text:
(a) Section 61 of the Internal Revenue Code, relating to gross income defined, shall apply, except as otherwise provided.

(b) A distributive share of partnership gross income shall be determined in accordance with Part 10 (commencing with Section 17001).

(c) Income from an interest in an estate or trust shall be determined in accordance with Part 10 (commencing with Section 17001).

history: (History: Amended by Stats. 1993, Ch. 877, Sec. 41. Effective October 6, 1993.)

chapter: 6. Gross Income

article: 1. Definitions

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 6. Gross Income > 1. Definitions


kind: section

code: RTC

text: For the purposes of the tax imposed under Chapter 2 (commencing with Section 23101), “gross income” includes all interest received from federal, state, municipal or other bonds.

history: (History: Amended by Stats. 1984, Ch. 193, Sec. 126.)

division: 2. OTHER TAXES

part: 11. CORPORATION TAX LAW

article: 1. Definitions


text: The provisions of Section 72(u) of the Internal Revenue Code, relating to the treatment of annuity contracts not held by natural persons, shall be applicable.

history: (History: Added by Stats. 1987, Ch. 1139, Sec. 58. Effective September 25, 1987. Applicable to income years beginning on or after January 1, 1987, by Sec. 241 of Ch. 1139.)

article: 1. Definitions


text:
(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 23151 in lieu of Section 11 of the Internal Revenue Code.

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

history: (History: Added by Stats. 1997, Ch. 611, Sec. 77. Effective October 3, 1997.)

article: 1. Definitions


text:
(a) Amounts received as loans from the Commodity Credit Corporation shall, at the election of the taxpayer, be considered as income and shall be included in gross income for the taxable year in which received.

(b) If a taxpayer exercises the election provided for in subsection (a) 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.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 113. Effective January 1, 2001.)

article: 1. Definitions


text:
(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 such 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 such allocations.

(c) If a taxpayer elects to exclude noncash patronage allocations from gross income for the taxable year in which received, such 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 such noncash patronage allocations shall be disclosed in the return made for the taxable year in which such 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 any manner as the Franchise Tax Board may by regulation prescribe) of the realization of gain on such allocations; and (2) that deficiency may be assessed prior to the expiration of the four-year period, notwithstanding the provisions of Section 19057 or the provisions of any other law or rule of law which would otherwise prevent such assessment.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 114. Effective January 1, 2001.)

article: 1. Definitions


text: In the case of any taxpayer who is required to include the amount of any nuclear decommissioning costs in the taxpayer’s cost of service for ratemaking purposes, there shall be includable in the gross income of that taxpayer the amount so included for any taxable year.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 115. Effective January 1, 2001.)

article: 1. Definitions


text: Section 90 of the Internal Revenue Code, relating to illegal federal irrigation subsidies, shall apply to water delivered to the taxpayer on or after January 1, 1988, in taxable years beginning on or after January 1, 1989, except as otherwise provided.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 116. Effective January 1, 2001.)

article: 1. Definitions


text: In computing the tax imposed under this part, “gross income” does not include any of the items specified in this article.

history: (History: Repealed and added by Stats. 1955, Ch. 938.)

article: 2. Exclusions

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 6. Gross Income > 2. Exclusions


text: Amounts received other than amounts paid by reason of the death of the insured under life insurance, endowment or annuity contracts, either during the term or at maturity or upon surrender of the contract, equal to the total amount of premiums paid thereon. In the case of a transfer for a valuable consideration by assignment or otherwise, of a life insurance, endowment or annuity contract or any interest therein, only the actual value of such consideration and the amount of the premiums and other sums subsequently paid by the transferee shall be excluded from gross income under Section 24305 or this section. The preceding sentence shall not apply in the case of such a transfer if such contract or interest therein has a basis for determining gain or loss in the hands of a transferee determined in whole or in part by reference to such basis of such contract or interest therein in the hands of the transferor or to a corporation in which the insured is a shareholder or officer.

history: (History: Amended by Stats. 1963, Ch. 1028.)

article: 2. Exclusions


text: Any grant made in any taxable year by the Secretary of the Treasury under Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 (Public Law 111-5) to a person that places in service specified energy property shall not be includable in the gross income or the alternative minimum taxable income of the taxpayer, but shall be taken into account in determining the basis of the property to which that grant relates, except that the basis of that property shall be reduced using rules prescribed under Section 50(c) of the Internal Revenue Code in the same manner as a credit allowed under Section 48(a) of the Internal Revenue Code, and adjusted in accordance with rules applied by the Secretary of the Treasury under Section 1603(f) of the American Recovery and Reinvestment Tax Act of 2009 (Public Law 111-5).

history: (History: Added by Stats. 2010, Ch. 14, Sec. 64. (SB 401) Effective January 1, 2011.)

article: 2. Exclusions


text:
(a) Except as provided in subdivisions (b) and (c), amounts received under life insurance policies and contracts paid by reason of the death of the insured but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income.

(b) Proceeds of flexible premium contracts payable by reason of death shall be excluded from gross income only in accordance with the provisions of Section 101(f) of the Internal Revenue Code.

(c) (1) In the case of an employer-owned life insurance contract, any amount received by reason of death of an insured shall be excluded from gross income only in accordance with the provisions of Section 101(j) of the Internal Revenue Code.

(2) Section 101(j) of the Internal Revenue Code, relating to treatment of certain employer-owned life insurance contracts, shall apply in accordance with the provisions of Section 863(d) of the Pension Protection Act of 2006 (Public Law 109-280), relating to effective dates, except that the phrase “January 1, 2010,” shall be substituted for “the date of the enactment of this Act” contained therein.

history: (History: Amended by Stats. 2010, Ch. 14, Sec. 65. (SB 401) Effective January 1, 2011.)

article: 2. Exclusions


text:
(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) For taxable years beginning on or after January 1, 1998, and before January 1, 2002, except as otherwise provided in subdivision (c), gross income of a participant shall not include any of the following:

(1) Any earnings under a Scholarshare trust, or a participation agreement, as provided in Article 19 (commencing with Section 69980) of Chapter 2 of Part 42 of the Education Code.

(2) Contributions to the Scholarshare trust on behalf of a beneficiary shall not be includable as gross income of that beneficiary.

(c) For taxable years beginning on or after January 1, 1998, and before January 1, 2002:

(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 24272.2, to the extent not excluded from gross income under any other provision of 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 (Public Law 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 2032A(e)(2) of the Internal Revenue Code, of the former beneficiary of that Scholarshare trust.

(d) For taxable years beginning on or after January 1, 2002, Sections 529(c) and 529(e) of the Internal Revenue Code shall apply except as otherwise provided in Part 10 (commencing with Section 17001) and this part.

history: (History: Amended by Stats. 2005, Ch. 691, Sec. 59. Effective October 7, 2005.)

article: 2. Exclusions


text:
(a) Section 108 of the Internal Revenue Code, relating to income from discharge of indebtedness, shall apply, except as otherwise provided.

(b) Section 108(b)(2)(B) of the Internal Revenue Code, relating to general business credit, is modified by substituting “this part” in lieu of “Section 38 (relating to general business credit).”

(c) Section 108(b)(2)(G) of the Internal Revenue Code, relating to foreign tax credit carryovers, shall not apply.

(d) Section 108(b)(3)(B) of the Internal Revenue Code, relating to credit carryover reduction, is modified by substituting “11.1 cents” in lieu of “3313 cents” in each place in which it appears. In the case where more than one credit is allowable under this part, the credits shall be reduced on a pro rata basis.

(e) Section 108(g)(3)(B) of the Internal Revenue Code, relating to adjusted tax attributes, is modified by substituting “$9” in lieu of “$3.”

(f) (1) The amendments to Section 108 of the Internal Revenue Code made by Section 13150 of the Revenue Reconciliation Act of 1993 (Public Law 103-66), relating to exclusion from gross income for income from discharge of qualified real property business indebtedness, shall apply to discharges occurring on or after January 1, 1996, in taxable years beginning on or after January 1, 1996.

(2) If a taxpayer makes an election for federal income tax purposes under Section 108(c) of the Internal Revenue Code, relating to treatment of discharge of qualified real property business indebtedness, a separate election shall not be allowed under paragraph (3) of subdivision (e) of Section 23051.5 and the federal election shall be binding for purposes of this part.

(3) If a taxpayer has not made an election for federal income tax purposes under Section 108(c) of the Internal Revenue Code, relating to treatment of discharge of qualified real property business indebtedness, then the taxpayer shall not be allowed to make that election for purposes of this part.

(g) The amendments to Section 108 of the Internal Revenue Code made by Section 13226 of the Revenue Reconciliation Act of 1993 (Public Law 103-66), relating to modifications of discharge of indebtedness provisions, shall apply to discharges occurring on or after January 1, 1996, in taxable years beginning on or after January 1, 1996.

(h) The amendments made to Section 108(d)(7)(A) of the Internal Revenue Code, relating to certain provisions to be applied at the corporate level by Section 402 of the Job Creation and Worker Assistance Act of 2002 (Public Law 107-147), shall apply to discharges of indebtedness after December 31, 2001, in taxable years ending after that date. This subdivision shall not apply to any discharge of indebtedness made before March 1, 2002, pursuant to a plan of reorganization filed with a bankruptcy court on or before October 11, 2001.

(i) Section 108(i) of the Internal Revenue Code, relating to deferral and ratable inclusion of income arising from business indebtedness discharged by the reacquisition of a debt instrument, shall not apply.

history: (History: Amended by Stats. 2015, Ch. 359, Sec. 30. (AB 154) 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.)

article: 2. Exclusions


text:
Section 1078 of Public Law 98-369 (Tax Reform Act of 1984), relating to exclusions from gross income of payments from the United States Forest Service as a result of restricting motorized traffic in the Boundary Waters Canoe Area, shall apply, with the following exceptions:

(a) Section 1078(f)(2) of that act shall not be applicable.

(b) This section shall be effective only for payments made in taxable years beginning on or after January 1, 1985.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 119. Effective January 1, 2001.)

article: 2. Exclusions


text:
Gross income does not include any amount received as a rebate, voucher, or other financial incentive issued by the California Energy Commission, the Public Utility Commission, or a local publicly owned electric utility, as defined in subdivision (d) of Section 9604 of the Public Utilities Code, for any expenses paid or incurred by a taxpayer for the purchase or installation of any of the following devices:

(a) A thermal system as defined in Section 25600 of the Public Resources Code.

(b) A solar system as defined in Section 25600 of the Public Resources Code.

(c) A wind energy system device that produces electricity.

(d) A fuel cell generating system, as described in the California Energy Commission’s Emerging Renewable Resources Account Guidebook, that produces electricity.

history: (History: Added by Stats. 2002, Ch. 843, Sec. 2. Effective September 24, 2002.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2020, gross income does not include any amount awarded as a restaurant revitalization grant pursuant to Section 9009c of Title 15 of the United States Code.

(b) (1) Notwithstanding Section 24425, for taxable years beginning on or after January 1, 2020, paragraph (2) of Section 9673 of the American Rescue Plan Act of 2021 (Public Law 117-2) shall apply, except as provided.

(2) Paragraph (2) of Section 9673 of the American Rescue Plan Act of 2021 (Public Law 117-2) is modified by substituting the phrase “provided by paragraph (1)” with “provided by this section.”

(c) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) shall not apply to any standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board pursuant to this section.

(d) This section shall be operative for taxable years beginning on or after January 1, 2020.

history: (History: Added by Stats. 2022, Ch. 3, Sec. 17. (SB 113) Effective February 9, 2022.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2019, gross income does not include any amount awarded as a shuttered venue operator grant pursuant to Section 9009a of Title 15 of the United States Code.

(b) (1) Notwithstanding Section 24425, for taxable years beginning on or after January 1, 2019, subsection (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Subsection (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986” with “For purposes of this part”.

(3) Paragraphs (2) and (3) of subsection (d) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply to an ineligible entity.

(c) For purposes of this section:

(1) “Ineligible entity” means a taxpayer that either:

(A) Is a publicly-traded company.

(B) Does not meet the reduction from the gross receipts requirements of Section 636(a)(37)(A)(iv)(bb) of Title 15 of the United States Code, as added by Section 311 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(2) “Publicly-traded company” means a publicly-traded entity as described in Section 342 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(d) This section shall be operative for taxable years beginning on or after January 1, 2019.

history: (History: Added by Stats. 2022, Ch. 3, Sec. 18. (SB 113) Effective February 9, 2022.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2021, and before January 1, 2026, gross income does not include a bill credit or credits received by a customer from a community water system or wastewater treatment provider pursuant to the Water and Wastewater System Payments Under the American Rescue Plan Act of 2021 (Chapter 4.7 (commencing with Section 116773) of Part 12 of Division 104 of the Health and Safety Code).

(b) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 3, Sec. 19. (SB 113) Effective February 9, 2022. Repealed as of December 1, 2026, by its own provisions.)

article: 2. Exclusions


text:
(a) Gross income does not include cost-share payments received by forest landowners from the Department of Forestry and Fire Protection pursuant to the California Forest Improvement Act of 1978 (Part 2.5 (commencing with Section 4790) of Division 1 of the Public Resources Code) or from the United States Department of Agriculture, Forest Service, under the Forest Stewardship Program and the Stewardship Incentives Program, pursuant to the Cooperative Forestry Assistance Act, as amended (Public Law 101-624).

(b) The amount of any cost-share payment excluded pursuant to subdivision (a) shall not be considered with regard to either of the following:

(1) Determining the basis of property acquired or improved.

(2) Computing any allowable deduction to which the taxpayer may otherwise be entitled.

history: (History: Added by Stats. 1994, Ch. 22, Sec. 3. Effective March 25, 1994. See same-numbered section added by Stats. 2022, Ch. 3.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2021, and before January 1, 2026, gross income does not include a bill credit or credits received by a customer from a utility applicant pursuant to the California Arrearage Payment Program Under the American Rescue Plan Act of 2021 (Article 12 (commencing with Section 16429.5) of Chapter 2 of Part 2 of Division 4 of Title 2 of the Government Code).

(b) This section shall remain in effect only until December 1, 2026, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 3, Sec. 20. (SB 113) Effective February 9, 2022. Repealed as of December 1, 2026, by its own provisions. See same-numbered section added by Stats. 1994, Ch. 22.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2019, gross income does not include any covered loan amount forgiven pursuant to Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), pursuant to the Paycheck Protection Program and Health Care Enhancement Act (Public Law 116-139), pursuant to the Paycheck Protection Program Flexibility Act of 2020 (Public Law 116-142), pursuant to the Consolidated Appropriations Act, 2021 (Public Law 116-260), or pursuant to the PPP Extension Act of 2021 (Public Law 117-6).

(b) For taxable years beginning on or after January 1, 2019, gross income does not include any advance grant amount issued pursuant to Section 1110(e) of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), or pursuant to Section 331 of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(c) (1) Notwithstanding Section 24425, for taxable years beginning on or after January 1, 2019, subsection (a) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Paragraph (1) of subsection (a) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986” with “For purposes of this part.”

(3) The provisions of paragraph (1) of subsection (a) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260), relating to paragraphs (2) and (3) of subsection (i) of Section 7A of the Small Business Act, shall not apply to an ineligible entity.

(4) Paragraph (2) of subsection (a) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply.

(d) (1) Notwithstanding Section 24425, for taxable years beginning on or after January 1, 2019, subsection (b) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Subsection (b) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986, in the case of any taxable year ending after the date of the enactment of this Act” with “For purposes of this part.”

(3) Paragraphs (2) and (3) of subsection (b) of Section 276 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply to an ineligible entity.

(e) (1) Notwithstanding Section 24425, for taxable years beginning on or after January 1, 2019, subsection (a) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Subsection (a) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986” with “For purposes of this part.”

(3) Paragraphs (2) and (3) of subsection (a) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall not apply to an ineligible entity.

(f) (1) Notwithstanding Section 24425, for taxable years beginning on or after January 1, 2019, subsection (b) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

(2) Subsection (b) of Section 278 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) is modified by substituting the phrase “For purposes of the Internal Revenue Code of 1986” with “For purposes of this part.”

(g) Notwithstanding Section 17280, for taxable years beginning on or after January 1, 2019, subsection (a) of Section 304 of Title III of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260) shall apply, except as provided.

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

(1) “Covered loan” has the same meaning as in Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), or pursuant to the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(2) “Advance grant amount” means an emergency Economic Injury Disaster Loan grant pursuant to Section 1110(e) of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116-136), or a targeted Economic Injury Disaster Loan advance pursuant to Section 331 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(3) “Ineligible entity” means a taxpayer that either:

(A) Is a publicly traded company.

(B) Does not meet the reduction from the gross receipts requirements of Section 636(a)(37)(A)(iv)(bb) of Title 15 of the United States Code, as added by Section 311 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(4) “Publicly traded company” means a publicly traded entity as described in Section 342 of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116-260).

(i) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) shall not apply to any standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board pursuant to this section.

(j) The amendments made by the act adding this subdivision shall be operative for taxable years beginning on or after January 1, 2019.

(k) The amendments made to this section by Chapter 55 of the Statutes of 2022 shall be operative for taxable years beginning on or after January 1, 2019.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 88. (SB 711) Effective October 1, 2025. Operative in taxable years beginning on or after January 1, 2019, by Stats. 2022, Ch. 55.)

article: 2. Exclusions


text:
(a) For each taxable year beginning on or after July 1, 2015, gross income does not include an amount received as a loan forgiveness, grant, credit, rebate, voucher, or other financial incentive issued by the California Residential Mitigation Program or the California Earthquake Authority to assist a residential property owner or occupant with expenses paid, or obligations incurred, for earthquake loss mitigation.

(b) For the purposes of this section, “earthquake loss mitigation” means an activity that reduces seismic risks to a residential structure or its contents, or both. For purposes of structural seismic risk mitigation, a residential structure is either of the following:

(1) A structure described in subdivision (a) of Section 10087 of the Insurance Code.

(2) A residential building of not fewer than 2, but not more than 10, dwelling units.

history: (History: Amended by Stats. 2015, Ch. 323, Sec. 11. (SB 102) Effective September 22, 2015.)

article: 2. Exclusions


text:
(a) Gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) The term “qualified amount” includes any of the following:

(A) Amounts received by a qualified taxpayer during the remediation of the Carousel Housing Tract, located in Carson, California, from the Shell Oil Company for costs associated with temporary accommodations and relocation pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046. These costs include all amounts paid under the Temporary Living Assistance section of the Revised Remedial Action Plan, Relocation Plan, developed by URS Corporation for Shell Oil Products U.S., dated September 19, 2014.

(B) Amounts received by a qualified taxpayer paid under the Optional Real Estate Program of the Revised Remedial Action Plan, Relocation Plan, developed by URS Corporation for Shell Oil Products U.S., dated September 19, 2014.

(C) Any amounts received by a qualified taxpayer from a settlement arising out of the investigation, cleanup, or abatement of the waste discharged at the former Kast Property Tank Farm facility pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046.

(2) The term “qualified amount” does not include any reimbursed amounts representing any expenses related to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046 that were deducted under this part.

(c) For purposes of this section, “qualified taxpayer” means any taxpayer that currently owns or previously owned real property located within the Carousel Housing Tract, located in Carson, California, who received amounts, incurred expenses, or received amounts from a settlement arising out of or pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046.

(d) The payor under the Revised Remedial Action Plan, Relocation Plan, developed by URS Corporation for Shell Oil Products U.S., dated September 19, 2014, and the payor or payors of the settlement proceeds arising out of or pursuant to California Regional Water Quality Control Board, Los Angeles Region Order R4-2011-0046, shall provide, upon request by the Franchise Tax Board, an annual list of names, addresses, payment dates, and amounts paid to qualified taxpayers.

(e) (1) This section shall apply to taxable years beginning before, on, or after the effective date of the act adding this section.

(2) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before the effective date of this section is prevented as of such date by the operation of any law or rule of law, including res judicata, such credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the one-year period beginning on the effective date of the act adding this section.

history: (History: Added by Stats. 2018, Ch. 887, Sec. 3. (SB 343) Effective September 28, 2018.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2022, and before January 1, 2027, gross income does not include any amount received as a rebate, voucher, or other financial incentive issued by a public water system, local government, or state agency for participation in a turf replacement water conservation program.

(b) For the purposes of this section, “public water system” shall have the same meaning as in Section 116275 of the Health and Safety Code.

(c) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 674, Sec. 2. (AB 2142) Effective September 28, 2022. Repealed as of December 1, 2027, by its own provisions.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, gross income shall not include any amount received by a qualified taxpayer as a California qualified wildfire loss mitigation payment.

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

(1) “California qualified wildfire loss mitigation payment” means any amount which is received through the California Wildfire Mitigation Financial Assistance Program under Article 16.5 (commencing with Section 8654.2) of Chapter 7 of Division 1 of Title 2 of the Government Code for the benefit of a residential property owner or occupant with expenses paid, or obligations incurred, for wildfire loss mitigation.

(2) “Qualified taxpayer” means a taxpayer that owns the structure for which a California qualified wildfire loss mitigation payment was received.

(3) “Wildfire loss mitigation” means an activity that reduces wildfire risks to a residential structure or its contents, or both.

(c) This section shall remain in effect only until December 1, 2029, and as of that date is repealed.

history: (History: Added by Stats. 2024, Ch. 987, Sec. 2. (SB 946) Effective September 29, 2024. Repealed as of December 1, 2029, by its own provisions.)

article: 2. Exclusions


text: Gross income does not include income (other than rent) derived by a lessor of real property on the termination of a lease, representing the value of such property attributable to buildings erected or other improvements made by the lessee.

history: (History: Added by Stats. 1955, Ch. 938.)

article: 2. Exclusions


text:
(a) For taxable years beginning before January 1, 2027, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from Southern California Edison in settlement for claims relating to the 2017 Thomas Fire or the 2018 Woolsey Fire.

(2) “Qualified taxpayer” means either of the following:

(A) Any taxpayer that owned real property located in the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(B) Any taxpayer that had a place of business within the County of Ventura or Santa Barbara during the 2017 Thomas Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2017 Thomas Fire.

(C) Any taxpayer that owned real property located in the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(D) Any taxpayer that had a place of business within the County of Ventura or Los Angeles during the 2018 Woolsey Fire who paid and incurred expenses and received amounts from a settlement arising out of or pursuant to the 2018 Woolsey Fire.

(3) “Settlement entity” means the entity making the settlement payment to a qualified taxpayer as described in subparagraphs (A) and (B) of paragraph (2).

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) (1) This section shall apply to taxable years beginning before, on, or after the effective date of the act adding this section.

(2) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before the effective date of this section is prevented as of that date by the operation of any law or rule of law, including res judicata, that credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the one-year period beginning on the effective date of the act adding this section.

(e) This section shall remain in effect only until December 1, 2027, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 841, Sec. 3. (SB 1246) Effective September 29, 2022. Repealed as of December 1, 2027, by its own provisions.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2021, and before January 1, 2030, gross income shall not include any qualified amount received by a qualified taxpayer in the taxable year.

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

(1) “Qualified amount” means any amount received from a settlement entity by a qualified taxpayer in connection with a qualified wildfire disaster in California.

(2) “Qualified taxpayer” means any of the following:

(A) Any taxpayer that owns real property located in an area damaged by a qualified wildfire disaster that paid or incurred expenses, and received qualified amounts from a settlement entity, arising out of or pursuant to the qualified wildfire disaster.

(B) Any taxpayer that has a place of business within an area damaged by a qualified wildfire disaster that paid or incurred expenses, and received qualified amounts from a settlement entity, arising out of or pursuant to the qualified wildfire disaster.

(3) “Qualified wildfire disaster” means any disaster arising from a wildfire for which either the Governor has declared a state of emergency or the President of the United States has declared an emergency or major disaster as defined under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. Sec. 5121 et seq.).

(4) “Settlement entity” means an entity making a settlement payment of a qualified amount to a qualified taxpayer.

(c) The settlement entity shall provide, upon request by the Franchise Tax Board or qualified taxpayer, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board or the qualified taxpayer.

(d) The qualified taxpayer shall provide, upon request, all necessary information in the form and manner prescribed by the Franchise Tax Board.

(e) This section shall remain in effect only until December 1, 2030, and as of that date is repealed.

history: (History: Amended by Stats. 2025, Ch. 112, Sec. 2. (SB 159) Effective September 17, 2025. Repealed as of December 1, 2030, by its own provisions.)

article: 2. Exclusions


text:
(a) Gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from the Fire Victims Trust, established pursuant to the order of the United States Bankruptcy Court for the Northern District of California dated June 20, 2020, case number 19-30088, docket number 8053.

(2) “Qualified taxpayer” means any of the following:

(A) Any taxpayer that owned real property located in the County of Amador or Calaveras during the 2015 Butte Fire who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to the 2015 Butte Fire.

(B) Any taxpayer that owned real property located in the County of Napa, Sonoma, Lake, Butte, Mendocino, or Solano during the 2017 North Bay Fires who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to one or more of the 2017 North Bay Fires.

(C) Any taxpayer that owned real property located in the County of Butte during the 2018 Camp Fire who incurred and paid expenses and received amounts from a settlement arising out of or pursuant to the 2018 Camp Fire.

(c) The Fire Victims Trust, shall provide, upon request by the Franchise Tax Board, an annual list of names, addresses, payment dates, and qualified amounts paid to qualified taxpayers.

(d) (1) This section shall apply to taxable years beginning before, on, or after the effective date of the act adding this section.

(2) If the credit or refund of any overpayment of tax resulting from the application of this section to a period before the effective date of this section is prevented as of that date by the operation of any law or rule of law, including res judicata, that credit or refund may nevertheless be allowed or made if the claim therefor is filed before the close of the one-year period beginning on the effective date of the act adding this section.

(e) This section shall remain in effect only until January 1, 2028, and as of that date is repealed.

history: (History: Added by Stats. 2022, Ch. 749, Sec. 3. (AB 1249) Effective September 29, 2022. Repealed as of January 1, 2028, by its own provisions.)

article: 2. Exclusions


text:
Section 110 of the Internal Revenue Code, relating to qualified lessee construction allowances for short-term leases, shall apply, except as otherwise provided.

(a) Section 110(b) of the Internal Revenue Code is modified by substituting the phrase “(including for purposes of paragraph (2) of subdivision (e) of Section 24349)” for the phrase “(including for purposes of Section 168(i)(8)(B).”

(b) Section 110(c)(2) of the Internal Revenue Code is modified by substituting the phrase “(as determined under the rules of paragraph (3) of subdivision (e) of Section 24349)” for the phrase “(as determined under the rules of Section 168(i)(3)).”

history: (History: Added by Stats. 1998, Ch. 322, Sec. 78. Effective August 20, 1998.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2020, and before January 1, 2028, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from a settlement entity in connection with the 2019 Kincade Fire.

(2) “Qualified taxpayer” means either of the following:

(A) Any taxpayer that owned real property located in the County of Sonoma during the 2019 Kincade Fire that paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2019 Kincade Fire.

(B) Any taxpayer that had a place of business within the County of Sonoma during the 2019 Kincade Fire that paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2019 Kincade Fire.

(3) “Settlement entity” means Pacific Gas and Electric Company or its subsidiary that is making the settlement payment to a qualified taxpayer.

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

history: (History: Added by Stats. 2023, Ch. 55, Sec. 13. (SB 131) Effective July 10, 2023. Repealed as of December 1, 2028, by its own provisions.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2020, and before January 1, 2028, gross income does not include any qualified amount received by a qualified taxpayer.

(b) For purposes of this section:

(1) “Qualified amount” means any amount received in settlement by a qualified taxpayer from a settlement entity in connection with the 2020 Zogg Fire.

(2) “Qualified taxpayer” means either of the following:

(A) Any taxpayer that owned real property located in the County of Shasta or the County of Tehama during the 2020 Zogg Fire that paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2020 Zogg Fire.

(B) Any taxpayer that had a place of business within the County of Shasta or the County of Tehama during the 2020 Zogg Fire that paid or incurred expenses and received amounts from a settlement arising out of or pursuant to the 2020 Zogg Fire.

(3) “Settlement entity” means Pacific Gas and Electric Company or its subsidiary that is making the settlement payment to a qualified taxpayer.

(c) The settlement entity shall provide, upon request by the Franchise Tax Board, documentation of the settlement payments in the form and manner requested by the Franchise Tax Board.

(d) This section shall remain in effect only until December 1, 2028, and as of that date is repealed.

history: (History: Added by Stats. 2023, Ch. 55, Sec. 14. (SB 131) Effective July 10, 2023. Repealed as of December 1, 2028, by its own provisions.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2024, and before January 1, 2029, gross income does not include any Chiquita Canyon elevated temperature landfill event payment amount received by a taxpayer.

(b) For purposes of this section:

(1) “Chiquita Canyon elevated temperature landfill event” means the elevated temperature landfill event, beginning on May 1, 2022, that occurred beneath the Chiquita Canyon Landfill in the County of Los Angeles, California.

(2) “Chiquita Canyon elevated temperature landfill event payment” means any amount received by a taxpayer on or after March 1, 2024, as compensation for loss, damages, expenses, relocation, suffering, loss in real property value, closing costs with respect to real property, including realtor commissions, or inconvenience, including access to real property, resulting from the Chiquita Canyon elevated temperature landfill event, if the amount was provided by either of the following:

(A) A federal, state, or local governmental agency.

(B) Waste Connections, Inc., any subsidiary, insurer, or agent of Waste Connections, Inc., or any person related to Waste Connections, Inc.

(c) The payor shall provide, upon request by the Franchise Tax Board, documentation of the Chiquita Canyon elevated temperature landfill event payment amount in the form and manner requested by the Franchise Tax Board.

(d) This section shall remain operative only until December 1, 2029, and is repealed as of that date.

history: (History: Added by Stats. 2025, Ch. 17, Sec. 21. (SB 132) Effective June 27, 2025. Repealed as of December 1, 2029, by its own provisions.)

article: 2. Exclusions


text:
(a) Section 111 of the Internal Revenue Code, relating to recovery of tax benefit items, shall apply, except as otherwise provided.

(b) Sections 111(b) and 111(c) of the Internal Revenue Code, relating to credits and treatment of credit carryovers, shall be applicable with respect to credits allowable under this part.

history: (History: Amended by Stats. 1991, Ch. 117, Sec. 58. Effective July 16, 1991.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any payment made pursuant to Section 6417 of the Internal Revenue Code, as added by Public Law 117-169, relating to elective payment of applicable credits. Sections 6417(c)(1)(C) and 6417(c)(1)(D) of the Internal Revenue Code, as added by Public Law 117-169, shall apply.

(b) For taxable years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include any payment made pursuant to Section 6418 of the Internal Revenue Code, as added by Public Law 117-169, relating to transfer of certain credits.

(1) Sections 6418(c)(1)(A) and 6418(c)(1)(B) of the Internal Revenue Code, as added by Public Law 117-169, shall apply.

(2) No deduction shall be allowed for any amount paid in consideration of a transfer made as described in Section 6418 of the Internal Revenue Code, as added by Public Law 117-169.

(c) For purposes of this section, “payment made pursuant to Section 6418 of the Internal Revenue Code” includes the value of a credit received by a transferee pursuant to Section 6418 of the Internal Revenue Code, as added by Public Law 117-169.

(d) This section shall remain in effect only until December 1, 2031, and as of that date is repealed.

history: (History: Added by Stats. 2025, Ch. 215, Sec. 3. (SB 302) Effective October 1, 2025. Repealed as of December 1, 2031, by its own provisions.)

article: 2. Exclusions


text:
(a) For taxable years beginning on or after September 1, 2020, and before January 1, 2025, gross income does not include grant allocations received by a taxpayer pursuant to the California Microbusiness COVID-19 Relief Program that is administered by the Office of Small Business Advocate pursuant to Article 9 (commencing with Section 12100.90) of Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code.

(b) Section 41 shall not apply to the exclusion allowed by this section.

history: (History: Amended by Stats. 2023, Ch. 196, Sec. 23. (SB 143) Effective September 13, 2023.)

article: 2. Exclusions


text:
(a) Gross income does not include any of the following grant allocations:

(1) For taxable years beginning on or after January 1, 2020, and before January 1, 2030, grant allocations received by a taxpayer pursuant to the COVID-19 Relief Grant that is administered by the Office of Small Business Advocate, is funded by Executive Order No. E 20/21-182, and is described in a letter from the Department of Finance to the Joint Legislative Budget Committee, dated December 17, 2020, entitled, “Disaster Response-Emergency Operations Account Request—Increased Funding for the California Rebuilding Fund and Funding to Support a New COVID-19 Relief Grant for Small Businesses.”

(2) For taxable years beginning on or after January 1, 2020, and before January 1, 2030, grant allocations received by a taxpayer pursuant to the California Small Business COVID-19 Relief Grant Program established by Section 12100.83 of the Government Code.

(3) For taxable years beginning on or after September 1, 2020, and before January 1, 2030, grant allocations received by a taxpayer pursuant to the California Venues Grant Program established by Section 12100.83.5 of the Government Code.

(4) For taxable years beginning on or after January 1, 2021, and before January 1, 2030, grant allocations received by a taxpayer pursuant to the California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program established by Section 12100.975 of the Government Code.

(b) Section 41 shall not apply to the exclusion allowed by this section.

(c) Notwithstanding any other law, the Franchise Tax Board may include in audits the grants referenced in this section.

(d) The Franchise Tax Board may adopt regulations that are necessary and appropriate to implement this section.

(e) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) shall not apply to any regulation, standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board pursuant to this section.

(f) This section shall remain in effect only until December 1, 2030, and as of that date is repealed.

history: (History: Amended by Stats. 2022, Ch. 736, Sec. 6. (AB 152) Effective September 29, 2022. Repealed as of December 1, 2030, by its own provisions.)

article: 2. Exclusions


text:
The following phrase (or its substantial equivalent) in other codes or statutes does not exempt the gain or loss from the sale or transfer of bonds from the provisions of this part:

“The issuance, transfer and interest income earned on any bonds issued by an agency (state or local) under this article (chapter, section, etc.) is exempt from taxation of every kind by any state or local entity.”

history: (History: Added by Stats. 1986, Ch. 317, Sec. 2. Effective July 15, 1986.)

article: 2. Exclusions


text: Gross income does not include any amount received for empty beverage containers by a consumer from a recycling center or recycling location as the recycling value, as defined in Chapter 2 (commencing with Section 14502) of Division 12.1 of the Public Resources Code.

history: (History: Added by Stats. 1986, Ch. 1290, Sec. 5. Effective September 29, 1986.)

article: 2. Exclusions


text:
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.

history: (History: Added by Stats. 1969, Ch. 1191.)

article: 3. Other Exclusions

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 6. Gross Income > 3. Other Exclusions


text:
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.

article: 3. Other Exclusions


text:
(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.

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

article: 3. Other Exclusions


text: 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.

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

article: 3. Other Exclusions


text:
(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.

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

article: 3. Other Exclusions


text: 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.

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

article: 3. Other Exclusions


text:
(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.

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

article: 3. Other Exclusions


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

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

article: 3. Other Exclusions


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

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

article: 3. Other Exclusions


text: “Net income” means the gross income, computed under Chapter 6 (commencing with Section 24271), less the deductions allowed under this article and Article 2 (commencing with Section 24401).

history: (History: Amended by Stats. 1984, Ch. 193, Sec. 127.)

chapter: 7. Net Income

article: 1. Deductions

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 7. Net Income > 1. Deductions


text:
(a) Section 162 of the Internal Revenue Code, relating to trade or business expenses, shall apply, except as otherwise provided.

(b) For purposes of applying Section 162 of the Internal Revenue Code, any references to Section 170 of the Internal Revenue Code shall be modified to refer to Sections 24357 to 24359.1, inclusive, of this part.

(c) (1) The amendments made by Section 13601(a), (b), (c), and (d) of the Tax Cuts and Jobs Act (Public Law 115-97) to Section 162(m) of the Internal Revenue Code, relating to certain excessive employee remuneration, shall apply, except as otherwise provided.

(2) The amendments made by Section 13601(e)(2) of the Tax Cuts and Jobs Act (Public Law 115-97), relating to exception for binding contracts, shall apply, and is modified by substituting “March 31, 2019” for “November 2, 2017.”

history: (History: Amended by Stats. 2019, Ch. 39, Sec. 22. (AB 91) Effective July 1, 2019.)

article: 1. Deductions


text:
(a) The amendments made by Section 13531(a) of the Tax Cuts and Jobs Act (Public Law 115-97) to add Section 162(r) to the Internal Revenue Code, relating to the disallowance of FDIC premiums paid by certain large financial institutions, shall apply, except as otherwise provided.

(b) For purposes of this section, Article 9 (commencing with Section 23361) of Chapter 2 of Part 11 shall not apply.

history: (History: Added by Stats. 2019, Ch. 39, Sec. 23. (AB 91) Effective July 1, 2019.)

article: 1. Deductions


text:
Whereas, the people of the State of California desire to promote and achieve tax equity and fairness among all the state’s citizens and further desire to conform to the public policy of nondiscrimination, the Legislature hereby enacts the following for these reasons and for no other purpose:

(a) No deduction shall be allowed under Section 24343 for expenses incurred by a taxpayer with respect to expenditures made at, or payments made to, a club which restricts membership or the use of its services or facilities on the basis of ancestry or any characteristic listed or defined in Section 11135 of the Government Code, except for genetic information.

(b) A club described in subdivision (a) holding an alcoholic beverage license pursuant to Division 9 (commencing with Section 23000) of the Business and Professions Code, except a club holding an alcoholic beverage license pursuant to Section 23425 thereof, shall provide on each receipt furnished to a taxpayer a printed statement as follows:

“The expenditures covered by this receipt are nondeductible for state income tax purposes or franchise tax purposes.”

(c) For purposes of this section:

(1) “Expenses” means those expenses otherwise deductible under Section 24343, except for subdivision (a), and includes, but is not limited to, club membership dues and assessments, food and beverage expenses, expenses for services furnished by the club, and reimbursements or salary adjustments to officers or employees for any of the preceding expenses.

(2) “Club” means a club as defined in Division 9 (commencing with Section 23000) of the Business and Professions Code, except a club as defined in Section 23425 thereof.

history: (History: Amended by Stats. 2011, Ch. 261, Sec. 23. (SB 559) Effective January 1, 2012.)

article: 1. Deductions


text: Any employer contribution to a medical savings account, as defined in Section 220 of the Internal Revenue Code, relating to medical savings accounts, if otherwise deductible under this part, shall be allowed only for the taxable year in which paid.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 122. Effective January 1, 2001.)

article: 1. Deductions


text:
(a) In addition to the deduction allowed by Section 24343, a deduction shall be allowed to an employer as an ordinary and necessary expense paid or incurred during the taxable year in carrying on any trade or business for those expenses involved in any of the following ridesharing arrangements:

(1) Subsidizing employees commuting in vanpools.

(2) Subsidizing employees commuting in private commuter buses or buspools.

(3) Subsidizing monthly transit passes for its employees or for use by the employee’s dependents, except that no deduction shall be allowed for transit passes issued for the use of elementary and secondary school students.

(4) Subsidizing employees commuting in subscription taxipools.

(5) Subsidizing employees commuting in a carpool.

(6) In the case of an employer who offers free parking to its employees, offering a cash equivalent to employees who do not require parking, including a parking cash-out program, as defined by subdivision (f) of Section 65088.1 of the Government Code.

(7) Providing free or preferential parking to carpools, vanpools, or any other vehicle used in a ridesharing arrangement.

(8) Making facility improvements to encourage employees, for the purpose of commuting from their homes, to participate in ridesharing arrangements, to use bicycles, or to walk. These facility improvements may include, but are not limited to, any of the following: the construction of bus shelters; the installation of bicycle racks and other bicycle-related facilities, such as showers and locker rooms; and parking lot modifications to provide carpools, vanpools, or buspools with preferential treatment. The cost of these facility improvements shall be allowed as a depreciation deduction. Notwithstanding subdivision (c), the depreciation deduction shall be allowable over a 36-month period.

(9) Providing company commuter van or bus service to its employees and to others for commuting from their homes, but not for transportation required as part of the employer’s business activities, except as otherwise provided in this section. The capital costs of providing this service shall not be an eligible deduction under this section.

(10) Providing to employees transportation services which are required as part of the employer’s business activities to the extent that the transportation would be provided by employees without reimbursement in the absence of an employer-sponsored ridesharing incentive program. The capital costs of providing this service shall not be an eligible deduction under this section.

(b) For purposes of this section:

(1) “Employer” means either of the following:

(A) A taxpayer for whom services are performed by employees, except entities which are not subject to tax under this part.

(B) A taxpayer which is a private or public educational institution which enrolls students at higher than the secondary level.

(2) “Employee” means either of the following:

(A) An individual who performs service for an employer for more than eight hours per week for remuneration.

(B) Any commuting student, as defined in paragraph (3).

(3) “Commuting student” means a registered full-time student at a college, university, or other postsecondary educational institution, who lives apart from the property which is designated as the “employment site” for the purpose of this section, and who travels between his or her residence and the designated employment site on a regular, though not necessarily daily, basis.

(4) “Employer-sponsored ridesharing incentive program” means a program undertaken by an employer either alone or in cooperation with other employers to encourage or provide, or both, fiscal other incentives to employees to make the home-to-work commute trip by any mode other than the single-occupant motor vehicle.

(5) “Company commuter bus or van” means a highway vehicle which meets all of the following criteria:

(A) Has at least seven or more persons commuting on a daily basis to and from work.

(B) At least 50 percent of the mileage of which can be reasonably expected to be used for the purpose of transporting employees to and from work.

(C) Is acquired by the taxpayer on or after the date of enactment of this legislation.

(6) “Vanpool” means seven or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry 7 to 15 adult persons.

(7) “Monthly transit pass” means any bulk purchase of transit rides that entitles the purchaser to 40 or more rides per month, whether at a discount rate or the base fare rate.

(8) “Transit” means transportation service for use by the general public that utilizes buses, railcars, or ferries with a seating capacity of 16 or more persons.

(9) “Subscription taxipool” means a type of service in which employers or groups of employees contract with a public or private taxi operator to provide daily commuter service for a group of preassembled subscribers on a prepaid or daily-fare basis, following a relatively fixed route and schedule tailored to meet the needs of the subscribers.

(10) “Ridesharing arrangement” means the transportation of persons in a motor vehicle where that transportation is incidental to another purpose of the driver. The term includes ridesharing arrangements known as carpools, vanpools, and buspools.

(11) “Carpool” means two or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry less than seven adults, including the driver.

(12) “Buspool” means 16 or more persons commuting on a daily basis to and from work by means of a vehicle with a seating arrangement designed to carry more than 15 adult passengers.

(13) “Private commuter bus” means a highway vehicle which meets all of the following criteria:

(A) Has a seating capacity of at least seven adults, including the driver.

(B) At least 50 percent of the mileage of which can be reasonably expected to be used for the purpose of transporting employees to and from work.

(C) Is acquired by the taxpayer on or after the date of enactment of this section.

(D) With respect to which the taxpayer makes an election under this paragraph on its return for the taxable year in which the vehicle is placed in service.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 123. Effective January 1, 2001.)

article: 1. Deductions


text: Section 162(k)(2)(A)(ii) of the Internal Revenue Code shall not apply.

history: (History: Amended by Stats. 2002, Ch. 35, Sec. 48. Effective May 8, 2002.)

article: 1. Deductions


text: For taxable years beginning on or after January 1, 2014, a deduction shall not be allowed for the amount of any fine or penalty paid or incurred by an owner of all or part of a professional sports franchise, where that fine or penalty is assessed or imposed by the professional sports league that includes that franchise.

history: (History: Added by Stats. 2014, Ch. 792, Sec. 2. (AB 877) Effective September 29, 2014.)

article: 1. Deductions


text:
(a) Section 163 of the Internal Revenue Code, relating to interest, shall apply, except as otherwise provided.

(b) If income of the taxpayer which is derived from or attributable to sources within this state is determined pursuant to Section 25101 or 25110, the interest deductible shall be an amount equal to interest income subject to apportionment by formula, plus the amount, if any, by which the balance of interest expense exceeds interest and dividend income (except dividends deductible under Section 24402 and dividends subject to the deductions provided for in Section 24411 to the extent of those deductions) not subject to apportionment by formula. Interest expense not included in the preceding sentence shall be directly offset against interest and dividend income (except dividends deductible under Section 24402 and dividends subject to the deductions provided for in Section 24411 to the extent of those deductions) not subject to apportionment by formula.

(c) (1) Notwithstanding subdivision (b) and subject to paragraph (2), interest expense allowable under Section 163 of the Internal Revenue Code that is incurred for purposes of foreign investments may be offset against dividends deductible under Section 24411.

(2) For taxable years beginning on or after January 1, 1997, the amount of interest computed pursuant to paragraph (1) shall be multiplied by the same percentage used to determine the dividend deduction under Section 24411 to determine that amount of interest that may be offset as provided in paragraph (1).

(d) Section 7210(b) of Public Law 101-239, relating to the effective date for limitation on deduction for certain interest paid to a related person, shall apply.

(e) Section 163(j) of the Internal Revenue Code, relating to the limitation on business interest, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 89. (SB 711) Effective October 1, 2025.)

article: 1. Deductions


text:
(a) A deduction, determined in accordance with Section 163(e) of the Internal Revenue Code, shall be allowed to the issuer of an original issue discount bond.

(b) For taxable years beginning on or after January 1, 1987, and before the taxable year in which the debt obligation matures or is sold, exchanged, or otherwise disposed, the amount deductible under this part shall be the same as the amount deductible on the federal tax return.

(c) The difference between the amount deductible on the federal tax return and the amount allowable under this part, with respect to obligations issued after December 31, 1984, for taxable years beginning before January 1, 1987, shall be allowed as a deduction in the taxable year in which the debt obligation matures or is sold, exchanged, or otherwise disposed.

(d) The provisions of Section 7202(c) of Public Law 101-239, relating to the effective date for treatment of certain high yield original issue discount obligations, shall apply.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 126. Effective January 1, 2001.)

article: 1. Deductions


text: The amendments to Section 163 of the Internal Revenue Code made by Section 13228 of the Revenue Reconciliation Act of 1993 (P.L. 103-66), relating to modification to limitation on deduction for certain interest, shall apply to taxable years beginning on or after January 1, 1996.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 127. Effective January 1, 2001.)

article: 1. Deductions


text:
A deduction shall be allowed for taxes or licenses paid or accrued during the taxable year, except:

(a) Taxes paid to the state under this part.

(b) Taxes on or according to or measured by income or profits paid or accrued within the taxable year imposed by the authority of any of the following:

(1) The Government of the United States or any foreign country.

(2) Any state, territory, county, school district, municipality, or other taxing subdivision of any state or territory.

(c) Taxes assessed against local benefits of a kind tending to increase the value of the property assessed, but this does not exclude the allowance as a deduction of so much of the taxes assessed against local benefits as is properly allocable to maintenance or interest charges. Nor does this exclude the allowance of any irrigation or other water district taxes or assessments which are levied for the payment of the principal of any improvement or other bonds for which a general assessment on all lands within the district is levied as distinguished from a special assessment levied on part of the area within the district.

(d) Federal stamp taxes (not described in subdivision (b) or (c)); but this subdivision shall not prevent such taxes from being deducted under Section 24343 (relating to trade or business expenses).

(e) State and local general sales or use taxes. However, there shall be allowed as a deduction, state and local sales or use taxes which are paid or accrued within the taxable year in carrying on a trade or business or an activity described in Section 212 of the Internal Revenue Code (relating to expenses for production of income). Notwithstanding the preceding sentence, any sales or use tax (except where a tax credit is claimed under Section 23612.2) which is paid or accrued by the taxpayer in connection with an acquisition or disposition of property shall be treated as part of the cost of the acquired property or, in the case of a disposition, as a reduction in the amount realized on the disposition.

(f) For purposes of subdivision (b), “taxes on or according to or measure by income” shall include any taxes imposed on a dividend that is eliminated from the income of the recipient under Section 25106.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 128. Effective January 1, 2001.)

article: 1. Deductions


text: A deduction shall not be allowed for the fee imposed by subsection (a) of Section 9008 of the Patient Protection and Affordable Care Act (Public Law 111-148).

history: (History: Added by Stats. 2015, Ch. 359, Sec. 31. (AB 154) 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.)

article: 1. Deductions


text: A deduction shall not be allowed for the excise tax imposed by Section 4501 of the Internal Revenue Code, relating to repurchase of corporate stock.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 90. (SB 711) Effective October 1, 2025.)

article: 1. Deductions


text: A deduction shall not be allowed for the excise tax imposed by Section 5000D of the Internal Revenue Code, relating to designated drugs during noncompliance periods.

history: (History: Added by Stats. 2025, Ch. 231, Sec. 91. (SB 711) Effective October 1, 2025.)

article: 1. Deductions


text:
(a) For purposes of subdivision (a) of Section 24345, if real property is sold during any real property tax year, then—

(1) So much of the real property tax as is properly allocable to that part of the year which ends on the day before the date of the sale shall be treated as a tax imposed on the seller; and

(2) So much of that tax as is properly allocable to that part of the year which begins on the date of the sale shall be treated as a tax imposed on the purchaser.

(b) (1) In the case of any sale of real property; if—(A) A corporation may not, by reason of its method of accounting, deduct any amount for taxes unless paid; and(B) The other party to the sale is (under the law imposing the real property tax) liable for the real property tax for the real property tax year;then for purposes of subdivision (a) of Section 24345 the corporation shall be treated as having paid, on the date of the sale, so much of the tax as, under subdivision (a), is treated as imposed on the corporation. For purposes of the preceding sentence, if neither party is liable for the tax, then the party holding the property at the time the tax becomes a lien on the property shall be considered liable for the real property tax for the real property tax year.

(2) Subdivision (a) shall apply to taxable years beginning after December 31, 1960, but only in the case of sales after December 31, 1960.

(3) Subdivision (a) shall not apply to any real property tax, to the extent that the tax was allowable as a deduction under the Bank and Corporation Tax Law of 1954 to the seller for a taxable year which began before January 1, 1961.

(4) In the case of any sale of real property, if the corporation’s net income for the taxable year during which the sale occurs is computed under an accrual method of accounting, and if no election under subdivision (b) of Section 24681 (relating to the accrual of real property taxes) applies, then, for purposes of subdivision (a) of Section 24345, that portion of the tax that—(A) Is treated, under subdivision (a), as imposed on the corporation; and(B) May not, by reason of the corporation’s method of accounting, be deducted by the corporation for any taxable year,shall be treated as having accrued on the date of the sale.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 129. Effective January 1, 2001.)

article: 1. Deductions


text:
For taxable years beginning on or after January 1, 1990, all of the following shall apply:

(a) Section 165 of the Internal Revenue Code, relating to losses.

(b) Section 166 of the Internal Revenue Code, relating to bad debts, except that the deduction of a savings and loan association, bank or financial corporation shall be determined under Section 24348.

(c) (1) Section 582 of the Internal Revenue Code, relating to bad debts, losses, and gains with respect to securities held by financial institutions.

(2) Section 582(c)(2)(C) of the Internal Revenue Code, relating to limitations on foreign banks, but only to foreign corporations that have in effect for the taxable year a water’s edge election under Section 25110.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 130. Effective January 1, 2001.)

article: 1. Deductions


text:
(a) Section 165(i) of the Internal Revenue Code, relating to disaster losses, is modified to additionally provide that an appraisal for the purpose of obtaining a loan of federal funds or a loan guarantee from the federal government as a result of a presidentially declared disaster (as defined by Section 1033(h)(3) of the Internal Revenue Code) may be used to establish the amount of any loss described in Section 165(i)(1) or (2) of the Internal Revenue Code to the extent provided in regulations or other guidance of the Secretary of the Treasury under Section 165(i)(4) of the Internal Revenue Code (as added by Section 912 of Public Law 105-34).

(b) This section shall apply on and after August 5, 1997.

history: (History: Added by Stats. 1998, Ch. 7, Sec. 32. Effective March 14, 1998.)

article: 1. Deductions


text:
(a) An excess disaster loss, as defined in subdivision (c), shall be carried to other taxable years as provided in subdivision (b), with respect to losses resulting from any of the following disasters:

(1) Forest fire or any other related casualty occurring in 1985 in California.

(2) Storm, flooding, or any other related casualty occurring in 1986 in California.

(3) Any loss sustained during 1987 as a result of a forest fire or any other related casualty.

(4) Earthquake, aftershock, or any other related casualty occurring in October 1987 in California.

(5) Earthquake, aftershock, or any other related casualty occurring in October 1989 in California.

(6) Any loss sustained during 1990 as a result of fire or any other related casualty in California.

(7) Any loss sustained as a result of the Oakland/Berkeley Fire of 1991, or any other related casualty.

(8) Any loss sustained as a result of storm, flooding, or any other related casualty occurring in February 1992 in California.

(9) Earthquake, aftershock, or any other related casualty occurring in April 1992 in the County of Humboldt.

(10) Riots, arson, or any other related casualty occurring in April or May 1992 in California.

(11) Any loss sustained as a result of the earthquakes or any other related casualty that occurred in the County of San Bernardino in June and July of 1992.

(12) Any loss sustained as a result of the Fountain Fire that occurred in the County of Shasta, or as a result of either of the fires in the Counties of Calaveras and Trinity that occurred in August 1992, or any other related casualty.

(13) Any loss sustained as a result of storm, flooding, or any other related casualty that occurred in the Counties of Alpine, Contra Costa, Fresno, Humboldt, Imperial, Lassen, Los Angeles, Madera, Mendocino, Modoc, Monterey, Napa, Orange, Plumas, Riverside, San Bernardino, San Diego, Santa Barbara, Sierra, Siskiyou, Sonoma, Tehama, Trinity, and Tulare, and the City of Fillmore in January 1993.

(14) Any loss sustained as a result of a fire that occurred in the Counties of Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura, during October or November of 1993, or any other related casualty.

(15) Any loss sustained as a result of the earthquake, aftershocks, or any other related casualty that occurred in the Counties of Los Angeles, Orange, and Ventura on or after January 17, 1994.

(16) Any loss sustained as a result of a fire that occurred in the County of San Luis Obispo during August of 1994, or any other related casualty.

(17) Any loss sustained as a result of the storms or flooding occurring in 1995, or any other related casualty, sustained in any county of this state subject to a disaster declaration with respect to the storms and flooding.

(18) Any loss sustained as a result of the storms or flooding occurring in December 1996 or January 1997, or any related casualty, sustained in any county of this state subject to a disaster declaration with respect to the storms or flooding.

(19) Any loss sustained as a result of the storms or flooding occurring in February 1998, or any related casualty, sustained in any county of this state subject to a disaster declaration with respect to the storms or flooding.

(20) Any loss sustained as a result of a freeze occurring in the winter of 1998–99, or any related casualty, sustained in any county of this state subject to a disaster declaration with respect to the freeze.

(21) Any loss sustained as a result of an earthquake occurring in September 2000, that was included in the Governor’s proclamation of a state of emergency for the County of Napa.

(22) Any loss sustained as a result of the Middle River levee break in San Joaquin County occurring in June 2004.

(23) Any losses sustained as a result of the fires that occurred in the Counties of Los Angeles, Riverside, San Bernardino, San Diego, and Ventura in October and November 2003, or as a result of floods, mudflows, and debris flows, directly related to fires.

(24) Any losses sustained in the Counties of Santa Barbara and San Luis Obispo as a result of the San Simeon earthquake, aftershocks, and any other related casualties.

(25) Any losses sustained as a result of the wildfires that occurred in Shasta County, commencing August 11, 2004, and any other related casualty.

(26) Any loss sustained in the Counties of Kern, Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura as a result of the severe rainstorms, related flooding and slides, and any other related casualties, that occurred in December 2004, January 2005, February 2005, March 2005, or June 2005.

(27) Any loss sustained in the Counties of Alameda, Alpine, Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado, Fresno, Humboldt, Kings, Lake, Lassen, Madera, Marin, Mariposa, Mendocino, Merced, Monterey, Napa, Nevada, Placer, Plumas, Sacramento, San Joaquin, San Luis Obispo, San Mateo, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter, Trinity, Tulare, Tuolumne, Yolo, and Yuba as a result of the severe rainstorms, related flooding and slides, and any other related casualties, that occurred in December 2005, January 2006, March 2006, or April 2006.

(28) Any loss sustained in the County of San Bernardino as a result of the wildfires that occurred in July 2006.

(29) Any loss sustained in the Counties of Riverside and Ventura as a result of wildfires that occurred during the 2006 calendar year.

(30) Any loss sustained in the Counties of El Dorado, Fresno, Imperial, Kern, Kings, Madera, Merced, Monterey, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, Santa Clara, Stanislaus, Tulare, Ventura, and Yuba that were the subject of the Governor’s proclamations of a state of emergency for the severe freezing conditions that occurred in January 2007.

(31) Any loss sustained in the County of El Dorado as a result of wildfires that occurred in June 2007.

(32) Any loss sustained in the Counties of Santa Barbara and Ventura as a result of the Zaca Fire that occurred during the 2007 calendar year.

(33) Any loss sustained in the County of Inyo as a result of wildfires that commenced in July 2007.

(34) Any loss sustained in the Counties of Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura as a result of wildfires that occurred during the 2007 calendar year that were the subject of the Governor’s disaster proclamations of September 15, 2007, and October 21, 2007.

(35) Any loss sustained in the County of Riverside as a result of extremely strong and damaging winds that occurred in October 2007.

(36) Any loss sustained in the Counties of Butte, Kern, Mariposa, Mendocino, Monterey, Plumas, Santa Clara, Santa Cruz, Shasta, and Trinity as a result of wildfires that occurred in May or June 2008 that were the subject of the Governor’s proclamations of a state of emergency.

(37) Any loss sustained in the County of Santa Barbara as a result of wildfires that occurred in July 2008.

(38) Any loss sustained in the County of Inyo as a result of the severe rainstorms, related flooding and landslides, and any other related casualties, that occurred in July 2008.

(39) Any loss sustained in the County of Humboldt as a result of wildfires that commenced in May 2008.

(40) Any loss sustained in the County of Santa Barbara as a result of wildfires that commenced in November 2008.

(41) Any loss sustained in the Counties of Los Angeles and Ventura as a result of wildfires that commenced in October 2008 or November 2008 that were the subject of the Governor’s proclamations of a state of emergency.

(42) Any loss sustained in the Counties of Orange, Riverside, and San Bernardino as a result of wildfires that commenced in November 2008.

(43) Any loss sustained in the County of Santa Barbara as a result of wildfires that commenced in May 2009.

(b) (1) In the case of any loss allowed under Section 165 of the Internal Revenue Code, relating to losses, any excess disaster loss shall be carried forward to each of the five taxable years following the taxable year for which the loss is claimed. However, if there is any excess disaster loss remaining after the five-year period, then the applicable percentage, as set forth in paragraph (1) of subdivision (b) of Section 24416, of that excess disaster loss shall be carried forward to each of the next 10 taxable years.

(2) The entire amount of any excess disaster loss as defined in subdivision (c) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of excess disaster loss over the sum of the net income for each of the prior taxable years to which that excess disaster loss is carried.

(c) “Excess disaster loss” means a disaster loss computed pursuant to Section 165 of the Internal Revenue Code, which exceeds the net income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the net income of the year preceding the loss.

(d) The provisions of this section and Section 165(i) of the Internal Revenue Code shall be applicable to any of the losses listed in subdivision (a) sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster.

(e) Any corporation subject to the provisions of Section 25101 or 25101.15 that has disaster losses pursuant to this section, shall determine the excess disaster loss to be carried to other taxable years under the principles specified in Section 25108 relating to net operating losses.

(f) Losses allowable under this section may not be taken into account in computing a net operating loss deduction under Section 172 of the Internal Revenue Code.

(g) For losses described in paragraphs (15) to (43), inclusive, of subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return (determined with regard to extension) for the taxable year in which the disaster occurred.

history: (History: Amended by Stats. 2009, Ch. 299, Sec. 3. (AB 1568) Effective January 1, 2010.)

article: 1. Deductions


text:
(a) An excess disaster loss, as defined in subdivision (c), shall be carried to other taxable years as provided in subdivision (b), with respect to losses sustained in the County of Mendocino as a result of the tsunami that occurred in March 2011.

(b) (1) In the case of any loss allowed under Section 165 of the Internal Revenue Code, relating to losses, any excess disaster loss shall be carried forward to each of the five taxable years following the taxable year for which the loss is claimed. However, if there is any excess disaster loss remaining after the five-year period, then the applicable percentage, as set forth in paragraph (1) of subdivision (b) of Section 24416, of that excess disaster loss shall be carried forward to each of the next 10 taxable years.

(2) The entire amount of any excess disaster loss as defined in subdivision (c) shall be carried to the earliest of the taxable years to which, by reason of subdivision (b), the loss may be carried. The portion of the loss which shall be carried to each of the other taxable years shall be the excess, if any, of the amount of excess disaster loss over the sum of the net income for each of the prior taxable years to which that excess disaster loss is carried.

(c) “Excess disaster loss” means a disaster loss computed pursuant to Section 165 of the Internal Revenue Code, which exceeds the net income of the year of loss or, if the election under Section 165(i) of the Internal Revenue Code is made, the net income of the year preceding the loss.

(d) This section and Section 165(i) of the Internal Revenue Code apply to any of the losses listed in subdivision (a) sustained in any county or city in this state which was proclaimed by the Governor to be in a state of disaster.

(e) A corporation subject to Section 25101 or 25101.15 that has disaster losses pursuant to this section shall determine the excess disaster loss to be carried to other taxable years under the principles specified in Section 25108 relating to net operating losses.

(f) Losses allowable under this section shall not be taken into account in computing a net operating loss deduction under Section 172 of the Internal Revenue Code.

(g) For losses described in subdivision (a), the election under Section 165(i) of the Internal Revenue Code may be made on a return or amended return filed on or before the due date of the return (determined with regard to extension) for the taxable year in which the disaster occurred.

history: (History: Amended by Stats. 2015, Ch. 303, Sec. 491. (AB 731) Effective January 1, 2016.)

article: 1. Deductions