Official Summary Text
SB 1113, as amended, Valladares.
Corporation taxes.
Corporate tax: exclusions: qualifying shipping activities.
The Corporation Tax Law, in conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income.
Existing federal income tax law authorizes a qualifying vessel operator, as defined, to elect to determine its corporate tax burden for specified international shipping activities using a per-ton rate and provides an exclusion from gross income for qualifying shipping activities of an electing corporation or a member of an electing group, as specified.
This bill, for taxable years beginning on or after January 1, 2026, would provide an exclusion from
gross income for qualifying shipping activities of an electing corporation or a member of an electing group for which an election is in effect under the above-described federal law, as specified. The bill would also provide special rules relating to depreciation and basis of a qualifying vessel, as defined, and would, in conformity with federal income tax laws, provide for the nonrecognition of gain from the disposition of a qualifying vessel where the electing corporation acquires a replacement qualifying vessel, as provided.
This bill would take effect immediately as a tax levy.
The Corporation Tax Law specifies that its provisions are applicable to the corporation franchise tax, the alternative minimum tax, the corporation income tax, or the predecessor acts of the Corporation Tax Law.
This bill would make nonsubstantive changes to that provision.