|
Amended
IN
Assembly
March 11, 2022 |
| Introduced by Assembly Member Kiley |
January 26, 2022 |
The Personal Income Tax Law and Corporation Tax Law, in modified conformity with federal income tax laws, generally allow various deductions in computing the income that is subject to taxes imposed by those laws, including a deduction for a net
operating loss, as specified. Existing law suspends the deduction for a net operating loss, as specified, for taxable years beginning on or after January 1, 2020, and before January 1, 2023. Existing law extends the carryover period for a net operating loss that the suspension denies a deduction by a certain number of years depending on the taxable year in which the losses were incurred, including a one-year extension for losses incurred in taxable years beginning on or after January 1, 2021, and before January 1, 2022.
This bill would reinstate the net operating loss deduction for taxable years beginning on or after January 1, 2021, and would continue to allow the additional one-year carryover period for a net operating loss incurred in taxable years beginning on or after January 1, 2021, and before January 1, 2022.
Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific
goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
The bill would also state the intent of the Legislature to comply with the additional information requirement for any bill authorizing a new income tax expenditure.
This bill would take effect immediately as a tax levy.
(c)“Hold request,” “notification request,” and “transfer request” have the same meanings as provided in Section 7283. Hold, notification, and transfer requests include requests issued by the United States Immigration and Customs Enforcement or the United States Customs and Border Protection as well as any other immigration authorities.
(5)
(6)In no case shall cooperation occur pursuant to this section for individuals arrested, detained, or convicted of misdemeanors that were previously felonies, or were previously crimes punishable as either misdemeanors or felonies, prior to passage of the Safe Neighborhoods and Schools Act of 2014 as it amended the Penal Code.
(b)In cases in which the individual is arrested and taken before a magistrate on a charge involving a serious or violent felony, as identified in subdivision (c) of Section 1192.7 or subdivision (c) of Section 667.5 of the
Penal Code, respectively, or a felony that is punishable by imprisonment in state prison, and the magistrate makes a finding of probable cause as to that charge pursuant to Section 872 of the Penal Code, a law enforcement official shall additionally have discretion to cooperate with immigration officials pursuant to subparagraph (C) of paragraph (1) of subdivision (a) of Section 7284.6.
(a)Notwithstanding Sections 17276, 17276.1, 17276.4, 17276.7, and 17276.22, former Sections 17276.2, 17276.5, 17276.6, and 17276.20, and Section 172 of the Internal Revenue Code, a net operating loss deduction shall not be allowed for any taxable year beginning on or after January 1, 2020, and before January 1, 2021.
(b)(1)For any net operating loss or carryover of a net operating loss for which a deduction is denied by subdivision (a), the carryover period under Section 172 of the Internal Revenue Code shall be extended as follows:
(A)By two years, for losses incurred in taxable years beginning on or after January 1, 2020, and before January 1, 2021.
(B)By three
years, for losses incurred in taxable years beginning before January 1, 2020.
(2)For a net operating loss incurred in taxable years beginning on or after January 1, 2021, and before January 1, 2022, the carryover period under Section 172 of the Internal Revenue Code shall be extended by one year.
(c)This section shall not apply as follows:
(1)For a taxable year beginning on or after January 1, 2020, and before January 1, 2021, this section shall not apply to a taxpayer with a net business income of less than one million dollars ($1,000,000) for the taxable year.
(2)For a taxable year beginning on or after January 1, 2020, and before January 1, 2021, this section shall not apply to a taxpayer with a modified adjusted gross income of less than one million dollars ($1,000,000) for the
taxable year.
(d)For purposes of this section:
(1)“Business income” means any of the following:
(A)Income from a trade or business, whether conducted by the taxpayer or by a passthrough entity owned directly or indirectly by the taxpayer.
(B)Income from rental activity.
(C)Income attributable to a farming business.
(2)“Modified adjusted gross income” means the amount described in paragraph (2) of subdivision (h) of Section 17024.5, determined without regard to the deduction allowed under Section 172 of the Internal Revenue Code, relating to net operating loss deduction.
(3)“Passthrough entity” means a partnership or an S corporation.
(a)Notwithstanding Sections 24416, 24416.1, 24416.4, 24416.7, and 24416.22, former Sections 24416.2, 24416.5, 24416.6, and 24416.20, and Section 172 of the Internal Revenue Code, a net operating loss deduction shall not be allowed for any taxable year beginning on or after January 1, 2020, and before January 1, 2021.
(b)(1)For any net operating loss or carryover of a net operating loss for which a deduction is denied by subdivision (a), the carryover period under Section 172 of the Internal Revenue Code shall be extended as follows:
(A)By two years, for losses incurred in taxable years beginning on or after January 1, 2020, and before January 1, 2021.
(B)By
three years, for losses incurred in taxable years beginning before January 1, 2020.
(2)For a net operating loss or carryover of a net operating loss incurred in taxable years beginning on or after January 1, 2021, and before January 1, 2022, the carryover period under Section 172 of the Internal Revenue Code shall be extended by one year.
(c)The disallowance of any net operating loss deduction for any taxable year beginning on or after January 1, 2020, and before January 1, 2021, pursuant to subdivision (a) shall not apply to a taxpayer with income subject to tax under this part of less than one million dollars ($1,000,000) for the taxable year.
It is the intent of the Legislature to comply with Section 41 of the Revenue and Taxation Code.
This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.