Recess time: California legislature adjourns for the year.

• Author: Allen, Bruce C.
• Position: CapitolBeat

The Legislature adjourned for the year Sept. 13 and will be on interim recess until January 2014. During the break, legislators will return to their districts.

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150-hour Grace Period Legislation Moves to Governor

SB 823, the California Board of Accountancy sponsored bill that CalCPA is supporting. has been passed out of the Legislature and is awaiting action by Gov. Brown. As an urgency measure, this bill will take effect immediately upon being signed into law.

SB 823 extends the current licensure requirements for those who have passed all parts of the Uniform CPA Exam by the end of this year. The two-year grace period will assist candidates by allowing additional time LO wrap up any additional licensure requirements they may need. Alter the two-year grace period, the candidate would have to satisfy the new licensure requirements that take effect Jan. 1, 2014.

The bill also allows student-candidates enrolled in a five-year, combined master's (or certificate)/bachelor's program to sit for the Uniform CPA Exam prior to official receipt of the bachelor's degree--as long as they have completed all the necessary requirements for the degree and the school is able to certify the student's status.

Legislature Sends Two Bills to Governor to Address Cutler Decision

In Cutler v. Franchise Tax Board, the California Court of Appeals overturned the Qualified Small Business (QSB) Tax Incentive--a long-standing tax policy allowing taxpayers to exclude half of the profits From their income taxes when they sold their interest in a small business that had at least 80 percent of its payroll and assets in California.

In response, the FTB retroactively sought hack taxes and interest from individuals who benefited from the tax law provision within the last live years. Many taxpayers who followed the law as it existed at the time received notices from the FTB informing them that they now owe a significant amount of back taxes.

SB 209 (Lieu) and AB 1412 (Bocanegra) were passed nit of the Legislature and to the governor to resolve this situation and avoid penalizing taxpayers that were simply following the law.

SB 209 would partially reinstate the QSB tax incentive and apply it to the 2008-2013 taxable years. Also under this bill, instead of 50 percent of the profits, only 38 percent of the profits would be allowed to be excluded.

AB 1412, amended just before the end of session on Sept. 6, now contains language to reinstate the full QSB tax...