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FTB Will Issue Instructions for NASSCO Changes

Last month the State Board of Equalization issued a formal ruling in a case brought by NASSCO dealing with the question of whether certain tax credits could be used to offset alternative minimum tax.

The following article from BNA Tax Report by Laura Mahoney explains how the FTB will be addressing the change imposed by the BOE decision:

FTB Will Revise Filing Instructions For Taxpayers With EZ, MIC Credits, AMT

By Laura Mahoney

SACRAMENTO, Calif.—The California Franchise Tax Board will revise its 2010 filing instructions in February so that corporate taxpayers with enterprise zone hiring credits or manufacturers’ investment credits may apply those credits to offset alternative minimum tax, to comply with a recent ruling from the State Board of Equalization.

The revised Form 100 Schedule P instructions for the 2010 tax year stem from SBOE’s adoption in November 2010 of a formal opinion in the appeal of NASSCO Holdings Inc. (235 DTR H-1, 12/9/10) According to FTB, the NASSCO decision applies only to corporate income taxpayers and not personal income taxpayers, in part because of differences between corporate and personal income tax statutes. Corporate taxpayers will be able to claim the credits at issue in the NASSCO case.

“Only the corporate tax credits at issue in NASSCO will be administered in the manner contemplated by the NASSCO decision,” FTB said.

FTB has not said whether corporate taxpayers may file amended returns for open years in which they had both AMT and credits under the EZ or MIC programs. The February instructions may provide more details about what FTB will allow and how it will implement the decision, a spokeswoman for FTB told BNA Jan.4.

The updated instructions will be posted in February at http://www.ftb.ca.gov. Use the search term NASSCO for more information.

Reproduced with permission from Daily Tax Report, 3 DTR H-1 (Jan. 5, 2011). Copyright 2011 by The Bureau of National Affairs, Inc. (800-372-1033)

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