2011 California Code
Revenue and Taxation Code
DIVISION 2. OTHER TAXES [6001 - 60708]
ARTICLE 1. Deductions
Section 24356.7
(a) A taxpayer may elect to treat 40 percent of the cost of any Section 24356.7 property as an expense that is not chargeable to a capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the taxpayer places the Section 24356.7 property in service.
(b) (1) An election under this section for any taxable year shall do both of the following:
(A) Specify the items of Section 24356.7 property to which the election applies and the percentage of the cost of each of those items that are to be taken into account under subdivision (a).
(B) Be made on the taxpayer s original return of the tax imposed by this part for the taxable year.
(2) Any election made under this section, and any specification contained in that election, may not be revoked except with the consent of the Franchise Tax Board.
(c) (1) For purposes of this section, Section 24356.7 property means any recovery property that is:
(A) Section 1245 property (as defined in Section 1245(a)(3) of the Internal Revenue Code).
(B) Purchased and placed in service by the taxpayer for exclusive use in a trade or business conducted within an enterprise zone designated pursuant to Chapter 12.8 (commencing with Section 7070) of Division 7 of Title 1 of the Government Code.
(C) Purchased and placed in service before the date the enterprise zone designation expires, is no longer binding, or becomes inoperative.
(2) For purposes of paragraph (1), purchase means any acquisition of property, but only if all of the following apply:
(A) The property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of losses under Sections 24427 through 24429. However, in applying Sections 24428 and 24429 for purposes of this section, subdivision (d) of Section 24429 shall be treated as providing that the family of an individual shall include only his or her spouse, ancestors, and lineal descendants.
(B) The property is not acquired by one member of an affiliated group from another member of the same affiliated group.
(C) The basis of the property in the hands of the person acquiring it is not determined in whole or in part by reference to the adjusted basis of that property in the hands of the person from whom it is acquired.
(3) For purposes of this section, the cost of property does not include that portion of the basis of that property that is determined by reference to the basis of other property held at any time by the person acquiring that property.
(4) This section shall not apply to any property for which the taxpayer could not make a federal election under Section 179 of the Internal Revenue Code because of the application of the provisions of Section 179(d) of the Internal Revenue Code.
(5) For purposes of subdivision (b) of this section, both of the following apply:
(A) All members of an affiliated group shall be treated as one taxpayer.
(B) The taxpayer shall apportion the dollar limitation contained in subdivision (f) among the members of the affiliated group in whatever manner the board shall prescribe.
(6) For purposes of paragraphs (2) and (5), affiliated group means affiliated group as defined in Section 1504 of the Internal Revenue Code, except that, for these purposes, the phrase more than 50 percent shall be substituted for the phrase at least 80 percent each place it appears in Section 1504(a) of the Internal Revenue Code.
(d) For purposes of this section, taxpayer means a bank or corporation that conducts a trade or business within an enterprise zone designated pursuant to Chapter 12.8 (commencing with Section 7070) of Division 7 of Title 1 of the Government Code.
(e) Any taxpayer who elects to be subject to this section shall not be entitled to claim additional depreciation pursuant to Section 24356 with respect to any property that constitutes Section 24356.7 property. However, the taxpayer may claim depreciation by any method permitted by Section 24349 commencing with the taxable year following the taxable year in which Section 24356.7 property is placed in service.
(f) The aggregate cost of all Section 24356.7 property that may be taken into account under subdivision (a) for any taxable years shall not exceed the following applicable amount for the taxable year of the designation of the relevant enterprise zone and taxable years thereafter:
The applicable | |
amount is: | |
Taxable year of designation ........................ | $100,000 |
1st taxable year thereafter ........................ | 100,000 |
2nd taxable year thereafter ........................ | 75,000 |
3rd taxable year thereafter ........................ | 75,000 |
Each taxable year thereafter ........................ | 50,000 |
(g) Any amounts deducted under subdivision (a) with respect to Section 24356.7 property that ceases to be used in the taxpayer s trade or business within an enterprise zone at any time before the close of the second taxable year after the property is placed in service shall be included in income in the taxable year in which the property ceases to be so used.
(Amended by Stats. 2000, Ch. 862, Sec. 140. Effective January 1, 2001.)
Disclaimer: These codes may not be the most recent version. California may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
