California Revenue and Taxation Code

§ 19774

RTC § 19774 Effective Mar 24, 2011Div. 2 · Part 10.2 · Ch. 9.5 · Art. 4

Statute text

(a)If a taxpayer has a noneconomic substance transaction understatement for any taxable year, there shall be added to the tax an amount equal to 40 percent of the amount of that understatement.

(b)(1) Subdivision (a) shall be applied by substituting “20 percent” for “40 percent” with respect to the portion of any noneconomic substance transaction understatement with respect to which the relevant facts affecting the tax treatment of the item are adequately disclosed in the return or a statement attached to the return.

(2)For taxable years beginning before January 1, 2003, “adequately disclosed” includes the disclosure of the tax shelter identification number on the taxpayer’s return as required by subdivision (c) of Section 18628, as applicable for the year in which the transaction was entered into.

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Legislative history

Amended by Stats. 2011, Ch. 14, Sec. 23. (SB 86) Effective March 24, 2011.