2023 California Code › Revenue and Taxation Code - RTC › DIVISION 2 - OTHER TAXES › PART 10 - PERSONAL INCOME TAX › CHAPTER 3 - Computation of Taxable Income › ARTICLE 3 - Items Specifically Excluded from Gross Income › Section 17140.5.

17140.5. (a) Pursuant to Section 206 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 526), the period of a servicemember’s military service may not be included in computing any period limited by law, regulation, or order for the bringing of any action or proceeding under this part, Part 10.2 (commencing with Section 18401), or Part 11 (commencing with Section 23001), by or against the servicemember or the servicemember’s heirs, executors, administrators, or assigns.
(b) Section 19521 is modified to provide that, pursuant to Section 207 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 527), the maximum rate of interest on any underpayment incurred by a servicemember, or the servicemember and the servicemember’s spouse jointly, before the servicemember enters military service may not bear interest at a rate in excess of 6 percent per year during the period of military service.
(c) Pursuant to Section 511 of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 571):
(1) A servicemember not domiciled in this state does not become a resident of this state by reason of being present in this state solely in compliance with military orders.
(2) Compensation for military service of a servicemember not domiciled in this state is not income for services performed or from sources within this state.
(3) The military compensation of a servicemember not domiciled in this state may not be used to increase the tax liability imposed on other income of that servicemember or that servicemember’s spouse.
(4) A Native American servicemember whose legal residence or domicile is a federal Indian reservation shall be treated as living on the federal Indian reservation and the compensation of that servicemember for military service shall be deemed to be income derived wholly from federal Indian reservation sources.
(d) For purposes of this part and Part 10.2 (commencing with Section 18401), in the case of a servicemember not domiciled in this state, all of the following shall apply:
(1) Compensation for military service shall not be included in any of the following:
(A) Gross income of that servicemember or the spouse of that servicemember.
(B) “Entire taxable income” for purposes of computing the tax imposed under subdivision (b) or (d) of Section 17041.
(C) “Alternative minimum taxable income” for purposes of computing tax imposed under subparagraph (B) of paragraph (3) of subdivision (b) of Section 17062.
(2) Paragraph (2) of subdivision (h) of Section 17024.5 is modified to provide that references to “adjusted gross income” for purposes of computing limitations based upon adjusted gross income, shall mean the amount required to be shown as adjusted gross income on the federal tax return for the same taxable year reduced by the amount of the compensation for military service for that taxable year of a servicemember not domiciled in this state.
(e) (1) “Federal Indian reservation,” “servicemember,” “military service,” “period of military service,” and “compensation for military service” shall have the same meanings as applicable for purposes of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 501 et seq.).
(2) “Native American” has the same meaning as the term “Indian” for purposes of applying Section 511(e) of the Servicemembers Civil Relief Act (50 U.S.C. Appen. Sec. 571(e)) for federal purposes.
(f) The amendments made to this section by the act adding this subdivision shall apply to any taxable year for which the period for making assessments or allowing a claim for refund or credit has not expired as of December 19, 2003.
(Repealed and added by Stats. 2004, Ch. 388, Sec. 2. Effective September 9, 2004.)