Bill Text: CA SB775 | 2019-2020 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Corporation taxes: exempt organizations: mutual ditch or irrigation companies: public water system: mutual water companies.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2019-08-30 - August 30 hearing: Held in committee and under submission. [SB775 Detail]

Download: California-2019-SB775-Introduced.html

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CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill

No. 775

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Introduced by Senator Rubio

February 22, 2019

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An act to amend Section 24473 of, and to add Section 23701m to, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

SB 775, as introduced, Rubio. Corporation taxes: exempt organizations: mutual ditch or irrigation companies.

The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from taxes imposed by that law.

This bill, in further conformity with federal income tax laws, for taxable years beginning on or after January 1, 2019, would exempt from the taxes imposed by the Corporation Tax Law a mutual ditch or irrigation company, as provided. This bill would make additional conforming changes.

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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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 23701m is added to the Revenue and Taxation Code, to read:

23701m.

 For taxable years beginning on or after January 1, 2019, mutual ditch or irrigation companies subject to the limitations and as described in Section 501(c)(12) of the Internal Revenue Code.

SEC. 2.

 Section 24473 of the Revenue and Taxation Code is amended to read:

24473.

 Notwithstanding any other provision of law, for taxable years beginning before January 1, 2019, the contribution or other transfer of the assets of a mutual water company established prior to September 26, 1977, that is tax exempt under Section 501(c)(12) of the Internal Revenue Code, but is a taxable entity under California Law, including its lands, easements, rights, and obligations to act as sole agent of the stockholders in exercising the riparian rights of the stockholders, and rights relating to the ownership, operation, and maintenance of a water system and facilities serving the customers of the company, to a community services district formed pursuant to Part 1 (commencing with Section 61100) 61000) of Division 3 of Title 6 of the Government Code, is not a transfer subject to taxes imposed by this part if all of the following requirements are met:

(a) The consideration for the transfer of all or substantially all of the assets is the assumption by the district of the company’s liability to provide service to the company’s stockholders.

(b) The legal or beneficial title to all or substantially all of the company’s assets is vested in the district on or before January 1, 2008.

(c) For the one-year period immediately prior to commencement of the transfer and continuing until the transfer is completed, 85 percent or more of the company’s income consists of amounts collected from stockholders for the sole purpose of meeting losses and expenses.

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.