SECTIONS 24341-24384.5 - California Statutes

REVENUE AND TAXATION CODE

SECTION 24341-24384.5

24341. "Net income" means the gross income, computed under Chapter
6 (commencing with Section 24271), less the deductions allowed under
this article and Article 2 (commencing with Section 24401).

24343. (a) Section 162 of the Internal Revenue Code, relating to
trade or business expenses, shall apply, except as otherwise
provided.
(b) For purposes of applying Section 162 of the Internal Revenue
Code, any references to Section 170 of the Internal Revenue Code
shall be modified to refer to Sections 24357 to 24359.1, inclusive,
of this part.

24343.2. Whereas, the people of the State of California desire to
promote and achieve tax equity and fairness among all the state's
citizens and further desire to conform to the public policy of
nondiscrimination, the Legislature hereby enacts the following for
these reasons and for no other purpose:
(a) No deduction shall be allowed under Section 24343 for expenses
incurred by a taxpayer with respect to expenditures made at, or
payments made to, a club which restricts membership or the use of its
services or facilities on the basis of ancestry or any
characteristic listed or defined in Section 11135 of the Government
Code.
(b) A club described in subdivision (a) holding an alcoholic
beverage license pursuant to Division 9 (commencing with Section
23000) of the Business and Professions Code, except a club holding an
alcoholic beverage license pursuant to Section 23425 thereof, shall
provide on each receipt furnished to a taxpayer a printed statement
as follows:
"The expenditures covered by this receipt are nondeductible for
state income tax purposes or franchise tax purposes."
(c) For purposes of this section:
(1) "Expenses" means those expenses otherwise deductible under
Section 24343, except for subdivision (a), and includes, but is not
limited to, club membership dues and assessments, food and beverage
expenses, expenses for services furnished by the club, and
reimbursements or salary adjustments to officers or employees for any
of the preceding expenses.
(2) "Club" means a club as defined in Division 9 (commencing with
Section 23000) of the Business and Professions Code, except a club as
defined in Section 23425 thereof.

24343.3. Any employer contribution to a medical savings account, as
defined in Section 220 of the Internal Revenue Code, relating to
medical savings accounts, if otherwise deductible under this part,
shall be allowed only for the taxable year in which paid.

24343.5. (a) In addition to the deduction allowed by Section 24343,
a deduction shall be allowed to an employer as an ordinary and
necessary expense paid or incurred during the taxable year in
carrying on any trade or business for those expenses involved in any
of the following ridesharing arrangements:
(1) Subsidizing employees commuting in vanpools.
(2) Subsidizing employees commuting in private commuter buses or
buspools.
(3) Subsidizing monthly transit passes for its employees or for
use by the employee's dependents, except that no deduction shall be
allowed for transit passes issued for the use of elementary and
secondary school students.
(4) Subsidizing employees commuting in subscription taxipools.
(5) Subsidizing employees commuting in a carpool.
(6) In the case of an employer who offers free parking to its
employees, offering a cash equivalent to employees who do not require
parking, including a parking cash-out program, as defined by
subdivision (f) of Section 65088.1 of the Government Code.
(7) Providing free or preferential parking to carpools, vanpools,
or any other vehicle used in a ridesharing arrangement.
(8) Making facility improvements to encourage employees, for the
purpose of commuting from their homes, to participate in ridesharing
arrangements, to use bicycles, or to walk. These facility
improvements may include, but are not limited to, any of the
following: the construction of bus shelters; the installation of
bicycle racks and other bicycle-related facilities, such as showers
and locker rooms; and parking lot modifications to provide carpools,
vanpools, or buspools with preferential treatment. The cost of these
facility improvements shall be allowed as a depreciation deduction.
Notwithstanding subdivision (c), the depreciation deduction shall be
allowable over a 36-month period.
(9) Providing company commuter van or bus service to its employees
and to others for commuting from their homes, but not for
transportation required as part of the employer's business
activities, except as otherwise provided in this section. The capital
costs of providing this service shall not be an eligible deduction
under this section.
(10) Providing to employees transportation services which are
required as part of the employer's business activities to the extent
that the transportation would be provided by employees without
reimbursement in the absence of an employer-sponsored ridesharing
incentive program. The capital costs of providing this service shall
not be an eligible deduction under this section.
(b) For purposes of this section:
(1) "Employer" means either of the following:
(A) A taxpayer for whom services are performed by employees,
except entities which are not subject to tax under this part.
(B) A taxpayer which is a private or public educational
institution which enrolls students at higher than the secondary
level.
(2) "Employee" means either of the following:
(A) An individual who performs service for an employer for more
than eight hours per week for remuneration.
(B) Any commuting student, as defined in paragraph (3).
(3) "Commuting student" means a registered full-time student at a
college, university, or other postsecondary educational institution,
who lives apart from the property which is designated as the
"employment site" for the purpose of this section, and who travels
between his or her residence and the designated employment site on a
regular, though not necessarily daily, basis.
(4) "Employer-sponsored ridesharing incentive program" means a
program undertaken by an employer either alone or in cooperation with
other employers to encourage or provide, or both, fiscal other
incentives to employees to make the home-to-work commute trip by any
mode other than the single-occupant motor vehicle.
(5) "Company commuter bus or van" means a highway vehicle which
meets all of the following criteria:
(A) Has at least seven or more persons commuting on a daily basis
to and from work.
(B) At least 50 percent of the mileage of which can be reasonably
expected to be used for the purpose of transporting employees to and
from work.
(C) Is acquired by the taxpayer on or after the date of enactment
of this legislation.
(6) "Vanpool" means seven or more persons commuting on a daily
basis to and from work by means of a vehicle with a seating
arrangement designed to carry 7 to 15 adult persons.
(7) "Monthly transit pass" means any bulk purchase of transit
rides that entitles the purchaser to 40 or more rides per month,
whether at a discount rate or the base fare rate.
(8) "Transit" means transportation service for use by the general
public that utilizes buses, railcars, or ferries with a seating
capacity of 16 or more persons.
(9) "Subscription taxipool" means a type of service in which
employers or groups of employees contract with a public or private
taxi operator to provide daily commuter service for a group of
preassembled subscribers on a prepaid or daily-fare basis, following
a relatively fixed route and schedule tailored to meet the needs of
the subscribers.
(10) "Ridesharing arrangement" means the transportation of persons
in a motor vehicle where that transportation is incidental to
another purpose of the driver. The term includes ridesharing
arrangements known as carpools, vanpools, and buspools.
(11) "Carpool" means two or more persons commuting on a daily
basis to and from work by means of a vehicle with a seating
arrangement designed to carry less than seven adults, including the
driver.
(12) "Buspool" means 16 or more persons commuting on a daily basis
to and from work by means of a vehicle with a seating arrangement
designed to carry more than 15 adult passengers.
(13) "Private commuter bus" means a highway vehicle which meets
all of the following criteria:
(A) Has a seating capacity of at least seven adults, including the
driver.
(B) At least 50 percent of the mileage of which can be reasonably
expected to be used for the purpose of transporting employees to and
from work.
(C) Is acquired by the taxpayer on or after the date of enactment
of this section.
(D) With respect to which the taxpayer makes an election under
this paragraph on its return for the taxable year in which the
vehicle is placed in service.

24343.7. Section 162(k)(2)(A)(ii) of the Internal Revenue Code
shall not apply.

24344. (a) Section 163 of the Internal Revenue Code, relating to
interest, shall apply, except as otherwise provided.
(b) If income of the taxpayer which is derived from or
attributable to sources within this state is determined pursuant to
Section 25101 or 25110, the interest deductible shall be an amount
equal to interest income subject to apportionment by formula, plus
the amount, if any, by which the balance of interest expense exceeds
interest and dividend income (except dividends deductible under
Section 24402 and dividends subject to the deductions provided for in
Section 24411 to the extent of those deductions) not subject to
apportionment by formula. Interest expense not included in the
preceding sentence shall be directly offset against interest and
dividend income (except dividends deductible under Section 24402 and
dividends subject to the deductions provided for in Section 24411 to
the extent of those deductions) not subject to apportionment by
formula.
(c) (1) Notwithstanding subdivision (b) and subject to paragraph
(2), interest expense allowable under Section 163 of the Internal
Revenue Code that is incurred for purposes of foreign investments may
be offset against dividends deductible under Section 24411.
(2) For taxable years beginning on or after January 1, 1997, the
amount of interest computed pursuant to paragraph (1) shall be
multiplied by the same percentage used to determine the dividend
deduction under Section 24411 to determine that amount of interest
that may be offset as provided in paragraph (1).
(d) Section 7210(b) of Public Law 101-239, relating to the
effective date for limitation on deduction for certain interest paid
to a related person, shall apply.
(e) Section 163(j)(6)(C) of the Internal Revenue Code, relating to
treatment of an affiliated group, is modified to apply to all
members of a combined report filed under Section 25101.

24344.5. (a) A deduction, determined in accordance with Section 163
(e) of the Internal Revenue Code, shall be allowed to the issuer of
an original issue discount bond.
(b) For taxable years beginning on or after January 1, 1987, and
before the taxable year in which the debt obligation matures or is
sold, exchanged, or otherwise disposed, the amount deductible under
this part shall be the same as the amount deductible on the federal
tax return.
(c) The difference between the amount deductible on the federal
tax return and the amount allowable under this part, with respect to
obligations issued after December 31, 1984, for taxable years
beginning before January 1, 1987, shall be allowed as a deduction in
the taxable year in which the debt obligation matures or is sold,
exchanged, or otherwise disposed.
(d) The provisions of Section 7202(c) of Public Law 101-239,
relating to the effective date for treatment of certain high yield
original issue discount obligations, shall apply.

24344.7. The amendments to Section 163 of the Internal Revenue Code
made by Section 13228 of the Revenue Reconciliation Act of 1993
(P.L. 103-66), relating to modification to limitation on deduction
for certain interest, shall apply to taxable years beginning on or
after January 1, 1996.

24345. A deduction shall be allowed for taxes or licenses paid or
accrued during the taxable year, except:
(a) Taxes paid to the state under this part.
(b) Taxes on or according to or measured by income or profits paid
or accrued within the taxable year imposed by the authority of any
of the following:
(1) The Government of the United States or any foreign country.
(2) Any state, territory, county, school district, municipality,
or other taxing subdivision of any state or territory.
(c) Taxes assessed against local benefits of a kind tending to
increase the value of the property assessed, but this does not
exclude the allowance as a deduction of so much of the taxes assessed
against local benefits as is properly allocable to maintenance or
interest charges. Nor does this exclude the allowance of any
irrigation or other water district taxes or assessments which are
levied for the payment of the principal of any improvement or other
bonds for which a general assessment on all lands within the district
is levied as distinguished from a special assessment levied on part
of the area within the district.
(d) Federal stamp taxes (not described in subdivision (b) or (c));
but this subdivision shall not prevent such taxes from being
deducted under Section 24343 (relating to trade or business
expenses).
(e) State and local general sales or use taxes. However, there
shall be allowed as a deduction, state and local sales or use taxes
which are paid or accrued within the taxable year in carrying on a
trade or business or an activity described in Section 212 of the
Internal Revenue Code (relating to expenses for production of
income). Notwithstanding the preceding sentence, any sales or use tax
(except where a tax credit is claimed under Section 23612.2) which
is paid or accrued by the taxpayer in connection with an acquisition
or disposition of property shall be treated as part of the cost of
the acquired property or, in the case of a disposition, as a
reduction in the amount realized on the disposition.
(f) For purposes of subdivision (b), "taxes on or according to or
measure by income" shall include any taxes imposed on a dividend that
is eliminated from the income of the recipient under Section 25106.

24346. (a) For purposes of subdivision (a) of Section 24345, if
real property is sold during any real property tax year, then--
(1) So much of the real property tax as is properly allocable to
that part of the year which ends on the day before the date of the
sale shall be treated as a tax imposed on the seller; and
(2) So much of that tax as is properly allocable to that part of
the year which begins on the date of the sale shall be treated as a
tax imposed on the purchaser.
(b) (1) In the case of any sale of real property; if--

(A) A corporation may not, by reason of its method of accounting,
deduct any amount for taxes unless paid; and

(B) The other party to the sale is (under the law imposing the
real property tax) liable for the real property tax for the real
property tax year;

then for purposes of subdivision (a) of Section 24345 the corporation
shall be treated as having paid, on the date of the sale, so much of
the tax as, under subdivision (a), is treated as imposed on the
corporation. For purposes of the preceding sentence, if neither party
is liable for the tax, then the party holding the property at the
time the tax becomes a lien on the property shall be considered
liable for the real property tax for the real property tax year.
(2) Subdivision (a) shall apply to taxable years beginning after
December 31, 1960, but only in the case of sales after December 31,
1960.
(3) Subdivision (a) shall not apply to any real property tax, to
the extent that the tax was allowable as a deduction under the Bank
and Corporation Tax Law of 1954 to the seller for a taxable year
which began before January 1, 1961.
(4) In the case of any sale of real property, if the corporation's
net income for the taxable year during which the sale occurs is
computed under an accrual method of accounting, and if no election
under subdivision (b) of Section 24681 (relating to the accrual of
real property taxes) applies, then, for purposes of subdivision (a)
of Section 24345, that portion of the tax that--

(A) Is treated, under subdivision (a), as imposed on the
corporation; and

(B) May not, by reason of the corporation's method of accounting,
be deducted by the corporation for any taxable year,

shall be treated as having accrued on the date of the sale.

24347. For taxable years beginning on or after January 1, 1990, all
of the following shall apply:
(a) Section 165 of the Internal Revenue Code, relating to losses.
(b) Section 166 of the Internal Revenue Code, relating to bad
debts, except that the deduction of a savings and loan association,
bank or financial corporation shall be determined under Section
24348.
(c) (1) Section 582 of the Internal Revenue Code, relating to bad
debts, losses, and gains with respect to securities held by financial
institutions.
(2) Section 582(c)(2)(C) of the Internal Revenue Code, relating to
limitations on foreign banks, but only to foreign corporations that
have in effect for the taxable year a water's edge election under
Section 25110.

24347.4. (a) Section 165(i) of the Internal Revenue Code, relating
to disaster losses, is modified to additionally provide that an
appraisal for the purpose of obtaining a loan of federal funds or a
loan guarantee from the federal government as a result of a
presidentially declared disaster (as defined by Section 1033(h)(3) of
the Internal Revenue Code) may be used to establish the amount of
any loss described in Section 165(i)(1) or (2) of the Internal
Revenue Code to the extent provided in regulations or other guidance
of the Secretary of the Treasury under Section 165(i)(4) of the
Internal Revenue Code (as added by Section 912 of Public Law 105-34).
(b) This section shall apply on and after August 5, 1997.

24347.5. (a) An excess disaster loss, as defined in subdivision
(c), shall be carried to other taxable years as provided in
subdivision (b), with respect to losses resulting from any of the
following disasters:
(1) Forest fire or any other related casualty occurring in 1985 in
California.
(2) Storm, flooding, or any other related casualty occurring in
1986 in California.
(3) Any loss sustained during 1987 as a result of a forest fire or
any other related casualty.
(4) Earthquake, aftershock, or any other related casualty
occurring in October 1987 in California.
(5) Earthquake, aftershock, or any other related casualty
occurring in October 1989 in California.
(6) Any loss sustained during 1990 as a result of fire or any
other related casualty in California.
(7) Any loss sustained as a result of the Oakland/Berkeley Fire of
1991, or any other related casualty.
(8) Any loss sustained as a result of storm, flooding, or any
other related casualty occurring in February 1992 in California.
(9) Earthquake, aftershock, or any other related casualty
occurring in April 1992 in the County of Humboldt.
(10) Riots, arson, or any other related casualty occurring in
April or May 1992 in California.
(11) Any loss sustained as a result of the earthquakes or any
other related casualty that occurred in the County of San Bernardino
in June and July of 1992.
(12) Any loss sustained as a result of the Fountain Fire that
occurred in the County of Shasta, or as a result of either of the
fires in the Counties of Calaveras and Trinity that occurred in
August 1992, or any other related casualty.
(13) Any loss sustained as a result of storm, flooding, or any
other related casualty that occurred in the Counties of Alpine,
Contra Costa, Fresno, Humboldt, Imperial, Lassen, Los Angeles,
Madera, Mendocino, Modoc, Monterey, Napa, Orange, Plumas, Riverside,
San Bernardino, San Diego, Santa Barbara, Sierra, Siskiyou, Sonoma,
Tehama, Trinity, and Tulare, and the City of Fillmore in January
1993.
(14) Any loss sustained as a result of a fire that occurred in the
Counties of Los Angeles, Orange, Riverside, San Bernardino, San
Diego, and Ventura, during October or November of 1993, or any other
related casualty.
(15) Any loss sustained as a result of the earthquake,
aftershocks, or any other related casualty that occurred in the
Counties of Los Angeles, Orange, and Ventura on or after January 17,
1994.
(16) Any loss sustained as a result of a fire that occurred in the
County of San Luis Obispo during August of 1994, or any other
related casualty.
(17) Any loss sustained as a result of the storms or flooding
occurring in 1995, or any other related casualty, sustained in any
county of this state subject to a disaster declaration with respect
to the storms and flooding.
(18) Any loss sustained as a result of the storms or flooding
occurring in December 1996 or January 1997, or any related casualty,
sustained in any county of this state subject to a disaster
declaration with respect to the storms or flooding.
(19) Any loss sustained as a result of the storms or flooding
occurring in February 1998, or any related casualty, sustained in any
county of this state subject to a disaster declaration with respect
to the storms or flooding.
(20) Any loss sustained as a result of a freeze occurring in the
winter of 1998-99, or any related casualty, sustained in any county
of this state subject to a disaster declaration with respect to the
freeze.
(21) Any loss sustained as a result of an earthquake occurring in
September 2000, that was included in the Governor's proclamation of a
state of emergency for the County of Napa.
(22) Any loss sustained as a result of the Middle River levee
break in San Joaquin County occurring in June 2004.
(23) Any losses sustained as a result of the fires that occurred
in the Counties of Los Angeles, Riverside, San Bernardino, San Diego,
and Ventura in October and November 2003, or as a result of floods,
mudflows, and debris flows, directly related to fires.
(24) Any losses sustained in the Counties of Santa Barbara and San
Luis Obispo as a result of the San Simeon earthquake, aftershocks,
and any other related casualties.
(25) Any losses sustained as a result of the wildfires that
occurred in Shasta County, commencing August 11, 2004, and any other
related casualty.
(26) Any loss sustained in the Counties of Kern, Los Angeles,
Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and
Ventura as a result of the severe rainstorms, related flooding and
slides, and any other related casualties, that occurred in December
2004, January 2005, February 2005, March 2005, or June 2005.
(27) Any loss sustained in the Counties of Alameda, Alpine,
Amador, Butte, Calaveras, Colusa, Contra Costa, Del Norte, El Dorado,
Fresno, Humboldt, Kings, Lake, Lassen, Madera, Marin, Mariposa,
Mendocino, Merced, Monterey, Napa, Nevada, Placer, Plumas,
Sacramento, San Joaquin, San Luis Obispo, San Mateo, Santa Cruz,
Shasta, Sierra, Siskiyou, Solano, Sonoma, Stanislaus, Sutter,
Trinity, Tulare, Tuolumne, Yolo, and Yuba as a result of the severe
rainstorms, related flooding and slides, and any other related
casualties, that occurred in December 2005, January 2006, March 2006,
or April 2006.
(28) Any loss sustained in the County of San Bernardino as a
result of the wildfires that occurred in July 2006.
(29) Any loss sustained in the Counties of Riverside and Ventura
as a result of wildfires that occurred during the 2006 calendar year.
(30) Any loss sustained in the Counties of El Dorado, Fresno,
Imperial, Kern, Kings, Madera, Merced, Monterey, Riverside, San
Bernardino, San Diego, San Luis Obispo, Santa Barbara, Santa Clara,
Stanislaus, Tulare, Ventura, and Yuba that were the subject of the
Governor's proclamations of a state of emergency for the severe
freezing conditions that occurred in January 2007.
(31) Any loss sustained in the County of El Dorado as a result of
wildfires that occurred in June 2007.
(32) Any loss sustained in the Counties of Santa Barbara and
Ventura as a result of the Zaca Fire that occurred during the 2007
calendar year.
(33) Any loss sustained in the County of Inyo as a result of
wildfires that commenced in July 2007.
(34) Any loss sustained in the Counties of Los Angeles, Orange,
Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura as a
result of wildfires that occurred during the 2007 calendar year that
were the subject of the Governor's disaster proclamations of
September 15, 2007, and October 21, 2007.
(35) Any loss sustained in the County of Riverside as a result of
extremely strong and damaging winds that occurred in October 2007.
(36) Any loss sustained in the Counties of Butte, Kern, Mariposa,
Mendocino, Monterey, Plumas, Santa Clara, Santa Cruz, Shasta, and
Trinity as a result of wildfires that occurred in May or June 2008
that were the subject of the Governor's proclamations of a state of
emergency.
(37) Any loss sustained in the County of Santa Barbara as a result
of wildfires that occurred in July 2008.
(38) Any loss sustained in the County of Inyo as a result of the
severe rainstorms, related flooding and landslides, and any other
related casualties, that occurred in July 2008.
(39) Any loss sustained in the County of Humboldt as a result of
wildfires that commenced in May 2008.
(40) Any loss sustained in the County of Santa Barbara as a result
of wildfires that commenced in November 2008.
(41) Any loss sustained in the Counties of Los Angeles and Ventura
as a result of wildfires that commenced in October 2008 or November
2008 that were the subject of the Governor's proclamations of a state
of emergency.
(42) Any loss sustained in the Counties of Orange, Riverside, and
San Bernardino as a result of wildfires that commenced in November
2008.
(43) Any loss sustained in the County of Santa Barbara as a result
of wildfires that commenced in May 2009.
(b) (1) In the case of any loss allowed under Section 165 of the
Internal Revenue Code, relating to losses, any excess disaster loss
shall be carried forward to each of the five taxable years following
the taxable year for which the loss is claimed. However, if there is
any excess disaster loss remaining after the five-year period, then
the applicable percentage, as set forth in paragraph (1) of
subdivision (b) of Section 24416, of that excess disaster loss shall
be carried forward to each of the next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the net income for each of the prior
taxable years to which that excess disaster loss is carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code, which exceeds the net
income of the year of loss or, if the election under Section 165(i)
of the Internal Revenue Code is made, the net income of the year
preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Any corporation subject to the provisions of Section 25101 or
25101.15 that has disaster losses pursuant to this section, shall
determine the excess disaster loss to be carried to other taxable
years under the principles specified in Section 25108 relating to net
operating losses.
(f) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(g) For losses described in paragraphs (15) to (43), inclusive, of
subdivision (a), the election under Section 165(i) of the Internal
Revenue Code may be made on a return or amended return filed on or
before the due date of the return (determined with regard to
extension) for the taxable year in which the disaster occurred.

24347.7. (a) An excess disaster loss, as defined in subdivision
(c), shall be carried to other taxable years as provided in
subdivision (b), with respect to losses sustained in the County of
Humboldt as a result of the earthquake that occurred in January 2010.
(b) (1) In the case of any loss allowed under Section 165 of the
Internal Revenue Code, relating to losses, any excess disaster loss
shall be carried forward to each of the five taxable years following
the taxable year for which the loss is claimed. However, if there is
any excess disaster loss remaining after the five-year period, then
the applicable percentage, as set forth in paragraph (1) of
subdivision (b) of Section 24416, of that excess disaster loss shall
be carried forward to each of the next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the net income for each of the prior
taxable years to which that excess disaster loss is carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code, which exceeds the net
income of the year of loss or, if the election under Section 165(i)
of the Internal Revenue Code is made, the net income of the year
preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Any corporation subject to the provisions of Section 25101 or
25101.15 that has disaster losses pursuant to this section, shall
determine the excess disaster loss to be carried to other taxable
years under the principles specified in Section 25108 relating to net
operating losses.
(f) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.

24347.8. (a) An excess disaster loss, as defined in subdivision
(c), shall be carried to other taxable years as provided in
subdivision (b), with respect to losses sustained in the County of
Imperial as a result of the earthquake that occurred in April 2010.
(b) (1) In the case of any loss allowed under Section 165 of the
Internal Revenue Code, relating to losses, any excess disaster loss
shall be carried forward to each of the five taxable years following
the taxable year for which the loss is claimed. However, if there is
any excess disaster loss remaining after the five-year period, then
the applicable percentage, as set forth in paragraph (1) of
subdivision (b) of Section 24416, of that excess disaster loss shall
be carried forward to each of the next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the net income for each of the prior
taxable years to which that excess disaster loss is carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code, which exceeds the net
income of the year of loss or, if the election under Section 165(i)
of the Internal Revenue Code is made, the net income of the year
preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Any corporation subject to the provisions of Section 25101 or
25101.15 that has disaster losses pursuant to this section, shall
determine the excess disaster loss to be carried to other taxable
years under the principles specified in Section 25108 relating to net
operating losses.
(f) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.

24347.9. (a) An excess disaster loss, as defined in subdivision
(c), shall be carried to other taxable years as provided in
subdivision (b), with respect to losses resulting from any of the
following disasters:
(1) Any loss sustained in the Counties of Los Angeles and Monterey
as a result of wildfires that commenced in August 2009.
(2) Any loss sustained in the County of Placer as a result of
wildfires that commenced in August 2009.
(3) Any loss sustained in the Counties of Calaveras, Imperial, Los
Angeles, Orange, Riverside, San Bernardino, San Francisco, and
Siskiyou as a result of winter storms that commenced in January 2010.
(4) Any loss sustained in the County of Kern as a result of the
wildfires that commenced in July 2010.
(b) (1) In the case of any loss allowed under Section 165 of the
Internal Revenue Code, relating to losses, any excess disaster loss
shall be carried forward to each of the five taxable years following
the taxable year for which the loss is claimed. However, if there is
any excess disaster loss remaining after the five-year period, then
the applicable percentage, as set forth in paragraph (1) of
subdivision (b) of Section 24416, of that excess disaster loss shall
be carried forward to each of the next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the net income for each of the prior
taxable years to which that excess disaster loss is carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code, which exceeds the net
income of the year of loss or, if the election under Section 165(i)
of the Internal Revenue Code is made, the net income of the year
preceding the loss.
(d) The provisions of this section and Section 165(i) of the
Internal Revenue Code shall be applicable to any of the losses listed
in subdivision (a) sustained in any county or city in this state
which was proclaimed by the Governor to be in a state of disaster.
(e) Any corporation subject to the provisions of Section 25101 or
25101.15 that has disaster losses pursuant to this section, shall
determine the excess disaster loss to be carried to other taxable
years under the principles specified in Section 25108 relating to net
operating losses.
(f) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.

24347.10. (a) An excess disaster loss, as defined in subdivision
(c), shall be carried to other taxable years as provided in
subdivision (b), with respect to losses sustained in the County of
San Mateo as a result of the explosion and fire that occurred in
September 2010.
(b) (1) In the case of any loss allowed under Section 165 of the
Internal Revenue Code, relating to losses, any excess disaster loss
shall be carried forward to each of the five taxable years following
the taxable year for which the loss is claimed. However, if there is
any excess disaster loss remaining after the five-year period, then
the applicable percentage, as set forth in paragraph (1) of
subdivision (b) of Section 24416, of that excess disaster loss shall
be carried forward to each of the next 10 taxable years.
(2) The entire amount of any excess disaster loss as defined in
subdivision (c) shall be carried to the earliest of the taxable years
to which, by reason of subdivision (b), the loss may be carried. The
portion of the loss which shall be carried to each of the other
taxable years shall be the excess, if any, of the amount of excess
disaster loss over the sum of the net income for each of the prior
taxable years to which that excess disaster loss is carried.
(c) "Excess disaster loss" means a disaster loss computed pursuant
to Section 165 of the Internal Revenue Code, which exceeds the net
income of the year of loss or, if the election under Section 165(i)
of the Internal Revenue Code is made, the net income of the year
preceding the loss.
(d) This section and Section 165(i) of the Internal Revenue Code
shall be applicable to any of the losses listed in subdivision (a)
sustained in any county or city in this state which was proclaimed by
the Governor to be in a state of disaster.
(e) Any corporation subject to Section 25101 or 25101.15 that has
disaster losses pursuant to this section shall determine the excess
disaster loss to be carried to other taxable years under the
principles specified in Section 25108 relating to net operating
losses.
(f) Losses allowable under this section may not be taken into
account in computing a net operating loss deduction under Section 172
of the Internal Revenue Code.
(g) For losses described in subdivision (a), the election under
Section 165(i) of the Internal Revenue Code may be made on a return
or amended return filed on or before the due date of the return
(determined with regard to extension) for the taxable year in which
the disaster occurred.

24348. (a) There shall be allowed as a deduction either of the
following:
(1) Debts which become worthless within the taxable year in an
amount not in excess of the part charged off within that taxable
year.
(2) In the case of a bank (as defined in Section 581 of the
Internal Revenue Code), in lieu of any deduction under paragraph (1),
in the discretion of the Franchise Tax Board, a reasonable addition
to a reserve for bad debts determined in accordance with Section 585
of the Internal Revenue Code, relating to reserves for losses on
loans of banks, except as otherwise provided.
(b) When satisfied that a debt is recoverable in part only, the
Franchise Tax Board may allow that debt, in an amount not in excess
of the part charged off within the taxable year, as a deduction;
provided, however, that if a portion of a debt is claimed and allowed
as a deduction in any year, no deduction shall be allowed in any
subsequent year for any portion of the debt which in any prior year
was charged off, regardless of whether claimed as a deduction in that
prior year.
(c) (1) The amendments to this section made by the act adding this
subdivision shall apply only to taxable years beginning on or after
January 1, 2002.
(2) In the case of any bank, savings and loan association, or
financial corporation (whether a taxpayer or a member of a combined
reporting group) that maintained a reserve for bad debts for the last
taxable year beginning before January 1, 2002, and that is required
by the amendments to this section made by the act adding this
subdivision to change its method of computing reserves for bad debts,
all of the following shall apply:
(A) That change shall be treated as a change in a method of
accounting.
(B) That change shall be treated as initiated by the bank, savings
and loan association, or financial corporation (whether a taxpayer
or a member of a combined reporting group).
(C) That change shall be treated as made with the consent of the
Franchise Tax Board.
(D) The net amount of adjustments required by Article 6
(commencing with Section 24721) of Chapter 13 to be taken into
account by the bank, savings and loan association, or financial
corporation (whether a taxpayer or a member of a combined reporting
group):
(i) Shall be determined by taking into account only 50 percent of
the "applicable excess reserves" (as defined in subdivision (d)), and
(ii) As so determined, shall be taken into account on the last day
of the first taxable year beginning on or after January 1, 2002.
(iii) The amount of "applicable excess reserves" in excess of the
amount taken into account under clause (i) of this subparagraph shall
be reduced to zero and shall not be taken into account for purposes
of this part.
(d) (1) In the case of a large bank (as defined in Section 585(c)
(2) of the Internal Revenue Code), or a financial corporation that is
not allowed to use the reserve for bad debts under Section 585 of
the Internal Revenue Code, the term "applicable excess reserves"
means the balance of the reserves described in former subparagraph
(B) of paragraph (1) of subdivision (a) (prior to the amendments made
by the act adding this subdivision) as of the close of the last
taxable year beginning before January 1, 2002.
(2) In all other cases, the term "applicable excess reserves"
shall be zero and shall not be taken into account for purposes of
this part.
(e) The amount of "applicable excess reserves" not taken into
account pursuant to clause (iii) of subparagraph (D) of paragraph (2)
of subdivision (c) or paragraph (2) of subdivision (d) shall not
affect the amount of the allowable deduction under paragraph (1) of
subdivision (a).

24349. (a) There shall be allowed as a depreciation deduction a
reasonable allowance for the exhaustion, wear and tear (including a
reasonable allowance for obsolescence)--
(1) Of property used in the trade or business; or
(2) Of property held for the production of income.
(b) Except as otherwise provided in subdivision (c), for taxable
years ending after December 31, 1958, the term "reasonable allowance"
as used in subdivision (a) shall include, but shall not be limited
to, an allowance computed in accordance with regulations prescribed
by the Franchise Tax Board, under any of the following methods:
(1) The straight-line method.
(2) The declining balance method, using a rate not exceeding twice
the rate that would have been used had the annual allowance been
computed under the method described in paragraph (1).
(3) The sum of the years-digits method.
(4) Any other consistent method productive of an annual allowance
that, when added to all allowances for the period commencing with the
taxpayer's use of the property and including the taxable year, does
not, during the first two-thirds of the useful life of the property,
exceed the total of those allowances that would have been used had
those allowances been computed under the method described in
paragraph (2).
Nothing in this subdivision shall be construed to limit or reduce
an allowance otherwise allowable under subdivision (a).
(c) Any grapevine replaced in a vineyard in California in a
taxable year beginning on or after January 1, 1992, as a direct
result of a phylloxera infestation in that vineyard, and any
grapevine replaced in a vineyard in California in a taxable year
beginning on or after January 1, 1997, as a direct result of Pierce's
disease in that vineyard, shall have a useful life of five years,
except that it shall have a class life of 10 years for purposes of
depreciation under Section 168(g)(2) of the Internal Revenue Code
where the taxpayer has made an election under Section 263A(d)(3) of
the Internal Revenue Code not to capitalize costs of the infested
vineyard. Every taxpayer claiming a deduction under this section with
respect to a grapevine as described in this subdivision shall obtain
a written certification from an independent state-certified
integrated pest management adviser, or a state agricultural
commissioner or adviser, that specifies that the replanting was
necessary to restore a vineyard infested with phylloxera or Pierce's
disease. The taxpayer shall retain the certification for future audit
purposes.
(d) For purposes of this part, the deduction for property leased
to governments and other tax-exempt entities, as defined in Section
168(h) of the Internal Revenue Code, shall be limited to the amount
determined under Section 168(g) of the Internal Revenue Code,
relating to alternative depreciation system for certain property.
(e) (1) In the case of any building erected or improvements made
on leased property, if the building or improvement is property to
which this section applies, the depreciation deduction shall be
determined under the provisions of this section.
(2) An improvement shall be treated for purposes of determining
gain or loss under this part as disposed of by the lessor when so
disposed of or abandoned if both of the following occur:
(A) The improvement is made by the lessor of leased property for
the lessee of that property.
(B) The improvement is irrevocably disposed of or abandoned by the
lessor at the termination of the lease by the lessee.
This subdivision shall not apply to any property to which Section
168 of the Internal Revenue Code does not apply for federal purposes
by reason of Section 168(f) of the Internal Revenue Code. Any
election made under Section 168(f)(1) of the Internal Revenue Code
for federal purposes with respect to that property shall be treated
as a binding election for state purposes under this subdivision with
respect to that same property and no separate election under
subdivision (e) of Section 23051.5 with respect to that property
shall be allowed.
(3) (A) In determining a lease term, both of the following shall
apply:
(i) There shall be taken into account options to renew.
(ii) Two or more successive leases which are part of the same
transaction (or a series of related transactions) with respect to the
same or substantially similar property shall be treated as one
lease.
(B) For purposes of clause (i) of subparagraph (A), in the case of
nonresidential real property or residential rental property, there
shall not be taken into account any option to renew at fair market
value determined at the time of renewal.
(f) (1) Section 167(g) of the Internal Revenue Code, relating to
depreciation under income forecast method, shall apply except as
otherwise provided.
(2) Section 167(g)(2)(C) of the Internal Revenue Code is modified
by substituting "Section 19521" in lieu of "Section 460(b)(7)" of the
Internal Revenue Code.
(3) Section 167(g)(5)(D) of the Internal Revenue Code is modified
by substituting "Part 10.2 (commencing with Section 18401) (other
than Article 2 (commencing with Section 19021) and Sections 19142 to
19150, inclusive)" in lieu of "Subtitle F (other than Sections 6654
and 6655)."
(4) Section 167(g)(5)(E) of the Internal Revenue Code, relating to
treatment of distribution costs, shall not apply.
(5) Section 167(g)(7) of the Internal Revenue Code, relating to
treatment of participations and residuals, shall not apply.

24349.1. (a) Section 280F of the Internal Revenue Code, relating to
limitations on depreciation for luxury automobiles and certain
property used for personal purposes, shall apply, except as otherwise
provided.
(b) Except as provided in subdivision (c), Section 280F of the
Internal Revenue Code shall be modified as follows:
(1) The terms "deduction" or "recovery deduction," relating to
amounts allowable as a deduction under Section 168 of the Internal
Revenue Code, mean the amount allowable as a deduction for
depreciation under this part.
(2) The term "recovery period," relating to property under Section
168 of the Internal Revenue Code, means the class life asset
depreciation range allowable under this part.
(3) The provisions of Section 280F of the Internal Revenue Code
which relate to the investment tax credit shall not be applicable for
purposes of this part.
(c) Paragraphs (1) and (2) of subdivision (b) shall not apply to
Section 24356.7 property.

24349.2. Section 280G of the Internal Revenue Code, relating to
golden parachute payments, shall apply, except as otherwise provided.

24350. Paragraphs (2), (3), and (4) of Section 24349(b) shall apply
only in the case of property (other than intangible property)
described in Section 24349(a) with a useful life of three years or
more--
(a) The construction, reconstruction, or erection of which is
completed after December 31, 1958, and then only to that portion of
the basis which is properly attributable to such construction,
reconstruction, or erection after December 31, 1958; or
(b) Acquired after December 31, 1958, if the original use of such
property commences with the taxpayer and commences after such date.

24351. Where, under regulations prescribed by the Franchise Tax
Board, the taxpayer and the Franchise Tax Board have, after the date
of enactment of this section, entered into an agreement in writing
specifically dealing with the useful life and rate of depreciation of
any property, the rate so agreed upon shall be binding on both the
taxpayer and the Franchise Tax Board in the absence of facts or
circumstances not taken into consideration in the adoption of such
agreement. The responsibility of establishing the existence of such
facts and circumstances shall rest with the party initiating the
modification. Any change in the agreed rate and useful life specified
in the agreement shall not be effective for taxable years before the
taxable year in which notice in writing by certified mail or
registered mail is served by the party to the agreement initiating
such change.

24352. In the absence of an agreement under Section 24351
containing a provision to the contrary, a taxpayer may at any time
elect in accordance with regulations prescribed by the Franchise Tax
Board to change from the method of depreciation described in Section
24349(b)(2) to the method described in Section 24349(b)(1).

24352.5. (a) Under regulations prescribed by the Franchise Tax
Board, a taxpayer may, for purposes of computing the allowance under
Section 24349 with respect to personal property, reduce the amount
taken into account as salvage value by an amount which does not
exceed 10 percent of the basis of such property (as determined under
Section 24353 as of the time as of which such salvage value is
required to be determined).
(b) For purposes of this section, the term "personal property"
means depreciable personal property (other than livestock) with a
useful life of three years or more.

24353. (a) The basis on which exhaustion, wear and tear, and
obsolescence are to be allowed in respect of any property shall be
the adjusted basis provided in Section 24911 for the purpose of
determining the gain on the sale or other disposition of the
property.
(b) If any property is acquired subject to a lease, each of the
following shall apply:
(1) No portion of the adjusted basis shall be allocated to the
leasehold interest.
(2) The entire adjusted basis shall be taken into account in
determining the depreciation deduction, if any, with respect to the
property subject to lease.

24354. In the case of property held by one person for life with
remainder to another person, the deduction shall be computed as if
the life tenant were the absolute owner of the property and shall be
allowed to the life tenant. In the case of property held in trust,
the allowable deduction shall be apportioned between the income
beneficiaries and the trustee in accordance with the pertinent
provisions of the instrument creating the trust, or, in the absence
of such provisions on the basis of the trust income allocable to
each.

24354.1. (a) Except as provided in subdivisions (b) and (c) of this
section, in the case of property of the type defined in Section 1250
(c) of the Internal Revenue Code, subdivision (b) of Section 24349
shall not apply and the term "reasonable allowance" as used in
subdivision (a) of Section 24349 shall include an allowance computed
in accordance with regulations prescribed by the Franchise Tax Board,
under any of the following methods:

(1) The straight line method,

(2) The declining balance method, using a rate not exceeding 150
percent of the rate which would have been used had the annual
allowance been computed under the method described in paragraph (1),
or

(3) Any other consistent method productive of an annual allowance
which, when added to all allowances for the period commencing with
the taxpayer's use of the property and including the taxable year,
does not, during the first two-thirds of the useful life of the
property, exceed the total of such allowances which would have been
used had such allowances been computed under the method described in
paragraph (2).

Nothing in this subdivision shall be construed to limit or reduce an
allowance otherwise allowable under subdivision (a) of Section 24349
except where allowable solely by reason of paragraph (2), (3), or (4)
of subdivision (b) of Section 24349.
(b) (1) Subdivision (a) of this section shall not apply, and
subdivision (b) of Section 24349 shall apply in any taxable year, to
a building or structure--
(A) Which is residential rental property located within the United
States or any of its possessions, or located within a foreign
country if a method of depreciation for such property comparable to
the method provided in paragraph (2) or (3) of subdivision (b) of
Section 24349 is provided by the laws of such country and
(B) The original use of which commences with the taxpayer. In the
case of residential rental property located within a foreign country,
the original use of which commences with the taxpayer, if the
allowance for depreciation provided under the laws of such country
for such property is greater than that provided under subdivision (a)
of this section, but less than that provided under subdivision (b)
of Section 24349, the allowance for depreciation under subdivision
(b) of Section 24349 shall be limited to the amount provided under
the laws of such country.
(2) For purposes of paragraph (1), a building or structure shall
be considered to be residential rental property for any taxable year
only if 80 percent or more of the gross rental income from such
building or structure for such year is rental income from dwelling
units (within the meaning of paragraph (3) of subdivision (c) of
Section 24354.2. For purposes of the preceding sentence, if any
portion of such building or structure is occupied by the taxpayer,
the gross rental income from such building or structure shall include
the rental value of the portion so occupied.
(3) Any change in the computation of the allowance for
depreciation for any taxable year, permitted or required by reason of
the application of paragraph (1), shall not be considered a change
in a method of accounting.
(c) Subdivision (a) of this section shall not apply, and
subdivision (b) of Section 24349 shall apply, in the case of
property--
(1) The construction, reconstruction, or erection of which was
begun before January 1, 1971, or
(2) For which a written contract entered into before January 1,
1971, with respect to any part of the construction, reconstruction,
or erection or for the permanent financing thereof, was on January 1,
1971, and at all times thereafter, binding on the taxpayer.
(d) Except as provided in subdivision (e), in the case of property
of the type defined in Section 1250(c) of the Internal Revenue Code
acquired after December 31, 1970, the original use of which does not
commence with the taxpayer, the allowance for depreciation under
Sections 24349 to 24354.2, inclusive, shall be limited to an amount
computed under--
(1) The straight line method, or
(2) Any other method determined by the Franchise Tax Board to
result in a reasonable allowance under subdivision (a) of Section
24349, not including--
(A) Any declining balance method,
(B) The sum of the years-digits method, or
(C) Any other method allowable solely by reason of the application
of paragraph (4) of subdivision (b) of Section 24349 or paragraph
(3) of subdivision (a) of this section.
(e) In the case of property of the type defined in Section 1250(c)
of the Internal Revenue Code which is residential rental property
(as defined in paragraph (2) of subdivision (b)) acquired after
December 31, 1970, having a useful life of 20 years or more, the
original use of which does not commence with the taxpayer, the
allowance for depreciation under Sections 24349 to 24354.2,
inclusive, shall be limited to an amount computed under--
(1) The straight line method,
(2) The declining balance method, using a rate not exceeding 125
percent of the rate which would have been used had the annual
allowance been computed under the method described in paragraph (1),
or
(3) Any other method determined by the Franchise Tax Board to
result in a reasonable allowance under subdivision (a) of Section
24349, not including--
(A) The sum of the years-digits method,
(B) Any declining balance method using a rate in excess of the
rate permitted under paragraph (2), or
(C) Any other method allowable solely by reason of the application
of paragraph (4) of subdivision (b) of Section 24349 or paragraph
(3) of subdivision (a) of this section.
(f) (1) For purposes of subdivisions (b), (d), and (e), if
property of the type defined in Section 1250(c) of the Internal
Revenue Code which is not property described in subdivision (a) of
Section 24349 when its original use commences, becomes property
described in subdivision (a) of Section 24349 after December 31,
1970, such property shall not be treated as property the original use
of which commences with the taxpayer.
(2) Subdivisions (d) and (e) shall not apply in the case of
property of the type defined in Section 1250(c) of the Internal
Revenue Code, acquired after December 31, 1970, pursuant to a written
contract for the acquisition of such property or for the permanent
financing thereof, which was, on December 31, 1970, and at all times
thereafter, binding on the taxpayer.
(g) This section shall not apply to public utility property which
means property used predominantly in the trade or business of the
furnishing or sale of--

(1) Electrical energy, water, or sewage disposal services,

(2) Gas or steam through a local distribution system,

(3) Telephone services, or other communication services if
furnished or sold by the Communications Satellite Corporation for
purposes authorized by the Communications Satellite Act of 1962 (47
U.S.C. 701), or

(4) Transportation of gas or steam by pipeline,

if the rates for such furnishing or sale, as the case may be, have
been established or approved by a state or political subdivision
thereof, by any agency or instrumentality of the United States, or by
a public service or public utility commission or other similar body
of any state or political subdivision thereof.

24355. Section 167(f) of the Internal Revenue Code, relating to
treatment of property excluded from Section 197, shall apply, except
as otherwise provided.

24355.4. For purposes of computing the depreciation deduction under
Section 24349, a class life of four years shall be used for any
qualified rent-to-own property as defined in Section 168(i)(14) of
the Internal Revenue Code.

24355.4. For purposes of computing the depreciation deduction
pursuant to Section 24349, the useful life of any Alaska natural gas
pipeline, as defined in Section 168(i)(16) of the Internal Revenue
Code, shall be seven years.

24355.5. (a) Section 197 of the Internal Revenue Code, relating to
amortization of goodwill and certain other intangibles, shall apply,
except as otherwise provided.
(b) (1) Section 13261(g) of the Revenue Reconciliation Act of 1993
(P.L. 103-66), relating to effective dates, shall apply, except as
otherwise provided.
(2) (A) If a taxpayer has, at any time, made an election for
federal purposes under Section 13261(g)(2) of the Revenue
Reconciliation Act of 1993 (P.L. 103-66), relating to election to
have amendments apply to property acquired after July 25, 1991, or
Section 13261(g)(3) of that act, relating to elective binding
contract exception, a separate election for state purposes shall not
be allowed under paragraph (3) of subdivision (e) of Section 23051.5
and the federal election shall be binding for purposes of this part.
(B) If a taxpayer has not made an election for federal purposes
under Section 13261(g)(2) of the Revenue Reconciliation Act of 1993
(P.L. 103-66), relating to election to have amendments apply to
property acquired after July 25, 1991, or Section 13261(g)(3) of that
act, relating to elective binding contract exception, with respect
to property acquired before August 11, 1993, then the taxpayer shall
not be allowed to make an election under Section 13261(g) of the
Revenue Reconciliation Act of 1993 (P.L. 103-66), for purposes of
this part, with respect to that property.
(c) Notwithstanding any other provision of this section, each of
the following shall apply:
(1) No deduction shall be allowed under this section for any
taxable year beginning prior to January 1, 1994.
(2) No inference is intended with respect to the allowance or
denial of any deduction for amortization in any taxable year
beginning before January 1, 1994.
(3) In the case of an intangible that was acquired in an taxable
year beginning before January 1, 1994, the amount to be amortized
shall not exceed the adjusted basis of that intangible as of the
first day of the first taxable year beginning on or after January 1,
1994, and that amount shall be amortized ratably over the period
beginning with the first month of the first taxable year beginning on
or after January 1, 1994, and ending 15 years after the month in
which the intangible was acquired.

24356. (a) (1) In the case of Section 24356 property, the term
"reasonable allowance" as used in subdivision (a) of Section 24349,
may, at the election of the taxpayer, include an allowance, for the
first taxable year for which a deduction is allowable under Sections
24349 through 24354 to the taxpayer with respect to such property, of
20 percent of the cost of that property.
(2) If in any one taxable year the cost of Section 24349 property
with respect to which the taxpayer may elect an allowance under
paragraph (1) for that taxable year exceeds ten thousand dollars
($10,000), then paragraph (1) shall apply with respect to those items
selected by the taxpayer, but only to the extent of an aggregate
cost of ten thousand dollars ($10,000).
(b) (1) In lieu of subdivision (a), Section 179 of the Internal
Revenue Code, relating to election to expense certain depreciable
business assets, shall apply, except as otherwise provided.
(2) Section 179(b)(1) of the Internal Revenue Code, relating to
dollar limitation, shall not apply and in lieu thereof, the aggregate
cost that may be taken into account under Section 179(a) of the
Internal Revenue Code, for any taxable year, shall not exceed
twenty-five thousand dollars ($25,000).
(3) Section 179(b)(2) of the Internal Revenue Code, relating to
reduction in limitation, shall not apply and in lieu thereof, the
limitation under paragraph (2), for any taxable year, shall be
reduced, but not below zero, by the amount by which the cost of
Section 179 property, as defined in Section 179(d)(1) of the Internal
Revenue Code, except as otherwise provided, that is placed in
service during the taxable year, exceeds two hundred thousand dollars
($200,000).
(4) Section 179 of the Internal Revenue Code is modified to
provide that the "aggregate amount disallowed" referred to in Section
179(b)(3)(B) of the Internal Revenue Code shall be computed under
this part