California FTB issues proposed language for new Regulation Section 23663-6

Multistate Tax alert | May 31, 2018

This tax alert summarizes the proposed language for new California Code of Regulations (CCR) Section 23663-6 issued by California Franchise Tax Board (FTB).


On May 15, 2018, the California FTB issued proposed language for new California Code of Regulations (CCR) Section 23663-6 that provides guidance for certain taxpayers who may wish to assign credits to affiliated members of the taxpayer’s combined reporting group. The FTB will hold its Second Interested Parties Meeting on June 12, 2018, to discuss the proposed language (see meeting notice and information).

Currently, under California Revenue and Tax Code Section 23663, credits may only be assigned to an eligible assignee which generally means an affiliated corporation that is a member of the same combined reporting group as the assignor in the taxable year that the credits were earned and the taxable year that the credits are assigned to the assignee.

However, as the FTB states in the meeting notice, it is “presently unclear as to which members of the assignor's combined reporting group are eligible for assignment of a credit” when a corporate reorganization or restructuring has occurred. The proposed language of new CCR Section 23663-6 seeks to clarify the eligibility rules for assignees that are impacted by corporate mergers, acquisitions, and reorganizations.

The FTB also states in the meeting notice that all written comments must be submitted by July 10, 2018.



If you have any questions regarding the FTB’s new CCR Section 23663-6 or other California tax matters, please contact one of the following Deloitte Tax professionals:

Valerie C. Dickerson, partner, Deloitte Tax LLP, Washington, DC, +1 202 220 2693

Christopher Campbell, principal, Deloitte Tax LLP, Los Angeles, CA, +1 213 553 3072

Steve West, managing director, Deloitte Tax LLP, Los Angeles, CA, +1 213 688 5339

Shirley J. Wei, senior manager, Deloitte Tax LLP, Los Angeles, CA, +1 213 553 1715

Brian Toman, Tax specialist leader, Deloitte Tax LLP, San Francisco, +1 415 783 6137

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