| 1 | 1 | | CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 376Introduced by Senator ValladaresFebruary 13, 2025 An act to amend Section 17082 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGESTSB 376, as introduced, Valladares. Incomplete gift nongrantor trusts: Personal Income Tax Law.Existing law, the Personal Income Tax Law, in partial conformity with federal income tax law, imposes a tax on the taxable income of estates or of any kind of property held in trust. That law provides the taxable income of an estate or trust is computed in the same manner as in the case of an individual, except as provided, and the tax is paid by the fiduciary of the trust or estate. Existing law provides that, where the grantor or another person is treated as the owner of any portion of the trust, known as a grantor trust, then items of income, deductions, and credits against tax of the trust are included in computing the taxable income and credits of the grantor or other owner. Existing law, for taxable years beginning on or after January 1, 2023, includes the income of an incomplete gift nongrantor trust, as defined, in the gross income of the grantor to the extent the income of the trust would be taken into account in computing the grantors taxable income if the trust were treated as a grantor trust, except as provided. This bill would amend the definition of incomplete gift nongrantor trust to specifically exclude a trust, or portion of a trust, that qualifies as a charitable remainder trust, as specified.Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 17082 of the Revenue and Taxation Code is amended to read:17082. (a) For taxable years beginning on or after January 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayers gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayers taxable income if the trust in its entirety were treated as a grantor trust under Section 17731.(b) Notwithstanding subdivision (a), Section 17745 applies to distributions from an incomplete gift nongrantor trust.(c) Notwithstanding subdivision (a), the income of an incomplete gift nongrantor trust shall not be included in a qualified taxpayers gross income for a taxable year if all of the following apply:(1) The fiduciary of the incomplete gift nongrantor trust timely files an original California Fiduciary Income Tax Return and makes an irrevocable election on that return to be taxed as a resident nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731). The election shall be made in the form and manner prescribed by the Franchise Tax Board.(2) The incomplete gift nongrantor trust is a nongrantor trust pursuant to Chapter 9 (commencing with Section 17731).(3) Ninety percent or more of the distributable net income of the incomplete gift nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731), is distributed, or treated as being distributed pursuant to Section 17752 or 17731, including subdivision (a), for purposes of Chapter 9 (commencing with Section 17731), to a charitable organization, as defined in Section 501(c)(3) of the Internal Revenue Code.(d) For purposes of this section, the following definitions apply:(1) (A) Incomplete gift nongrantor trust means a trust that meets both of the following conditions:(A)(i) The trust does not qualify as a grantor trust under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to grantors and others treated as substantial owners.(B)(ii) The qualified taxpayers transfer of assets to the trust is treated as an incomplete gift under Section 2511 of the Internal Revenue Code, relating to transfers in general.(B) Notwithstanding subparagraph (A), incomplete gift nongrantor trust shall not include a trust, or portion of a trust, that qualifies as a charitable remainder trust under Section 664 of the Internal Revenue Code.(2) Qualified taxpayer means a grantor of an incomplete gift nongrantor trust.(3) Resident nongrantor trust means a trust that is not a grantor trust and where the tax applies to the entire taxable income of the trust based on the residency of the fiduciary or beneficiary in accordance with Section 17742.(e) (1) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section.(2) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of 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, procedure, or other guidance prescribed by the Franchise Tax Board pursuant to this section.SEC. 2. For the purpose of complying with Section 41, as it relates to the amendments made to Section 17082 of the Revenue and Taxation Code by Section 1 of this act, the Legislature finds and declares both of the following: (a) The specific goal of the exclusion is to continue to support charity efforts.(b) There is no available data to collect or report with respect to the amendments made to Section 17082 of the Revenue and Taxation by Section 1 of this act. 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. |
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| 3 | 3 | | CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 376Introduced by Senator ValladaresFebruary 13, 2025 An act to amend Section 17082 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. LEGISLATIVE COUNSEL'S DIGESTSB 376, as introduced, Valladares. Incomplete gift nongrantor trusts: Personal Income Tax Law.Existing law, the Personal Income Tax Law, in partial conformity with federal income tax law, imposes a tax on the taxable income of estates or of any kind of property held in trust. That law provides the taxable income of an estate or trust is computed in the same manner as in the case of an individual, except as provided, and the tax is paid by the fiduciary of the trust or estate. Existing law provides that, where the grantor or another person is treated as the owner of any portion of the trust, known as a grantor trust, then items of income, deductions, and credits against tax of the trust are included in computing the taxable income and credits of the grantor or other owner. Existing law, for taxable years beginning on or after January 1, 2023, includes the income of an incomplete gift nongrantor trust, as defined, in the gross income of the grantor to the extent the income of the trust would be taken into account in computing the grantors taxable income if the trust were treated as a grantor trust, except as provided. This bill would amend the definition of incomplete gift nongrantor trust to specifically exclude a trust, or portion of a trust, that qualifies as a charitable remainder trust, as specified.Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO |
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| 9 | 9 | | CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION |
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| 11 | 11 | | Senate Bill |
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| 12 | 12 | | |
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| 13 | 13 | | No. 376 |
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| 14 | 14 | | |
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| 15 | 15 | | Introduced by Senator ValladaresFebruary 13, 2025 |
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| 17 | 17 | | Introduced by Senator Valladares |
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| 18 | 18 | | February 13, 2025 |
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| 19 | 19 | | |
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| 20 | 20 | | An act to amend Section 17082 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. |
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| 21 | 21 | | |
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| 22 | 22 | | LEGISLATIVE COUNSEL'S DIGEST |
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| 23 | 23 | | |
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| 24 | 24 | | ## LEGISLATIVE COUNSEL'S DIGEST |
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| 25 | 25 | | |
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| 26 | 26 | | SB 376, as introduced, Valladares. Incomplete gift nongrantor trusts: Personal Income Tax Law. |
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| 27 | 27 | | |
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| 28 | 28 | | Existing law, the Personal Income Tax Law, in partial conformity with federal income tax law, imposes a tax on the taxable income of estates or of any kind of property held in trust. That law provides the taxable income of an estate or trust is computed in the same manner as in the case of an individual, except as provided, and the tax is paid by the fiduciary of the trust or estate. Existing law provides that, where the grantor or another person is treated as the owner of any portion of the trust, known as a grantor trust, then items of income, deductions, and credits against tax of the trust are included in computing the taxable income and credits of the grantor or other owner. Existing law, for taxable years beginning on or after January 1, 2023, includes the income of an incomplete gift nongrantor trust, as defined, in the gross income of the grantor to the extent the income of the trust would be taken into account in computing the grantors taxable income if the trust were treated as a grantor trust, except as provided. This bill would amend the definition of incomplete gift nongrantor trust to specifically exclude a trust, or portion of a trust, that qualifies as a charitable remainder trust, as specified.Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy. |
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| 30 | 30 | | Existing law, the Personal Income Tax Law, in partial conformity with federal income tax law, imposes a tax on the taxable income of estates or of any kind of property held in trust. That law provides the taxable income of an estate or trust is computed in the same manner as in the case of an individual, except as provided, and the tax is paid by the fiduciary of the trust or estate. Existing law provides that, where the grantor or another person is treated as the owner of any portion of the trust, known as a grantor trust, then items of income, deductions, and credits against tax of the trust are included in computing the taxable income and credits of the grantor or other owner. Existing law, for taxable years beginning on or after January 1, 2023, includes the income of an incomplete gift nongrantor trust, as defined, in the gross income of the grantor to the extent the income of the trust would be taken into account in computing the grantors taxable income if the trust were treated as a grantor trust, except as provided. |
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| 31 | 31 | | |
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| 32 | 32 | | This bill would amend the definition of incomplete gift nongrantor trust to specifically exclude a trust, or portion of a trust, that qualifies as a charitable remainder trust, as specified. |
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| 33 | 33 | | |
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| 34 | 34 | | Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. |
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| 35 | 35 | | |
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| 36 | 36 | | This bill also would include additional information required for any bill authorizing a new tax expenditure. |
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| 37 | 37 | | |
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| 38 | 38 | | This bill would take effect immediately as a tax levy. |
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| 39 | 39 | | |
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| 40 | 40 | | ## Digest Key |
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| 41 | 41 | | |
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| 42 | 42 | | ## Bill Text |
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| 43 | 43 | | |
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| 44 | 44 | | The people of the State of California do enact as follows:SECTION 1. Section 17082 of the Revenue and Taxation Code is amended to read:17082. (a) For taxable years beginning on or after January 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayers gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayers taxable income if the trust in its entirety were treated as a grantor trust under Section 17731.(b) Notwithstanding subdivision (a), Section 17745 applies to distributions from an incomplete gift nongrantor trust.(c) Notwithstanding subdivision (a), the income of an incomplete gift nongrantor trust shall not be included in a qualified taxpayers gross income for a taxable year if all of the following apply:(1) The fiduciary of the incomplete gift nongrantor trust timely files an original California Fiduciary Income Tax Return and makes an irrevocable election on that return to be taxed as a resident nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731). The election shall be made in the form and manner prescribed by the Franchise Tax Board.(2) The incomplete gift nongrantor trust is a nongrantor trust pursuant to Chapter 9 (commencing with Section 17731).(3) Ninety percent or more of the distributable net income of the incomplete gift nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731), is distributed, or treated as being distributed pursuant to Section 17752 or 17731, including subdivision (a), for purposes of Chapter 9 (commencing with Section 17731), to a charitable organization, as defined in Section 501(c)(3) of the Internal Revenue Code.(d) For purposes of this section, the following definitions apply:(1) (A) Incomplete gift nongrantor trust means a trust that meets both of the following conditions:(A)(i) The trust does not qualify as a grantor trust under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to grantors and others treated as substantial owners.(B)(ii) The qualified taxpayers transfer of assets to the trust is treated as an incomplete gift under Section 2511 of the Internal Revenue Code, relating to transfers in general.(B) Notwithstanding subparagraph (A), incomplete gift nongrantor trust shall not include a trust, or portion of a trust, that qualifies as a charitable remainder trust under Section 664 of the Internal Revenue Code.(2) Qualified taxpayer means a grantor of an incomplete gift nongrantor trust.(3) Resident nongrantor trust means a trust that is not a grantor trust and where the tax applies to the entire taxable income of the trust based on the residency of the fiduciary or beneficiary in accordance with Section 17742.(e) (1) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section.(2) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of 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, procedure, or other guidance prescribed by the Franchise Tax Board pursuant to this section.SEC. 2. For the purpose of complying with Section 41, as it relates to the amendments made to Section 17082 of the Revenue and Taxation Code by Section 1 of this act, the Legislature finds and declares both of the following: (a) The specific goal of the exclusion is to continue to support charity efforts.(b) There is no available data to collect or report with respect to the amendments made to Section 17082 of the Revenue and Taxation by Section 1 of this act. 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. |
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| 46 | 46 | | The people of the State of California do enact as follows: |
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| 47 | 47 | | |
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| 48 | 48 | | ## The people of the State of California do enact as follows: |
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| 49 | 49 | | |
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| 50 | 50 | | SECTION 1. Section 17082 of the Revenue and Taxation Code is amended to read:17082. (a) For taxable years beginning on or after January 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayers gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayers taxable income if the trust in its entirety were treated as a grantor trust under Section 17731.(b) Notwithstanding subdivision (a), Section 17745 applies to distributions from an incomplete gift nongrantor trust.(c) Notwithstanding subdivision (a), the income of an incomplete gift nongrantor trust shall not be included in a qualified taxpayers gross income for a taxable year if all of the following apply:(1) The fiduciary of the incomplete gift nongrantor trust timely files an original California Fiduciary Income Tax Return and makes an irrevocable election on that return to be taxed as a resident nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731). The election shall be made in the form and manner prescribed by the Franchise Tax Board.(2) The incomplete gift nongrantor trust is a nongrantor trust pursuant to Chapter 9 (commencing with Section 17731).(3) Ninety percent or more of the distributable net income of the incomplete gift nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731), is distributed, or treated as being distributed pursuant to Section 17752 or 17731, including subdivision (a), for purposes of Chapter 9 (commencing with Section 17731), to a charitable organization, as defined in Section 501(c)(3) of the Internal Revenue Code.(d) For purposes of this section, the following definitions apply:(1) (A) Incomplete gift nongrantor trust means a trust that meets both of the following conditions:(A)(i) The trust does not qualify as a grantor trust under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to grantors and others treated as substantial owners.(B)(ii) The qualified taxpayers transfer of assets to the trust is treated as an incomplete gift under Section 2511 of the Internal Revenue Code, relating to transfers in general.(B) Notwithstanding subparagraph (A), incomplete gift nongrantor trust shall not include a trust, or portion of a trust, that qualifies as a charitable remainder trust under Section 664 of the Internal Revenue Code.(2) Qualified taxpayer means a grantor of an incomplete gift nongrantor trust.(3) Resident nongrantor trust means a trust that is not a grantor trust and where the tax applies to the entire taxable income of the trust based on the residency of the fiduciary or beneficiary in accordance with Section 17742.(e) (1) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section.(2) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of 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, procedure, or other guidance prescribed by the Franchise Tax Board pursuant to this section. |
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| 52 | 52 | | SECTION 1. Section 17082 of the Revenue and Taxation Code is amended to read: |
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| 54 | 54 | | ### SECTION 1. |
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| 56 | 56 | | 17082. (a) For taxable years beginning on or after January 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayers gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayers taxable income if the trust in its entirety were treated as a grantor trust under Section 17731.(b) Notwithstanding subdivision (a), Section 17745 applies to distributions from an incomplete gift nongrantor trust.(c) Notwithstanding subdivision (a), the income of an incomplete gift nongrantor trust shall not be included in a qualified taxpayers gross income for a taxable year if all of the following apply:(1) The fiduciary of the incomplete gift nongrantor trust timely files an original California Fiduciary Income Tax Return and makes an irrevocable election on that return to be taxed as a resident nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731). The election shall be made in the form and manner prescribed by the Franchise Tax Board.(2) The incomplete gift nongrantor trust is a nongrantor trust pursuant to Chapter 9 (commencing with Section 17731).(3) Ninety percent or more of the distributable net income of the incomplete gift nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731), is distributed, or treated as being distributed pursuant to Section 17752 or 17731, including subdivision (a), for purposes of Chapter 9 (commencing with Section 17731), to a charitable organization, as defined in Section 501(c)(3) of the Internal Revenue Code.(d) For purposes of this section, the following definitions apply:(1) (A) Incomplete gift nongrantor trust means a trust that meets both of the following conditions:(A)(i) The trust does not qualify as a grantor trust under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to grantors and others treated as substantial owners.(B)(ii) The qualified taxpayers transfer of assets to the trust is treated as an incomplete gift under Section 2511 of the Internal Revenue Code, relating to transfers in general.(B) Notwithstanding subparagraph (A), incomplete gift nongrantor trust shall not include a trust, or portion of a trust, that qualifies as a charitable remainder trust under Section 664 of the Internal Revenue Code.(2) Qualified taxpayer means a grantor of an incomplete gift nongrantor trust.(3) Resident nongrantor trust means a trust that is not a grantor trust and where the tax applies to the entire taxable income of the trust based on the residency of the fiduciary or beneficiary in accordance with Section 17742.(e) (1) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section.(2) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of 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, procedure, or other guidance prescribed by the Franchise Tax Board pursuant to this section. |
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| 58 | 58 | | 17082. (a) For taxable years beginning on or after January 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayers gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayers taxable income if the trust in its entirety were treated as a grantor trust under Section 17731.(b) Notwithstanding subdivision (a), Section 17745 applies to distributions from an incomplete gift nongrantor trust.(c) Notwithstanding subdivision (a), the income of an incomplete gift nongrantor trust shall not be included in a qualified taxpayers gross income for a taxable year if all of the following apply:(1) The fiduciary of the incomplete gift nongrantor trust timely files an original California Fiduciary Income Tax Return and makes an irrevocable election on that return to be taxed as a resident nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731). The election shall be made in the form and manner prescribed by the Franchise Tax Board.(2) The incomplete gift nongrantor trust is a nongrantor trust pursuant to Chapter 9 (commencing with Section 17731).(3) Ninety percent or more of the distributable net income of the incomplete gift nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731), is distributed, or treated as being distributed pursuant to Section 17752 or 17731, including subdivision (a), for purposes of Chapter 9 (commencing with Section 17731), to a charitable organization, as defined in Section 501(c)(3) of the Internal Revenue Code.(d) For purposes of this section, the following definitions apply:(1) (A) Incomplete gift nongrantor trust means a trust that meets both of the following conditions:(A)(i) The trust does not qualify as a grantor trust under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to grantors and others treated as substantial owners.(B)(ii) The qualified taxpayers transfer of assets to the trust is treated as an incomplete gift under Section 2511 of the Internal Revenue Code, relating to transfers in general.(B) Notwithstanding subparagraph (A), incomplete gift nongrantor trust shall not include a trust, or portion of a trust, that qualifies as a charitable remainder trust under Section 664 of the Internal Revenue Code.(2) Qualified taxpayer means a grantor of an incomplete gift nongrantor trust.(3) Resident nongrantor trust means a trust that is not a grantor trust and where the tax applies to the entire taxable income of the trust based on the residency of the fiduciary or beneficiary in accordance with Section 17742.(e) (1) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section.(2) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of 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, procedure, or other guidance prescribed by the Franchise Tax Board pursuant to this section. |
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| 60 | 60 | | 17082. (a) For taxable years beginning on or after January 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayers gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayers taxable income if the trust in its entirety were treated as a grantor trust under Section 17731.(b) Notwithstanding subdivision (a), Section 17745 applies to distributions from an incomplete gift nongrantor trust.(c) Notwithstanding subdivision (a), the income of an incomplete gift nongrantor trust shall not be included in a qualified taxpayers gross income for a taxable year if all of the following apply:(1) The fiduciary of the incomplete gift nongrantor trust timely files an original California Fiduciary Income Tax Return and makes an irrevocable election on that return to be taxed as a resident nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731). The election shall be made in the form and manner prescribed by the Franchise Tax Board.(2) The incomplete gift nongrantor trust is a nongrantor trust pursuant to Chapter 9 (commencing with Section 17731).(3) Ninety percent or more of the distributable net income of the incomplete gift nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731), is distributed, or treated as being distributed pursuant to Section 17752 or 17731, including subdivision (a), for purposes of Chapter 9 (commencing with Section 17731), to a charitable organization, as defined in Section 501(c)(3) of the Internal Revenue Code.(d) For purposes of this section, the following definitions apply:(1) (A) Incomplete gift nongrantor trust means a trust that meets both of the following conditions:(A)(i) The trust does not qualify as a grantor trust under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to grantors and others treated as substantial owners.(B)(ii) The qualified taxpayers transfer of assets to the trust is treated as an incomplete gift under Section 2511 of the Internal Revenue Code, relating to transfers in general.(B) Notwithstanding subparagraph (A), incomplete gift nongrantor trust shall not include a trust, or portion of a trust, that qualifies as a charitable remainder trust under Section 664 of the Internal Revenue Code.(2) Qualified taxpayer means a grantor of an incomplete gift nongrantor trust.(3) Resident nongrantor trust means a trust that is not a grantor trust and where the tax applies to the entire taxable income of the trust based on the residency of the fiduciary or beneficiary in accordance with Section 17742.(e) (1) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section.(2) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of 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, procedure, or other guidance prescribed by the Franchise Tax Board pursuant to this section. |
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| 64 | 64 | | 17082. (a) For taxable years beginning on or after January 1, 2023, the income of an incomplete gift nongrantor trust shall be included in a qualified taxpayers gross income to the extent the income of the trust would be taken into account in computing the qualified taxpayers taxable income if the trust in its entirety were treated as a grantor trust under Section 17731. |
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| 66 | 66 | | (b) Notwithstanding subdivision (a), Section 17745 applies to distributions from an incomplete gift nongrantor trust. |
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| 67 | 67 | | |
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| 68 | 68 | | (c) Notwithstanding subdivision (a), the income of an incomplete gift nongrantor trust shall not be included in a qualified taxpayers gross income for a taxable year if all of the following apply: |
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| 69 | 69 | | |
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| 70 | 70 | | (1) The fiduciary of the incomplete gift nongrantor trust timely files an original California Fiduciary Income Tax Return and makes an irrevocable election on that return to be taxed as a resident nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731). The election shall be made in the form and manner prescribed by the Franchise Tax Board. |
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| 72 | 72 | | (2) The incomplete gift nongrantor trust is a nongrantor trust pursuant to Chapter 9 (commencing with Section 17731). |
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| 73 | 73 | | |
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| 74 | 74 | | (3) Ninety percent or more of the distributable net income of the incomplete gift nongrantor trust, pursuant to Chapter 9 (commencing with Section 17731), is distributed, or treated as being distributed pursuant to Section 17752 or 17731, including subdivision (a), for purposes of Chapter 9 (commencing with Section 17731), to a charitable organization, as defined in Section 501(c)(3) of the Internal Revenue Code. |
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| 75 | 75 | | |
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| 76 | 76 | | (d) For purposes of this section, the following definitions apply: |
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| 78 | 78 | | (1) (A) Incomplete gift nongrantor trust means a trust that meets both of the following conditions: |
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| 80 | 80 | | (A) |
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| 84 | 84 | | (i) The trust does not qualify as a grantor trust under Subpart E of Part I of Subchapter J of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to grantors and others treated as substantial owners. |
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| 85 | 85 | | |
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| 86 | 86 | | (B) |
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| 90 | 90 | | (ii) The qualified taxpayers transfer of assets to the trust is treated as an incomplete gift under Section 2511 of the Internal Revenue Code, relating to transfers in general. |
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| 91 | 91 | | |
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| 92 | 92 | | (B) Notwithstanding subparagraph (A), incomplete gift nongrantor trust shall not include a trust, or portion of a trust, that qualifies as a charitable remainder trust under Section 664 of the Internal Revenue Code. |
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| 93 | 93 | | |
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| 94 | 94 | | (2) Qualified taxpayer means a grantor of an incomplete gift nongrantor trust. |
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| 95 | 95 | | |
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| 96 | 96 | | (3) Resident nongrantor trust means a trust that is not a grantor trust and where the tax applies to the entire taxable income of the trust based on the residency of the fiduciary or beneficiary in accordance with Section 17742. |
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| 97 | 97 | | |
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| 98 | 98 | | (e) (1) The Franchise Tax Board may prescribe any regulations necessary or appropriate to carry out the purposes of this section. |
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| 99 | 99 | | |
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| 100 | 100 | | (2) The Franchise Tax Board may prescribe rules, guidelines, procedures, or other guidance to carry out the purposes of 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, procedure, or other guidance prescribed by the Franchise Tax Board pursuant to this section. |
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| 101 | 101 | | |
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| 102 | 102 | | SEC. 2. For the purpose of complying with Section 41, as it relates to the amendments made to Section 17082 of the Revenue and Taxation Code by Section 1 of this act, the Legislature finds and declares both of the following: (a) The specific goal of the exclusion is to continue to support charity efforts.(b) There is no available data to collect or report with respect to the amendments made to Section 17082 of the Revenue and Taxation by Section 1 of this act. |
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| 103 | 103 | | |
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| 104 | 104 | | SEC. 2. For the purpose of complying with Section 41, as it relates to the amendments made to Section 17082 of the Revenue and Taxation Code by Section 1 of this act, the Legislature finds and declares both of the following: (a) The specific goal of the exclusion is to continue to support charity efforts.(b) There is no available data to collect or report with respect to the amendments made to Section 17082 of the Revenue and Taxation by Section 1 of this act. |
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| 105 | 105 | | |
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| 106 | 106 | | SEC. 2. For the purpose of complying with Section 41, as it relates to the amendments made to Section 17082 of the Revenue and Taxation Code by Section 1 of this act, the Legislature finds and declares both of the following: |
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| 107 | 107 | | |
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| 108 | 108 | | ### SEC. 2. |
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| 109 | 109 | | |
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| 110 | 110 | | (a) The specific goal of the exclusion is to continue to support charity efforts. |
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| 111 | 111 | | |
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| 112 | 112 | | (b) There is no available data to collect or report with respect to the amendments made to Section 17082 of the Revenue and Taxation by Section 1 of this act. |
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| 113 | 113 | | |
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| 114 | 114 | | 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. |
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| 115 | 115 | | |
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| 116 | 116 | | 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. |
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| 117 | 117 | | |
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| 118 | 118 | | 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. |
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| 119 | 119 | | |
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| 120 | 120 | | ### SEC. 3. |
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