Discussion:California Sec 179 Election on Amended Return

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Discussion Forum Index --> Advanced Tax Questions --> California Sec 179 Election on Amended Return


Discussion Forum Index --> Tax Questions --> California Sec 179 Election on Amended Return

R2 (talk|edits) said:

8 November 2010
Does the California FTB allow an individual taxpayer to make a Sec. 179 election on an amended return?

I checked the draft copy of Form 3885 which seems to say that the election for a corporation must be on a timely filed original return; however, I cannot find similar language in the instructions for Form 3885A for individuals.

Thanks in advance for any insight on this issue.

DaveFogel (talk|edits) said:

8 November 2010
IRC §179(c)(1)(B) provides that the section 179 election shall be made on the taxpayer’s return. California conforms to this particular section. See CR&TC §17255.

Treas. Reg. §1.179-5(c)(1) provides that for a year beginning after 2002 and before 2008, a taxpayer will be permitted to make or revoke a section 179 election on an amended return filed within the time prescribed by law for filing an amended return for the year. The IRS extended this rule in Revenue Procedure 2008-54, 2008-38 I.R.B. 722 to apply to years after 2008.

The question, then, is whether California conforms to Treas. Reg. §1.179-5(c)(1).

When California law conforms to a section of the Internal Revenue Code, Federal regulations issued under that section in either temporary or final form govern the interpretation of the comparable California statute to the extent they do not conflict with California law, or with regulations issued by the Franchise Tax Board. See CR&TC §§17024.5(d) and 23051.5(d).

As a result, since Treas. Reg. §1.179-5(c)(1) allows a taxpayer to make a section 179 election on an amended return (filed within the time prescribed by law for filing the amended return), and since California conforms to Federal law for making a section 179 election, then California must allow the election to be made on an amended return as well.

R2 (talk|edits) said:

8 November 2010
Dave, thank you for your input.

Now the question remains whether the amended California individual income tax return for 2007 can be filed before the effective date of SB 401 (January 1, 2010).

Also, it is clear that RTC 24356(c)(1) [as amended by SB 401] requires that a corporate Sec. 179 election be made on or before the due date of the California corporation return.

KatieJ (talk|edits) said:

8 November 2010
...and no one seems to be certain, right now, whether SB 401 is effective at all or is rendered null and void by Proposition 26. Prop 26 provides that a bill that increases the tax liability of ANY TAXPAYER requires a 2/3 vote. Any bill that was passed after January 1, 2010 that did not have a 2/3 majority and that increases anybody's tax (as SB 401 does) is void one year after the passage of Prop 26. When I asked the question at the California Tax Policy Conference this week, some folks said SB 401 is effective for years beginning in 2010 and maybe also in 2011, but nobody is sure. In any case, since such "revenue-neutral" bills will now require a 2/3 majority, it is clear that by November 2, 2011 at the very latest, California will be conformed to the Internal Revenue Code as it was in effect as of January 1, 2005, except as otherwise specifically provided. And we will probably never again get a date-change conformity bill passed in California.

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