Articles Posted in California

Posted
by and

(This alert was also published as a bylined article by Law360 on July 31, 2015.)

Over five years into a personal income tax residency audit by the California Franchise Tax Board (FTB), Gilbert Hyatt filed a civil suit in Nevada state court against FTB alleging tortious conduct by FTB auditors. After more than 17 years of litigation, including a previous trip to the United States Supreme Court, the High Court has again agreed to weigh in, this time to decide the extent the United States Constitution requires Nevada to provide the FTB immunity from such a civil suit.

Continue Reading ›

Posted
by , and

In 926 North Ardmore Avenue, LLC v. County of Los Angeles, the 2nd District Court of Appeal held that Proposition 13 changes in ownership prompted by transfers of legal entity interests should also be characterized as “realty sold,” resulting in the imposition of realty transfer taxes under the California Documentary Transfer Tax Act in cases even where no real property interests are transferred at all.

Continue Reading ›

Posted
by , , and

As part of a sweeping law change, New York will require taxpayers to use a water’s-edge combined reporting method when filing corporate income tax returns beginning January 1, 2015.

Continue Reading ›

Posted
by and

On June 3, 2014, in a published decision, the California Court of Appeal for the Second Appellate District affirmed the Superior Court ruling in Ocean Avenue LLC v. County of Los Angeles, holding that even though 100 percent of an entity was sold, a reassessable change in ownership of the entity’s real property did not occur because no one person obtained more than 50 percent of the entity. Assembly Bill 2372 would change that result by requiring reassessment of an entity’s realty if 90 percent or more of its ownership interests were sold within a three year period, even if no one owner acquired more than 50 percent.

Continue Reading ›

Posted
by , , and

The amount of non-taxable embedded software being taxed in California is a staggering number. While companies own assets with millions of dollars of embedded software, few companies are maximizing their property tax savings through the embedded software exemption. The good news is that it is not too late to dig in and maximize your potential tax savings. Most businesses have until May 7, 20141 to file their annual Business Property Tax Statements (Form 571-L) with California counties.

Continue Reading ›

Posted
by

The California Franchise Tax Board has issued a chief counsel ruling stating that a registered broker-dealer must include the entire sales price received from the sale of securities—including the return of capital—in the sales apportionment factor. Interestingly, the chief counsel determined that California’s alternative apportionment provisions do not apply to the combined group’s intrastate apportionment result.

Continue Reading ›

Posted
by and

On May 30, 2012, the State Board of Equalization (SBE), approved pro-posed amendments to the California Code of Regulations, Title 18, section 1684. The Proposed Regulation attempts to provide guidance as to the meaning of the broadened statutory definition of “retailers engaged in business in this state.” The statutory definition now includes retailers who are members of “commonly controlled groups,” as well as retailers who enter into agreements with “a person or persons in this state” who meet certain minimum thresholds.

Continue Reading ›

Posted
by and

Introduction
As a result of discussions between Gov. Arnold Schwarzenegger and the California Legislature as part of the funding of the fiscal 2005 Budget Act, language to implement a tax amnesty program was included in Senate Bill (SB) 1100, which was written by the Senate Budget and Fiscal Committee. Amnesty bills have been pending in the California Legislature for the last several sessions, but none had been enacted until SB 1100. On August 2, 2004, the Legislature passed SB 100, which was signed by the Governor on August 16, 2004, as Stats. 2004, Chapter 226. The bill was classified as an “urgency statute,” which went into immediate effect when signed by the Governor. According to SB 1100, “tax amnesty is an innovative and responsible way to increase state revenue to preserve vital state programs without proposing new tax burdens on business and working families, as well as to expose tax evaders operating in the underground economy.”

(The remainder of this article can be accessed in the Nov.-Dec. 2004 edition of The Tax Executive.)

Posted
by and

California generally conforms to the federal provisions regarding net operating loss (NOL) deductions. However, California’s seemingly endless battle with budget deficits has resulted in periodic suspensions of California taxpayers’ ability—both personal and corporate—to take NOL deductions. For example, California suspended NOL deductions for the 2002 and 2003 taxable years. More recently, California generally suspended NOL deductions for the 2008 through 2011 taxable years.

Read the remainder of this alert here.

Posted
by and

Beginning August 1, California income taxpayers that used a tax shelter or that have unreported income from the use of an offshore financial arrangement for tax years beginning before January 1, 2011, will have the opportunity to pay tax and interest on income related to those transactions and avoid a barrage of penalties under California’s new voluntary compliance initiative (VCI 2). According to the California Franchise Tax Board, VCI 2 is aimed at “tax schemes that serve no significant purpose other than reducing tax.” Taxpayers may recall California’s first voluntary compliance initiative (VCI 1), which was enacted in 2003 as part of the state’s initial deluge of antitax shelter legislation and in response to what the FTB claimed to be a steady loss of revenue because of tax shelter transactions. Although VCI 2 mirrors its predecessor in many ways, as explained in greater detail below, there are significant differences worth consideration. Moreover, VCI 2 follows closely on the heels of the latest round of FTB notices aimed at identifying some transactions as abusive tax avoidance transactions for purposes of California’s widening penalty provisions. Clearly, a storm is on the horizon; however, refuge under cover of voluntary compliance should be taken only after careful consideration of the pros and cons associated with participating in VCI 2.

Continue Reading ›