18001.
(a) Subject to the following conditions, residents shall be allowed a credit against the “net tax” (as defined by Section 17039) for net income taxes imposed by and paid to another state (not including any preference, alternative, or minimum tax comparable to the tax imposed by Section 17062) on income taxable under this part:(1) The credit shall be allowed only for taxes paid to the other state (not including any preference, alternative, or minimum tax comparable to the tax imposed by Section 17062) on income derived from sources within that state which is taxable under its laws irrespective of the residence or domicile of the recipient.
This paragraph shall not apply to residents to whom subdivision (b) of Section 17014 applies.
(2) The credit shall not be allowed if the other state allows residents of this state a credit against the taxes imposed by that state (not including any preference, alternative, or minimum tax comparable to the tax imposed by Section 17062) for “net tax” (as defined by Section 17039) paid or payable under this part.
(3) The credit shall not exceed the proportion of the “net tax” (as defined by Section 17039) payable under this part as the income subject to tax in the other state (not including any preference, alternative, or minimum tax comparable to the tax imposed by Section 17062) and also taxable under this part bears to the taxpayer’s entire
income upon which the “net tax” (as defined by Section 17039) is imposed by this part.
(4) No credit shall be allowed under this section for any tax imposed by Section 17062.
(b) For purposes of this section:
(1) The amount of “net income taxes” paid to another state shall include the taxpayer’s pro rata share of any taxes on, or according to, or measured by, income or profits paid or accrued, which were paid by an S corporation, as provided by Section 18006.
(2) (A) Whether taxes paid to another state are net income taxes shall be determined by
reference to the actual method used to calculate the taxes paid by the taxpayer and without regard to the method used by other taxpayers. other methods allowed by the other state.
(B) For purposes of this paragraph, “actual method used” shall mean the method used by the taxpayer to determine the amount of tax paid to the other state for the taxable year, provided the method is consistent with the laws of the other state.
(C) This paragraph shall be operative for taxable years beginning on or after January 1, 2020, and before January 1, 2025.
(c) For purposes of this section, “income derived from sources within that state” shall be determined by applying the nonresident sourcing rules for determining income from sources within this state, as specified in Chapter 11 (commencing with Section 17951), and the regulations thereunder.
(d) In accordance with Section 41, the credit allowed by this section is provided to alleviate the instances of double taxation on residents. The Franchise Tax Board shall provide a report to the Legislature with the amount of credit claimed for each state by taxable year pursuant to this section for 2009 to 2015, inclusive, for 2016 to 2019, inclusive, and biannually thereafter from 2020 and beyond. The report required by this subdivision shall be submitted pursuant to Section
9795 of the Government Code.