California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 3 - Corporation Income Tax › Article 3 - Tax Credits › Section 23637-1 - The Joint Strike Fighter (JSF) Property Credit

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The Joint Strike Fighter (JSF) Property Credit (See
						Regulation 23637-0 for Table of Contents.)
(a) In General. The Joint Strike Fighter
					 (JSF) Property Credit is allowed to any qualified taxpayer in an amount equal
					 to ten percent (10%) of any qualified costs paid or incurred on or after
					 January 1, 2001, and before January 1, 2006, for qualified property that is
					 placed in service in this state and used by a qualified taxpayer in qualified
					 activities to manufacture a product for ultimate use in a Joint Strike Fighter.
					 A qualified taxpayer who leases qualified property for use in qualified
					 activities of the qualified taxpayer may also claim the JSF Property Credit.
					 Qualified property may be either new or used and must be placed in service in
					 this state and used by a qualified taxpayer in qualified activities for more
					 than one year to avoid recapture of the JSF Property Credit. The basis of any
					 qualified property for which the JSF Property Credit is claimed is not required
					 to be reduced by the amount of any JSF Property Credit claimed.
(b) Cross References. Regulation 23637-2
					 contains definitions applicable to Regulations 23637-1 through 23637-11,
					 inclusive, Regulation 23637-3 contains rules relating to qualified taxpayers,
					 Regulation 23637-4 contains rules relating to qualified costs, Regulation
					 23637-5 contains rules relating to qualified property, Regulation 23637-6
					 contains rules applicable to leases of qualified property by qualified
					 taxpayers, Regulation 23637-7 contains rules relating to contract bidding,
					 Regulation 23637-8 contains recapture rules, Regulation 23637-9 contains rules
					 relating to carryforwards, Regulation 23637-10 contains general recordkeeping
					 requirements, and Regulation 23637-11 contains other miscellaneous provisions.
					 For rules relating to the JSF Property Credit allowed to taxpayers under the
					 Personal Income Tax Law, see Revenue and Taxation Code section
					 17053.37
					 and the regulations thereunder.
(c)
					 General References. For purposes of Regulations 23637-1 through 23637-11,
					 inclusive, the following general references shall apply:
(1) All citations to the Revenue and Taxation
					 Code are to the California Revenue and Taxation Code.
(2) All citations to the Internal Revenue
					 Code are to the Internal Revenue Code of 1986, as amended.
(3) The credits provided for in Revenue and
					 Taxation Code sections
					 17053.37
					 and
					 23637
					 shall be collectively referred to as the "Joint Strike Fighter Property Credit"
					 or the "JSF Property Credit."
(4)
					 Any reference to sales or use tax shall mean California sales or use tax
					 imposed under Part 1 (commencing with section
					 6001) of Division 2 of the Revenue
					 and Taxation Code. Any discussion of California sales and use tax law in
					 Regulations
					 23637-1
					 through
					 23637-11,
					 inclusive, is based upon such law as in effect on the date these regulations
					 become effective, and is generally intended to restate the requirements set
					 forth in Revenue and Taxation Code section
					 23637 and to be illustrative of,
					 but have no effect on, the California sales and use tax law and the regulations
					 thereunder. All examples which contain references to an amount of California
					 sales or use tax shall be at an assumed hypothetical sales or use tax rate of
					 eight percent (8%).
(5) Unless
					 otherwise provided, any reference to capitalized labor costs in the examples in
					 this regulation shall mean labor costs that are direct costs, as that term is
					 used in Internal Revenue Code section
					 263 A and defined in the
					 regulations thereunder, that can be identified or associated with and are
					 properly allocable to construction or modification of qualified
					 property.
(6) Unless otherwise
					 provided, any reference to qualified property in the examples in this
					 regulation shall assume that the qualified property is being used primarily to
					 manufacture a product for ultimate use in a Joint Strike Fighter. In addition,
					 unless otherwise provided, all examples in this regulation shall assume that
					 the qualified taxpayer's bid to manufacture property for ultimate use in a
					 Joint Strike Fighter reflected a reduction in the amount of the Joint Strike
					 Fighter credit allowable as provided in Revenue and Taxation Code section
					 23637, subsection (i)(2), and
					 Regulation 23637-7.