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California Laws | Revenue and Taxation Code
DIVISION 2. OTHER TAXES
PART 11. CORPORATION TAX LAW

(b) For purposes of this section, "California qualified stock option" means a stock option that is issued and exercised pursuant to this section and that is designated by the corporation issuing the option as a California qualified stock option at the time the option is granted. (22425)

(c) (1) This section shall apply only to those stock options that are issued on or after January 1, 1997, and before January 1, 2002, by a corporation to its employee and are exercised by the employee, while employed by the corporation that issued those stock options (or within three months thereof, or within one year thereof if permanently and totally disabled as defined in Section 22(e)(3) of the Internal Revenue Code), during the taxable year with respect to any class of shares, or combination thereof, issued by the corporation, to the extent that the number of shares transferable by the exercise of the options does not exceed a total of 1,000 and have a combined fair market value of less than one hundred thousand dollars ($100,000). The combined fair market value of any stock shall be determined as of the time the option with respect to that stock is granted. (22426)

(2) Paragraph (1) shall be applied by taking options into account in the order in which they were granted. (22427)

(d) In the case of a California qualified stock option, no amount shall be included in the gross income of the employee until the time of the disposition of the option (or the stock acquired upon exercise of the option). No deduction shall be allowed under Section 162 of the Internal Revenue Code to the employer on the grant or exercise of a California qualified stock option. (22428)

(e) Subdivision (d) shall not apply to any stock option for which an election has been made under Section 83(b) of the Internal Revenue Code, relating to election to include in gross income in year of transfer. (22429)

Article 2. Exceptions to Part I of Subchapter D of the Internal Revenue Code, Relating to Pension, Profit-Sharing, Stock Bonus Plans, etc. (24611-24612) (22430)(Text)

24611. (a) Section 404(k) of the Internal Revenue Code, relating to dividends paid deduction, shall apply to taxable years beginning on or after January 1, 1995. (22431)

(b) For taxable years beginning on or after January 1, 1998, Section 404(a)(9) of the Internal Revenue Code, relating to certain contributions to employee ownership plans, is modified to provide that Section 404(a)(9) of the Internal Revenue Code shall not apply to an "S corporation." (22432)

(c) For taxable years beginning on or after January l, 1998, Section 404(k)(1) of the Internal Revenue Code, relating to deduction for dividends on certain employer securities, is modified to provide that the phrase "a corporation" shall read "a C corporation." (22433)

24612. Sections 413(b)(6) and 413(c)(5) of the Internal Revenue Code, relating to liability for funding tax, shall not apply. (22434)

CHAPTER 13. ACCOUNTING PERIODS AND METHODS OF ACCOUNTING (22435)(Text)

Article 1. Accounting Periods (24631-24637) (22436)(Text)

24631. (a) (1) For taxable years beginning prior to January 1, 2000, income shall be computed on the basis of the taxpayer's income year. (22437)

(2) For taxable years beginning on or after January 1, 2000 (other than the first taxable year beginning on or after that date), income shall be computed on the basis of the taxpayer's taxable year. (22438)

(3) As provided in paragraph (1) of subdivision (f) of Section 23151, paragraph (1) of subdivision (f) of Section 23181, and paragraph (1) of subdivision (c) of Section 23183, for the first taxable year beginning on or after January 1, 2000, income shall be computed on the basis of both the preceding income year and the current taxable year. (22439)

(b) For purposes of this part, the term "income year" or "taxable year" (as applicable) means-- (22440)

(1) The taxpayer's annual accounting period, if it is a calendar year or a fiscal year; (22441)

(2) The calendar year, if subsection (g) applies; or (22442)

(3) The period for which the return is made, if a return is made for a period of less than 12 months. (22443)

(c) For purposes of this part, the term "annual accounting period" means the annual period on the basis of which the taxpayer regularly computes its income in keeping its books. (22444)

(d) For purposes of this part, the term "calendar year" means a period of 12 months ending on December 31st. (22445)

(e) For purposes of this part, the term "fiscal year" means a period of 12 months ending on the last day of any month other than December. In the case of any taxpayer who has made the election provided by subsection (f), the term means the annual period (varying from 52 to 53 weeks) so elected. (22446)

(f) (1) A taxpayer who, in keeping its books, regularly computes its income on the basis of an annual period which varies from 52 to 53 weeks and ends always on the same day of the week and ends always-- (22447)

(A) On whatever date such same day of the week last occurs in a calendar month, or (22448)

(B) On whatever date such same day of the week falls which is nearest to the last day of a calendar month, (22449)

may (in accordance with the regulations prescribed under paragraph (3)) elect to compute its income for purposes of this part on the basis of such annual period. This paragraph shall apply to taxable years ending after December 31, 1954. (22450)

(2) (A) In any case in which the effective date or the applicability of any provision of this part is expressed in terms of taxable years beginning or ending with reference to a specified date which is the first or last day of a month, a taxable year described in paragraph (1) shall be treated-- (22451)

(i) As beginning with the first day of the calendar month beginning nearest to the first day of such taxable year, or (22452)

(ii) As ending with the last day of the calendar month ending nearest to the last day of such taxable year, as the case may be. (22453)

(B) In the case of a change from or to a taxable year described in paragraph (1)-- (22454)

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