to the
treatment of debt instruments, is not applicable for taxable years
beginning before January 1, 1987.
(3) For each taxable year beginning on or after January 1, 1987,
the provisions referred to by paragraphs (1) and (2) shall be
applicable for purposes of this part in the same manner and with
respect to the same obligations as the federal provisions, except as
otherwise provided in this part.
(d) (1) When applying the Internal Revenue
Code for purposes of this part, regulations promulgated in final form
or issued as temporary regulations by "the secretary" shall be
applicable as regulations under this part to the extent that they do
not conflict with this part or with regulations issued by the
Franchise Tax Board.
(2) (A) Federal administrative guidance regarding an
interpretation of a provision of the Internal Revenue Code that is
applicable for purposes of this part shall be applicable as
administrative guidance issued by the Franchise Tax Board under this
part to the extent it does not conflict with this part or with
regulations issued by the Franchise Tax Board.
(B) For purposes of this paragraph, "federal administrative
guidance" means federal revenue rulings, notices, revenue procedures,
announcements, and other published administrative guidance
promulgated by the Commissioner of Internal Revenue or the Chief
Counsel of the Internal Revenue Service, but does not include a
private letter ruling or any other administrative guidance issued by
the Commissioner of Internal Revenue or the Chief Counsel of the
Internal Revenue Service with respect to a particular taxpayer.
(3) Unless otherwise specifically provided, final or temporary
federal regulations and any federal administrative guidance shall not
apply for purposes of this part prior to the applicable specified
date in subdivision (a).
(4) For purposes of this subdivision, the phrase "conflict with
this part" shall include, but not be limited to, any temporary or
final federal regulation or any federal administrative guidance that,
except as otherwise specifically provided in this part, constitutes
a substantive change in federal law that is inconsistent with the
statute or statutes to which such advice relates or is beyond the
scope of the Secretary of the Treasury's authority.
(e) Whenever this part allows a taxpayer to make an election, the
following rules shall apply:
(1) A proper election filed with the Internal Revenue Service in
accordance with the Internal Revenue Code or regulations issued by
"the secretary" shall be deemed to be a proper election for purposes
of this part, unless otherwise provided in this part or in
regulations issued by the Franchise Tax Board.
(2) A copy of that election shall be furnished to the Franchise
Tax Board upon request.
(3) (A) Except as provided in subparagraph (B), in order to obtain
treatment other than that elected for federal purposes, a separate
election shall be filed at the time and in the manner required by the
Franchise Tax Board.
(B) (i) If a taxpayer makes a proper election for federal income
tax purposes prior to the time that taxpayer becomes subject to the
tax imposed under this part or Part 11 (commencing with Section
23001), that taxpayer is deemed to have made the same election for
purposes of the tax imposed by this part, Part 10.2 (commencing with
Section 18401), and Part 11 (commencing with Section 23001), as
applicable, and that taxpayer may not make a separate election for
California tax purposes unless that separate election is expressly
authorized by this part, Part 10.2 (commencing with Section 18401),
or Part 11 (commencing with Section 23001), or by regulations issued
by the Franchise Tax Board.
(ii) If a taxpayer has not made a proper election for federal
income tax purposes prior to the time that taxpayer becomes subject
to tax under this part or Part 11 (commencing with Section 23001),
that taxpayer may not make a separate California election for
purposes of this part, Part 10.2 (commencing with Section 18401), or
Part 11 (commencing with Section 23001), unless that separate
election is expressly authorized by this part, Part 10.2 (commencing
with Section 18401), or Part 11 (commencing with Section 23001), or
by regulations issued by the Franchise Tax Board.
(iii) This subparagraph applies only to the extent that the
provisions of the Internal Revenue Code or the regulation issued by
"the secretary" authorizing an election for federal income tax
purposes apply for purposes of this part, Part 10.2 (commencing with
Section 18401) or Part 11 (commencing with Section 23001).
(f) Whenever this part allows or requires a taxpayer to file an
application or seek consent, the rules set forth in subdivision (e)
shall be applicable with respect to that application or consent.
(g) When applying the Internal Revenue Code for purposes of
determining the statute of limitations under this part, any reference
to a period of three years shall be modified to read four years for
purposes of this part.
(h) When applying, for purposes of this part, any section of the
Internal Revenue Code or any applicable regulation thereunder, all of
the following shall apply:
(1) References to "adjusted gross income" shall mean the amount
computed in accordance with Section 17072, except as provided in
paragraph (2).
(2) (A) Except as provided in subparagraph (B), references to
"adjusted gross income" for purposes of computing limitations based
upon adjusted gross income, shall mean the amount required to be
shown as adjusted gross income on the federal tax return for the same
taxable year.
(B) In the case of registered domestic partners and former
registered domestic partners, adjusted gross income, for the purposes
of computing limitations based upon adjusted gross income, shall
mean the adjusted gross income on a federal tax return computed as if
the registered domestic partner or former registered domestic
partner was treated as a spouse or former spouse, respectively, for
federal income tax purposes, and used the same filing status that was
used on the state tax return for the same taxable year.
(3) Any reference to "subtitle" or "chapter" shall mean this part.
(4) The provisions of Section 7806 of the Internal Revenue Code,
relating to construction of title, shall apply.
(5) Any provision of the Internal Revenue Code that becomes
operative on or after the specified date for that taxable year shall
become operative on the same date for purposes of this part.
(6) Any provision of the Internal Revenue Code that becomes
inoperative on or after the specified date for that taxable year
shall become inoperative on the same date for purposes of this part.
(7) Due account shall be made for differences in federal and state
terminology, effective dates, substitution of "Franchise Tax Board"
for "secretary" when appropriate, and other obvious differences.
(i) Any reference to a specific provision of the Internal Revenue
Code shall include modifications of that provision, if any, in this
part.
SEC. 3. Section 23051.5 of the Revenue
and Taxation Code is amended to read:
23051.5. (a) (1) Unless otherwise specifically provided, the
terms "Internal Revenue Code," "Internal Revenue Code of 1954," or
"Internal Revenue Code of 1986," for purposes of this part, mean
Title 26 of the United States Code, including all amendments thereto,
as enacted on the specified date for the applicable taxable year as
defined in paragraph (1) of subdivision (a) of Section 17024.5.
(2) (A) Unless otherwise specifically provided, for federal laws
enacted on or after January 1, 1987, and on or before the specified
date for the taxable year, uncodified provisions that relate to
provisions of the Internal Revenue Code that are incorporated for
purposes of this part, shall be applicable to the same taxable years
as the incorporated provisions.
(B) In the case where Section 901 of the Economic Growth and Tax
Relief Act of 2001 (Public Law 107-16) applies to any provision of
the Internal Revenue Code that is incorporated for purposes of this
part, Section 901 of the Economic Growth and Tax Relief Act of 2001
(Public Law 107-16) shall apply for purposes of this part in the same
manner and to the same taxable years as it applies for federal
income tax purposes.
(3) Subtitle G (Tax Technical Corrections) and Part I of Subtitle
H (Repeal of Expired or Obsolete Provisions) of the Revenue
Reconciliation Act of 1990 (Public Law 101-508) modified numerous
provisions of the Internal Revenue Code and provisions of prior
federal acts, some of which are incorporated by reference into this
part. Unless otherwise provided, the provisions described in the
preceding sentence, to the extent that they modify provisions that
are incorporated into this part, are declaratory of existing law and
shall be applied in the same manner and for the same periods as
specified in the Revenue Reconciliation Act of 1990.
(b) Unless otherwise specifically provided, when applying the
Internal Revenue Code for purposes of this part, a reference to any
of the following is not applicable for purposes of this part:
(1) Domestic International Sales Corporations (DISC), as defined
in Section 992(a) of the Internal Revenue Code.
(2) Foreign Sales Corporations (FSC), as defined in Section 922(a)
of the Internal Revenue Code.
(3) A personal holding company, as defined in Section 542 of the
Internal Revenue Code.
(4) A foreign personal holding company, as defined in Section 552
of the Internal Revenue Code.
(5) A foreign investment company, as defined in Section 1246(b) of
the Internal Revenue Code.
(6) A foreign trust as defined in Section 679 of the Internal
Revenue Code.
(7) Foreign income taxes and foreign income tax credits.
(8) Federal tax credits and carryovers of federal tax credits.
(c) (1) The provisions contained in Sections 41 to 44, inclusive,
and Section 172 of the Tax Reform Act of 1984 (Public Law 98-369),
relating to treatment of debt instruments, is not applicable for
taxable years beginning before January 1, 1987.
(2) The provisions contained in Public Law 99-121, relating to the
treatment of debt instruments, is not applicable for taxable years
beginning before January 1, 1987.
(3) For taxable years beginning on and after January 1, 1987, the
provisions referred to by paragraphs (1) and (2) shall be applicable
for purposes of this part in the same manner and with respect to the
same obligations as the federal provisions, except as otherwise
provided in this part.
(d) (1) When applying the Internal Revenue
Code for purposes of this part, regulations promulgated in final form
or issued as temporary regulations by "the secretary" shall be
applicable as regulations issued under this part to the extent that
they do not conflict with this part or with regulations issued by the
Franchise Tax Board.
(2) (A) Federal administrative guidance regarding an
interpretation of a provision of the Internal Revenue Code that is
applicable for purposes of this part shall be applicable as
administrative guidance issued by the Franchise Tax Board under this
part to the extent it does not conflict with this part or with
regulations issued by the Franchise Tax Board.
(B) For purposes of this paragraph, "federal administrative
guidance" means federal revenue rulings, notices, revenue procedures,
announcements, and other published administrative guidance
promulgated by the Commissioner of Internal Revenue or the Chief
Counsel of the Internal Revenue Service, but does not include a
private letter ruling or any other administrative guidance issued by
the Commissioner of Internal Revenue or the Chief Counsel of the
Internal Revenue Service with respect to a particular taxpayer.
(3) Unless otherwise specifically provided, final or temporary
federal regulations and any federal administrative guidance shall not
apply for purposes of this part prior to the applicable specified
date in subdivision (a).
(4) For purposes of this
subdivision, the phrase "conflict with this part" shall include, but
not be limited to, any temporary or final federal regulation or any
federal administrative guidance that, except as otherwise
specifically provided in this part, constitutes a substantive change
in federal law that is inconsistent with the statute or statutes to
which such advice relates or is beyond the scope of the Secretary of
the Treasury's authority.
(e) Whenever this part allows a taxpayer to make an election, the
following rules shall apply:
(1) A proper election filed with the Internal Revenue Service in
accordance with the Internal Revenue Code or regulations issued by
"the secretary" shall be deemed to be a proper election for purposes
of this part, unless otherwise expressly provided in this part or in
regulations issued by the Franchise Tax Board.
(2) A copy of that election shall be furnished to the Franchise
Tax Board upon request.
(3) (A) Except as provided in subparagraph (B), in order to obtain
treatment other than that elected for federal purposes, a separate
election shall be filed with the Franchise Tax Board at the time and
in the manner that may be required by the Franchise Tax Board.
(B) (i) If a taxpayer makes a proper election for federal income
tax purposes prior to the time that taxpayer becomes subject to the
tax imposed under this part or Part 10 (commencing with Section
17001), that taxpayer is deemed to have made the same election for
purposes of the tax imposed by this part, Part 10 (commencing with
Section 17001), and Part 10.2 (commencing with Section 18401), as
applicable, and that taxpayer may not make a separate election for
California tax purposes unless that separate election is expressly
authorized by this part, Part 10 (commencing with Section 17001), or
Part 10.2 (commencing with Section 18401), or by regulations issued
by the Franchise Tax Board.
(ii) If a taxpayer has not made a proper election for federal
income tax purposes prior to the time that taxpayer becomes subject
to tax under this part or Part 10 (commencing with Section 17001),
that taxpayer may not make a separate California election for
purposes of this part, Part 10 (commencing with Section 17001), or
Part 10.2 (commencing with Section 18401), unless that separate
election is expressly authorized by this part, Part 10 (commencing
with Section 17001), Part 10.2 (commencing with Section 18401), or by
regulations issued by the Franchise Tax Board.
(iii) This subparagraph applies only to the extent that the
provisions of the Internal Revenue Code or regulations issued by "the
secretary" authorizing an election for federal income tax purposes
apply for purposes of this part, Part 10 (commencing with Section
17001), or Part 10.2 (commencing with Section 18401).
(f) Whenever this part allows or requires a taxpayer to file an
application or seek consent, the rules set forth in subdivision (e)
shall apply to that application or consent.
(g) When applying the Internal Revenue Code for purposes of
determining the statute of limitations under this part, any reference
to a period of three years shall be modified to read four years for
purposes of this part.
(h) When applying, for purposes of this part, any section of the
Internal Revenue Code or any applicable regulation thereunder, all of
the following shall apply:
(1) For purposes of Chapter 2 (commencing with Section 23101),
Chapter 2.5 (commencing with Section 23400), and Chapter 3
(commencing with Section 23501), the term "taxable income" shall mean
"net income."
(2) For purposes of Article 2 (commencing with Section 23731) of
Chapter 4, the term "taxable income" shall mean "unrelated business
taxable income," as defined by Section 23732.
(3) Any reference to "subtitle," "Chapter 1," or "chapter" shall
mean this part.
(4) The provisions of Section 7806 of the Internal Revenue Code,
relating to construction of title, shall apply.
(5) Any provision of the Internal Revenue Code that becomes
operative on or after the specified date for that taxable year shall
become operative on the same date for purposes of this part.
(6) Any provision of the Internal Revenue Code that becomes
inoperative on or after the specified date for that taxable year
shall become inoperative on the same date for purposes of this part.
(7) Due account shall be made for differences in federal and state
terminology, effective dates, substitution of "Franchise Tax Board"
for "secretary" when appropriate, and other obvious differences.
(8) Any provision of the Internal Revenue Code that refers to a
"corporation" shall, when applicable for purposes of this part,
include a "bank," as defined by Section 23039.
(i) Any reference to a specific provision of the Internal Revenue
Code shall include modifications of that provision, if any, in this
part.
