California Conformity with Federal Tax Changes

By Gina Rodriguez and Chris Micheli

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REVENUE RECONCILIATION ACT OF 1993 (P.L. 103-66)
 
ACT § FEDERAL LAW IRC § CALIFORNIA LAW CRTC §
13101 Extended to 12/31/94 the exclusion for employer-provided education courses 127(d) and 132(i) Conforms (SB 38); Eff. 1/1/94; CA law is permanent 17131 and 17151
13102 Targeted jobs tax credit extended to 12/31/94 51 CA jobs tax credit expired for wages paid after 12/31/93 17053.7 and 23621
13111(a) and (c) Extended R&D credit to 6/30/95 and changed fixed base percentage for start-ups 41 Conforms (SB 671); Eff. 1/1/94 17052.12 and 23609
13111(b) Extended orphan drug credit to 12/31/94 28 Does not conform; CA credit expired on 12/31/92 17057 and 23609.5 [repealed]
13113 50% exclusion of gain from sale of small business stock held at least 5 years 53, 57(a), 172(d), 642, 643, 691, 871, 1202 Partially conforms (SB 671); Eff. 1/1/93; two exceptions focus CA exclusion on stock of corporations doing business primarily in the state 17062, 17063, 17276, 17736, 17750, 18152.5, 18683.5, 19133.5
13114 Rollover of gain from sale of publicly-traded securities into SBICs 1016 and 1044 Conforms (SB 455); Eff. 1/1/97 18031, 18044, 24916, 24956
13115 Eliminated ACE adjustment for property placed in service after 12/31/93 56(g) Does not conform 17201 and 23456
13116 Increased expensing limit to $17,500 for property used by small business after 12/31/92 179 Partially conforms (SB 38) (SB 455); Eff. 1/1/97 (PIT only) 17255
13121 High-speed intercity rail facility private activity bonds exemption from state cap 146 Does not conform 17143
13122 Qualified small-issue private activity bonds issuance made permanent 144 Does not conform 17143
13131 Earned income credit expanded and simplified 32, 162, 213, 3507 Does not conform Not applicable
13141 Qualified mortgage bonds issuance made permanent 25 and 143 Does not conform 17143
13142 Made permanent low-income housing credit 42 Conforms (AB 3651); Eff. 1/1/94 17058 and 23610.5
13143 Real property trade or business not subject to the passive activity loss limits 469 Does not conform 17561 and 24692
13144 Real estate investment rules relaxed for pension funds 514(c) Conforms (SB 455); Eff. 1/1/97 23735
13145 Repealed automatic UBTI rule for publicly-traded partnership income received by pension funds 512 Conforms (SB 455); Eff. 1/1/97 23732
13146 Allowed certain title-holding companies to receive minor amounts of UBTI 501(c) Conforms (SB 455); Eff. 1/1/97 23701h and 23701x
13147 Exempted dealer UBTI for real property acquired from financial institutions in conservatorship/receivership 512(b) Conforms (SB 455); Eff. 1/1/97 23732
13148 Expanded UBTI for option premiums and loan commitment fees 512(b) Conforms (SB 455); Eff. 1/1/97 23732
13149 Relaxed pension fund rules for investments in real estate investment trusts 856(h) Conforms (SB 455); Eff. 1/1/97 24870 and 24872
13150 Election to exclude from income discharge of qualified real property indebtedness 108, 703 and 1017 Conforms (SB 38); Eff. 1/1/96 17144, 17330, 17859, 24307, 24472 and 24903
13151 Increased nonresidential real recovery period from 31.5 to 39 years 168 Conforms (SB 38); Eff. 1/1/97 17201, 17250 and 24349
13161 and 13162 Repealed luxury tax on boats, aircraft, jewelry, furs; modified tax for passenger vehicles; exempted certain equipment installed in vehicles for disabled 4001 - 4004 Does not conform Not applicable
13163 Diesel tax on noncommercial motorboats 4041, 4092, 6421, 9508 Does not conform Not applicable
13171 Repealed preference tax treatment of contributions of appreciated property 53(d), 56(g), 57(a) Does not conform 17062 and 23400
13172 Substantiation requirements for charitable donations 170 Conforms (SB 455); state requirements are met if federal law is; Eff. 1/1/97 17275.5 and 24357
13173 Disclosure requirements for quid pro quo contributions 6115 and 6714 Conforms (SB 455); state requirements are met if federal law is; Eff. 1/1/97 18648.5 and 19182.5
13174 Extended to 12/13/93 the deduction for self-employed health insurance 162(l) Partially conforms (AB 35); Eff. 1/1/94; CA deduction is limited to 25% 17201 and 17273
13201 Increased individual tax rates 1 Not applicable 17041
13202 Imposed surtax on high-income taxpayers 1 Not applicable 17041
13203 Increased AMT rate and the exemption amount 55, 894 - 898 Partially conforms (SB 455); Eff. 1/1/97 17062
13204 Made permanent itemized deduction overall limits for high-income taxpayers 68 Conforms; CA's limit for high-income taxpayers is already permanent 17077
13205 Made permanent personal exemption phaseout of high-income taxpayers 151(d) Conforms; CA's limit for high-income taxpayers is already permanent 17054.1
13206(a) Ordinary income rule for conversion transactions after 4/30/93 1258 Conforms (SB 455); Eff. 1/1/97 18151 and 24990
13206(b) Expanded ordinary income rule for certain tax exempt obligations 1276(e)1277, 1278(a) Conforms (SB 455); Eff. 1/1/97 18151 and 24990
13206(c) Expanded the original issue discount rule for stripped preferred stock 167(e) and 305 Conforms (SB 455); Eff. 1/1/97 17321, 17250, 24349, 24451
13206(d) Excluded certain capital gain attributable to disposition of investment property 1(h) and 163(d) Conforms (SB 455); Eff. 1/1/97 17201 and 24344
13206(e) Partnership treatment of substantially appreciated property 751 Conforms (SB 455); Eff. 1/1/97 17851 and 17856
13207 Repealed wage limitation subject to health insurance employment tax for wages received after 12/31/93 1402, 3121 - 3123, 6413 Does not conform; CA does not impose FICA, FUTA or SECA taxes Not applicable
13208 Made permanent the top estate and gift tax rates 2110 Does not conform Not applicable
13209 Lowered the deduction for business meals and entertainment 274 Conforms (SB 671); Eff. 1/1/93 17201, 17271, and 24443
13210 Eliminated the deduction for club membership dues 274(a) Does not conform; but denies deduction for any clubs that discriminate 17269, 17271, 24343.2, 24443
13211 Eliminated the deduction for employee compensation over $1 million 162(m) Does not conform 24343.7
13212 Allows compensation to be taken into account for retirement plan purposes at a reduced amount of $150,000 401, 404, 408, 505 Conforms (SB 455); Eff. 1/1/97 17501, 24601, 23705
13213 Modified moving expenses deduction 62 and 1001 Conforms (SB 38); Eff. 1/1/96 17072, 17076, 17084, 17218
13214 Simplified estimate tax safe harbor based upon prior year's tax 6654 Conforms (SB 455); but does not include AMT taxpayers; Eff. 1/1/97 19136 and 19136.2
13215 Social Security and Tier I railroad retirement benefits 86 Does not conform 17081 and 17087
13221 Increased the top marginal corporate tax rate 11, 852, 1201, 1445 Does not conform 23151, 23501, 24870, 24990
13222 Eliminated the deduction for lobbying expenses 162, 170(f), 6033 Does not conform 17201, 17270.5, 24343
13223 Mark-to-market rules for securities dealers 475 and 988 Conforms (SB 38); Eff. 1/1/97 17077.5, 17078, 17551, 24651, 24701, 24905
13224 Clarified treatment of cerain FSLIC financial assistance 165, 166, 585 Does not conform 24322
13225 Modified estimated tax rules for corporations 6655 Partially conforms (SB 38); Eff. 1/1/96 19142 and 19144
13226(a) Discharge of indebtedness stock-for-debt exception 108 Conforms (SB 38); Eff. 1/1/96 17131, 17144, 24307
13226(b) Discharge of indebtedness additional tax attributes 108 Conforms (SB 38); Eff. 1/1/96 17131, 17144, 17330, 24307, 24472, 24903
13227 Limited IRC § 936 tax credit for possession corporations 936 Does not conform Not applicable
13228 Expanded earnings stripping interest deduction limitation 163(j) Conforms (SB 38); Eff. 1/1/96 24344
13231-13233 Deferred tax on controlled foreign corporations earnings limitation after 10/1/93 951, 956A, 959, 1296 Does not conform 18151, 23051.5, 24995, 25110
13234 Allocation of research and experimental expenses 864(f) Does not conform 25110
13235 Eliminated working capital exception for foreign oil, gas and shipping income 907, 914, 954 Does not conform 19164
13236 Accuracy-related penalties for transfer pricing violations 6662 Conforms (SB 455); Eff. 1/1/97 19164
13237 Portfolio interest exemption received by nonresident alien individuals or corporations for contingent interest 871, 881, 1441, 1442 Does not conform 17201 and 24344
13238 Regulatory authority for multi-party conduits 7701 Does not conform 19164
13239 Exclusion of softwood logs from export authority 861- 865, 921- 927, 951-964 Conforms (AB 2925); Eff. 1/1/94 25101 and 25110
13241-13245 Increased per-gallon excise tax on all fuels used in point of collection and transport 4041, 4081, 6416, 6421, 5427, 9502 Does not conform 7301-8405, 8701-9355
13251 Modified penalty for any substantial underpayments 6662 Conforms (SB 455); Eff. 1/1/97 19164
13252 Required financial entities to file information returns 6050P Conforms (SB 455); Eff. 1/1/98 18645
13261 Amortization of goodwill and certain intangibles 167, 197, 1016, 1060, 1245 Conforms (SB 1880); Eff. 1/1/94 17279, 17748, 18035, 24353, 24355, 24916
13262 Treatment of payments to deceased or retired partners 736 and 751 Conforms (SB 38); Eff. 1/1/96 17851, 17855, 17857
13271 Interest-free period for certain tax overpayments 6611(e) Does not conform 19349
13272 Eliminated the deduction for spousal/dependent travel 274(m) Conforms (SB 38); Eff. 1/1/96 17201, 17271, 24443
13273 Increased withholding rate on supplemental wages 3402(g) Does not conform Not applicable
13301-13303 Created empowerment zones 38, 39, 51, 280C, 381, 1391-1397 Not applicable; CA has state enterprise zone program Not applicable
13311 Credit for contributions to community development corporations 38 Does not conform Not applicable
13321-13322 Indian reservations property depreciation 168(j) Does not conform 17201, 17250, 24349
13401 Access to certain tax info 6103 Does not conform 19543-19553
13421-13422 Made permanent excise tax and program funding on certain vaccines 4131, 4980B, 9510 Does not conform Not applicable
13431 Modified the involuntary conversion rules for disaster related conversions 1033(a) Conforms (AB 1228); Eff. 9/1/91 18031, 19061, 24943
13441 Increased President Election Campaign check-off to $3 6096 Does not conform Not applicable
13442 Eliminated the deduction for noncomplying group health plans 162(n) Conforms (SB 455); Eff. 1/1/97 17201 and 24343
13443 Credit for the portion of employer FICA paid on tips 38 and 45B Does not conform; CA does not impose FICA taxes Not applicable
13444 Availability and use of certain death information 6103 Does not conform 19543-19553
Bill numbers cited above: 
AB 35 (Stats. 1993, Ch. 873) 
AB 1228 (Stats. 1993, Ch. 725) 
SB 671 (Alquist, Stats. 1993, Ch. 881) 
AB 2925 (Sher, Stats. 1994, Ch. 1296) 
AB 3651 (Hauser, Stats. 1994, Ch. 1164) 
SB 1880 (Campbell, Stats. 1994, Ch. 861) 
SB 38 (Lockyer/Pringle, Stats. 1996, Ch. 954) 
SB 455 (Alpert, Stats. 1997, Ch. 611)
 

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