Code Section Group

Revenue and Taxation Code - RTC

DIVISION 2. OTHER TAXES [6001 - 61045]

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

PART 11. CORPORATION TAX LAW [23001 - 25141]

  ( Heading of Part 11 amended by Stats. 2001, Ch. 543, Sec. 21. )

CHAPTER 2. The Corporation Franchise Tax [23101 - 23364a]

  ( Heading of Chapter 2 amended by Stats. 2001, Ch. 543, Sec. 26. )

ARTICLE 9. Affiliated Railroads [23361 - 23364a]
  ( Article 9 added by Stats. 1949, Ch. 557. )

23361.
  

“Affiliated group” means one or more chains of corporations connected through stock ownership with a common parent corporation if during the period when the income was accrued or realized and on the 16th day of the first month after the close of the taxable year—

(a) At least 80 percent of the stock of each of the corporations, except the common parent corporation, is owned directly by one or more of the other corporations; and

(b) The common parent corporation owns directly at least 80 percent of the stock of at least one of the other corporations; and

(c) Each of the corporations except the common parent corporation is either (1) a corporation whose principal business is that of a common carrier by railroad or (2) a corporation the assets of which consist principally of stock in such corporations and which does not itself operate a business other than that of a common carrier by railroad. For the purpose of determining whether the principal business of a corporation is that of a common carrier by railroad, if a common carrier by railroad has leased its railroad properties and such properties are operated as such by another common carrier by railroad, the business of receiving rents for such railroad properties shall be considered as the business of a common carrier by railroad.

The provisions of this section shall not preclude the application of Chapter 17 (commencing with Section 25101) of this part.

Except in paragraph (c), “stock” does not include nonvoting stock which is limited and preferred as to dividends.

(Amended by Stats. 2000, Ch. 862, Sec. 62. Effective January 1, 2001.)

23362.
  

An affiliated group, subject to the provisions of this article, shall have the privilege of making a consolidated return for the taxable year in lieu of separate returns. The making of a consolidated return shall be upon the condition that all the corporations, which have been members of the affiliated group at any time during the taxable year for which the return is made, consent to all regulations under Section 23363 prescribed prior to the making of such return and the making of a consolidated return shall be considered as such consent. In the case of a corporation, which is a member of the affiliated group for a fractional part of the taxable year, the consolidated return shall include the income of such corporation for such part of the taxable year as it is a member of the affiliated group. In the case of a common parent company which is not itself a common carrier by railroad the consolidated return shall include on a consolidated-return basis only the income received from affiliates which are common carriers by railroad.

(Amended by Stats. 2000, Ch. 862, Sec. 63. Effective January 1, 2001.)

23363.
  

The Franchise Tax Board shall prescribe such regulations as it may deem necessary in order that the tax liability of any affiliated group of corporations making a consolidated return and of each corporation in the group, both during and after the period of affiliation, may be determined, computed, assessed, collected, and adjusted in such manner as to reflect the proper income.

(Amended by Stats. 1951, Ch. 374.)

23364.
  

If a consolidated return is made subject to the provisions of this article, the tax imposed under this chapter shall be computed as a unit upon the consolidated net income of the group except as hereinafter provided. The parent corporation and each subsidiary, a member of the group during any part of a consolidated period, shall be severally liable for the tax, including any deficiency in respect thereof, computed upon the consolidated net income of the group. If a subsidiary by reason of a bona fide sale of stock for fair value has ceased to be a member of the affiliated group, its liability shall remain unchanged, except that if such cessation occurred prior to the date upon which any such deficiency is assessed, such deficiency, in the case of such former subsidiary, shall be reduced to an amount equal to such part as may be allocable to it upon the basis of the consolidated net income properly assignable to it. In no case, however, shall any demand for the payment of any deficiency be made, or any proceeding in court for the collection thereof be begun against such former subsidiary prior to the determination by the Franchise Tax Board that the amount of the deficiency cannot be collected from the parent corporation and the corporations, if any, remaining members of the affiliated group.

(Amended by Stats. 1951, Ch. 71.)

23364a.
  

Where a member of an affiliated group filing a consolidated return is a corporation commencing to do business in this state for the first time after August 27, 1937, its tax for the taxable year of commencement shall be the tax for such year as provided for in subdivisions (a) and (b) of Section 23151.1.

(Amended by Stats. 1977, Ch. 552.)

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