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 17053.37-10 - Recordkeeping Requirements

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Recordkeeping Requirements -- (See Regulation 17053.37-0
						for Table of Contents.)
(a) In
					 General. For purposes of Regulations 17053.37-1 through 17053.37-11, inclusive,
					 a qualified taxpayer shall be required to maintain books and records that are
					 adequate to substantiate its entitlement to any claimed JSF Property Credit.
					 These books and records should be retained for as long as the statute of
					 limitations on assessment for the taxable year for which the JSF Property
					 Credit was allowed remains open, and, in the case of any JSF Property Credit
					 that is being carried forward, for the additional number of years that the
					 actual carryforward of such JSF Property Credit occurs.
(b) Books and Records. The books and records
					 maintained by the qualified taxpayer should be sufficient to clearly establish
					 all necessary facts which affect the allowance and amount of the JSF Property
					 Credit. For this purpose, "adequate" recordkeeping depends upon the sufficiency
					 of the information contained in the documentation. In many cases, the books and
					 records normally maintained for California income or franchise tax purposes
					 will be adequate substantiation for the JSF Property Credit.
EXAMPLE 1: X, a qualified taxpayer, claims a JSF Property
						Credit for the purchase of 100 computers to be used in X's manufacturing
						facility in West Los Angeles. Assume the computers were purchased from a mail
						order retailer located in South Dakota. If X has only retained the original
						invoice and a cash disbursements journal, neither of which reflect that
						California sales or use tax was paid by X, then the invoice would not be
						sufficient to establish that California sales or use tax was paid on the
						computers. However, if X has retained a copy of a timely filed California use
						tax return that clearly demonstrates that California use tax was paid by X with
						respect to the computers, then X would be treated as having paid or incurred
						qualified costs.
EXAMPLE 2: Assume the same facts as in EXAMPLE 1, except
						that X intends to use 20 of the computers for general administrative functions
						such as payroll and marketing. In addition to the records necessary to
						establish that California sales or use tax was paid, X should also retain a
						copy of the purchase contract containing a detailed list of the computers by
						model number so that X can establish which of the computers are being used in
						qualified activities and which are not being used in qualified
						activities.
(c) Affidavit
					 Regarding Sales and Use Tax. For purposes of this regulation only, in the case
					 of any lump sum or turn key contract, the requirement that California sales or
					 use tax be paid may be established by reference to bids, contracts or
					 affidavits from the contractor. For purposes of determining whether California
					 sales or use tax has been paid, directly or indirectly by the contractor, when
					 it is not a separately stated contract amount, a qualified taxpayer shall be
					 entitled to rely on a written representation to that effect from the
					 contractor, and California sales or use tax shall be deemed to have been paid
					 in the absence of affirmative knowledge on the part of the qualified taxpayer
					 that California sales or use tax was not paid.
(d) Written Statement by Lessor to Lessee. In
					 the case of any leasing transaction described in subsection (b) of Regulation
					 17053.37-6 (relating to operating leases), the lessor shall provide a statement
					 to the lessee specifying the amount of the lessor's original cost of the
					 qualified property upon which the lessee may claim the JSF Property Credit and
					 the amount of that cost upon which California sales or use tax was paid. This
					 statement must be provided to the lessee within 45 days after the close of the
					 lessee's taxable year for which the JSF Property Credit is allowable to the
					 lessee. For purposes of providing this statement only, if a lessor is legally
					 obligated to remit California sales or use tax with respect to its acquisition
					 of qualified property, but has not yet remitted such amounts solely due to
					 timing differences between the lessor's California sales and use tax return
					 filing period and the lessee's taxable year, then the lessor may treat the
					 amounts upon which the California sales or use tax liability arises as
					 "qualified costs to the lessor." This written statement should not be filed
					 with any return of either the lessor or lessee, but shall instead be retained
					 by the lessee and made available to the Franchise Tax Board upon
					 request.
1. New
						section filed 1-23-2003; operative 2-22-2003 (Register 2003, No.
						4).
Note: Authority cited: Section
						  19503,
						  Revenue and Taxation Code. Reference: Section
						  17053.37,
						  Revenue and Taxation Code.