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Corporation Tax Law Changes in California

Recently enacted California legislation adopted new statutes and amended existing statutes that result in major changes to how corporations are taxed in California. These changes to the R&TC are applicable for taxable years beginning January 1, 2011. The changes are as follows:

  • R&TC Section 23101 - Modifies the definition of "doing business" in California.
  • R&TC Section 25120 - Provides a definition of "gross receipts."
  • R&TC Section 25128.5 - Allows specific entities to elect to utilize a sales only formula to apportion income subject to the franchise or income tax.
  • R&TC Section 25135 - Adopts the "Finnigan" rule in assigning sales from tangible personal property.
  • R&TC Section 25136 - Modifies the rules for assigning sales from other than tangible personal property.

We established a team to ensure a successful and smooth implementation of these law changes. Arrangements are being made for informal interested parties meetings to be held at our Sacramento office beginning with R&TC Sections 25128.5 and 25136. We anticipate that the interested parties meetings will occur early in 2010. If you have any questions, comments, or suggestions pertaining to the above five statutes, please send your email to 2011corplawchanges@ftb.ca.gov.

Back to December 2009 Tax News