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SB-733 Personal income and bank and corporations taxes: federal conformity: qualified tuition programs.(2001-2002)



Current Version: 06/28/01 - Amended Assembly

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SB733:v98#DOCUMENT

Amended  IN  Assembly  June 28, 2001

CALIFORNIA LEGISLATURE— 2001–2002 REGULAR SESSION

Senate Bill
No. 733

Introduced  by  Senator Brulte, Alpert
 (Principal Coauthor(s): Assembly Member Nation)
 (Coauthor(s): Senator Alarcon, Chesbro, Costa, Figueroa, Karnette, Kuehl, O'Connell, Ortiz, Polanco, Romero, Scott)
 (Coauthor(s): Assembly Member Alquist, Aroner, Calderon, Cardenas, Cardoza, Cedillo, Chu, Cohn, Corbett, Dutra, Frommer, Havice, Horton, Jackson, Keeley, Kehoe, Liu, Longville, Matthews, Migden, Nakano, Reyes, Salinas, Shelley, Steinberg, Strom-Martin, Washington, Wayne, Wiggins)

February 23, 2001

An act relating to the Department of Fish and Game, and declaring the urgency thereof, to take effect immediately. An act to amend Sections 17140, 17140.3, and 23711 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 733, as amended, Brulte. Department of Fish and Game: Implementation of the Budget Act of 2001 Personal income and bank and corporations taxes: federal conformity: qualified tuition programs.
The Personal Income Tax Law and Bank and Corporation Tax Law, in partial conformity with federal law, authorizes various tax benefits for qualified tuition programs.
This bill would conform, as specified, to the modifications of the federal provisions under the Economic Growth and Tax Relief Reconciliation Act of 2001, relating to qualified tuition programs. This bill would take effect immediately as a tax levy.

Under existing law, there is in the Resources Agency the Department of Fish and Game, which is vested with specified duties, powers, purposes, and responsibilities related to the management of wildlife resources.

This bill would declare the intent of the Legislature to make the necessary statutory changes to implement the Budget Act of 2001 relative to the Department of Fish and Game.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

It is the intent of the Legislature in enacting this

Section 17140 of the Revenue and Taxation Code is amended to read:

17140.
 (a) For purposes of this section, the following terms have the following meanings as provided in the Golden State Scholarshare Trust Act (Article 19 (commencing with Section 69980) of Chapter 2 of Part 42 of the Education Code):
(1) “Beneficiary” has the meaning set forth in subdivision (c) of Section 69980 of the Education Code.
(2) “Benefit” has the meaning set forth in subdivision (d) of Section 69980 of the Education Code.
(3) “Participant” has the meaning set forth in subdivision (h) of Section 69980 of the Education Code.
(4) “Participation agreement” has the meaning set forth in subdivision (i) of Section 69980 of the Education Code.
(5) “Scholarshare trust” has the meaning set forth in subdivision (f) of Section 69980 of the Education Code.
(b) Except as otherwise provided in subdivision (c), gross income of a beneficiary or a participant does not include any of the following:
(1) Any distribution or earnings under a Scholarshare trust participation agreement, as provided in Article 19 (commencing with Section 69980) of Chapter 2 of Part 42 of the Education Code.
(2) Any contribution to the Scholarshare trust on behalf of a beneficiary shall not be includable as gross income of that beneficiary.
(c) (1) Any distribution under a Scholarshare trust participation agreement shall be includable in the gross income of the distributee in the manner as provided under Section 72 of the Internal Revenue Code, as modified by Section 17085, to the extent not excluded from gross income under this part. For purposes of applying Section 72 of the Internal Revenue Code, the following apply:
(A) All Scholarshare trust accounts of which an individual is a beneficiary shall be treated as one account, except as otherwise provided.
(B) All distributions during a taxable year shall be treated as one distribution.
(C) The value of the participation agreement, income on the participation agreement, and investment in the participation agreement shall be computed as of the close of the calendar year in which the taxable year begins.
(2) A contribution by a for-profit or nonprofit entity, or by a state or local government agency, for the benefit of an owner or employee of that entity or a beneficiary whom the owner or employee has the power to designate, including the owner or employee’s minor children, shall be included in the gross income of that owner or employee in the year the contribution is made.
(3) For purposes of this subdivision, “distribution” includes any benefit furnished to a beneficiary under a participation agreement, as provided in Article 19 (commencing with Section 69980) of Chapter 2 of Part 42 of the Education Code.
(4) (A) Paragraph (1) shall not apply to that portion of any distribution that, within 60 days of distribution, is transferred to the credit of another beneficiary under the Scholarshare trust who is a “member of the family,” as that term is used in Section 529(e)(2) of the Internal Revenue Code, as amended by Section 211 of the Taxpayer Relief Act of 1997 (P.L. 105-34), of the former beneficiary of that Scholarshare trust.
(B) Any change in the beneficiary of an interest in the Scholarshare trust shall not be treated as a distribution for purposes of paragraph (1) if the new beneficiary is a “member of the family,” as that term is used in Section 529(e)(2) of the Internal Revenue Code, as amended by Section 211 of the Taxpayer Relief Act of 1997 (P.L. 105-34), of the former beneficiary of that Scholarshare trust.
(d) For purposes of determining adjusted gross income, Section 62(a)(9) of the Internal Revenue Code shall not apply to any amount forfeited upon distribution of an account created pursuant to a participation agreement.
(e) The amendments made to the Internal Revenue Code by Section 211 of the Taxpayer Relief Act of 1997 (P.L. 105-34) shall apply to taxable years beginning on or after January 1, 1998.
(f) The amendments made to the Internal Revenue Code by Section 402 of the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16), shall apply to taxable years beginning on or after January 1, 2002.
(g) For taxable years beginning on or after January 1, 2002, Sections 529(c) and 529(e) of the Internal Revenue Code, as amended by Section 402 of the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16), shall apply in lieu of subdivisions (b) and (c) of this section.

Section 17140.3 of the Revenue and Taxation Code is amended to read:

17140.3.
 Section 529 of the Internal Revenue Code, as amended by Section 402 of the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16), relating to qualified state tuition programs, shall apply, except as otherwise provided.
(a) Section 529 (a) of the Internal Revenue Code is modified as follows:
(1) By substituting the phrase “under this part and Part 11 (commencing with Section 23001)” in lieu of the phrase “under this subtitle.”
(2) By substituting “Article 2 (commencing with Section 23731)” in lieu of “Section 511.”
(b) A copy of the report required to be filed with the Secretary of the Treasury under Section 529(d) of the Internal Revenue Code shall be filed with the Franchise Tax Board at the same time and in the same manner as specified in that section.

Section 23711 of the Revenue and Taxation Code is amended to read:

23711.
 Section 529 of the Internal Revenue Code, as amended by Section 402 of the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16), relating to qualified state tuition programs, shall apply, except as otherwise provided.
(a) Section 529(a) of the Internal Revenue Code is modified as follows:
(1) By substituting the phrase “under Part 10 (commencing with Section 17001) and this part” in lieu of the phrase “under this subtitle.”
(2) By substituting “Article 2 (commencing with Section 23731)” in lieu of “section 511.”
(b) A copy of the report required to be filed with the Secretary of the Treasury under Section 529(d) of the Internal Revenue Code shall be filed with the Franchise Tax Board at the same time and in the same manner as specified in that section.

SEC. 4.

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

act to make the necessary statutory changes to implement the Budget Act of 2001 relative to the Department of Fish and Game.

SEC. 2.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to make the necessary statutory changes to implement the Budget Act of 2001 at the earliest possible time, it is necessary that this act take effect immediately.