Tax News

CCH (cch.taxgroup.com) reports:

  The California Franchise Tax Board (FT has released the results of the April 3, 2009 interested parties meeting on the new statute allowing taxpayers to assign corporation franchise and income tax credits among members of a combined reporting group (see TAXDAY, 2008/10/02, S.2). The meeting focused upon the draft frequently asked questions (FAQs) released in late March 2009 (see TAXDAY, 2009/04/01, S.5). The results address a variety of issues raised at the meeting, including those discussed below.

  The FTB will be looking into the application of the statute to limited liability companies (LLCs), and in particular whether an LLC will be treated as a division for purposes of the statute. The statute requires that an election to assign a credit to another member be made on an originally filed return. The FTB has taken the position that a second return filed by the original due date is not considered an "original return" for purposes of making the credit assignment. However, FTB staff has agreed to re-examine this issue. The FTB has also agreed to re-examine its position that an unsigned credit will not be considered a valid original filed return. In addition, the FTB will examine the issue of whether the one-time credit assignment would prevent transfers of credit under Internal Revenue Code §331, §332, §368, or §381. Finally, the FTB will also be clarifying its treatment of this provision as it relates to enterprise zone credits.

  Subscribers can view the text of the meeting results.

 
Summary of Interested Parties Meeting --Revenue and Taxation Code Section 23663 Assignment of Credits Among Combined Report Members , California Franchise Tax Board, April 17, 2009