PROPOSAL FOR STATUTORY AND REGULATORY CHANGE: MODIFIYING AN ASSIGNMENT OF TAX CREDITS AFTER SUBSEQUENT ADJUSTMENTS TO THE ASSIGNEE’S TAX LIABILITY
AUTHORS: Karen Notz1 and Ovsep Akopchikyan2
EXECUTIVE SUMMARY3 ,4 ,5
This paper primarily proposes a regulatory change that would allow modifying an original assignment of tax credits in the event the assignee’s tax liability for the taxable year in which the assignment was made is subsequently adjusted. If this proposal requires a change to Section 23663 of the California Revenue and Taxation Code, which would be helpful in any event, we also propose a statutory change.
Statutory tax credits often are provided to encourage specific economic activity in California, such as credits for hiring employees in a designated geographic area and for research and development performed in the State. This paper addresses the assignment of tax credits generated within a combined reporting groupâthat is, the assignment of tax credits between taxpayer members of a commonly controlled group of corporations engaged in a unitary trade or business within and outside of California.