SECTIONS 23361-23364a - California Statutes

REVENUE AND TAXATION CODE

SECTION 23361-23364a

23361. "Affiliated group" means one or more chains of corporations
connected through stock ownership with a common parent corporation if
during the period when the income was accrued or realized and on the
16th day of the first month after the close of the taxable year--
(a) At least 80 percent of the stock of each of the corporations,
except the common parent corporation, is owned directly by one or
more of the other corporations; and
(b) The common parent corporation owns directly at least 80
percent of the stock of at least one of the other corporations; and
(c) Each of the corporations except the common parent corporation
is either (1) a corporation whose principal business is that of a
common carrier by railroad or (2) a corporation the assets of which
consist principally of stock in such corporations and which does not
itself operate a business other than that of a common carrier by
railroad. For the purpose of determining whether the principal
business of a corporation is that of a common carrier by railroad, if
a common carrier by railroad has leased its railroad properties and
such properties are operated as such by another common carrier by
railroad, the business of receiving rents for such railroad
properties shall be considered as the business of a common carrier by
railroad.
The provisions of this section shall not preclude the application
of Chapter 17 (commencing with Section 25101) of this part.
Except in paragraph (c), "stock" does not include nonvoting stock
which is limited and preferred as to dividends.

23362. An affiliated group, subject to the provisions of this
article, shall have the privilege of making a consolidated return for
the taxable year in lieu of separate returns. The making of a
consolidated return shall be upon the condition that all the
corporations, which have been members of the affiliated group at any
time during the taxable year for which the return is made, consent to
all regulations under Section 23363 prescribed prior to the making
of such return and the making of a consolidated return shall be
considered as such consent. In the case of a corporation, which is a
member of the affiliated group for a fractional part of the taxable
year, the consolidated return shall include the income of such
corporation for such part of the taxable year as it is a member of
the affiliated group. In the case of a common parent company which is
not itself a common carrier by railroad the consolidated return
shall include on a consolidated-return basis only the income received
from affiliates which are common carriers by railroad.

23363. The Franchise Tax Board shall prescribe such regulations as
it may deem necessary in order that the tax liability of any
affiliated group of corporations making a consolidated return and of
each corporation in the group, both during and after the period of
affiliation, may be determined, computed, assessed, collected, and
adjusted in such manner as to reflect the proper income.

23364. If a consolidated return is made subject to the provisions
of this article, the tax imposed under this chapter shall be computed
as a unit upon the consolidated net income of the group except as
hereinafter provided. The parent corporation and each subsidiary, a
member of the group during any part of a consolidated period, shall
be severally liable for the tax, including any deficiency in respect
thereof, computed upon the consolidated net income of the group. If a
subsidiary by reason of a bona fide sale of stock for fair value has
ceased to be a member of the affiliated group, its liability shall
remain unchanged, except that if such cessation occurred prior to the
date upon which any such deficiency is assessed, such deficiency, in
the case of such former subsidiary, shall be reduced to an amount
equal to such part as may be allocable to it upon the basis of the
consolidated net income properly assignable to it. In no case,
however, shall any demand for the payment of any deficiency be made,
or any proceeding in court for the collection thereof be begun
against such former subsidiary prior to the determination by the
Franchise Tax Board that the amount of the deficiency cannot be
collected from the parent corporation and the corporations, if any,
remaining members of the affiliated group.

23364a. Where a member of an affiliated group filing a consolidated
return is a corporation commencing to do business in this state for
the first time after August 27, 1937, its tax for the taxable year of
commencement shall be the tax for such year as provided for in
subdivisions (a) and (b) of Section 23151.1.