Cal. Code Regs. Tit. 18, §§ 23649-9
(See Section 23649-0 for Table of Contents.)
Except as provided in this regulation, the amount of MIC that may be carried over to the following year, and succeeding years, including carryforwards from any and all prior years, is not limited.
EXAMPLE 1: Assume that as of the last day of its 1996 income year G, a qualified taxpayer, is a "small business" for purposes of the MIC. During G's 1996 income year, G purchased a machine that was qualified property for $500, thereby entitling G to a $30 MIC. Assume that the entire $30 MIC exceeds the "tax," so that G is required to carry forward the $30 MIC. Under these facts, G is entitled to carry forward the unused $30 MIC to each of its ten (10) succeeding income years, if necessary, until the MIC is exhausted, regardless of whether G is a small business in any of its succeeding income years.
EXAMPLE 2: Assume the same facts as in EXAMPLE 1 except that G purchases another machine that is qualified property in its 1997 income year for $750, thereby entitling G to a $45 MIC. Assume that in G's 1997 income year G is no longer treated as a "small business" for purposes of the MIC. Assume further that the entire $45 MIC for 1997 exceeds the "tax," so that G is required to carry forward the $45 MIC. Under these facts, G is entitled to carry forward the unused $45 MIC to each of its eight (8) succeeding income years, if necessary, until the MIC is exhausted, regardless of whether G is a small business in any of its succeeding income years.
EXAMPLE 1: Assume that as of the last day of its 1994 income year H, a qualified taxpayer filing on a calendar year basis, is a "small business" for purposes of the MIC. During H's 1994 income year, H purchased a machine that was qualified property for $800, thereby entitling H to a $48 MIC. Under the rules of subsection (b) of Regulation 23649-1, H may not claim the credit until its first income year beginning on or after January 1, 1995. Assume that in H's 1995 income year the entire $48 MIC exceeds the "tax," so that H is required to carry forward the $48 MIC. Under these facts, H is entitled to carry forward the unused $48 MIC to each of its ten (10) income years succeeding the income year in which the credit could first be claimed (1995), if necessary, until the MIC is exhausted, regardless of whether H is a small business in any of its succeeding income years.
EXAMPLE 2: Assume the same facts as in EXAMPLE 1, except that for its 1995 income year H is no longer treated as a "small business" for purposes of the MIC. Under these facts, the result is the same as in EXAMPLE 1 since the determination of whether H is a small business for purposes of the MIC is made as of the last day of the income year in which the MIC was allowed (1994), rather than the last day of the income year in which the MIC could first be claimed (1995).
EXAMPLE 3: Assume the same facts as in EXAMPLE 2, except that for its 1994 income year H was not a "small business" for purposes of the MIC but was a "small business" for purposes of the MIC for H's 1995 income year. Under these facts, H is entitled to carry forward the unused MIC for the eight (8) income years succeeding 1995 (the income year in which the MIC could first be claimed), even though H was a small business in 1995, since H was not a small business in the income year in which the MIC was allowed (1994).
Cal. Code Regs. Tit. 18, §§ 23649-9
Note: Authority cited: Section 19503, Revenue and Taxation Code. Reference: Section 23649, Revenue and Taxation Code.