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California Laws | Revenue and Taxation Code
DIVISION 2. OTHER TAXES
PART 10. PERSONAL INCOME TAX

(b) Section 663(c) of the Internal Revenue Code, relating to separate shares treated as separate estates or trusts, is modified as follows: (14748)

(1) An election under Section 663(c) of the Internal Revenue Code for federal purposes shall be treated for purposes of this part as an election made by the executor of the estate or the fiduciary of the trust, as the case may be, under Section 663(c) of the Internal Revenue Code for state purposes and a separate election under paragraph (3) of subdivision (e) of Section 17024.5 shall not be allowed. (14749)

(2) If the executor of the estate or the fiduciary of the trust, as the case may be, fails to make an election under Section 663(c) of the Internal Revenue Code for federal purposes with respect to separate shares treated as separate estates or trusts, an election under Section 663(c) of the Internal Revenue Code for state purposes shall not be allowed, and a separate election under paragraph (3) of subdivision (e) of Section 17024.5 shall not be allowed. (14750)

17755. Section 664(c) of the Internal Revenue Code, relating to the taxation of trusts, shall not apply and, in lieu thereof, a charitable remainder annuity trust and a charitable remainder unitrust shall, for any taxable year, not be subject to any tax imposed under this part, unless that trust, for the taxable year, has unrelated business taxable income, within the meaning of Section 23732, determined as if Chapter 4 (commencing with Section 23701) of Part 11, applied to that trust. (14751)

17760. Section 684 of the Internal Revenue Code, relating to recognition of gain on certain transfers to certain foreign trusts and estates, shall not apply. (14752)

17760.5. Section 685 of the Internal Revenue Code, relating to treatment of funeral trusts, is modified as follows: (14753)

(a) Section 685(a) of the Internal Revenue Code is modified to read: In the case of a qualified funeral trust-- (14754)

(1) Subparts B, C, D, and E of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code shall not apply. (14755)

(2) No credit for personal exemption shall be allowed under Section 17054 or Section 17733. (14756)

(b) Section 685(b) of the Internal Revenue Code is modified as follows: (14757)

(1) An election under Section 685(b)(5) of the Internal Revenue Code for federal purposes shall be treated for purposes of this part as an election made by the trustee of the qualified funeral trust under Section 685(b)(5) of the Internal Revenue Code for state purposes and a separate election under paragraph (3) of subdivision (e) of Section 17024.5 shall not be allowed. (14758)

(2) If the trustee of a qualified funeral trust fails to make an election under Section 685(b)(5) of the Internal Revenue Code for federal purposes with respect to a qualified funeral trust, that trust shall be treated for purposes of this part as owned under Subpart E of the Internal Revenue Code by the purchasers of the contracts described in Section 685(b)(1) of the Internal Revenue Code, an election under Section 685(b)(5) of the Internal Revenue Code for state purposes with respect to that trust shall not be allowed, and a separate election under paragraph (3) of subdivision (e) of Section 17024.5 shall not be allowed with respect to that trust. (14759)

(c) Section 685(d) of the Internal Revenue Code is modified to read: Subdivision (e) of Section 17041 shall be applied to each qualified funeral trust by treating each beneficiary's interest in each qualified funeral trust as a separate trust. (14760)

(d) The Franchise Tax Board may, by forms and instructions, provide rules for simplified reporting of all trusts having a single trustee consistent with the rules prescribed by the Secretary of the Treasury under Section 685 of the Internal Revenue Code. (14761)

(e) This section shall apply to taxable years ending after August 5, 1997. (14762)

(f) The amendments made to this section by the act adding this subdivision shall apply to taxable years beginning on or after January 1, 1998. (14763)

17779. Sections 665 to 668, inclusive, of the Internal Revenue Code shall not apply to distributions described in subdivision (b) of Section 17745. (14764)

CHAPTER 10. PARTNERS AND PARTNERSHIPS (17851-17865) (14765)(Text)

17851. Subchapter K of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to partners and partnerships, shall apply, except as otherwise provided. (14766)

17851.5. Notwithstanding the provisions of Section 701 of the Internal Revenue Code, relating to partners, not partnerships, subject to tax, a partnership, as an entity shall be subject to Chapter 10.5 (commencing with Section 17935), relating to tax on limited partnerships, Chapter 10.6 (commencing with Section 17941), relating to tax on limited liability companies, and Chapter 10.7 (commencing with Section 17951), relating to tax on limited liability partnerships. (14767)

17853. Section 703(a)(2) of the Internal Revenue Code is modified to additionally provide that the deduction for taxes provided in Section 164(a) of the Internal Revenue Code with respect to taxes, described in Section 18006, paid to another state shall not be allowed to the partnership. (14768)

17854. For purposes of computing "taxable income of a nonresident or part-year resident" under paragraph (1) of subdivision (i) of Section 17041, in the case of a nonresident partner, guaranteed payments, as defined by Section 707(c) of the Internal Revenue Code, shall be included in that computation as gross income from sources within this state in the same manner as if those payments were a distributive share of that partnership. (14769)

17855. The term "unrealized receivables," as defined by Section 751 (c) of the Internal Revenue Code, shall not include any of the following: (14770)

(a) Stock in certain foreign corporations, as described in Section 1248 of the Internal Revenue Code. (14771)

(b) Oil, gas, or geothermal property, described in Section 1254 of the Internal Revenue Code. (14772)

17856. Section 751(d)(3) of the Internal Revenue Code, relating to appreciated inventory items subject to tax as a gain on foreign investment company stock, does not apply. (14773)

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