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California Code, Revenue and Taxation Code - RTC § 17276.23

Current as of January 01, 2023 | Updated by FindLaw Staff

(a) Notwithstanding Sections 17276, 17276.1, 17276.4, 17276.7, and 17276.22, former Sections 17276.2, 17276.5, 17276.6, and 17276.20, and Section 172 of the Internal Revenue Code,  1 a net operating loss deduction shall not be allowed for any taxable year beginning on or after January 1, 2020, and before January 1, 2022.

(b) For any net operating loss or carryover of a net operating loss for which a deduction is denied by subdivision (a), the carryover period under Section 172 of the Internal Revenue Code shall be extended as follows:

(1) By one year, for losses incurred in taxable years beginning on or after January 1, 2021, and before January 1, 2022.

(2) By two years, for losses incurred in taxable years beginning on or after January 1, 2020, and before January 1, 2021.

(3) By three years, for losses incurred in taxable years beginning before January 1, 2020.

(c) This section shall not apply as follows:

(1) For a taxable year beginning on or after January 1, 2020, and before January 1, 2022, this section shall not apply to a taxpayer with a net business income of less than one million dollars ($1,000,000) for the taxable year.

(2) For a taxable year beginning on or after January 1, 2020, and before January 1, 2022, this section shall not apply to a taxpayer with a modified adjusted gross income of less than one million dollars ($1,000,000) for the taxable year.

(d) For purposes of this section:

(1) “Business income” means any of the following:

(A) Income from a trade or business, whether conducted by the taxpayer or by a passthrough entity owned directly or indirectly by the taxpayer.

(B) Income from rental activity.

(C) Income attributable to a farming business.

(2) “Modified adjusted gross income” means the amount described in paragraph (2) of subdivision (h) of Section 17024.5, determined without regard to the deduction allowed under Section 172 of the Internal Revenue Code, relating to net operating loss deduction.

(3) “Passthrough entity” means a partnership or an S corporation.

(e) The amendments made to this section by the act adding this subdivision  2 shall be operative for taxable years beginning on or after January 1, 2022.

1 Internal Revenue Code sections are in Title 26 of the U.S.C.A.
2 Stats.2022, c. 3 (S.B.113).
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Cite this article: FindLaw.com - California Code, Revenue and Taxation Code - RTC § 17276.23 - last updated January 01, 2023 | https://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-sect-17276-23/

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