Deloitte: California Franchise Tax Board Revamps Rules on Small Business Stock Gain Exclusions, Deferrals

Notice implements court of appeal decision involving qualified small business stock gain exclusion/deferral

Deloitte’s Tax Matters newsletter (Issue 2013-02) reports that on September 10, 2012, a Tax Alert was issued summarizing the California Court of Appeal’s decision in Cutler v. Franchise Tax Board (“Cutler”) involving the exclusion or deferral of qualified small business stock gain.  More:

On September 10, 2012, a Tax Alert was issued summarizing the California Court of Appeal’s decision in Cutler v. Franchise Tax Board (“Cutler”) involving the exclusion or deferral of qualified small business stock gain. In Tax Alert recently released we discuss a related administrative development announced by the California Franchise Tax Board (the “FTB”) in Notice 2012-03.

The Notice outlines the procedures that the FTB will use in applying the Court of Appeal’s decision holding that the qualified small business stock exclusion and deferral statutes (California Revenue and Taxation Code Secs. 18152.5 and 18038.5, respectively) were unconstitutional. Included among other related information, the Notice explains that for taxable years beginning before January 1, 2008, the FTB will allow the exclusion and deferral. However, for taxable years beginning on or after January 1, 2008, the Notice states that the FTB will disallow the exclusion and deferral.

Download the whole PDF here. 

Certain California Franchise Stock and Exclusion Deferrals are No Longer Valid