Capital Gains and Losses

Division 2, Part 10, Chapter 14 of the Revenue and Taxation Code deals with the general rules for determining capital gains and losses under California’s Personal Income Tax Law.

Section 18151 states that Subchapter P of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to capital gains and losses, applies.

Section 18151.5 states that Section 301 of Title III of Division A of the Emergency Economic Stabilization Act of 2008, relating to gain or loss from sale of certain preferred stock, does not apply.

Section 18151.9 states that the amendments made to Sections 1221(a)(3) and 1231(b)(1)(C) of the Internal Revenue Code, relating to certain self-created property not treated as a capital asset, does not apply.

Section 18155 prohibits a deduction from being allowed for capital loss carrybacks provided by Section 1212 of the Internal Revenue Code, relating to capital loss carrybacks and carryovers.

Section 18155.5 states that Section 1223 of the Internal Revenue Code, relating to holding period of property, is modified as specified.

Section 18155.6 states that specific reference to Sections 1223(4) to (16), inclusive, of the Internal Revenue Code in this part instead is to be treated as a reference to Sections 1223(3) to (15), inclusive, of the Internal Revenue Code, respectively.

Section 18165 states that Section 1245(a)(2)(C) of the Internal Revenue Code, relating to certain deductions treated as amortization, is modified. Section 1245(b)(8) of the Internal Revenue Code, relating to disposition of amortizable Section 197 intangibles, applies.

Section 18171 states that Section 1250(b) of the Internal Revenue Code, relating to additional depreciation, is modified as specified. The terms “depreciation adjustments” and “additional depreciation” are defined.

Section 18171.5 states that Section 1250(a) of the Internal Revenue Code is modified as specified.

Section 18177 states that Section 1275(a)(3) of the Internal Revenue Code, relating to the definition of tax-exempt obligations, does not apply.

Section 18178 states that Section 1272 of the Internal Revenue Code is modified as specified.

Section 18180 states that Section 7872 of the Internal Revenue Code, relating to treatment of loans with below market interest rates, applies. Section 7872(h) of the Internal Revenue Code, relating to exception for loans to qualified continuing care facilities, applies.

Section 18181 states that Part VI of Subchapter P of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to treatment of certain passive foreign investment companies, does not apply.