Goto previous pageGoto next page
pg. 671

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

18042. (a) Section 1042 of the Internal Revenue Code, relating to sales of stock to employee stock ownership plans or certain cooperatives, shall apply to taxable years beginning on or after January 1, 1995. (14998)

(b) For taxable years beginning on or after January 1, 1998, Section 1042 of the Internal Revenue Code, relating to sales of stock to employee stock ownership plans or certain cooperatives, is modified to provide that the term "domestic corporation" shall instead mean "domestic C corporation." (14999)

(c) Section 1042(g) of the Internal Revenue Code, relating to application of section to sales of stock in agricultural refiners and processors to eligible farm cooperatives, shall not apply. (15000)

18044. The provisions of Section 1044 of the Internal Revenue Code, relating to rollover of publicly traded securities gain into specialized small business investment companies, shall not apply to any taxable year (or portion thereof) that those provisions (or similar provisions) are not applicable for federal income tax purposes. (15001)

CHAPTER 14. GENERAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES (18151-18181) (15002)(Text)

18151. Subchapter P of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to capital gains and losses, shall apply, except as otherwise provided. (15003)

18151.5. Section 301 of Title III of Division A of the Emergency Economic Stabilization Act of 2008 (Public Law 110-343), relating to gain or loss from sale of certain preferred stock, shall not apply. (15004)

18152. (a) Section 1202 of the Internal Revenue Code, relating to 50-percent exclusion for gain from certain small business stock, shall not apply. (15005)

(b) Any reference in the Internal Revenue Code to the "exclusion allowed under Section 1202" shall, for purposes of this part, be modified to refer to the exclusion allowed under Section 18152.5. (15006)

18152.5. (a) For purposes of this part, gross income shall not include 50 percent of any gain from the sale or exchange of qualified small business stock held for more than five years. (15007)

(b) (1) If the taxpayer has eligible gain for the taxable year from one or more dispositions of stock issued by any corporation, the aggregate amount of the gain from dispositions of stock issued by the corporation which may be taken into account under subdivision (a) for the taxable year shall not exceed the greater of either of the following: (15008)

(A) Ten million dollars ($10,000,000) reduced by the aggregate amount of eligible gain taken into account by the taxpayer under subdivision (a) for prior taxable years and attributable to dispositions of stock issued by the corporation. (15009)

(B) Ten times the aggregate adjusted bases of qualified small business stock issued by the corporation and disposed of by the taxpayer during the taxable year. For purposes of subparagraph (B), the adjusted basis of any stock shall be determined without regard to any addition to basis after the date on which the stock was originally issued. (15010)

(2) For purposes of this subdivision, the term "eligible gain" means any gain from the sale or exchange of qualified small business stock held for more than five years. (15011)

(3) (A) In the case of a married individual filing a separate return, subparagraph (A) of paragraph (1) shall be applied by substituting five million dollars ($5,000,000) for ten million dollars ($10,000,000). (15012)

(B) In the case of a married taxpayer filing a joint return, the amount of gain taken into account under subdivision (a) shall be allocated equally between the spouses for purposes of applying this subdivision to subsequent taxable years. (15013)

(C) For purposes of this subdivision, marital status shall be determined under Section 7703 of the Internal Revenue Code. (15014)

(c) For purposes of this section: (15015)

(1) Except as otherwise provided in this section, the term "qualified small business stock" means any stock in a C corporation which is originally issued after August 10, 1993, if both of the following apply: (15016)

(A) As of the date of issuance, the corporation is a qualified small business. (15017)

(B) Except as provided in subdivisions (f) and (h), the stock is acquired by the taxpayer at its original issue (directly or through an underwriter) in either of the following manners: (15018)

(i) In exchange for money or other property (not including stock). (15019)

(ii) As compensation for services provided to the corporation (other than services performed as an underwriter of the stock). (15020)

(2) (A) Stock in a corporation shall not be treated as qualified small business stock unless, during substantially all of the taxpayer' s holding period for the stock, the corporation meets the active business requirements of subdivision (e) and the corporation is a C corporation. (15021)

(B) (i) Notwithstanding subdivision (e), a corporation shall be treated as meeting the active business requirements of subdivision (e) for any period during which the corporation qualifies as a specialized small business investment company. (15022)

(ii) For purposes of clause (i), the term "specialized small business investment company" means any eligible corporation (as defined in paragraph (4) of subdivision (e)) that is licensed to operate under Section 301(d) of the Small Business Investment Act of 1958 (as in effect on May 13, 1993). (15023)

(3) (A) Stock acquired by the taxpayer shall not be treated as qualified small business stock if, at any time during the four-year period beginning on the date two years before the issuance of the stock, the corporation issuing the stock purchased (directly or indirectly) any of its stock from the taxpayer or from a related person (within the meaning of Section 267(b) or 707(b)) to the taxpayer. (15024)

(B) Stock issued by a corporation shall not be treated as qualified small business stock if, during the two-year period beginning on the date one year before the issuance of the stock, the corporation made one or more purchases of its stock with an aggregate value (as of the time of the respective purchases) exceeding 5 percent of the aggregate value of all of its stock as of the beginning of the two-year period. (15025)

Goto previous page671Goto next page

  

Our Mission
Objective

Our mission is to provide citizens free access to the laws and codes of their state utilizing a unique search engine that matches clients with qualified legal professionals who can help with specific issues.

Our goal is to do this in a manner that promotes open government and freedom of information, while providing attorneys with valuable tools to connect with qualified prospects in need of professional services.

Ignorance Is No Excuse
Your Right To Know The Law

All citizens have a right to have access to the laws that govern them. Citizen awareness and participation in government is fundamental to ensuring a sound democracy.

Although unfettered access to the law is a fundamental right to all citizens, there is no substitute for experienced legal counsel.

We do not recommend self-representation. We do, however, recognize that in an age where people routinely research legal matters online using everything from a smartphone to their xbox, both attorneys and clients alike can benefit from this resource.