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AB-31 Income taxes: bank and corporation taxes: deductions: casualty losses: earthquake.(1991-1992)

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AB31:v95#DOCUMENT

Assembly Bill No. 31
CHAPTER 26

An act to amend Sections 17207 and 24347.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

[ Filed with Secretary of State  September 30, 1992. Approved by Governor  September 29, 1992. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 31, Hauser. Income taxes: bank and corporation taxes: deductions: casualty losses: earthquake.
The existing Personal Income Tax Law and the Bank and Corporation Tax Law provide for the carryover to specified taxable years of specified losses sustained as a result of various disasters occurring in California in an area subsequently determined by the President of the United States to warrant specified federal assistance, or proclaimed by the Governor to be in a state of disaster.
This bill would extend those provisions to losses sustained as a result of earthquake, aftershock, or any other related casualty occurring in the County of Humboldt during April 1992.
This bill would incorporate changes to Sections 17207 and 24347.5 of the Revenue and Taxation Code proposed by AB 39 of the 1991–92 First Extraordinary Session to be operative only if AB 39 and this bill are both enacted and this bill is enacted last.
This bill would take effect immediately as a tax levy.

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


SECTION 1.

 Section 17207 of the Revenue and Taxation Code is amended to read:

17207.
 (a)  For disaster losses that qualify for treatment under Section 165(i) of the Internal Revenue Code, to the extent that those losses, as computed pursuant to Section 165(a) of the Internal Revenue Code, exceed the adjusted taxable income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the adjusted taxable income of the year preceding the loss, then that “excess loss,” at the election of the taxpayer, may be carried to other taxable years as provided in subdivision (b), with respect to disaster losses resulting from any of the following:
(1)  Forest fire or any other related casualty occurring in 1985 in California.
(2)  Storm, flooding, or any other related casualty occurring in 1986 in California.
(3)  Any loss sustained during 1987 as a result of a forest fire or any other related casualty.
(4)  Earthquake, aftershock, or any other related casualty occurring in 1987 in California.
(5)  Earthquake, aftershock, or any other related casualty occurring in 1989 in California.
(6)  Any loss sustained during 1990 as a result of fire or any other related casualty in California.
(7)  Earthquake, aftershock, or any other related casualty occurring in April 1992 in the County of Humboldt.
(b)  For losses covered by Sections 165(c)(1) and 165(c)(2) of the Internal Revenue Code, relating to trade or business losses, losses resulting from transactions entered into for profit, and for losses covered by Section 165(c)(3) of the Internal Revenue Code, relating to personal casualty losses, the “excess loss” may be carried forward to each of the five taxable years following the year the loss is claimed. However, if there is any “excess loss” remaining after the five-year period, then 50 percent of that “excess loss” may be carried forward to each of the next 10 taxable years.
(c)  The entire amount of any “excess loss” as defined in subdivision (a) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of “excess loss” over the sum of the adjusted taxable income for each of the prior taxable years to which that “excess loss” may be carried.
(d)  The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the following losses sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster:
(1)  Any loss sustained during February 1986 as a result of storm, flooding, or any other related casualty.
(2)  Any loss sustained during 1987 as a result of forest fire or any other related casualty.
(3)  Any loss sustained during October 1987 as the result of earthquake, aftershock, or any other related casualty.
(4)  Any loss resulting from the earthquake which occurred in October 1989, aftershock, or any other related casualty.
(5)  Any loss sustained during 1990 as the result of fire in the County of Santa Barbara.
(6)  Any loss sustained during April 1992 as a result of earthquake, aftershock, or any other related casualty in the County of Humboldt.
(e)  Losses described in this section may not be taken into account in computing a net operating loss deduction under Section 17201, as modified by Sections 17276, 17276.1, and 17276.2.
(f)  For purposes of this section, “adjusted taxable income” shall be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.

SEC. 1.5.

 Section 17207 of the Revenue and Taxation Code is amended to read:

17207.
 (a)  For disaster losses that qualify for treatment under Section 165(i) of the Internal Revenue Code, to the extent that those losses, as computed pursuant to Section 165(a) of the Internal Revenue Code, exceed the adjusted taxable income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the adjusted taxable income of the year preceding the loss, then that “excess loss,” at the election of the taxpayer, may be carried to other taxable years as provided in subdivision (b), with respect to disaster losses resulting from any of the following:
(1)  Forest fire or any other related casualty occurring in 1985 in California.
(2)  Storm, flooding, or any other related casualty occurring in 1986 in California.
(3)  Any loss sustained during 1987 as a result of a forest fire or any other related casualty.
(4)  Earthquake, aftershock, or any other related casualty occurring in 1987 in California.
(5)  Earthquake, aftershock, or any other related casualty occurring in 1989 in California.
(6)  Any loss sustained during 1990 as a result of fire or any other related casualty in California.
(7)  Earthquake, aftershock, or any other related casualty occurring in April 1992 in the County of Humboldt.
(8)  Riots, arson, or any other related casualty occurring in April or May 1992 in California.
(b)  For losses covered by Sections 165(c)(1) and 165(c)(2) of the Internal Revenue Code, relating to trade or business losses, losses resulting from transactions entered into for profit, and for losses covered by Section 165(c)(3) of the Internal Revenue Code, relating to personal casualty losses, the “excess loss” may be carried forward to each of the five taxable years following the year the loss is claimed. However, if there is any “excess loss” remaining after the five-year period, then 50 percent of that “excess loss” may be carried forward to each of the next 10 taxable years.
(c)  The entire amount of any “excess loss” as defined in subdivision (a) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of “excess loss” over the sum of the adjusted taxable income for each of the prior taxable years to which that “excess loss” may be carried.
(d)  The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the following losses sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster:
(1)  Any loss sustained during February 1986 as a result of storm, flooding, or any other related casualty.
(2)  Any loss sustained during 1987 as a result of forest fire or any other related casualty.
(3)  Any loss sustained during October 1987 as the result of earthquake, aftershock, or any other related casualty.
(4)  Any loss resulting from the earthquake which occurred in October 1989, aftershock, or any other related casualty.
(5)  Any loss sustained during 1990 as the result of fire in the County of Santa Barbara.
(6)  Any loss sustained during April 1992 as a result of earthquake, aftershock, or any other related casualty in the County of Humboldt.
(7)  Any loss sustained during April or May 1992 as a result of riots, arson, or any other related casualty.
(e)  Losses described in this section may not be taken into account in computing a net operating loss deduction under Section 17201, as modified by Sections 17276, 17276.1, and 17276.2.
(f)  For purposes of this section, “adjusted taxable income” shall be defined by Section 1212(b)(2)(B) of the Internal Revenue Code.

SEC. 2.

 Section 24347.5 of the Revenue and Taxation Code is amended to read:

24347.5.
 (a)  In lieu of Section 24347, a deduction is allowed pursuant to Section 165(i) of the Internal Revenue Code for disaster losses resulting from any of the following:
(1)  Forest fire or any other related casualty occurring in 1985 in California.
(2)  Storm, flooding, or any other related casualty occurring in 1986 in California.
(3)  Any loss sustained during 1987 as a result of a forest fire or any other related casualty.
(4)  Earthquake, aftershock, or any other related casualty occurring in October 1987 in California.
(5)  Earthquake, aftershock, or any related casualty occurring in October 1989 in California.
(6)  Any loss sustained during 1990 as a result of fire or any other related casualty in California.
(7)  Earthquake, aftershock, or any other related casualty occurring in April 1992 in the County of Humboldt.
(b)  To the extent that losses under subdivision (a) exceed the net income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the net income of the year preceding the loss, then that “excess loss,” at the election of the taxpayer, may be carried forward to each of the five income years following the income year the loss is claimed. However, if there is any “excess loss” remaining after the five-year period, then 50 percent of that “excess loss” may be carried forward to each of the next 10 income years.
(c)  The entire amount of any “excess loss” as defined in subdivision (b) shall be carried to the earliest of the income years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other income years shall be the excess, if any, of the amount of “excess loss” over the sum of the net income for each of the prior income years to which that “excess loss” may be carried.
(d)  The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the following losses sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster:
(1)  Any loss sustained during February 1986 as a result of storm, flooding, or any other related casualty.
(2)  Any loss sustained during 1987 as a result of forest fire or any other related casualty.
(3)  Any loss sustained during October 1987 as the result of earthquake, aftershock, or any other related casualty.
(4)  Any loss resulting from the earthquake which occurred in October 1989, aftershock, or any other related casualty.
(5)  Any loss sustained during 1990 as the result of fire in the County of Santa Barbara.
(6)  Any loss sustained during April 1992 as the result of earthquake, aftershock, or any other related casualty in the County of Humboldt.
(e)  Any corporation subject to the provisions of Section 25101 or 25101.15 that has disaster losses pursuant to this section, shall determine the “excess loss” to be carried to other income years under the principles specified in Section 25108 relating to net operating losses.
(f)  Losses described in this section may not be taken into account in computing a net operating loss deduction under Section 24416 or 24416.1.

SEC. 2.5.

 Section 24347.5 of the Revenue and Taxation Code is amended to read:

24347.5.
 (a)  In lieu of Section 24347, a deduction is allowed pursuant to Section 165(i) of the Internal Revenue Code for disaster losses resulting from any of the following:
(1)  Forest fire or any other related casualty occurring in 1985 in California.
(2)  Storm, flooding, or any other related casualty occurring in 1986 in California.
(3)  Any loss sustained during 1987 as a result of a forest fire or any other related casualty.
(4)  Earthquake, aftershock, or any other related casualty occurring in October 1987 in California.
(5)  Earthquake, aftershock, or any related casualty occurring in October 1989 in California.
(6)  Any loss sustained during 1990 as a result of fire or any other related casualty in California.
(7)  Earthquake, aftershock, or any other related casualty occurring in April 1992 in the County of Humboldt.
(8)  Riots, arson, or any other related casualty occurring in April or May 1992 in California.
(b)  To the extent that losses under subdivision (a) exceed the net income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the net income of the year preceding the loss, then that “excess loss,” at the election of the taxpayer, may be carried forward to each of the five income years following the income year the loss is claimed. However, if there is any “excess loss” remaining after the five-year period, then 50 percent of that “excess loss” may be carried forward to each of the next 10 income years.
(c)  The entire amount of any “excess loss” as defined in subdivision (b) shall be carried to the earliest of the income years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other income years shall be the excess, if any, of the amount of “excess loss” over the sum of the net income for each of the prior income years to which that “excess loss” may be carried.
(d)  The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the following losses sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster:
(1)  Any loss sustained during February 1986 as a result of storm, flooding, or any other related casualty.
(2)  Any loss sustained during 1987 as a result of forest fire or any other related casualty.
(3)  Any loss sustained during October 1987 as the result of earthquake, aftershock, or any other related casualty.
(4)  Any loss resulting from the earthquake which occurred in October 1989, aftershock, or any other related casualty.
(5)  Any loss sustained during 1990 as the result of fire in the County of Santa Barbara.
(6)  Any loss sustained during April 1992 as a result of earthquake, aftershock, or any other related casualty in the County of Humboldt.
(7)  Any loss sustained during April or May 1992 as a result of riots, arson, or any other related casualty.
(e)  Any corporation subject to the provisions of Section 25101 or 25101.15 that has disaster losses pursuant to this section, shall determine the “excess loss” to be carried to other income years under the principles specified in Section 25108 relating to net operating losses.
(f)  Losses described in this section may not be taken into account in computing a net operating loss deduction under Section 24416 or 24416.1.

SEC. 3.

 Section 1.5 of this bill incorporates amendments to Section 17207 of the Revenue and Taxation Code proposed by both this bill and AB 39 of the 1991–92 First Extraordinary Session. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 1993, (2) each bill amends Section 17207 of the Revenue and Taxation Code, and (3) this bill is enacted after AB 39 of the 1991–92 First Extraordinary Session, in which case Section 17207 of the Revenue and Taxation Code, as amended by AB 39 of the 1991–92 First Extraordinary Session, shall remain operative only until the operative date of this bill, at which time Section 1.5 of this bill shall become operative, and Section 1 of this bill shall not become operative.

SEC. 4.

 Section 2.5 of this bill incorporates amendments to Section 24347.5 of the Revenue and Taxation Code proposed by both this bill and AB 39 of the 1991–92 First Extraordinary Session. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 1993, (2) each bill amends Section 24347.5 of the Revenue and Taxation Code, and (3) this bill is enacted after AB 39 of the 1991–92 First Extraordinary Session, in which case Section 24347.5 of the Revenue and Taxation Code, as amended by AB 39 of the 1991–92 First Extraordinary Session, shall remain operative only until the operative date of this bill, at which time Section 2.5 of this bill shall become operative, and Section 2 of this bill shall not become operative.

SEC. 5.

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