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 17053.49-3 - Qualified Taxpayer

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(See Regulation Section
						17053.49-0 for Table of
						Contents.)
(a)
In
					 General.
For purposes of Regulations 17053.49-1 through 17053.49-11,
					 inclusive, a qualified taxpayer is any taxpayer or partnership that is engaged
					 in an activity that is described in Division D of the SIC Manual. The
					 determination of whether a taxpayer is engaged in an activity that is described
					 in Division D of the SIC Manual shall be made under the rules and methods
					 described in the SIC Manual, 1987 edition, herein incorporated by reference,
					 and the rules in this regulation on the basis of all of the facts and
					 circumstances. Thus, for example, a taxpayer is a qualified taxpayer where such
					 taxpayer is engaged in multiple business activities, one or more of which
					 constitutes an activity that is described in Division D of the SIC Manual. For
					 purposes of the MIC, a SIC Code assignment to a given taxpayer's activity made
					 by any federal, state (other than the Franchise Tax Board), regional, or local
					 government agency shall not be controlling.
(b)
Business Activities Treated as an
					 Establishment.
The determination of whether a taxpayer is engaged in
					 an activity that is described in Division D of the SIC Manual shall be made by
					 reference to the classification of business activity rules contained in the SIC
					 Manual. If a taxpayer is engaged in one or more lines of business that is
					 treated as an establishment under the SIC Manual, and that establishment is
					 properly classified in Division D of the SIC Manual, then the taxpayer is a
					 qualified taxpayer. In contrast, if a taxpayer is only engaged in business
					 activities that are properly classified in any division or divisions of the SIC
					 Manual other than Division D of the SIC Manual, then the taxpayer shall not be
					 treated as a qualified taxpayer.
(1)
Establishment.
For purposes of this section, the term
					 "establishment" shall mean an economic unit (as distinguished from subunits
					 such as departments), generally at a single physical location, where business
					 is conducted or where services or manufacturing or other industrial operations
					 are performed. For example, a factory, mill, store, hotel, movie theater, mine,
					 farm, ranch, bank, railroad depot, airline terminal, sales office, warehouse,
					 or central administrative office would each be treated as an establishment.
					 There are two types of establishments under the SIC Manual, auxiliary
					 establishments and operating establishments.
A.
Activities Conducted at Different
					 Physical Locations.
Business activities conducted at different
					 physical locations shall generally be treated as separate establishments. Thus,
					 for example, if a taxpayer manufactures clay tiles in Los Angeles and operates
					 a retail tile store in Tarzana, each of these activities would be generally
					 treated as a separate establishment.
B.
Activities Conducted at A Single
					 Physical Location.
Where distinct and separate business activities are
					 performed at a single physical location (such as construction activities
					 operated out of the same physical location as a lumber yard), each activity
					 shall be treated as a separate establishment where all of the following are
					 satisfied:
1. No single industry description
					 in the SIC Manual includes such combined activities;
2. Separate reports are prepared on the
					 number of employees, their wages and salaries, sales or receipts, property and
					 equipment, and other types of financial data, such as financial statements, job
					 costing, and profit center accounting; and
3. Employment in each such economic activity
					 is significant (as defined in subsection (b)(4)).
Where all of the requirements in subsection (b) (1)B. of
						this regulation are not satisfied, then all of the activities conducted at that
						location shall be assigned a single SIC Code based upon the principal activity
						being conducted at that location. For example, where there are five distinct
						and separate business activities being conducted at a single physical location
						and none of those activities meet all of the requirements of subsection
						(b)(1)B. of this regulation, that location would properly be assigned a single
						SIC Code representing the principal business
						activity.