Year to deduct California franchise tax for accrual-method corp.For taxable years beginning after 1999, California law was amended to replace "income year" with "taxable year." Consequently, the California franchise tax is measured by the net income of the year in which the tax is imposed and payable. A question arose about whether or not this law change accelerated the California franchise tax deduction Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. for federal income tax purposes. Rev. Rul. 2003-90, IRB IRB See: Industrial Revenue Bond 2003-33, Aug. 18, 2003, answers this question in the negative, illustrated as follows: ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. Corp. is a calendar-year accrual-method corporation doing business in California. Its 2002 California net income is $10,000 and it paid $884 in 2002 California franchise tax. Under current California law, ABC Corp.'s 2002 California franchise tax liability is $884, based on its $10,000 of 2002 California net income. However, Rev. Rul. 2003-90 holds that ABC Corp. must deduct this $884 on its 2003 federal income tax return, pursuant to IRC (Internet Relay Chat) Computer conferencing on the Internet. There are hundreds of IRC channels on numerous subjects that are hosted on IRC servers around the world. After joining a channel, your messages are broadcast to everyone listening to that channel. Sec. 461(d). Thus, there is no change in the timing of this deduction for federal purposes. Stuart R. Josephs, CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , of the San Diego-based Tax Assistance Practice. |
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