California FTB issues three of four anticipated reports on California’s conformity to 2017 federal income tax changes
Multistate Tax alert | April 13, 2018
The California Franchise Tax Board (FTB) has now issued three of the four anticipated reports addressing California’s conformity to P.L. 115-97, The 2017 Tax Reform Act (the Act).
- Initial Report and Revised Initial Report
- First Release Preliminary Summary
- Second Release Preliminary Summary
|FTB report number||FTB title||Short title
||Link to report
|First report||Preliminary report on specific provisions of the act and Revised preliminary report on specific provisions of the act||Initial report and Revised initial report||Available here|
|Second report||Preliminary summary of federal income tax changes 2017—First release||First release preliminary summary||Available here|
|Third report||Preliminary summary of federal income tax changes 2017—First release||Second release preliminary summary||Available here|
|Final report||Pending (FTB has indicated it anticipates issuing the last report on or before April 20, 2018)|
Initial Report and Revised Initial Report
On February 12, 2018, the FTB issued its Initial report (see Deloitte’s prior tax alert for an overview). On March 20, 2018, the FTB issued a Revised initial report, noting that the primary revisions (relative to the initial version) pertain to the California tax implications of the new limit on the state and local tax (SALT) deduction, as well as non-substantive changes to other elements of the Initial Report including the FTB consideration of the federal repatriation provisions.
First Release Preliminary Summary
On March 4, 2018, the FTB issued its second report, First release preliminary summary. The First release preliminary summary addresses California’s conformity to select provisions in the Act, including among others, the repeal of technical terminations of partnerships, the modification of certain business credits, insurance reform, modifications of limitations on executive compensation, certain provisions impacting exempt organizations, S corporations, banks and financial instruments, and alcoholic beverage production.
The First release preliminary summary also addresses provisions of P.L. 115-63, the Disaster Relief and Airport and Airway Extension Act of 2017 (Disaster Relief Act). The Disaster Relief Act was enacted to provide tax relief to taxpayers affected by Hurricanes Harvey, Irma, or Maria.
Second Release Preliminary Summary
On March 26, 2018, the FTB issued its third report, Second release preliminary summary. The Second release preliminary summary addresses California’s tax conformity to various business-related provisions of the Act including the temporary 100 percent expensing for certain business assets, the limitation on the interest expense deduction, and modifications to the federal net operating loss deduction.
It should be noted that California specifically conforms to only certain provisions of the Internal Revenue Code. In addition, for both individual and corporate tax, California’s current IRC conformity date is January 1, 2015.
If you have any questions regarding any of the FTB’s reports 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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