Amended IN Assembly March 16, 2023 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Assembly Bill No. 926Introduced by Assembly Member PapanFebruary 14, 2023An act to amend Section 23609 of the Revenue and Taxation Code, relating to taxation. An act to add and repeal Sections 17057.7 and 23610.7 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.LEGISLATIVE COUNSEL'S DIGESTAB 926, as amended, Papan. Corporation taxes. Income taxes: credits: affordable housing: employer-assisted housing programs.The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2023, and before January 1, 2028, in an amount equal to ____% of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing, as defined, for employees or the investment in an employer-assisted housing program, as defined. Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.The Corporation Tax Law imposes taxes upon a corporation doing business in this state, according to, or measured by, net income, as specified. The Corporation Tax Law, in modified conformity to a credit allowed under federal law, allows a credit against taxes imposed by that law for increasing research activities, as described.This bill would make nonsubstantive changes to the provisions allowing that credit.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 17057.7 is added to the Revenue and Taxation Code, to read:17057.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the net tax, as defined in Section 17039, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code. (2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) (1) For the purpose of complying with Section 41, as it relates to the credit allowed pursuant to this section and Section 23610.7, the Legislature finds and declares as follows:(A) The specific goal, purpose, or objective of the credit allowed by this section and Section 23610.7 is to encourage employers to contribute to solving the labor shortage and housing unaffordability problems by providing a tax incentive.(B) The performance indicators for the Legislature to use in determining whether the credit achieves the stated goal shall be the number of taxpayers allowed a credit and the total dollar value of credits allowed.(2) (A) The Franchise Tax Board shall submit a report by November 1, 2024, and annually thereafter, to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a credit under this section or Section 23610.7 for the most recent taxable year, and the total dollar value of credits allowed.(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.SEC. 2. Section 23610.7 is added to the Revenue and Taxation Code, to read:23610.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the tax, as defined in Section 23036, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.(2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) For the purpose of complying with Section 41, the goal, purpose, objective performance indicators, and data collection requirements for the credit allowed by this section shall be as specified in subdivision (e) of Section 17057.7.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.SECTION 1.Section 23609 of the Revenue and Taxation Code is amended to read:23609.For each taxable year beginning on or after January 1, 1987, there shall be allowed as a credit against the tax, as defined by Section 23036, an amount determined in accordance with Section 41 of the Internal Revenue Code, relating to credit for increasing research activities, except as follows:(a)For each taxable year beginning before January 1, 1997, both of the following modifications shall apply:(1)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 8 percent.(2)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 12 percent.(b)(1)For each taxable year beginning on or after January 1, 1997, and before January 1, 1999, both of the following modifications shall apply:(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 11 percent.(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.(2)For each taxable year beginning on or after January 1, 1999, and before January 1, 2000, both of the following shall apply:(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 12 percent.(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.(3)For each taxable year beginning on or after January 1, 2000, both of the following shall apply:(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 15 percent.(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.(c)(1)With respect to any expense paid or incurred after the operative date of Section 6378, Section 41(b)(1) of the Internal Revenue Code, relating to qualified research expenses, is modified to exclude from the definition of qualified research expense any amount paid or incurred for tangible personal property that is eligible for the exemption from sales or use tax provided by Section 6378.(2)Qualified research and basic research shall include only research conducted in California.(d)The provisions of Section 41(e)(7)(A) of the Internal Revenue Code, relating to basic research, shall be modified so that basic research, for purposes of this section, includes any basic or applied research including scientific inquiry or original investigation for the advancement of scientific or engineering knowledge or the improved effectiveness of commercial products, except that the term does not include any of the following:(1)Basic research conducted outside California.(2)Basic research in the social sciences, arts, or humanities.(3)Basic research for the purpose of improving a commercial product if the improvements relate to style, taste, cosmetic, or seasonal design factors.(4)Any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas).(e)(1)In the case of a taxpayer engaged in any biopharmaceutical research activities that are described in codes 2833 to 2836, inclusive, or any research activities that are described in codes 3826, 3829, or 3841 to 3845, inclusive, of the Standard Industrial Classification (SIC) Manual published by the United States Office of Management and Budget, 1987 edition, or any other biotechnology research and development activities, the provisions of Section 41(e)(6) of the Internal Revenue Code, relating to qualified organization, shall be modified to include both of the following:(A)A qualified organization as described in Section 170(b)(1)(A)(iii) of the Internal Revenue Code and owned by an institution of higher education as described in Section 3304(f) of the Internal Revenue Code, relating to definition of institution of higher education.(B)A charitable research hospital owned by an organization that is described in Section 501(c)(3) of the Internal Revenue Code, is exempt from taxation under Section 501(a) of the Internal Revenue Code, relating to exemption from taxation, is not a private foundation, is designated a specialized laboratory cancer center, and has received Clinical Cancer Research Center status from the National Cancer Institute.(2)For purposes of this subdivision:(A)Biopharmaceutical research activities means those activities that use organisms or materials derived from organisms, and their cellular, subcellular, or molecular components, in order to provide pharmaceutical products for human or animal therapeutics and diagnostics. Biopharmaceutical activities make use of living organisms to make commercial products, as opposed to pharmaceutical activities that make use of chemical compounds to produce commercial products.(B)Other biotechnology research and development activities means research and development activities consisting of the application of recombinant DNA technology to produce commercial products, as well as research and development activities regarding pharmaceutical delivery systems designed to provide a measure of control over the rate, duration, and site of pharmaceutical delivery.(f)In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following year, and succeeding years if necessary, until the credit has been exhausted.(g)For each taxable year beginning on or after January 1, 1998, the reference to Section 501(a) in Section 41(b)(3)(C) of the Internal Revenue Code, relating to amounts paid to certain research consortia, is modified to read this part or Part 10 (commencing with Section 17001).(h)(1)For each taxable year beginning on or after January 1, 2000:(A)The reference to 3 percent in Section 41(c)(4)(A)(i) of the Internal Revenue Code is modified to read one and forty-nine hundredths of one percent.(B)The reference to 4 percent in Section 41(c)(4)(A)(ii) of the Internal Revenue Code is modified to read one and ninety-eight hundredths of one percent.(C)The reference to 5 percent in Section 41(c)(4)(A)(iii) of the Internal Revenue Code is modified to read two and forty-eight hundredths of one percent.(2)Section 41(c)(4)(B) of the Internal Revenue Code, relating to election, shall not apply and in lieu thereof an election under Section 41(c)(4)(A) of the Internal Revenue Code, relating to in general, may be made for any taxable year of the taxpayer beginning on or after January 1, 1998. That election shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Franchise Tax Board.(3)Section 41(c)(7) of the Internal Revenue Code, relating to gross receipts, is modified to take into account only those gross receipts from the sale of property held primarily for sale to customers in the ordinary course of the taxpayers trade or business that is delivered or shipped to a purchaser within this state, regardless of f.o.b. point or any other condition of the sale.(4)Section 41(c)(5) of the Internal Revenue Code, relating to election of alternative simplified credit, shall not apply.(i)Section 41(h) of the Internal Revenue Code, relating to termination, shall not apply.(j)Section 41(g) of the Internal Revenue Code, relating to special rule for pass-thru of credit, is modified by each of the following:(1)The last sentence shall not apply.(2)If the amount determined under Section 41(a) of the Internal Revenue Code, relating to general rule, for any taxable year exceeds the limitation of Section 41(g) of the Internal Revenue Code, that amount may be carried over to other taxable years under the rules of subdivision (f), except that the limitation of Section 41(g) of the Internal Revenue Code, relating to special rule for pass-thru of credit, shall be taken into account in each subsequent taxable year.(k)Section 41(a)(3) of the Internal Revenue Code shall not apply.(l)Section 41(b)(3)(D) of the Internal Revenue Code, relating to amounts paid to eligible small businesses, universities, and federal laboratories, shall not apply.(m)Section 41(f)(6) of the Internal Revenue Code, relating to energy research consortium, shall not apply.
Amended IN Assembly March 16, 2023 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Assembly Bill No. 926Introduced by Assembly Member PapanFebruary 14, 2023An act to amend Section 23609 of the Revenue and Taxation Code, relating to taxation. An act to add and repeal Sections 17057.7 and 23610.7 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.LEGISLATIVE COUNSEL'S DIGESTAB 926, as amended, Papan. Corporation taxes. Income taxes: credits: affordable housing: employer-assisted housing programs.The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2023, and before January 1, 2028, in an amount equal to ____% of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing, as defined, for employees or the investment in an employer-assisted housing program, as defined. Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.The Corporation Tax Law imposes taxes upon a corporation doing business in this state, according to, or measured by, net income, as specified. The Corporation Tax Law, in modified conformity to a credit allowed under federal law, allows a credit against taxes imposed by that law for increasing research activities, as described.This bill would make nonsubstantive changes to the provisions allowing that credit.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO
Amended IN Assembly March 16, 2023
Amended IN Assembly March 16, 2023
CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION
Assembly Bill
No. 926
Introduced by Assembly Member PapanFebruary 14, 2023
Introduced by Assembly Member Papan
February 14, 2023
An act to amend Section 23609 of the Revenue and Taxation Code, relating to taxation. An act to add and repeal Sections 17057.7 and 23610.7 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 926, as amended, Papan. Corporation taxes. Income taxes: credits: affordable housing: employer-assisted housing programs.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws. This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2023, and before January 1, 2028, in an amount equal to ____% of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing, as defined, for employees or the investment in an employer-assisted housing program, as defined. Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.The Corporation Tax Law imposes taxes upon a corporation doing business in this state, according to, or measured by, net income, as specified. The Corporation Tax Law, in modified conformity to a credit allowed under federal law, allows a credit against taxes imposed by that law for increasing research activities, as described.This bill would make nonsubstantive changes to the provisions allowing that credit.
The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.
This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2023, and before January 1, 2028, in an amount equal to ____% of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing, as defined, for employees or the investment in an employer-assisted housing program, as defined.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy.
The Corporation Tax Law imposes taxes upon a corporation doing business in this state, according to, or measured by, net income, as specified. The Corporation Tax Law, in modified conformity to a credit allowed under federal law, allows a credit against taxes imposed by that law for increasing research activities, as described.
This bill would make nonsubstantive changes to the provisions allowing that credit.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Section 17057.7 is added to the Revenue and Taxation Code, to read:17057.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the net tax, as defined in Section 17039, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code. (2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) (1) For the purpose of complying with Section 41, as it relates to the credit allowed pursuant to this section and Section 23610.7, the Legislature finds and declares as follows:(A) The specific goal, purpose, or objective of the credit allowed by this section and Section 23610.7 is to encourage employers to contribute to solving the labor shortage and housing unaffordability problems by providing a tax incentive.(B) The performance indicators for the Legislature to use in determining whether the credit achieves the stated goal shall be the number of taxpayers allowed a credit and the total dollar value of credits allowed.(2) (A) The Franchise Tax Board shall submit a report by November 1, 2024, and annually thereafter, to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a credit under this section or Section 23610.7 for the most recent taxable year, and the total dollar value of credits allowed.(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.SEC. 2. Section 23610.7 is added to the Revenue and Taxation Code, to read:23610.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the tax, as defined in Section 23036, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.(2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) For the purpose of complying with Section 41, the goal, purpose, objective performance indicators, and data collection requirements for the credit allowed by this section shall be as specified in subdivision (e) of Section 17057.7.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.SECTION 1.Section 23609 of the Revenue and Taxation Code is amended to read:23609.For each taxable year beginning on or after January 1, 1987, there shall be allowed as a credit against the tax, as defined by Section 23036, an amount determined in accordance with Section 41 of the Internal Revenue Code, relating to credit for increasing research activities, except as follows:(a)For each taxable year beginning before January 1, 1997, both of the following modifications shall apply:(1)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 8 percent.(2)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 12 percent.(b)(1)For each taxable year beginning on or after January 1, 1997, and before January 1, 1999, both of the following modifications shall apply:(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 11 percent.(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.(2)For each taxable year beginning on or after January 1, 1999, and before January 1, 2000, both of the following shall apply:(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 12 percent.(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.(3)For each taxable year beginning on or after January 1, 2000, both of the following shall apply:(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 15 percent.(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.(c)(1)With respect to any expense paid or incurred after the operative date of Section 6378, Section 41(b)(1) of the Internal Revenue Code, relating to qualified research expenses, is modified to exclude from the definition of qualified research expense any amount paid or incurred for tangible personal property that is eligible for the exemption from sales or use tax provided by Section 6378.(2)Qualified research and basic research shall include only research conducted in California.(d)The provisions of Section 41(e)(7)(A) of the Internal Revenue Code, relating to basic research, shall be modified so that basic research, for purposes of this section, includes any basic or applied research including scientific inquiry or original investigation for the advancement of scientific or engineering knowledge or the improved effectiveness of commercial products, except that the term does not include any of the following:(1)Basic research conducted outside California.(2)Basic research in the social sciences, arts, or humanities.(3)Basic research for the purpose of improving a commercial product if the improvements relate to style, taste, cosmetic, or seasonal design factors.(4)Any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas).(e)(1)In the case of a taxpayer engaged in any biopharmaceutical research activities that are described in codes 2833 to 2836, inclusive, or any research activities that are described in codes 3826, 3829, or 3841 to 3845, inclusive, of the Standard Industrial Classification (SIC) Manual published by the United States Office of Management and Budget, 1987 edition, or any other biotechnology research and development activities, the provisions of Section 41(e)(6) of the Internal Revenue Code, relating to qualified organization, shall be modified to include both of the following:(A)A qualified organization as described in Section 170(b)(1)(A)(iii) of the Internal Revenue Code and owned by an institution of higher education as described in Section 3304(f) of the Internal Revenue Code, relating to definition of institution of higher education.(B)A charitable research hospital owned by an organization that is described in Section 501(c)(3) of the Internal Revenue Code, is exempt from taxation under Section 501(a) of the Internal Revenue Code, relating to exemption from taxation, is not a private foundation, is designated a specialized laboratory cancer center, and has received Clinical Cancer Research Center status from the National Cancer Institute.(2)For purposes of this subdivision:(A)Biopharmaceutical research activities means those activities that use organisms or materials derived from organisms, and their cellular, subcellular, or molecular components, in order to provide pharmaceutical products for human or animal therapeutics and diagnostics. Biopharmaceutical activities make use of living organisms to make commercial products, as opposed to pharmaceutical activities that make use of chemical compounds to produce commercial products.(B)Other biotechnology research and development activities means research and development activities consisting of the application of recombinant DNA technology to produce commercial products, as well as research and development activities regarding pharmaceutical delivery systems designed to provide a measure of control over the rate, duration, and site of pharmaceutical delivery.(f)In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following year, and succeeding years if necessary, until the credit has been exhausted.(g)For each taxable year beginning on or after January 1, 1998, the reference to Section 501(a) in Section 41(b)(3)(C) of the Internal Revenue Code, relating to amounts paid to certain research consortia, is modified to read this part or Part 10 (commencing with Section 17001).(h)(1)For each taxable year beginning on or after January 1, 2000:(A)The reference to 3 percent in Section 41(c)(4)(A)(i) of the Internal Revenue Code is modified to read one and forty-nine hundredths of one percent.(B)The reference to 4 percent in Section 41(c)(4)(A)(ii) of the Internal Revenue Code is modified to read one and ninety-eight hundredths of one percent.(C)The reference to 5 percent in Section 41(c)(4)(A)(iii) of the Internal Revenue Code is modified to read two and forty-eight hundredths of one percent.(2)Section 41(c)(4)(B) of the Internal Revenue Code, relating to election, shall not apply and in lieu thereof an election under Section 41(c)(4)(A) of the Internal Revenue Code, relating to in general, may be made for any taxable year of the taxpayer beginning on or after January 1, 1998. That election shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Franchise Tax Board.(3)Section 41(c)(7) of the Internal Revenue Code, relating to gross receipts, is modified to take into account only those gross receipts from the sale of property held primarily for sale to customers in the ordinary course of the taxpayers trade or business that is delivered or shipped to a purchaser within this state, regardless of f.o.b. point or any other condition of the sale.(4)Section 41(c)(5) of the Internal Revenue Code, relating to election of alternative simplified credit, shall not apply.(i)Section 41(h) of the Internal Revenue Code, relating to termination, shall not apply.(j)Section 41(g) of the Internal Revenue Code, relating to special rule for pass-thru of credit, is modified by each of the following:(1)The last sentence shall not apply.(2)If the amount determined under Section 41(a) of the Internal Revenue Code, relating to general rule, for any taxable year exceeds the limitation of Section 41(g) of the Internal Revenue Code, that amount may be carried over to other taxable years under the rules of subdivision (f), except that the limitation of Section 41(g) of the Internal Revenue Code, relating to special rule for pass-thru of credit, shall be taken into account in each subsequent taxable year.(k)Section 41(a)(3) of the Internal Revenue Code shall not apply.(l)Section 41(b)(3)(D) of the Internal Revenue Code, relating to amounts paid to eligible small businesses, universities, and federal laboratories, shall not apply.(m)Section 41(f)(6) of the Internal Revenue Code, relating to energy research consortium, shall not apply.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 17057.7 is added to the Revenue and Taxation Code, to read:17057.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the net tax, as defined in Section 17039, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code. (2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) (1) For the purpose of complying with Section 41, as it relates to the credit allowed pursuant to this section and Section 23610.7, the Legislature finds and declares as follows:(A) The specific goal, purpose, or objective of the credit allowed by this section and Section 23610.7 is to encourage employers to contribute to solving the labor shortage and housing unaffordability problems by providing a tax incentive.(B) The performance indicators for the Legislature to use in determining whether the credit achieves the stated goal shall be the number of taxpayers allowed a credit and the total dollar value of credits allowed.(2) (A) The Franchise Tax Board shall submit a report by November 1, 2024, and annually thereafter, to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a credit under this section or Section 23610.7 for the most recent taxable year, and the total dollar value of credits allowed.(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
SECTION 1. Section 17057.7 is added to the Revenue and Taxation Code, to read:
### SECTION 1.
17057.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the net tax, as defined in Section 17039, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code. (2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) (1) For the purpose of complying with Section 41, as it relates to the credit allowed pursuant to this section and Section 23610.7, the Legislature finds and declares as follows:(A) The specific goal, purpose, or objective of the credit allowed by this section and Section 23610.7 is to encourage employers to contribute to solving the labor shortage and housing unaffordability problems by providing a tax incentive.(B) The performance indicators for the Legislature to use in determining whether the credit achieves the stated goal shall be the number of taxpayers allowed a credit and the total dollar value of credits allowed.(2) (A) The Franchise Tax Board shall submit a report by November 1, 2024, and annually thereafter, to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a credit under this section or Section 23610.7 for the most recent taxable year, and the total dollar value of credits allowed.(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
17057.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the net tax, as defined in Section 17039, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code. (2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) (1) For the purpose of complying with Section 41, as it relates to the credit allowed pursuant to this section and Section 23610.7, the Legislature finds and declares as follows:(A) The specific goal, purpose, or objective of the credit allowed by this section and Section 23610.7 is to encourage employers to contribute to solving the labor shortage and housing unaffordability problems by providing a tax incentive.(B) The performance indicators for the Legislature to use in determining whether the credit achieves the stated goal shall be the number of taxpayers allowed a credit and the total dollar value of credits allowed.(2) (A) The Franchise Tax Board shall submit a report by November 1, 2024, and annually thereafter, to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a credit under this section or Section 23610.7 for the most recent taxable year, and the total dollar value of credits allowed.(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
17057.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the net tax, as defined in Section 17039, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code. (2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) (1) For the purpose of complying with Section 41, as it relates to the credit allowed pursuant to this section and Section 23610.7, the Legislature finds and declares as follows:(A) The specific goal, purpose, or objective of the credit allowed by this section and Section 23610.7 is to encourage employers to contribute to solving the labor shortage and housing unaffordability problems by providing a tax incentive.(B) The performance indicators for the Legislature to use in determining whether the credit achieves the stated goal shall be the number of taxpayers allowed a credit and the total dollar value of credits allowed.(2) (A) The Franchise Tax Board shall submit a report by November 1, 2024, and annually thereafter, to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a credit under this section or Section 23610.7 for the most recent taxable year, and the total dollar value of credits allowed.(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
17057.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the net tax, as defined in Section 17039, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.
(b) For purposes of this section:
(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.
(2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.
(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.
(c) In the case where the credit allowed by this section exceeds the net tax, the excess may be carried over to reduce the net tax in the following taxable year.
(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.
(e) (1) For the purpose of complying with Section 41, as it relates to the credit allowed pursuant to this section and Section 23610.7, the Legislature finds and declares as follows:
(A) The specific goal, purpose, or objective of the credit allowed by this section and Section 23610.7 is to encourage employers to contribute to solving the labor shortage and housing unaffordability problems by providing a tax incentive.
(B) The performance indicators for the Legislature to use in determining whether the credit achieves the stated goal shall be the number of taxpayers allowed a credit and the total dollar value of credits allowed.
(2) (A) The Franchise Tax Board shall submit a report by November 1, 2024, and annually thereafter, to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of taxpayers allowed a credit under this section or Section 23610.7 for the most recent taxable year, and the total dollar value of credits allowed.
(B) The disclosure provisions of this paragraph shall be treated as an exception to Section 19542.
(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
SEC. 2. Section 23610.7 is added to the Revenue and Taxation Code, to read:23610.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the tax, as defined in Section 23036, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.(2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) For the purpose of complying with Section 41, the goal, purpose, objective performance indicators, and data collection requirements for the credit allowed by this section shall be as specified in subdivision (e) of Section 17057.7.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
SEC. 2. Section 23610.7 is added to the Revenue and Taxation Code, to read:
### SEC. 2.
23610.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the tax, as defined in Section 23036, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.(2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) For the purpose of complying with Section 41, the goal, purpose, objective performance indicators, and data collection requirements for the credit allowed by this section shall be as specified in subdivision (e) of Section 17057.7.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
23610.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the tax, as defined in Section 23036, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.(2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) For the purpose of complying with Section 41, the goal, purpose, objective performance indicators, and data collection requirements for the credit allowed by this section shall be as specified in subdivision (e) of Section 17057.7.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
23610.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the tax, as defined in Section 23036, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.(b) For purposes of this section:(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.(2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.(c) In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following taxable year.(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.(e) For the purpose of complying with Section 41, the goal, purpose, objective performance indicators, and data collection requirements for the credit allowed by this section shall be as specified in subdivision (e) of Section 17057.7.(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
23610.7. (a) For each taxable year beginning on or after January 1, 2023, and before January 1, 2028, there shall be allowed as a credit against the tax, as defined in Section 23036, an amount equal to ____ percent of the costs paid or incurred, or the equivalent value of land or property donated, by an employer during the taxable year for the construction of affordable housing for employees or the investment in an employer-assisted housing program.
(b) For purposes of this section:
(1) Affordable housing means housing developments in which some of the dwelling units may be purchased or rented, with or without government assistance, on a basis that is affordable to persons or families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.
(2) Employer-assisted housing program includes monetary assistance for, or the subsidizing of, rent or mortgage payments for housing insecure employees or employer-funded housing developments for housing insecure employees.
(3) Housing insecure means a condition where a person lacks a fixed, regular, and adequate residence, or where a persons primary sleeping accommodation is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for people.
(c) In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following taxable year.
(d) Any deduction otherwise allowed under this part for any amount paid or incurred by the taxpayer upon which the credit is based shall be reduced by the amount of the credit allowed under this section.
(e) For the purpose of complying with Section 41, the goal, purpose, objective performance indicators, and data collection requirements for the credit allowed by this section shall be as specified in subdivision (e) of Section 17057.7.
(f) This section shall remain operative until December 1, 2028, and as of that date is repealed.
SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SEC. 3. This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
### SEC. 3.
For each taxable year beginning on or after January 1, 1987, there shall be allowed as a credit against the tax, as defined by Section 23036, an amount determined in accordance with Section 41 of the Internal Revenue Code, relating to credit for increasing research activities, except as follows:
(a)For each taxable year beginning before January 1, 1997, both of the following modifications shall apply:
(1)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 8 percent.
(2)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 12 percent.
(b)(1)For each taxable year beginning on or after January 1, 1997, and before January 1, 1999, both of the following modifications shall apply:
(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 11 percent.
(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.
(2)For each taxable year beginning on or after January 1, 1999, and before January 1, 2000, both of the following shall apply:
(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 12 percent.
(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.
(3)For each taxable year beginning on or after January 1, 2000, both of the following shall apply:
(A)The reference to 20 percent in Section 41(a)(1) of the Internal Revenue Code is modified to read 15 percent.
(B)The reference to 20 percent in Section 41(a)(2) of the Internal Revenue Code is modified to read 24 percent.
(c)(1)With respect to any expense paid or incurred after the operative date of Section 6378, Section 41(b)(1) of the Internal Revenue Code, relating to qualified research expenses, is modified to exclude from the definition of qualified research expense any amount paid or incurred for tangible personal property that is eligible for the exemption from sales or use tax provided by Section 6378.
(2)Qualified research and basic research shall include only research conducted in California.
(d)The provisions of Section 41(e)(7)(A) of the Internal Revenue Code, relating to basic research, shall be modified so that basic research, for purposes of this section, includes any basic or applied research including scientific inquiry or original investigation for the advancement of scientific or engineering knowledge or the improved effectiveness of commercial products, except that the term does not include any of the following:
(1)Basic research conducted outside California.
(2)Basic research in the social sciences, arts, or humanities.
(3)Basic research for the purpose of improving a commercial product if the improvements relate to style, taste, cosmetic, or seasonal design factors.
(4)Any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas).
(e)(1)In the case of a taxpayer engaged in any biopharmaceutical research activities that are described in codes 2833 to 2836, inclusive, or any research activities that are described in codes 3826, 3829, or 3841 to 3845, inclusive, of the Standard Industrial Classification (SIC) Manual published by the United States Office of Management and Budget, 1987 edition, or any other biotechnology research and development activities, the provisions of Section 41(e)(6) of the Internal Revenue Code, relating to qualified organization, shall be modified to include both of the following:
(A)A qualified organization as described in Section 170(b)(1)(A)(iii) of the Internal Revenue Code and owned by an institution of higher education as described in Section 3304(f) of the Internal Revenue Code, relating to definition of institution of higher education.
(B)A charitable research hospital owned by an organization that is described in Section 501(c)(3) of the Internal Revenue Code, is exempt from taxation under Section 501(a) of the Internal Revenue Code, relating to exemption from taxation, is not a private foundation, is designated a specialized laboratory cancer center, and has received Clinical Cancer Research Center status from the National Cancer Institute.
(2)For purposes of this subdivision:
(A)Biopharmaceutical research activities means those activities that use organisms or materials derived from organisms, and their cellular, subcellular, or molecular components, in order to provide pharmaceutical products for human or animal therapeutics and diagnostics. Biopharmaceutical activities make use of living organisms to make commercial products, as opposed to pharmaceutical activities that make use of chemical compounds to produce commercial products.
(B)Other biotechnology research and development activities means research and development activities consisting of the application of recombinant DNA technology to produce commercial products, as well as research and development activities regarding pharmaceutical delivery systems designed to provide a measure of control over the rate, duration, and site of pharmaceutical delivery.
(f)In the case where the credit allowed by this section exceeds the tax, the excess may be carried over to reduce the tax in the following year, and succeeding years if necessary, until the credit has been exhausted.
(g)For each taxable year beginning on or after January 1, 1998, the reference to Section 501(a) in Section 41(b)(3)(C) of the Internal Revenue Code, relating to amounts paid to certain research consortia, is modified to read this part or Part 10 (commencing with Section 17001).
(h)(1)For each taxable year beginning on or after January 1, 2000:
(A)The reference to 3 percent in Section 41(c)(4)(A)(i) of the Internal Revenue Code is modified to read one and forty-nine hundredths of one percent.
(B)The reference to 4 percent in Section 41(c)(4)(A)(ii) of the Internal Revenue Code is modified to read one and ninety-eight hundredths of one percent.
(C)The reference to 5 percent in Section 41(c)(4)(A)(iii) of the Internal Revenue Code is modified to read two and forty-eight hundredths of one percent.
(2)Section 41(c)(4)(B) of the Internal Revenue Code, relating to election, shall not apply and in lieu thereof an election under Section 41(c)(4)(A) of the Internal Revenue Code, relating to in general, may be made for any taxable year of the taxpayer beginning on or after January 1, 1998. That election shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Franchise Tax Board.
(3)Section 41(c)(7) of the Internal Revenue Code, relating to gross receipts, is modified to take into account only those gross receipts from the sale of property held primarily for sale to customers in the ordinary course of the taxpayers trade or business that is delivered or shipped to a purchaser within this state, regardless of f.o.b. point or any other condition of the sale.
(4)Section 41(c)(5) of the Internal Revenue Code, relating to election of alternative simplified credit, shall not apply.
(i)Section 41(h) of the Internal Revenue Code, relating to termination, shall not apply.
(j)Section 41(g) of the Internal Revenue Code, relating to special rule for pass-thru of credit, is modified by each of the following:
(1)The last sentence shall not apply.
(2)If the amount determined under Section 41(a) of the Internal Revenue Code, relating to general rule, for any taxable year exceeds the limitation of Section 41(g) of the Internal Revenue Code, that amount may be carried over to other taxable years under the rules of subdivision (f), except that the limitation of Section 41(g) of the Internal Revenue Code, relating to special rule for pass-thru of credit, shall be taken into account in each subsequent taxable year.
(k)Section 41(a)(3) of the Internal Revenue Code shall not apply.
(l)Section 41(b)(3)(D) of the Internal Revenue Code, relating to amounts paid to eligible small businesses, universities, and federal laboratories, shall not apply.
(m)Section 41(f)(6) of the Internal Revenue Code, relating to energy research consortium, shall not apply.