California Revenue and Taxation Code § 19147

(a) Notwithstanding Sections 19142 to 19145, inclusive, the addition to the tax with respect to any underpayment of any installment shall not be imposed if the total amount of all payments of estimated tax paid on or before the last date prescribed for the payment of the installment equals or exceeds the amount which would have been required to be paid on or before that date if the estimated tax were whichever of the following is the lesser: (1) (A) The tax shown on the return of the taxpayer for the preceding taxable year if a return showing a liability for tax was filed by the taxpayer for the preceding year and that preceding year was a year of 12 months. The tax shown on the return, in the case of the tax imposed by Article 3 (commencing with Section 23181) of Chapter 2 of Part 11, means the amount of tax shown on the return for the taxable year as prescribed in Section 19021. (B) In the case of a large corporation, subparagraph (A) shall not apply, except as provided in clauses (i) and (ii). (i) Subparagraph (A) shall apply for purposes of determining the amount of the first required installment for any taxable year. (ii) Any reduction in the first required installment by reason of clause (i) shall be recaptured by increasing the amount of the next required installment by the amount of that reduction. (2) (A) An amount equal to the applicable percentage specified in Section 19144 of the tax for the taxable year computed by placing on an annualized basis the taxable income: (i) For the first three months of the taxable year, in the case of the installment required to be paid in the fourth month. (ii) For the first three months of the taxable year, in the case of the installment required to be paid in the sixth month. (iii) For the first six months of the taxable year, in the case of the installment required to be paid in the ninth month. (iv) For the first nine months of the taxable year, in the case of the installment required to be paid in the 12th month of the taxable year. (B) (i) If the taxpayer makes an election under this clause, each of the following shall apply: (I) Clause (i) of subparagraph (A) shall be applied by substituting “two months” for “three months.” (II) Clause (ii) of subparagraph (A) shall be applied by substituting “four months” for “three months.” (III) Clause (iii) of subparagraph (A) shall be applied by substituting “seven months” for “six months.” (IV) Clause (iv) of subparagraph (A) shall be applied by substituting “ten months” for “nine months.” (ii) If the taxpayer makes an election under this clause, each of the following shall apply: (I) Clause (ii) of subparagraph (A) shall be applied by substituting “five months” for “three months.” (II) Clause (iii) of subparagraph (A) shall be applied by substituting “eight months” for “six months.” (III) Clause (iv) of subparagraph (A) shall be applied by substituting “eleven months” for “nine months.” (iii) An election under clause (i) or (ii) shall apply to the taxable year for which the election is made and shall be effective only if the election is made on or before the date required for the payment of the first required installment for that taxable year. (iv) This subparagraph shall apply to taxable years beginning on or after January 1, 1997. (C) For purposes of this paragraph, the taxable income shall be placed on an annualized basis in the following manner: (i) Multiply by 12 the taxable income referred to in subparagraph (A). (ii) Divide the resulting amount by the number of months in the taxable year referred to in subparagraph (A). “Taxable income” as used in this paragraph means “net income” includable in the measure of tax or “alternative minimum taxable income” (as defined by Section 23455). (D) In the case of any corporation which is subject to the tax imposed under Section 23731, any reference to taxable income shall be treated as including a reference to unrelated busi

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