California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 7 - Net Income › Article 1 - Deductions › Section 24356(c) - Definitions and Special Rules

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The following definitions and special rules apply for
						purposes of Section
						24356, Regs. 24356(a), 24356(b),
						24356(d), and this regulation.
(1)
					 Section 24356 Property. The term "Section
					 24356 property" means any tangible
					 personal property, new or used, of a character subject to the allowance for
					 depreciation under Sections
					 24349 through
					 24354, acquired by purchase after
					 December 31, 1958, for use in the taxpayer's trade or business or in the
					 production of its income, and which has an estimated useful life (determined at
					 the time of acquisition) of 6 years or more. For purposes of determining the
					 estimated useful life of Section
					 24356 property, the provisions of
					 Reg. 24349(a)(2) shall be applied. For definition of the term "purchase," see
					 subsection (3) of this regulation.
(2) Tangible Personal Property. Local law
					 definitions will not be controlling for purposes of determining the meaning of
					 the term "tangible personal property" as it is used in Section
					 24356 and the regulations
					 thereunder. For purposes of Section
					 24356, the term "tangible personal
					 property" includes any tangible property except land, and improvements thereto,
					 such as buildings or other inherently permanent structures thereon (including
					 items which are structural components of such buildings or structures). Assets
					 accessory to the operation of a business, such as machinery, printing presses,
					 transportation or office equipment, refrigerators, individual air conditioning
					 units, grocery counters, etc., generally constitute tangible personal property
					 for purposes of Section
					 24356, even though such assets may
					 be termed fixtures under local law. The term does not include, for example, the
					 wiring in a building, plumbing systems, nor central heating or central air
					 conditioning machinery, pipes, or ducts or other items, which are structural
					 components of a building or other permanent structure, nor does the term
					 include trademarks, goodwill, or other intangibles.
(3) Purchase.
(A) The term "purchase" means any acquisition
					 of property after December 31, 1958, but only if all the requirements of
					 subparagraphs (i), (ii), and (iii) of this paragraph are satisfied.
(i) The property is not acquired by purchase
					 if it is acquired from a taxpayer whose relationship to the taxpayer acquiring
					 it would result in the disallowance of losses under Sections
					 24427 to
					 24430, inclusive. In applying the
					 rules of Sections
					 24428 and
					 24429, subdivision (d) of Section
					 24429 shall be treated as
					 providing that the family of an individual shall include only his spouse,
					 ancestors, and lineal descendants. For example, a purchase of property by a
					 corporation from a taxpayer who owns, directly or indirectly, more than 50
					 percent in value of the outstanding stock of such corporation does not qualify
					 as a "purchase" under Section
					 24356(d)(2), nor
					 does the purchase of property from the wife of such a shareholder qualify.
					 However, the purchase of Section
					 24356 property by a corporation
					 from a brother or sister of a more than 50% shareholder of the corporation does
					 qualify as a purchase for purposes of Section
					 24356(d)(2).
(ii) The property is not acquired by purchase
					 if acquired from any one member of an affiliated group (as defined in
					 subsection (5) of this regulation) by another member of the same affiliated
					 group.
(iii) The property is not
					 acquired by purchase if the basis of the property in the hands of the taxpayer
					 acquiring it is determined in whole or in part by reference to the adjusted
					 basis of such property in the hands of the taxpayer from whom acquired. For
					 example, property acquired by gift does not qualify as property acquired by
					 purchase, for purposes of Section
					 24356(d)(2), nor
					 does property received in a corporate distribution the basis of which is
					 determined under Section
					 24454(b), nor
					 property acquired by a corporation in a transaction to which Section
					 24521 applies.