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R&TC § 25128.7—Apportionment of Business Income

Revenue and Taxation Code (R&TC) Section 25128.7 requires all trades or business except for qualified business activities under R&TC Section 25128 to use a sales only formula to apportion its business income subject to the franchise or income tax in California for taxable years beginning on or after January 1, 2013.

R&TC Section 25128.7—Applicable for Taxable Years Beginning on or after 1/1/2013 R&TC Section 25128.5—Applicable for Taxable Years Beginning on or after 1/1/2011 and before 1/1/2013
Notwithstanding Section 38006, for taxable years beginning on or after January 1, 2013, all business income of an apportioning trade or business, other than an apportioning trade or business described in subdivision (b) of Section 25128, shall be apportioned to this state by multiplying the business income by the sales factor.

(§ 25128.7 enacted by 2012 Proposition 39, § 6, approved by voters at the 11-6-2012 General Election.)

(a) Notwithstanding Section 38006, for taxable years beginning on or after January 1, 2011, and before January 1, 2013, any apportioning trade or business, other than an apportioning trade or business described in subdivision (b) of Section 25128, may make an irrevocable annual election on an original timely filed return, in the manner and form prescribed by the Franchise Tax Board to apportion its income in accordance with this section, and not in accordance with Section 25128.

(b) Notwithstanding Section 38006, for taxable years beginning on or after January 1, 2011, and before January 1, 2013, all business income of an apportioning trade or business making an election described in subdivision (a) shall be apportioned to this state by multiplying the business income by the sales factor.

(c) The Franchise Tax Board is authorized to issue regulations necessary or appropriate regarding the making of an election under this section, including regulations that are consistent with rules prescribed for making an election under Section 25113.

(d) This section shall not apply to taxable years beginning on or after January 1, 2013, and as of December 1, 2013, is repealed.

(§ 25128.5 enacted by Stats. 2009, c. 17 (3rd Ex. Sess.), § 11, eff. 2-20-09; amended by Stats. 2009, c. 544, §§ 7, 8; 2012 Proposition 39, § 5.)