Tax News

CCH (cch.taxgroup.com) reports:

  Effective May 6, 2009, the California Franchise Tax Board (FT has adopted a new regulation governing water's-edge elections made by unitary group members filing combined reports for corporation franchise and income tax purposes to address 2003 legislative changes that revised the water's-edge procedure from a contractual process to a statutory election. The regulation provides definitions of key terms and through the use of numerous examples clarifies how an election is made, terminated, and re-elected. The regulation also states that a taxpayer that is engaged in more than one apportioning trade or business may make a separate election for each apportioning trade or business.

  Amendments made to the current regulation governing water's-edge contracts that were in effect prior to January 1, 2003, clarify that an election made under the former contractual process, rather than the current statutory election procedure is still valid, but that the election will be governed by the post-2002 water's-edge rules. The new regulation notes that as a taxpayer would always have an 84-month contract on its anniversary date unless it filed a notice of non-renewal under the old procedures, the 84-month period election commencement date under the new procedure would be January 1, 2002 for all taxpayers who had entered a contract under the old procedures and who did not file a notice of non-renewal.