24631-24637
REVENUE AND TAXATION CODE
SECTION 24631-24637
24631. (a) (1) For taxable years beginning prior to January 1,
2000, income shall be computed on the basis of the taxpayer's income
year.
(2) For taxable years beginning on or after January 1, 2000 (other
than the first taxable year beginning on or after that date), income
shall be computed on the basis of the taxpayer's taxable year.
(3) As provided in paragraph (1) of subdivision (f) of Section
23151, paragraph (1) of subdivision (f) of Section 23181, and
paragraph (1) of subdivision (c) of Section 23183, for the first
taxable year beginning on or after January 1, 2000, income shall be
computed on the basis of both the preceding income year and the
current taxable year.
(b) For purposes of this part, the term "income year" or "taxable
year" (as applicable) means--
(1) The taxpayer's annual accounting period, if it is a calendar
year or a fiscal year;
(2) The calendar year, if subsection (g) applies; or
(3) The period for which the return is made, if a return is made
for a period of less than 12 months.
(c) For purposes of this part, the term "annual accounting period"
means the annual period on the basis of which the taxpayer regularly
computes its income in keeping its books.
(d) For purposes of this part, the term "calendar year" means a
period of 12 months ending on December 31st.
(e) For purposes of this part, the term "fiscal year" means a
period of 12 months ending on the last day of any month other than
December. In the case of any taxpayer who has made the election
provided by subsection (f), the term means the annual period (varying
from 52 to 53 weeks) so elected.
(f) (1) A taxpayer who, in keeping its books, regularly computes
its income on the basis of an annual period which varies from 52 to
53 weeks and ends always on the same day of the week and ends
always--
(A) On whatever date such same day of the week last occurs in a
calendar month, or
(B) On whatever date such same day of the week falls which is
nearest to the last day of a calendar month,
may (in accordance with the regulations prescribed under paragraph
(3)) elect to compute its income for purposes of this part on the
basis of such annual period. This paragraph shall apply to taxable
years ending after December 31, 1954.
(2) (A) In any case in which the effective date or the
applicability of any provision of this part is expressed in terms of
taxable years beginning or ending with reference to a specified date
which is the first or last day of a month, a taxable year described
in paragraph (1) shall be treated--
(i) As beginning with the first day of the calendar month
beginning nearest to the first day of such taxable year, or
(ii) As ending with the last day of the calendar month ending
nearest to the last day of such taxable year, as the case may be.
(B) In the case of a change from or to a taxable year described in
paragraph (1)--
(i) If such change results in a short period (within the meaning
of Section 24634) of 359 days or more, or less than seven days,
Section 24636 shall not apply;
(ii) If such change results in a short period of less than seven
days, such short period shall, for purposes of this part, be added to
and deemed a part of the following taxable year; and
(iii) If such change results in a short period to which Section
24634 applies, the income for such short period shall be placed on an
annual basis for purposes of such subsection by multiplying such
income by 365 and dividing the result by the number of days in a
short period, and the tax shall be the same part of the tax computed
on the annual basis as the number of days in the short period is of
365 days.
(3) The Franchise Tax Board shall prescribe such regulations as it
deems necessary for the application of this subsection.
(g) Except as provided in Section 24634 (relating to returns for
periods of less than 12 months), the taxpayer's taxable year shall be
the calendar year if--
(1) The taxpayer keeps no books;
(2) The taxpayer does not have an annual accounting period; or
(3) The taxpayer has an annual accounting period, but such period
does not qualify as a fiscal year.
24632. The taxable year of a taxpayer may not be different than the
taxable year used for purposes of the Internal Revenue Code, unless
initiated or approved by the Franchise Tax Board, or otherwise
required under Section 24634.
24633. If a taxpayer changes its annual accounting period, the new
accounting period shall become the taxpayer's taxable year only if
the change is approved by the Franchise Tax Board. For purposes of
this part, if a taxpayer to whom Section 24631(g) applies adopts an
annual accounting period (as defined in Section 24631(c)) other than
a calendar year, the taxpayer shall be treated as having changed its
annual accounting period.
24633.5. (a) In the case of any "S corporation" or personal service
corporation required to change its accounting period by the federal
Tax Reform Act of 1986 (Public Law 99-514) as modified by Section
10206 of Public Law 100-203 and Section 1008(e) of Public Law
100-647, that change shall be treated as initiated by the "S
corporation" or personal service corporation with the consent of the
Franchise Tax Board.
(b) With respect to any beneficiary, partner, or shareholder which
is required to include the items from more than one taxable year of
the trust, partnership, or corporation in any one taxable year, any
income in excess of expenses for the short taxable year resulting
from the change described in subdivision (a) or subdivision (a) of
Section 17551.5 shall be taken into account ratably in each of the
first four taxable years beginning after December 31, 1986, unless
the beneficiary, partner, or shareholder elects to include all that
income in the beneficiary's, partner's, or shareholder's taxable year
with or within which the trust's, partnership's, or corporation's
short taxable year ends.
(c) The spreading of income over four years, as allowed by
subdivision (b), shall not apply unless the taxpayer receives similar
treatment for federal income tax purposes.
(d) For taxable years beginning on or after January 1, 1987, each
of the following shall apply:
(1) The adjusted basis of any partner's interest in a partnership
or shareholder's stock in an "S corporation" shall be determined as
if all of the income to be taken into account ratably in the four
taxable years referred to in subdivision (b) were included in gross
income for the first of those taxable years.
(2) If any interest in a partnership or stock in an "S corporation"
is disposed of before the last taxable year in the spread period,
all amounts which would be included in the gross income of the
partner or shareholder for subsequent taxable years in the spread
period under subdivision (b) and attributable to the interest or
stock disposed of shall be included in gross income for the taxable
year in which the disposition occurs. For purposes of the preceding
sentence, the term "spread period" means the period consisting of the
four taxable years referred to in subdivision (b).
24634. (a) A return for a period of less than 12 months (referred
to in this article as "short period") shall be made under any of the
following circumstances:
(1) When the taxpayer, with the approval of the Franchise Tax
Board, changes its annual accounting period. In such a case, the
return shall be made for the short period beginning on the day after
the close of the former taxable year and ending at the close of the
day before the day designated as the first day of the new taxable
year.
(2) When the taxpayer is in existence during only part of what
would otherwise be its taxable year, except if the taxpayer's
existence terminates as a result of a reorganization described in
Section 368(a)(1)(F) of the Internal Revenue Code.
(3) When the Franchise Tax Board terminates the taxpayer's taxable
year under Sections 19081 and 19082 (relating to tax in jeopardy).
(4) When the taxpayer is required to make a federal return for a
period of less than 12 months.
(b) This section shall apply whether or not a federal return is
required to be filed for a period of less than 12 months.
(c) If a return is required to be filed under this section for a
period of less than 12 months, that period shall be deemed to be a
taxable year.
24636. (a) If a separate return is made by a taxpayer subject to
the tax imposed by Chapter 2, under Section 24634 on account of a
change in the accounting period the net income, computed on the basis
of the period for which the separate return is made, referred to in
this section as "the short period," shall be placed on an annual
basis by multiplying the amount thereof by 12, and dividing by the
number of months in the short period. The Franchise Tax Board shall
compute the amount of a tax on the income placed on such annual
basis, and shall allow the offset provided for in Article 3 of
Chapter 2, from such tax. The tax due under this section, which shall
not be subject of offset, shall be such part of the tax, less the
offset allowed, computed on such annual basis as the number of months
in the short period is of 12 months.
(b) If a taxpayer subject to the tax imposed by Chapter 2
establishes the amount of its net income for the period of 12 months
beginning with the first day of the short period, computed as if such
12-month period were a taxable year, under the law applicable to
such year, then the tax for the short period shall be reduced to an
amount which is such part of the tax computed on the net income for
such 12-month period as the net income computed on the basis of the
short period is of the net income for the 12-month period. The
taxpayer (other than a taxpayer to which the next sentence applies)
shall compute the tax and file its return without the application of
this section. If the taxpayer has disposed of substantially all its
assets prior to the end of such 12-month period, then in lieu of the
net income for such 12-month period there shall be used for the
purposes of this section the net income for the 12-month period
ending with the last day of the short period. The tax computed under
this section shall in no case be less than the tax computed on the
net income for the short period without placing such net income on an
annual basis. The benefits of this section shall not be allowed
unless the taxpayer, at such time as regulations prescribed hereunder
require (but not after the time prescribed for the filing of the
return for the first taxable year which ends on or after 12 months
after the beginning of the short period), makes application therefor
in accordance with such regulations. Such application, in case the
return was filed without regard to this section, shall be considered
a claim for credit or refund with respect to the amount by which the
tax is reduced under this section. The Franchise Tax Board shall
prescribe such regulations as it may deem necessary for the
application of this section.
(c) In the case of a taxpayer required to file a short period
return pursuant to Section 24634, the alternative minimum tax shall
be determined in accordance with Section 443(d) of the Internal
Revenue Code.
24637. For taxable years beginning on or after January 1, 1987,
Section 444 of the Internal Revenue Code, relating to election of
taxable year other than required taxable year, shall be applicable,
except that Section 444(c)(1), relating to effect of election, shall
not apply.