Personal Income Tax Law and Corporation Tax Law: federal conformity.

Under the Personal Income Tax Law and the Corporation Tax Law, various provisions of the federal Internal Revenue Code, as enacted as of a specified date, are referenced in various sections of the Revenue and Taxation Code. Those laws provide that, for taxable years beginning on or after January 1, 2025, the specified date of those referenced Internal Revenue Code sections is January 1, 2025, unless otherwise specifically provided. This bill would further update various references to the Internal Revenue Code for the purposes of the Personal Income Tax Law and the Corporation Tax Law, including by deleting outdated references to repealed provisions of federal income tax laws and updating references to the Internal Revenue Code to reduce confusion. The Personal Income Tax Law and the Corporation Tax Law, in modified conformity with federal income tax laws, provide a deduction from income for interest paid on indebtedness incurred in the ordinary course of a trade or business. Existing federal income tax law establishes a limit on the amount of interest that can be deducted based in part on the taxpayer's adjusted taxable income, as defined. Existing law specifically does not conform to this limitation on deduction of business interest for purposes of the Corporation Tax Law. This bill would, for taxable years beginning on or after January 1, 2025, provide that the limit on deductibility for business interest under federal income tax law does not apply for purposes of the Personal Income Tax Law. This bill would take effect immediately as a tax levy.