Research and development tax credit areas.

Existing law establishes the Department of Housing and Community Development with duties that include overseeing various programs to promote economic and community development throughout the state. This bill would authorize, until January 1, 2016, the department to designate, based on specific factors, a Research and Development Tax Credit Area located within an Innovation Hub or a city, as respectively defined. The Personal Income Tax Law and the Corporation Tax Law, by reference to a specified federal statute, allow a credit against taxes imposed by those laws for increasing research activities. The amount of the credit under both laws is equal to 15% of the excess of the qualified research expenses, as defined, for the taxable year over the base amount, as defined, and, in addition, under the Corporation Tax Law, 24% of the basic research payments, as defined. This bill would, under both laws, in lieu of that credit, for each taxable year beginning on or after January 1, 2011, and before January 1, 2016, provide to a qualified taxpayer, as defined, a tax credit for research and development, as defined, for expenses equal to 20% of the research and development expenses relating to the development of alternative energy sources and advanced transportation technologies, as those terms are defined, conducted in California in a research and development tax area, as described. The bill would further require the Legislative Analyst's Office to report to the Legislature on the effectiveness of the tax credit program established by this act. This bill would take effect immediately as a tax levy.