Income taxes: net operating losses: credit sharing: single sales factor.

Existing law allows individual and corporate taxpayers to utilize net operating losses and carryovers and carrybacks of those losses for purposes of offsetting their individual and corporate tax liabilities. Existing law, for net operating losses incurred in taxable years beginning on or after January 1, 2008, provides a carryover period of 20 years and allows net operating losses attributable to taxable years beginning on or after January 1, 2011, to be carrybacks to each of the preceding 2 taxable years. Existing law disallows the deduction for net operating losses and net operating loss carryovers in the 2008 and 2009 taxable years for a taxpayer with business income of $500,000 or more and extends the carryover period for those net operating losses, thus allowing the taxpayer to have the same number of years to utilize the deduction as it would have had if the disallowance for 2008 and 2009 had not occurred. This bill would disallow the use of net operating loss carrybacks by individual and corporate taxpayers. This bill would also extend the disallowance of the net operating loss deduction and carryovers, and the carryover extension, to the 2010 and 2011 taxable years. The Corporation Tax Law, for taxable years beginning on or after January 1, 2008, allows a credit to be assigned to an eligible assignee, as defined, for use by that assignee in a taxable year beginning on or after January 1, 2010. This bill would delay the use of the assigned credit by an eligible assignee to taxable years beginning on or after January 1, 2012. The Corporation Tax Law imposes taxes measured by income and, in the case of a business with income derived from or attributable to sources both within and without this state, apportions the business income between this state and other states and foreign countries in accordance with a specified 4-factor formula based on the property, payroll, and sales within and without this state, except that in the case of an apportioning trade or business that derives more than 50% of its gross business receipts from conducting one or more qualified business activities, as defined, business income is apportioned in accordance with a specified 3-factor formula. Existing law, for taxable years beginning on or after January 1, 2011, allows a taxpayer required to apportion its business income in accordance with the 4-factor formula to make an annual election to have that business income apportioned in accordance with a single sales factor formula. This bill would eliminate the authorization for specified taxpayers to elect to have business income apportioned in accordance with a single sales factor formula and instead require those taxpayers to apportion their business income in accordance with a single sales factor formula for taxable years beginning on or after January 1, 2012. Various provisions under the Personal Income Tax Law and the Corporation Tax Law conform to the federal Internal Revenue Code, including provisions relating to net operating losses that were chaptered by Chapter 14 of the Statutes of 2010 and apply to taxable years beginning on or after January 1, 2010. This bill would add provisions relating to net operating losses that would conform to the provisions in Chapter 14 of the Statutes of 2010, as provided. This bill would result in a change in state taxes for the purpose of increasing state revenues within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature. This bill would take effect immediately as a tax levy.