Section 24360-1 - Election with Respect to Taxable Bonds(a) In General. In the case of a bank or corporation, the election provided in Section 24362 may be made with respect to bonds the interest of which is not excludable from gross income. Such election shall be made by the taxpayer by claiming a deduction for the bond premium in its return for the first income year to which it desires the election to be applicable. No other method of making such election will be recognized. If the election is so made, the taxpayer should attach to its return a statement showing the computation of deduction. The election shall apply to all the bonds in respect of which it was made owned by the taxpayer at the beginning of the first income year to which the election applies and also to all the bonds of such class (or classes) thereafter acquired by it, and shall be binding for all subsequent income years. Upon application by the taxpayer, the Franchise Tax Board may permit it to revoke the election, subject to such conditions as the Franchise Tax Board deems necessary.(b) Special Rule for Transition Period. For income years beginning after December 31, 1954, and ending after June 6, 1955, the election to deduct amortizable bond premium applies to premiums on both the following type bonds: (1) Those with interest coupons or in registered form, and(2) Those without interest coupons and not in registered form, including those commonly referred to as "corporate mortgages."(c) Definition. The term "bond" as used in Section 24360, means any bond, debenture, note, or certificate or other evidence of indebtedness, issued by any bank or corporation and bearing interest (including any like obligation issued by a government or political subdivision thereof), but the term does not include any such obligation which constitutes stock in trade of the taxpayer or any such obligation of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the income year, or any such obligation held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business. This definition of a bond is applicable to bonds, whether or not with coupons or in registered form, held or acquired in income years beginning after December 31, 1954, and ending after June 6, 1955.(d) For income years beginning before January 1, 1955, or income years beginning after December 31, 1954, but ending on or before June 6, 1955, the term "bond," as defined in subsection (c) of this regulation, applies only to a bond, debenture, note, or certificate or other evidence of indebtedness with interest coupons or in registered form.Cal. Code Regs. Tit. 18, §§ 24360-1
1. New section filed 12-22-69; effective thirtieth day thereafter (Register 69, No. 52).
2. Renumbering and amendment of Section 24360-24363(c) and Section 24360-24363(d) to Section 24360-1 filed 9-3-82; effective thirtieth day thereafter (Register 82, No. 37). Note: Authority cited: Section 26422, Revenue and Taxation Code. Reference: Section 24360, Revenue and Taxation Code.
1. New section filed 12-22-69; effective thirtieth day thereafter (Register 69, No. 52).
2. Renumbering and amendment of Section 24360-24363(c) and Section 24360-24363(d) to Section 24360-1 filed 9-3-82; effective thirtieth day thereafter (Register 82, No. 37).