Code Section Group

Revenue and Taxation Code - RTC

DIVISION 2. OTHER TAXES [6001 - 60709]

  ( Heading of Division 2 amended by Stats. 1968, Ch. 279. )

PART 10. PERSONAL INCOME TAX [17001 - 18181]

  ( Part 10 added by Stats. 1943, Ch. 659. )

CHAPTER 3. Computation of Taxable Income [17071 - 17307]

  ( Chapter 3 repealed and added by Stats. 1955, Ch. 939. )

ARTICLE 2. Items Specifically Included in Gross Income [17081 - 17090]
  ( Article 2 repealed and added by Stats. 1983, Ch. 488, Sec. 24. )

17081.
  

Part II of Subchapter B of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to items that are specifically included in gross income, shall apply, except as otherwise provided.

(Amended by Stats. 1993, Ch. 873, Sec. 5. Effective October 6, 1993.)

17083.
  

Section 85 of the Internal Revenue Code, relating to unemployment compensation, shall not apply.

(Amended by Stats. 1999, Ch. 987, Sec. 14. Effective October 10, 1999.)

17085.
  

Section 72 of the Internal Revenue Code, relating to annuities, certain proceeds of endowment and life insurance contracts, is modified as follows:

(a) The amendments and transitional rules made by Public Law 99-514 shall be applicable to this part for the same transactions and the same years as they are applicable for federal purposes, except that the repeal of Section 72(d) of the Internal Revenue Code, relating to repeal of special rule for employees’ annuities, shall apply only to the following:

(1) Any individual whose annuity starting date is after December 31, 1986.

(2) At the election of the taxpayer, any individual whose annuity starting date is after July 1, 1986, and before January 1, 1987.

(b) The amount of a distribution from an individual retirement account or annuity or employee trust or employee annuity that is includable in gross income for federal purposes shall be reduced for purposes of this part by the lesser of either of the following:

(1) An amount equal to the amount includable in federal gross income for the taxable year.

(2) An amount equal to the basis in the account or annuity allowed by Section 17507 (relating to individual retirement accounts and simplified employee pensions), the increased basis allowed by Sections 17504 and 17506 (relating to plans of self-employed individuals), the increased basis allowed by Section 17501, or the increased basis allowed by Section 17551 that is remaining after adjustment for reductions in gross income under this provision in prior taxable years.

(c) (1) Except as provided in paragraph (2), the amount of the additional tax imposed under this part shall be computed in accordance with Sections 72(m), (q), (t), and (v) of the Internal Revenue Code, as applicable for federal income tax purposes for the same taxable year, using a rate of 21/2 percent, in lieu of the rate provided in those sections.

(2) In the case where Section 72(t)(6) of the Internal Revenue Code, relating to special rules for simple retirement accounts, as applicable for federal income tax purposes for the same taxable year, applies, the rate in paragraph (1) shall be 6 percent in lieu of the 21/2 percent rate specified therein.

(d) Section 72(f)(2) of the Internal Revenue Code shall be applicable without applying the exceptions which immediately follow that paragraph.

(e) The amendments made by Section 844 of the federal Pension Protection Act of 2006 (P.L. 109-280) to Section 72(e) of the Internal Revenue Code, shall not apply.

(Amended by Stats. 2012, Ch. 162, Sec. 169. Effective January 1, 2013.)

17085.7.
  

(a) In the case of any distribution made on account of a notice to withhold (pursuant to Section 18670 or 18670.5) on a qualified retirement plan, no additional tax shall be imposed in accordance with Section 72(t) of the Internal Revenue Code.

(b) This section shall apply to distributions after December 31, 1999.

(Added by Stats. 1999, Ch. 931, Sec. 4. Effective October 10, 1999.)

17086.
  

(a) Noncash patronage allocations from farmers’ cooperative and mutual associations (whether paid in capital stock, revolving fund certificates, retain certificates, certificates of indebtedness, letters of advice or in some other manner that discloses the dollar amount of those noncash patronage allocations) may, at the election of the taxpayer, be considered as income and included in gross income for the taxable year in which received.

(b) If a taxpayer exercises the election provided for in subdivision (a), the amount included in gross income shall be the face amount of those allocations.

(c) If a taxpayer elects to exclude noncash patronage allocations from gross income for the taxable year in which received, those allocations shall be included in gross income in the year that they are redeemed or realized upon.

(d) If a taxpayer exercises the election provided for in subdivision (c), the face amount of those noncash patronage allocations shall be disclosed in the return made for the taxable year in which those noncash patronage allocations were received.

(e) If a taxpayer exercises the election provided for in subdivision (a) or (c) for any taxable year, then the method of computing income so adopted shall be adhered to with respect to all subsequent taxable years unless with the approval of the Franchise Tax Board a change to a different method is authorized.

(f) If a taxpayer has made the election provided for in subdivision (c), then (1) the statutory period for the assessment of a deficiency for any taxable year in which the amount of any noncash patronage allocations are realized shall not expire prior to the expiration of four years from the date the Franchise Tax Board is notified by the taxpayer (in the manner as the Franchise Tax Board may by regulation prescribe) of the realization of gain on those allocations; and (2) that deficiency may be assessed prior to the expiration of that four-year period, notwithstanding the provisions of Section 19057 or the provisions of any other law or rule of law which would otherwise prevent that assessment.

(Amended by Stats. 1993, Ch. 31, Sec. 6. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

17087.
  

(a) Section 86 of the Internal Revenue Code, relating to Social Security and Tier 1 Railroad Retirement Benefits, shall not apply.

(b) Section 72(r) of the Internal Revenue Code, relating to Tier 2 Railroad Retirement Benefits, shall not apply.

(c) Section 105(h) of the Internal Revenue Code, relating to sick pay under the Railroad Unemployment Insurance Act, shall not apply.

(Amended by Stats. 1999, Ch. 987, Sec. 18. Effective October 10, 1999.)

17087.5.
  

Subchapter S of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to tax treatment of “S corporations” and their shareholders, shall apply, except as otherwise provided under this part or Part 11 (commencing with Section 23001).

(Repealed and added by Stats. 1993, Ch. 873, Sec. 7. Effective October 6, 1993.)

17087.6.
  

If a limited liability company is classified as a partnership for California tax purposes, a person with a membership or economic interest shall take into account amounts required to be recognized under Chapter 10 (commencing with Section 17851).

(Added by Stats. 1994, Ch. 1200, Sec. 52. Effective September 30, 1994.)

17088.
  

(a) Subchapter M of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to regulated investment companies and real estate investment trusts, shall apply, except as otherwise provided.

(b) Section 17145 shall apply in lieu of Section 852(b)(5) of the Internal Revenue Code, relating to exempt-interest dividends.

(c) (1) Section 852(b)(3)(D) of the Internal Revenue Code, relating to treatment by shareholders of undistributed capital gains, shall not apply.

(2) Section 852(g)(1)(A) of the Internal Revenue Code is modified by substituting the phrase “subdivision (a) of Section 17145” for the phrase “the first sentence of subsection (b)(5)” contained therein.

(Amended by Stats. 2015, Ch. 359, Sec. 5. Effective September 30, 2015. Applicable to taxable years beginning on or after January 1, 2015, as provided in Sec. 41 of Stats. 2015, Ch. 359.)

17088.3.
  

(a) Section 7518 of the Internal Revenue Code, relating to tax incentives relating to merchant marine capital construction funds, shall apply, except as otherwise provided.

(b) Section 7518(d)(2)(C) of the Internal Revenue Code is modified as follows:

(1) By substituting “70 percent” in lieu of the reference to “the percentage applicable under Section 243(a)(1).”

(2) To refer to Section 24402 in lieu of Section 243 of the Internal Revenue Code.

(c) Section 7518(d)(2)(D) of the Internal Revenue Code is modified to refer to “interest income exempt from taxation under this part” in lieu of “interest income exempt from taxation under Section 103.”

(d) Section 7518(g)(3) of the Internal Revenue Code is modified as follows:

(1) To refer to Article 6 (commencing with Section 19101) of Chapter 4 of Part 10.2 in lieu of Section 6601 of the Internal Revenue Code.

(2) To refer to Article 7 (commencing with Section 19131) of Chapter 4 of Part 10.2 in lieu of Section 6651 of the Internal Revenue Code.

(e) Section 7518(g)(6) of the Internal Revenue Code is modified as follows:

(1) By substituting a reference to “this part” in lieu of “Chapter 1” in each place in which it appears.

(2) To refer to Section 17041 in lieu of Section 1 of the Internal Revenue Code.

(3) The last sentence in Section 7518(g)(6)(A) of the Internal Revenue Code shall not apply.

(Added by Stats. 1997, Ch. 611, Sec. 12. Effective October 3, 1997.)

17090.
  

Gross income includes cash allowances received by an employee under a parking cash-out program, except any portion used for a ridesharing purpose and excluded from gross income by Section 17149.

(Added by Stats. 1992, Ch. 554, Sec. 6. Effective January 1, 1993.)

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