BILL NUMBER: SB 377	ENROLLED
	BILL TEXT

	PASSED THE SENATE  SEPTEMBER 11, 2015
	PASSED THE ASSEMBLY  SEPTEMBER 11, 2015
	AMENDED IN ASSEMBLY  SEPTEMBER 11, 2015
	AMENDED IN ASSEMBLY  AUGUST 25, 2015
	AMENDED IN SENATE  JUNE 1, 2015
	AMENDED IN SENATE  MAY 12, 2015
	AMENDED IN SENATE  APRIL 29, 2015
	AMENDED IN SENATE  APRIL 16, 2015
	AMENDED IN SENATE  APRIL 6, 2015

INTRODUCED BY   Senator Beall

                        FEBRUARY 24, 2015

   An act to add Sections 12206.1, 17058.1, and 23610.7 to the
Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 377, Beall. Income taxes: insurance taxes: credits: low-income
housing: sale of credit.
   Existing law establishes a low-income housing tax credit program
pursuant to which the California Tax Credit Allocation Committee
provides procedures and requirements for the allocation of state
insurance, income, and corporation tax credit amounts among
low-income housing projects based on federal law.
   This bill, beginning on or after January 1, 2016, and before
January 1, 2026, would allow a taxpayer that is allowed a low-income
housing tax credit to elect to sell all or a portion of that credit
to one or more unrelated parties, as described, for each taxable year
in which the credit is allowed for not less than 80% of the amount
of the credit to be sold, and would provide for the one-time resale
of that credit, as provided. The bill would require the California
Tax Credit Allocation Committee to enter into an agreement with the
Franchise Tax Board to pay any costs incurred by the Franchise Tax
Board in administering these provisions. The bill would require the
California Tax Credit Allocation Committee to report to the
Legislature on the total amounts of credits allowed to, and sold by,
taxpayers pursuant to these provisions, as specified.
    Existing law, in the case of a partnership, requires the
allocation of the credits, on or after January 1, 2009, and before
January 1, 2016, to partners based upon the partnership agreement,
regardless of how the federal low-income housing tax credit, as
provided, is allocated to the partners, or whether the allocation of
the credit under the terms of the agreement has substantial economic
effect, as specified.
   This bill would extend these provisions indefinitely.
   This bill would take effect immediately as a tax levy.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 12206.1 is added to the Revenue and Taxation
Code, to read:
   12206.1.  (a) (1) For a project that receives a preliminary
reservation of the state low-income housing tax credit, allowed
pursuant to subdivision (a) of Section 12206, on or after January 1,
2016, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
substantial economic effect, within the meaning of Section 704(b) of
the Internal Revenue Code, relating to determination of distributive
share.
   (2) This subdivision shall not apply to a project that receives a
preliminary reservation of state low-income housing tax credits under
the set-aside described in subdivision (c) of Section 50199.20 of
the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
   (b) (1) For a project that receives a preliminary reservation
under Section 12206 beginning on or after January 1, 2016, and before
January 1, 2026, a taxpayer may make an irrevocable election in its
application to the California Tax Credit Allocation Committee to sell
all or any portion of any credit allowed under Section 12206 to one
or more unrelated parties for each taxable year in which the credit
is allowed subject to both of the following conditions:
   (A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.
   (B) The unrelated party or parties purchasing any or all of the
credit pursuant to this subdivision is a taxpayer allowed the credit
under Section 12206 for the taxable year of the purchase or any prior
taxable year or is a taxpayer allowed the federal credit under
Section 42 of the Internal Revenue Code, relating to low-income
housing credit, for the taxable year of the purchase or any prior
taxable year in connection with any project located in this state.
For purposes of this subparagraph, "taxpayer allowed the credit under
Section 12206" means a taxpayer that is allowed the credit under
Section 12206 without regard to the purchase of a credit pursuant to
this subdivision.
   (2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within 10
days of the sale of the credit, in the form and manner specified by
the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit, including
the social security or other taxpayer identification number of the
unrelated party to whom the credit has been sold, the face amount of
the credit sold, and the amount of consideration received by the
taxpayer for the sale of the credit.
   (B) The California Tax Credit Allocation Committee shall provide
an annual listing to the Franchise Tax Board, in a form and manner
agreed upon by the California Tax Credit Allocation Committee and the
Franchise Tax Board, of the taxpayers that have sold or purchased a
credit pursuant to this subdivision.
   (3) (A) A credit may be sold pursuant to this subdivision to more
than one unrelated party.
   (B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.
   (ii) All or any portion of any credit allowed under Section 12206
may be resold once by an original purchaser to one or more unrelated
parties, subject to all of the requirements of this subdivision.
   (4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by Section 12206 with respect to the credit, none of
which shall apply to any party to whom the credit has been sold or
subsequently transferred. Parties who purchase credits pursuant to
paragraph (1) shall be entitled to utilize the purchased credits in
the same manner in which the taxpayer that originally received the
credit could utilize them.
   (5) A taxpayer shall not sell a credit allowed by Section 12206 if
the taxpayer was allowed the credit on any tax return of the
taxpayer.
   (6) Notwithstanding paragraph (1), the taxpayer, with the approval
of the Executive Director of the California Tax Credit Allocation
Committee, may rescind the election to sell all or any portion of the
credit allowed under Section 12206 if the consideration for the
credit falls below 80 percent of the amount of the credit after the
California Tax Credit Allocation Committee reservation.
   (c) The California Tax Credit Allocation Committee may prescribe
rules, guidelines, or procedures necessary or appropriate to carry
out the purposes of this section, including any guidelines regarding
the allocation of the credit allowed under this section. Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code shall not apply to any rule, guideline, or
procedure prescribed by the California Tax Credit Allocation
Committee pursuant to this section.
  SEC. 2.  Section 17058.1 is added to the Revenue and Taxation Code,
to read:
   17058.1.  (a) (1)  For a project that receives a preliminary
reservation of the state low-income housing tax credit, allowed
pursuant to subdivision (a) of Section 17058, on or after January 1,
2016, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
substantial economic effect, within the meaning of Section 704(b) of
the Internal Revenue Code, relating to determination of distributive
share.
   (2) To the extent the allocation of the credit to a partner under
Section 17058 lacks substantial economic effect, any loss or
deduction otherwise allowable under this part that is attributable to
the sale or other disposition of that partner's partnership interest
made prior to the expiration of the federal credit shall not be
allowed in the taxable year in which the sale or other disposition
occurs, but shall instead be deferred until and treated as if it
occurred in the first taxable year immediately following the taxable
year in which the federal credit period expires for the project
described in paragraph (1).
   (3) This subdivision shall not apply to a project that receives a
preliminary reservation of state low-income housing tax credits under
the set-aside described in subdivision (c) of Section 50199.20 of
the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
   (b) (1) For a project that receives a preliminary reservation
under Section 17058 beginning on or after January 1, 2016, and before
January 1, 2026, a taxpayer may make an irrevocable election in its
application to the California Tax Credit Allocation Committee to sell
all or any portion of any credit allowed under Section 17058 to one
or more unrelated parties for each taxable year in which the credit
is allowed subject to both of the following conditions:
   (A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.
   (B) The unrelated party or parties purchasing any or all of the
credit pursuant to this subdivision is a taxpayer allowed the credit
under Section 17058 for the taxable year of the purchase or any prior
taxable year or is a taxpayer allowed the federal credit under
Section 42 of the Internal Revenue Code, relating to low-income
housing credit, for the taxable year of the purchase or any prior
taxable year in connection with any project located in this state.
For purposes of this subparagraph, "taxpayer allowed the credit under
Section 17058" means a taxpayer that is allowed the credit under
Section 17058 without regard to the purchase of a credit pursuant to
this subdivision.
   (2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within 10
days of the sale of the credit, in the form and manner specified by
the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit, including
the social security or other taxpayer identification number of the
unrelated party to whom the credit has been sold, the face amount of
the credit sold, and the amount of consideration received by the
taxpayer for the sale of the credit.
   (B) The California Tax Credit Allocation Committee shall provide
an annual listing to the Franchise Tax Board, in a form and manner
agreed upon by the California Tax Credit Allocation Committee and the
Franchise Tax Board, of the taxpayers that have sold or purchased a
credit pursuant to this subdivision.
   (3) (A) A credit may be sold pursuant to this subdivision to more
than one unrelated party.
   (B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.
   (ii) All or any portion of any credit allowed under Section 17058
may be resold once by an original purchaser to one or more unrelated
parties, subject to all of the requirements of this subdivision.
   (4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by Section 17058 with respect to the credit, none of
which shall apply to any party to whom the credit has been sold or
subsequently transferred. Parties who purchase credits pursuant to
paragraph (1) shall be entitled to utilize the purchased credits in
the same manner in which the taxpayer that originally received the
credit could utilize them.
   (5) A taxpayer shall not sell a credit allowed by Section 17058 if
the taxpayer was allowed the credit on any tax return of the
taxpayer.
   (6) Notwithstanding paragraph (1), the taxpayer, with the approval
of the Executive Director of the California Tax Credit Allocation
Committee, may rescind the election to sell all or any portion of the
credit allowed under Section 17058 if the consideration for the
credit falls below 80 percent of the amount of the credit after the
California Tax Credit Allocation Committee reservation.
   (c) The California Tax Credit Allocation Committee may prescribe
rules, guidelines, or procedures necessary or appropriate to carry
out the purposes of this section, including any guidelines regarding
the allocation of the credit allowed under this section. Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code shall not apply to any rule, guideline, or
procedure prescribed by the California Tax Credit Allocation
Committee pursuant to this section.
  SEC. 3.  Section 23610.7 is added to the Revenue and Taxation Code,
to read:
   23610.7.  (a) (1) For a project that receives a preliminary
reservation of the state low-income housing tax credit, allowed
pursuant to subdivision (a) of Section 23610.5, on or after January
1, 2016, the credit shall be allocated to the partners of a
partnership owning the project in accordance with the partnership
agreement, regardless of how the federal low-income housing tax
credit with respect to the project is allocated to the partners, or
whether the allocation of the credit under the terms of the agreement
has substantial economic effect, within the meaning of Section 704
(b) of the Internal Revenue Code, relating to determination of
distributive share.
   (2) To the extent the allocation of the credit to a partner under
Section 23610.5 lacks substantial economic effect, any loss or
deduction otherwise allowable under this part that is attributable to
the sale or other disposition of that partner's partnership interest
made prior to the expiration of the federal credit shall not be
allowed in the taxable year in which the sale or other disposition
occurs, but shall instead be deferred until and treated as if it
occurred in the first taxable year immediately following the taxable
year in which the federal credit period expires for the project
described in paragraph (1).
   (3) This subdivision shall not apply to a project that receives a
preliminary reservation of state low-income housing tax credits under
the set-aside described in subdivision (c) of Section 50199.20 of
the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
   (b) (1) For a project that receives a preliminary reservation
under Section 23610.5 beginning on or after January 1, 2016, and
before January 1, 2026, a taxpayer may make an irrevocable election
in its application to the California Tax Credit Allocation Committee
to sell all or any portion of any credit allowed under Section
23610.5 to one or more unrelated parties for each taxable year in
which the credit is allowed subject to both of the following
conditions:
   (A) The credit is sold for consideration that is not less than 80
percent of the amount of the credit.
   (B) (i) The unrelated party or parties purchasing any or all of
the credit pursuant to this subdivision is a taxpayer allowed the
credit under Section 23610.5 for the taxable year of the purchase or
any prior taxable year or is a taxpayer allowed the federal credit
under Section 42 of the Internal Revenue Code, relating to low-income
housing credit, for the taxable year of the purchase or any prior
taxable year in connection with any project located in this state.
   (ii) For purposes of this subparagraph, "taxpayer allowed the
credit under Section 23610.5" means a taxpayer that is allowed the
credit under Section 23610.5 without regard to any of the following:
   (I) The purchase of a credit under Section 23610.5 pursuant to
this subdivision.
   (II) The assignment of a credit under Section 23610.5 pursuant to
subdivision (q) of Section 23610.5.
   (III) The assignment of a credit under Section 23610.5 pursuant to
Section 23363.
   (2) (A) The taxpayer that originally received the credit shall
report to the California Tax Credit Allocation Committee within 10
days of the sale of the credit, in the form and manner specified by
the California Tax Credit Allocation Committee, all required
information regarding the purchase and sale of the credit, including
the social security or other taxpayer identification number of the
unrelated party to whom the credit has been sold, the face amount of
the credit sold, and the amount of consideration received by the
taxpayer for the sale of the credit.
   (B) The California Tax Credit Allocation Committee shall provide
an annual listing to the Franchise Tax Board, in a form and manner
agreed upon by the California Tax Credit Allocation Committee and the
Franchise Tax Board, of the taxpayers that have sold or purchased a
credit pursuant to this subdivision.
   (3) (A) A credit may be sold pursuant to this subdivision to more
than one unrelated party.
   (B) (i) Except as provided in clause (ii), a credit shall not be
resold by the unrelated party to another taxpayer or other party.
   (ii) All or any portion of any credit allowed under Section
23610.5 may be resold once by an original purchaser to one or more
unrelated parties, subject to all of the requirements of this
subdivision.
   (4) Notwithstanding any other law, the taxpayer that originally
received the credit that is sold pursuant to paragraph (1) shall
remain solely liable for all obligations and liabilities imposed on
the taxpayer by Section 23610.5 with respect to the credit, none of
which shall apply to any party to whom the credit has been sold or
subsequently transferred. Parties who purchase credits pursuant to
paragraph (1) shall be entitled to utilize the purchased credits in
the same manner in which the taxpayer that originally received the
credit could utilize them.
   (5) A taxpayer shall not sell a credit allowed by Section 23610.5
if the taxpayer was allowed the credit on any tax return of the
taxpayer.
   (6) Notwithstanding paragraph (1), the taxpayer, with the approval
of the Executive Director of the California Tax Credit Allocation
Committee, may rescind the election to sell all or any portion of the
credit allowed under Section 23610.5 if the consideration for the
credit falls below 80 percent of the amount of the credit after the
California Tax Credit Allocation Committee reservation.
   (c) The California Tax Credit Allocation Committee may prescribe
rules, guidelines, or procedures necessary or appropriate to carry
out the purposes of this section, including any guidelines regarding
the allocation of the credit allowed under this section. Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code shall not apply to any rule, guideline, or
procedure prescribed by the California Tax Credit Allocation
Committee pursuant to this section.
  SEC. 4.  (a) The California Tax Credit Allocation Committee shall
enter into an agreement with the Franchise Tax Board to pay any costs
incurred by the Franchise Tax Board in the administration of
Sections 12206.1, 17058.1, and 23610.7 of the Revenue and Taxation
Code as added by this act.
   (b) (1) The California Tax Credit Allocation Committee shall
report to the Legislature as follows:
   (A) On or before January 1, 2021, for calendar years 2016 to 2019,
inclusive, the total amounts of credits allowed to, and sold by,
taxpayers pursuant to Sections 12206.1, 17058.1, and 23610.7 of the
Revenue and Taxation Code, including a separate accounting of credits
sold to original purchasers by the original investors and credits
resold by the original purchasers to secondary purchasers.
   (B) On or before January 1, 2025, for calendar years 2016 to 2023,
inclusive, the total of credits allowed to, and sold by, taxpayers
pursuant to Sections 12206.1, 17058.1, and 23610.7 of the Revenue and
Taxation Code, including a separate accounting of credits sold to
original purchasers by the original investors and credits resold by
the original purchasers to secondary purchasers.
   (2) The reports submitted pursuant to this subdivision shall be
submitted in compliance with Section 9795 of the Government Code.
  SEC. 5.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.