What's new for water's-edge taxpayers? March 2021 Tax News
On September 29, 2020, Governor Newsom signed Assembly Bill 3372 (AB 3372).
AB 3372 allows unitary, non-U.S. affiliates that become a California taxpayer solely due to California's economic nexus standard in Revenue and Taxation Code (R&TC) Section 23101(b), in a taxable year beginning on or after January 1, 2021, to be deemed to have made a water's-edge election with the existing water's-edge combined reporting group.
Before January 1, 2021, taxpayers can rely on three previously issued FTB Notices. These FTB Notices provided similar treatment, which clarified that an otherwise valid water's-edge election, would not be terminated, if a foreign affiliate became a taxpayer pursuant to R&TC Section 23101(b), as long as certain conditions were met.
 FTB Notice 2016-02, FTB Notice 2017-04, and FTB Notice 2019-02