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 6. Gross Income [24271 - 24330]

  ( Chapter 6 added by Stats. 1955, Ch. 938. )

ARTICLE 3. Other Exclusions [24320 - 24330]
  ( Article 3 added by Stats. 1969, Ch. 1191. )

24320.
  

Income derived from the operation of aircraft or a ship or ships by a corporation organized under the laws of a foreign country shall not be included in gross income, and shall be exempt from the taxes imposed by this part if:

(a) The aircraft are registered or the ships are documented under the laws of the foreign country;

(b) The income of the corporation is exempt from national income taxes by reason of a treaty or agreement between such foreign country and the United States which provides for an equivalent exemption to corporations organized in the United States; and

(c) Units of government (other than at the national level) within such foreign country do not impose a tax upon corporations organized in the United States with respect to income derived from the operation of aircraft registered or ships documented under the laws of the United States.

(Added by Stats. 1969, Ch. 1191.)

24321.
  

Notwithstanding any statute, ordinance, regulation, rule or decision to the contrary, no city, county, city and county, governmental subdivision, district, public and quasi-public corporation, municipal corporation, whether incorporated or not or whether chartered or not, shall levy or collect or cause to be levied or collected any tax upon income which is excludable from gross income and exempt from state taxes pursuant to Section 24320.

This section shall not be construed to authorize any such entity to levy a tax on, according to, or measured by, income or profits paid or accrued.

(Added by Stats. 1969, Ch. 1191.)

24322.
  

(a) Gross income of a domestic building and loan association, as defined in Section 7701(a)(19) of the Internal Revenue Code, does not include any amount of money or other property received from the Federal Savings and Loan Insurance Corporation pursuant to Section 406(f) of the National Housing Act (12 U.S.C. Section 1729(f)), regardless of whether any note or other instrument is issued in exchange therefor.

(b) No reduction in the basis of assets of a domestic building and loan association shall be made on account of money or other property received under the circumstances referred to in subdivision (a).

(c) Section 24425 shall not deny any deductions by reason of the deductions being allocable to amounts excluded from gross income under this section.

(d) This section shall not apply with respect to any amounts excludable under subdivision (a) received after December 31, 1988, in taxable years ending after that date, unless the payments are made by the Federal Savings and Loan Insurance Corporation pursuant to an acquisition or merger which occurred on or before December 31, 1988.

(Amended by Stats. 2000, Ch. 862, Sec. 120. Effective January 1, 2001.)

24323.
  

Any amount received as a rebate from a local water agency or supplier for any expenses the taxpayer paid or incurred for the purchase or installation of each water conservation water closet that meets the performance standards of the American National Standards Institute Standard A112.19.2 and uses no more than 1.6 gallons per flush, shall be treated as a refund or price adjustment of amounts payable to that water agency or supplier.

(Added by Stats. 1990, Ch. 809, Sec. 2. Effective September 14, 1990.)

24324.
  

(a) Gross income does not include any contribution to the capital of the taxpayer.

(b) (1) For purposes of this section, “contribution to the capital of the taxpayer” includes any amount of money or other property received from any person (whether or not a shareholder) by a regulated public utility that provides electric energy, gas (through a local distribution system or transportation by pipeline), water, or sewerage disposal services if all of the following apply:

(A) The amount is contribution in aid of construction.

(B) Where the contribution is in property that is other than electric energy, gas steam, water, or sewerage disposal facilities, the amount meets the requirements of the expenditure rule of paragraph (2).

(C) The amounts (or any property acquired or constructed with those amounts) are not included in the taxpayer’s rate base for ratemaking purposes.

(2) An amount meets the requirements of this paragraph if all of the following apply:

(A) An amount equal to that amount is expended for the acquisition or construction of tangible property described in Section 1231(b) of the Internal Revenue Code and both of the following apply:

(i) The expenditure was the purpose motivating the contribution.

(ii) The property is used predominantly in the trade or business of furnishing electric energy, gas, steam, water, or sewerage disposal services.

(B) The expenditure referred to in subparagraph (A) occurs before the end of the second taxable year after the taxable year in which that amount was received.

(C) Accurate records are kept of the amount contributed and expenditures made on the basis of the project for which the contribution was made and on the basis of the year of contribution or expenditure.

(3) For purposes of this section:

(A) “Contribution in aid of construction” does not include amounts paid as customer connection fees (including amounts paid to connect the customer’s line to an electric line, a gas main, a steam line, or a main water or sewer line) and amounts paid as service charges for starting or stopping services.

(B) “Contribution in aid of construction” includes amounts received by a regulated public utility from a contributor to recover the federal tax imposed upon contributions in aid of construction, provided that the method used to recover the tax is authorized by Public Utilities Commission Decision 87-09-026.

(C) “Predominantly” means 80 percent or more.

(D) “Regulated public utility” means a regulated public utility as defined by Section 7701(a)(33) of the Internal Revenue Code, except that it does not include any utility which is not required to provide electric energy, gas, water, or sewerage disposal services to members of the general public (including, in the case of a gas transmission utility, the provision of gas services by sale for resale to the general public) in its service area.

(4) Notwithstanding any other provision of this part, no deduction or credit shall be allowed for, or by reason of, the expenditure which constitutes a contribution in aid of construction to which this section applies. The adjusted basis of any property acquired with contributions in aid of construction to which this section applies shall be zero.

(c) This section shall apply to contributions in aid of construction made on or after January 1, 1977, and before January 1, 1992.

(Amended by Stats. 2000, Ch. 862, Sec. 121. Effective January 1, 2001.)

24325.
  

Section 118 of the Internal Revenue Code, relating to contributions to the capital of a corporation, shall apply to contributions made on or after January 1, 1992.

(Added by Stats. 1992, Ch. 698, Sec. 20. Effective September 15, 1992.)

24326.
  

(a) Section 136 of the Internal Revenue Code, relating to energy conservation subsidies provided by public utilities, shall apply, except as otherwise provided.

(b) Section 136 of the Internal Revenue Code, relating to energy conservation subsidies provided by public utilities, shall apply to amounts received on or after January 1, 1997.

(Amended by Stats. 1997, Ch. 611, Sec. 79. Effective October 3, 1997.)

24327.
  

Section 892 of the Internal Revenue Code, relating to the tax treatment of foreign governments and international organizations, shall apply.

(Added by Stats. 1996, Ch. 952, Sec. 48. Effective January 1, 1997.)

24329.
  

Section 139 of the Internal Revenue Code, relating to disaster relief payments, shall apply, except as otherwise provided.

(Added by Stats. 2010, Ch. 14, Sec. 66. (SB 401) Effective January 1, 2011.)

24330.
  

(a) Gross income shall not include the qualified health care service plan income of a qualified health care service plan properly accrued with respect to enrollment or services that occur on or after July 1, 2016, and on or before June 30, 2019.

(b) For purposes of this section, the following definitions shall apply:

(1) “Qualified health care service plan” means a health care service plan, as defined in subdivision (k) of Section 14199.51 of the Welfare and Institutions Code, that is subject to the tax imposed under Section 14199.54 of the Welfare and Institutions Code.

(2) “Qualified health care service plan income” means the revenue listed in subparagraphs (A) to (J), inclusive, that is associated with the operation of a qualified health care service plan and that is required to be reported to the Department of Managed Health Care pursuant to the instructions for filing financial statements and Section 1384 of the Health and Safety Code and the regulations adopted thereunder.

(A) Premiums (commercial).

(B) Copayments, COB, subrogation.

(C) Title XIX Medicaid.

(D) Point-of-service premiums.

(E) Risk pool revenue.

(F) Capitation payments.

(G) Title XVIII Medicare.

(H) Fee-for-service.

(I) Interest.

(J) Aggregate write-ins for other revenues, including capital gains and other investment income.

(c) (1) No later than December 1, 2016, and annually thereafter, the State Department of Health Care Services shall provide to the Franchise Tax Board information regarding every health care service plan that is subject to the tax imposed under Section 14199.54 of the Welfare and Institutions Code. The information shall include the corporate name, address, and calendar period for which each health care service plan is subject to the tax imposed under Section 14199.54 of the Welfare and Institutions Code, and, if applicable, the owner or owners of those health care service plans.

(2) A qualified health care service plan with no income other than qualified health care service plan income that is excluded from gross income pursuant to this section for a taxable year shall be exempt from the minimum franchise tax imposed under Chapter 2 (commencing with Section 23101) for that taxable year.

(d) The Franchise Tax Board may prescribe rules, guidelines, or procedures necessary or appropriate to carry out the purposes of this section. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to any rule, guideline, or procedure prescribed by the Franchise Tax Board pursuant to this section.

(e) This section shall remain in effect only until December 1, 2019, and as of June 30, 2020, is repealed.

(Added by Stats. 2016, 2nd Ex. Sess., Ch. 2, Sec. 4. (SB 2 2x) Effective June 9, 2016. Operative on July 1, 2016, or later date, as prescribed by Sec. 6 of Ch. 2. Conditionally inoperative as prescribed by Secs. 7 and 8 of Ch. 2. Inoperative December 1, 2019, by its own provisions, if not made inoperative sooner. Repealed as of June 30, 2020, by its own provisions.)

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