(a) For taxable years commencing on or after January 1, 2004, the allowable dividends received deduction with respect to qualified dividends received by a corporation during the taxable year from a corporation that is an insurer within the meaning of Section 28 of Article XIII of the California Constitution, whether or not the insurer is engaged in business in California, if at the time of each dividend payment at least 80 percent of each class of the stock of the insurer was owned, directly or indirectly, by the corporation receiving the dividend shall equal the percentage specified in paragraph (1) of the amount of the qualified dividends received. (1) For purposes of this subdivision, the percentage is equal to: (A) Eighty percent for taxable years beginning on or after January 1, 2004, and before January 1, 2008. (B) Eighty-five percent for taxable years beginning on or after January 1, 2008, and thereafter. (b) (1) For all taxable years ending on or after December 1, 1997, and commencing before January 1, 2004, a taxpayer may elect to determine its deduction under this section for dividends received by the taxpayer (or the members of the taxpayerâs commonly controlled group, if any) during each taxable year from a corporation that is an insurer within the meaning of Section 28 of Article XIII of the California Constitution, whether or not the insurer is engaged in business in California, in an amount equal to 80 percent of the qualified dividends received, if at the time of each dividend payment at least 80 percent of each class of stock of the insurer was owned, directly or indirectly, by the corporation receiving the dividend. (2) A taxpayer shall make the election under this subdivision by timely filing a return for at least one taxable year ending on or after December 1, 1997, and commencing before January 1, 2004, expressly electing to be subject to the dividends received deduction in accordance with the percentage set forth in paragraph (1), and reporting and remitting any amounts due pursuant to that election. (3) A return is timely filed for purposes of paragraph (2) if it is filed within 180 days of the effective date of the act adding this section. (4) By making the election pursuant to this subdivision, the taxpayer agrees to all of the following: (A) To be subject to the dividends received deduction in accordance with the percentage set forth in paragraph (1) for all taxable years ending on or after December 1, 1997, and commencing before January 1, 2004, for which the Franchise Tax Board may propose an assessment or allow a claim for refund, or in which the final determination of tax for the taxable year has not been made because of a dispute related to the dividends received deduction or the application of Section 24425 to any expense related to that dividends received deduction. (B) (i) Except as provided in clause (ii), to file a return (or amended return) and remit any amounts due pursuant to the election for all taxable years ending on or after December 1, 1997, and commencing before January 1, 2004, for which the Franchise Tax Board may propose an assessment or allow a claim for refund, within 180 days of the effective date of the act adding this section. (ii) In the case of a taxable year for which the due date of the return is more than 180 days after the effective date of the act adding this section, to file the return and remit any amounts due pursuant to the election under this subdivision on or before the due date of the return. (5) For purposes of determining taxable income on the return (or amended returns) filed pursuant to the election set forth in paragraph (1), Section 24425 does not apply to the amount of the dividends received deduction. (6) The election is irrevocable. With respect to electing taxpayers, no refund, credit, or offset may be allowed for a deduction for dividends received from an insurance company in excess of the amounts allowed under this subdivision for taxable years en
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