Bill Text: CA AB2426 | 2013-2014 | Regular Session | Amended

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Bill Title: Income taxes: education savings accounts.

Spectrum: Slight Partisan Bill (Republican 5-3)

Status: (Introduced - Dead) 2014-05-23 - Joint Rule 62(a), file notice suspended. (Page 5065.) In committee: Set, second hearing. Held under submission. [AB2426 Detail]

Download: California-2013-AB2426-Amended.html

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BILL NUMBER: AB 2426	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 5, 2014
	AMENDED IN ASSEMBLY  APRIL 1, 2014

INTRODUCED BY   Assembly Member Nestande
   (  Coauthor:   Assembly Member 
 Allen   Coauthors:   Assembly Members
  Allen,   Bonilla,   Grove,  
Harkey,   Maienschein,   and Olsen  )
    (   Coauthor:   Senator   Cannella
  ) 

                        FEBRUARY 21, 2014

   An act to  add Section 17141.1 to   amend
Section 17072 of, and to add Section 17208 to,  the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2426, as amended, Nestande. Income taxes: education savings
accounts.
   The Personal Income Tax  Law excludes from gross income
distributions from a Coverdell education savings account, provided
the distributions are used for qualified education expenses, as
provided   Law, in modified conformity with federal
income tax laws, allows various deductions in computing the income
that is subject to the taxes imposed by that law  .
   This bill would allow as  an exclusion from  
a deduction incomputing adjusted  gross income   
for  those amounts contributed to a Coverdell education savings
account, up to $750 per taxable year, as provided.  This bill
would impose a penalty upon a taxpayer of 2.5% for unauthorized
distributions from the account, as specified. 
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

   SECTION 1.    Section 17072 of the   Revenue
and Taxation Code   is amended to read: 
   17072.  (a) Section 62 of the Internal Revenue Code, relating to
adjusted gross income defined, shall apply, except as otherwise
provided.
   (b) Section 62(a)(2)(D) of the Internal Revenue Code, relating to
certain expenses of elementary and secondary school teachers, shall
not apply.
   (c) Section 62(a)(21) of the Internal Revenue Code, relating to
attorneys fees relating to awards to whistleblowers, shall not apply.

   (d) For taxable years beginning on or after January 1, 2014,
Section 62(a) of the Internal Revenue Code is modified to provide
that the deduction allowed under Section 17208 shall be allowed in
determining adjusted gross income. 
   SECTION 1.   SEC. 2.   Section 
17141.1   17208  is added to the Revenue and
Taxation Code, to read:
    17141.1.   17208.   (a) Notwithstanding
any other provision of this part or Part 11 (commencing with Section
23001) to the contrary,  any   a deduction
shall be allowed for an  amount contributed by a taxpayer during
the taxable year to a Coverdell education savings account, not to
exceed seven hundred fifty dollars ($750) per taxable year, 
shall not be includable in the gross income of the taxpayer,
 except as otherwise provided in this section. 
   (b) For purposes of this section:  
   (1) "Coverdell education savings account" shall have the same
meaning as that term is defined by Section 530 of the Internal
Revenue Code.  
   (2) "Dependent" shall have the same meaning as that term is
defined by Section 152 of the Internal Revenue Code. 

   (3) "Qualified education expenses" shall have the same meaning as
that term is defined by Section 530 of the Internal Revenue Code.
 
   (c) (1) Any amount withdrawn or distributed from a Coverdell
education savings account shall subject the taxpayer to a penalty in
an amount equal to 2.5 percent of the payment or distribution, unless
the payment or distribution is made to pay for the qualified
education expenses of the taxpayer that established the account or
his or her spouse or their dependents.  
   (2) If the withdrawal or distribution from a Coverdell education
savings account is not used to pay for qualified education expenses
then any amount previously excluded from gross income pursuant to
this section shall be included in a taxpayer's gross income for the
taxable year in which the amount was excluded and the taxpayer shall
be liable for any increase in tax attributable to that inclusion.
 
   (d) Notwithstanding any other provision of this part, the transfer
of a taxpayer's interest in a Coverdell education savings account to
his or her former spouse under a dissolution decree or under a
written instrument incident to a dissolution is not to be considered
a taxable transfer made by that taxpayer, as long as the transferred
moneys are deposited into another Coverdell education savings account
established by the former spouse.  
   (b) For purposes of this section, "Coverdell education savings
account" shall have the same meaning as that term is defined by
Section 530 of the Internal Revenue Code, as modified by Section
23712.  
   (c) For purposes of applying Section 530 of the Internal Revenue
Code, relating to Coverdell education savings accounts, the basis of
the Coverdell education savings account shall be reduced by any
amount deducted pursuant to this section. 
   SEC. 2.   SEC. 3.   This act provides
for a tax levy within the meaning of Article IV of the Constitution
and shall go into immediate effect.