SECTIONS 24701-24710 - California Statutes

REVENUE AND TAXATION CODE

SECTION 24701-24710

24701. (a) Section 471 of the Internal Revenue Code, relating to
the general rule for inventories, shall apply, except as otherwise
provided.
(b) Section 472 of the Internal Revenue Code, relating to last-in,
first-out inventories, shall apply, except as otherwise provided.

24708. Section 474 of the Internal Revenue Code, relating to
simplified dollar-value LIFO method for certain small businesses,
shall apply, except as otherwise provided.

24710. (a) For each taxable year beginning on or after January 1,
1997, Section 475 of the Internal Revenue Code, relating to mark to
market accounting method for securities dealers, shall apply, except
as otherwise provided.
(b) Section 13233(c)(2)(C) of the Revenue Reconciliation Act of
1993 (Public Law 103-66), relating to the effective date for changes
in the mark to market accounting method for securities dealers, is
modified to provide that the amount taken into account under Section
481 of the Internal Revenue Code of 1986 shall be taken into account
ratably over the five-taxable-year period beginning with the first
taxable year beginning on or after January 1, 1997.
(c) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 475(e) of the Internal Revenue Code,
relating to election of mark to market for dealers in commodities, to
have Section 475 of the Internal Revenue Code apply, Section 475 of
the Internal Revenue Code shall apply to that dealer in commodities
for state purposes, 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.
(2) If a taxpayer fails to make, or has not previously made, an
election for federal purposes under Section 475(e) of the Internal
Revenue Code, relating to election of mark to market for dealers in
commodities, to have Section 475 of the Internal Revenue Code apply,
an election under Section 475(e) of the Internal Revenue Code shall
not be allowed for state purposes, Section 475 of the Internal
Revenue Code shall not apply to that dealer in commodities for state
purposes, and a separate election for state purposes shall not be
allowed under paragraph (3) of subdivision (e) of Section 23051.5.
(d) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 475(f)(1) of the Internal Revenue
Code, relating to election of mark to market for traders in
securities, to have Section 475 of the Internal Revenue Code apply to
a trade or business, Section 475 of the Internal Revenue Code shall
apply to that trader in securities for state purposes with respect to
that trade or business, a separate election for state purposes with
respect to that trade or business 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.
(2) If a taxpayer fails to make, or has not previously made, an
election for federal purposes under Section 475(f)(1) of the Internal
Revenue Code, relating to election of mark to market for traders in
securities, to have Section 475 of the Internal Revenue Code apply to
a trade or business, an election under Section 475(f)(1) of the
Internal Revenue Code shall not be allowed for state purposes with
respect to that trade or business, Section 475 of the Internal
Revenue Code shall not apply to that trader in securities for state
purposes with respect to that trade or business, and a separate
election for state purposes shall not be allowed under paragraph (3)
of subdivision (e) of Section 23051.5.
(e) (1) If a taxpayer has, at any time, made an election for
federal purposes under Section 475(f)(2) of the Internal Revenue
Code, relating to election of mark to market for traders in
commodities, to have Section 475 of the Internal Revenue Code apply
to a trade or business, Section 475 of the Internal Revenue Code
shall apply to that trader in commodities for state purposes with
respect to that trade or business, a separate election for state
purposes with respect to that trade or business shall not be allowed
under paragraph (3) of subdivision (e) of Section 23051.5, and the
federal election with respect to that trade or business shall be
binding for purposes of this part.
(2) If a taxpayer fails to make, or has not previously made, an
election for federal purposes under Section 475(f)(2) of the Internal
Revenue Code, relating to election of mark to market for traders in
commodities, to have Section 475 of the Internal Revenue Code apply
to a trade or business, an election under Section 475(f)(2) of the
Internal Revenue Code shall not be allowed for state purposes with
respect to that trade or business, Section 475 of the Internal
Revenue Code shall not apply to that trader in commodities for state
purposes with respect to that trade or business, and a separate
election for state purposes with respect to that trade or business
shall not be allowed under paragraph (3) of subdivision (e) of
Section 23051.5.
(f) (1) An election under Section 475(e) or (f) of the Internal
Revenue Code made for federal purposes with respect to a taxable year
beginning before January 1, 1998, shall be treated as having been
made for state purposes with respect to the first taxable year
beginning on or after January 1, 1998.
(2) Section 1001(d)(4)(B) of the Taxpayer Relief Act of 1997
(Public Law 105-34), relating to the effective date for election of
mark to market by securities traders and traders and dealers in
commodities, is modified to provide that the requirement for timely
identification shall be treated as timely made for state purposes if
that identification is treated as timely made for federal purposes,
and the amount taken into account under Section 481 of the Internal
Revenue Code of 1986 shall be taken into account ratably over the
four-taxable-year period beginning with the first taxable year
beginning on or after January 1, 1998.
(g) In the case of any taxpayer required to change its method of
accounting by the enactment of the act amending this subdivision,
incorporating by reference to the amendments made by Section 7003 of
the Internal Revenue Service Restructuring and Reform Act of 1998
(Public Law 105-206) to Section 475 of the Internal Revenue Code,
each of the following shall apply for purposes of this part, Part 10
(commencing with Section 17001), or Part 10.2 (commencing with
Section 18401):
(1) The change shall be treated as initiated by the taxpayer.
(2) The change shall be treated as made with the consent of the
Franchise Tax Board.
(3) The taxpayer shall not be required to change its method of
accounting until the first taxable year beginning on or after January
1, 2002.
(4) The net amount of the adjustments required to be taken into
account by the taxpayer under Chapter 13 (commencing with Section
24631) shall be taken into account ratably over the three taxable
year period beginning with that taxpayer's first taxable year
beginning on or after January 1, 2002.