Tap any paragraph to write a margin note. Your notes collect in the Desk below the text and file under cases with @. The side-by-side margin rail opens on a larger screen.

§
Marginalia
Code · California · Revenue and Taxation Code

§ 23038.5

703 words·~3 min read·/ca/revenue-and-taxation-code/23038-5·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)Section 7704 of the Internal Revenue Code, relating to certain publicly traded partnerships treated as corporations, shall apply, except as otherwise provided.
(1)Section 7704(a) of the Internal Revenue Code shall not apply to an electing 1987 partnership.
(2)For purposes of this subdivision, the term “electing 1987 partnership” means any publicly traded partnership if all of the following apply:
(A)The partnership is an existing partnership (as defined in Section 10211(c)(2) of the Revenue Reconciliation Act of 1987).
(B)Section 7704(a) of the Internal Revenue Code has not applied (and without regard to Section 7704(c)(1) of the Internal Revenue Code would not have applied) to that partnership for all prior taxable years beginning after December 31, 1987, and before January 1, 1998.
(i)The partnership has made the election under Section 7704(g)(2)(C) of the Internal Revenue Code for federal tax purposes.
(ii)The election for federal tax purposes described in clause
(i)shall be treated as a binding election and a separate election for state tax purposes shall not be allowed under paragraph
(3)of subdivision
(e)of Section 23051.5.
(iii)The election for federal tax purposes described in clause
(i)shall be treated as a binding consent to the application of the tax imposed under paragraph
(3)and a separate election for state tax purposes shall not be allowed under paragraph
(3)of subdivision
(e)of Section 23051.5.
(D)A partnership that, but for this subparagraph, would be treated as an electing 1987 partnership shall cease to be so treated (and the election under subparagraph
(C)shall cease to be in effect) as of the first day after December 31, 1997, that the partnership is no longer treated as an electing 1987 partnership for federal tax purposes (and the election under Section 7704(g)(2)(C) of the Internal Revenue Code ceases to be in effect for federal tax purposes).
(A)There is hereby imposed for each taxable year beginning on or after January 1, 1998, on the gross income of each electing 1987 partnership a tax equal to 1 percent of that partnership’s gross income from all sources reportable to this state, taking into account Section 25101 and any election under Section 25110, attributable to the active conduct of trades and businesses by the partnership.
(B)The tax shall be due and payable on the date the return of the partnership is required to be filed under Section 18633 and shall be paid by the partnership. The tax shall be paid, collected, and refunded in the same manner as other taxes imposed by this part on corporations, and shall be subject to interest and applicable penalties. Section 19147 shall be applied to the partnership with respect to the tax imposed by this paragraph in the same manner as if references in that section to the taxable income were references to gross income referred to in subparagraph (A).
(C)For purposes of this paragraph, if a partnership is a partner in another partnership, the gross income referred to in subparagraph
(A)shall include the partnership’s distributive share of the gross income of the other partnership from all sources reportable to this state, taking into account Section 25101 and any election under Section 25110, attributable to the active conduct of trades and businesses of that other partnership. A similar rule shall apply in the case of lower-tiered partnerships.
(D)The tax imposed by this paragraph shall be treated as imposed by this part other than for purposes of determining the amount of any credit allowable under this part.
(4)The provisions of this subdivision shall apply to the taxable year for which the election described in clause
(i)of subparagraph
(C)of paragraph
(2)is made for federal purposes and all subsequent taxable years unless revoked by the partnership for federal purposes. Any revocation made for federal purposes shall be treated as a binding revocation under this part, but, once so revoked, may not be reinstated and a separate revocation for state purposes shall not be allowed under paragraph
(3)of subdivision
(e)of Section 23051.5.
(c)The amendment made to this section by the act adding this subdivision shall apply to taxable years beginning on or after January 1, 1998.
★   the supreme law of the land   ★
Don't Tread on Me
E Pluribus Unum — out of many, one

"If you don't know your rights, you don't have any."

Marginalia · a citizen's law index
A research desk, not legal advice. Always read the cited source before relying on a summary.
Questions or an issue? support@self-law.org
disclaimerMarginalia is a research index, not a law firm. Nothing on this site is legal, tax, or financial advice and no attorney–client relationship is formed by using it. Statutes, regulations, and case law change; summaries, search results, AI output, and member posts may be incomplete, out of date, or wrong. Any interpretation drawn from material on this site should be validated by a licensed attorney in your jurisdiction before you act on it.