Book vs. tax incomes.

The state Legislature last week passed a bill that would require corporations to document the differences between their "book" and "tax" incomes and report both sets of income to the state Franchise Tax Board.

Many corporations currently report two sets of income: one to their shareholders ("book income") and one to tax collecting agencies. Often, the figure reported to the tax agencies is significantly lower than the book income.

Democrat lawmakers and organized labor say this bill is crucial because it would alert state tax collectors to revenues that corporations are not counting towards their taxes.

Business groups oppose the bill, saying it adds cumbersome reporting requirements. They also note that the tax income figure is often lower because of depreciation, credits and other legitimate income-reducing measures allowed in the state tax code.

Schwarzenegger, who has in the past tended to side with business on tax issues, has until the last week of September to sign or veto the bill.

Staff reporter Howard Fine can be reached at hfine@labusinessjournaLcom or at [phone], ext. 227.