California Revenue and Taxation Code § 17052.10

(a) For taxable years beginning on or after January 1, 2021, and before January 1, 2026, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 17039, in an amount equal to the qualified amount. (b) For purposes of this section: (1) “Electing qualified entity” means a qualified entity, as defined by Section 19902, that has elected to pay the elective tax under Part 10.4 (commencing with Section 19900). (2) “Qualified amount” means an amount equal to 9.3 percent of the sum of the qualified taxpayer’s guaranteed payments as defined by Section 707(c) of the Internal Revenue Code, relating to guaranteed payments, and the qualified taxpayer’s pro rata share or distributive share, as applicable, of income, as determined under this part and Part 11 (commencing with Section 23001), subject to tax under this part included in qualified net income, as defined in Section 19900, subject to the election made by an electing qualified entity under Part 10.4 (commencing with Section 19900). (3) “Qualified taxpayer” means: (A) A taxpayer, as defined in Section 17004, excluding partnerships, that is a partner, shareholder, or member of an electing qualified entity that consented to have the sum of their guaranteed payments and pro rata share or distributive share of income, as determined under this part and Part 11 (commencing with Section 23001), subject to tax under this part included in the qualified net income, as defined in Section 19900, of the electing qualified entity. (B) “Qualified taxpayer” does not include a business entity that is disregarded for federal tax purposes, as described in Section 23038, or its partners or members. (C) Subparagraph (B) shall not apply to a limited liability company that is disregarded for federal tax purposes, as described in Section 23038, and meets both of the following: (i) Is owned by a taxpayer, as defined in Section 17004, excluding partnerships, that consented to have the sum of their guaranteed payments and pro rata share or distributive share of income, as determined under this part and Part 11 (commencing with Section 23001), subject to tax under this part included in the qualified net income, as defined in Section 19900, of the electing qualified entity. (ii) Is a partner, shareholder, or member of an electing qualified entity. (c) In the case where the credit allowed by this section exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following taxable year, and succeeding four years, if necessary, until the credit is exhausted. (d) Notwithstanding subdivision (a), a qualified taxpayer that is a partner, shareholder, or member of an electing qualified entity that makes the election under Section 19900 for their taxable year beginning on or after January 1, 2025, and before January 1, 2026, and files its return on a fiscal year basis pursuant to Section 18566, shall be allowed the credit pursuant to this section in the qualified taxpayer’s taxable year beginning on or after January 1, 2026, and before January 1, 2027. (e) (1) Any disallowance of a credit under this section due to any of the following conditions shall be treated as a mathematical error appearing on the return: (A) Timely payment was not made under subdivision (b) of Section 19904. (B) Payments made for the taxable year exceed the elective tax computed under Part 10.4 (commencing with Section 19900). (C) No election was made or allowed under Part 10.4 (commencing with Section 19900). (2) Any amount of tax resulting from such disallowance may be assessed by the Franchise Tax Board in the same manner as provided by Section 19051. (f) (1) For each taxable year the credit is allowed, for purposes of Sections 18001 and 18002, “‘net tax’ (as defined by Section 17039) payable under this part” shall be increased by the amount of credit under this section that reduced the “net tax,” as defined in Section 17039, in th

‹ Prev All California sections Next ›

Lexace provides legal information, not legal advice, and no attorney–client relationship is created. Statute text is provided for general information and may not reflect the most recent amendments; verify against the official state code.