Section 24356-1 - Dollar Limitation(a) Maximum Amount Subject to election. (1) In any one income year the maximum amount of the cost of Section 24356 property with respect to which the taxpayer may elect to take an allowance under Section 24356 is $10,000. If the Section 24356 property purchased by the taxpayer exceeds the $10,000 limitation, the taxpayer may select the cost or portion of the cost of Section 24356 property to which its election is to apply. For example, Corporation X purchased five new delivery trucks in February 1959 at a cost of $5,000 each. The trucks qualify as Section 24356 property. X may select $2,000 of the cost of each truck to be subject to the allowance, or the total cost of $5,000 for each of any two trucks, or X may allocate the $10,000 maximum cost among some or all of the trucks in any other manner it chooses. The selection of property made by X is irrevocable unless X obtains consent of the Franchise Tax Board to change. See subsection (2) of Reg. 24356(d).(2) The dollar limitations of Section 24356 apply to each taxpayer and not to each trade or business in which the taxpayer has an interest. For example, Corporation G makes its tax returns on the calendar year basis. G operates two separate businesses on its own account and is a member of a partnership engaged in business. During 1960, G purchased Section 24356 property costing $8,000 for one of its businesses and Section 24356 property costing $6,000 for the other. In addition, G's distributive share of the partnership's Section 24356 allowance for 1959 is $300. The maximum allowance available to G under Section 24356 for 1960, including its $300 distributive share from the partnership is $2,000 (20 percent of $10,000).(b) Affiliated Group. Taxpayers which constitute an affiliated group, as defined in subsection (c) of this regulation, shall be treated as one taxpayer in applying the $10,000 limitation of this regulation. The allowance may be taken by any one such member or allocated among the several members in any manner in accordance with an agreement entered into by the members of the group. The amount of the allowance allocated to any member, however, shall not exceed 20 percent of the cost of Section 24356 property actually purchased by the member in the income year. Each member of an affiliated group to which is allocated any part of the deduction under Section 24356 shall file a separate statement attached to its tax return in which an election is made to claim an additional first-year depreciation allowance. Such statement shall include the names of all the members of the affiliated group, the income years of the members of the affiliated group, and a description of the manner in which the deduction under Section 24356 has been divided among them. An allocation among the members of an affiliated group of the allowance under Section 24356 shall not be revoked after the due date of the return (including extensions of time) of the member corporation filing the latest return for an income year for which an election to take the allowance is made. For the purpose of the preceding sentence, the income years of the other members of the affiliated group ending with or within the income year of the member corporation filing the latest return shall be considered as corresponding to the income year of this member corporation. Thus, where this member corporation's income year ends November 30, 1960, the allowance will apply with respect to Section 24356 property purchased in August 1959 by an affiliated corporation whose income year ends June 30, 1960 (an income year ending within the income year of the member corporation filing the latest return).
(c) Affiliated Group. For purposes of Section 24356, the term "affiliated group" has the meaning assigned to it by Section 1504 of the Internal Revenue Code of 1954, except that the phrase "more than 50 percent" shall be substituted for the phrase "at least 80 percent" each place it appears in Section 1504(a) of the Internal Revenue Code of 1954.Cal. Code Regs. Tit. 18, §§ 24356-1
1. New section filed 3-31-70; effective thirtieth day thereafter (Register 70, No. 14).
2. Renumbering and amendment of Section 24356(b) to Section 24356-1 filed 9-3-82; effective thirtieth day thereafter (Register 82, No. 37). Note: Authority cited: Section 26422, Revenue and Taxation Code. Reference: Section 24356, Revenue and Taxation Code.
1. New section filed 3-31-70; effective thirtieth day thereafter (Register 70, No. 14).
2. Renumbering and amendment of Section 24356(b) to Section 24356-1 filed 9-3-82; effective thirtieth day thereafter (Register 82, No. 37).