California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 2.5 - Personal Income Tax (Taxable Years Beginning After 12-31-54) › Subchapter 2 - Imposition of Tax › Article 1 - Joint Strike Fighter Wage Credit › Section 17053.49-11 - Miscellaneous Provisions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
Operative Dates of the MIC.
The MIC shall cease to be
					 operative on January 1, 2001, or on the earliest January 1 thereafter, if the
					 total employment in this state, excluding employment in the aerospace sector,
					 as determined by the Employment Development Department on the preceding January
					 1, does not exceed by 100,000 jobs the total manufacturing sector employment in
					 this state on January 1, 1994.
(b)
Los Angeles Revitalization Zone (LARZ) Credits.
Under Revenue
					 and Taxation Code Section
					 17052.15,
					 relating to the Los Angeles Revitalization Zone ("LARZ"), in any case where a
					 credit would be allowed for qualified property under both that provision and
					 the MIC, a qualified taxpayer must make an election, on the return filed for
					 each taxable year, as to whether to claim the MIC or the LARZ credit. Thus, a
					 qualified taxpayer may not claim both the MIC and a LARZ credit for the costs
					 of the same qualified property.
(c)
Election to Claim Sales and Use Tax Refund in lieu of MIC under Revenue
					 and Taxation Code Section
					 6902.2.
Under Revenue and Taxation Code Section
					 6902.2,
					 a qualified taxpayer may elect to claim a refund of a portion of the California
					 sales and use tax paid with respect to qualified property from the California
					 State Board of Equalization in lieu of claiming the MIC. Under that section,
					 however, refunds may only be claimed at the times and in the amounts that the
					 MIC could have been actually used by the qualified taxpayer to offset its
					 California income tax liability for the taxable year or years in which the
					 refund claim is filed. Finally, the in-lieu election required under Revenue and
					 Taxation Code Section
					 6902.2
					 shall apply to each specific item of qualified property and shall also include
					 any capitalized labor costs that are directly allocable to such item of
					 qualified property.
EXAMPLE
: Assume that in X's taxable year
						beginning in 1995, X, a qualified taxpayer, incurs $100 in qualified costs
						(none of which are attributable to directly allocable capitalized labor) for an
						item of qualified property. Under these facts, X would be entitled to a MIC of
						$6 (6% of $100). X may generally claim the MIC on X's 1995 income tax return,
						or, under Revenue and Taxation Code Section
						6902.2,
						X may instead elect to apply for a refund from the State Board of Equalization
						of the amount of such MIC that X could have utilized to offset X's 1995 income
						tax liability. Thus, for example, if X had a 1995 income tax liability of $3
						BEFORE application of the $6 MIC, X could claim a $6 MIC, $3 of which is
						applied to X's 1995 tax liability and $3 of which is carried forward to
						subsequent taxable years. Similarly, X may only claim a $3 refund under Revenue
						and Taxation Code Section
						6902.2
						since this is the amount that "could have been used" by X to offset X's income
						tax liability for 1995. Finally, any MIC amounts that would have been required
						to be carried forward to future taxable years may not instead be claimed as a
						refund under Revenue and Taxation Code Section
						6902.2
						in lieu of claiming the MIC.
(d)
Sales and Use Tax Exemption under
					 Revenue and Taxation Code Section
					 6377
.
					 Under Revenue and Taxation Code Section
					 6377,
					 a qualified taxpayer that is treated as a "new business" may be eligible to
					 receive an exemption from California sales and use tax with respect to certain
					 acquisitions of property (some of which may also be treated as qualified
					 property under the MIC). However, Revenue and Taxation Code Section
					 6377(b)
					 (9) (C) provides that such sales and use tax
					 exemption is not available with respect to any property for which the MIC is
					 claimed.
(e)
Special Rule
					 Applicable to Fiscal Year Taxpayers.
Fiscal year taxpayers who paid or
					 incurred qualified costs on or after January 1, 1994, and during the qualified
					 taxpayer's taxable year beginning in 1993, shall treat any such taxable year
					 1993 qualified costs as 1994 qualified costs to be claimed on the qualified
					 taxpayer's 1995 taxable year return. As a result, fiscal year taxpayers that
					 pay or incur qualified costs during both their fiscal years beginning in 1993
					 and 1994 would treat such amounts as 1994 qualified costs under Regulations
					 17053.49-1 through 17053.49-11, inclusive.
1. New
						section filed 5-1-96; operative 5-31-96 (Register 96, No.
						18).
Note: Authority cited: Section
						  19503,
						  Revenue and Taxation Code. Reference: Section
						  17053.49,
						  Revenue and Taxation Code.