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FTB Notice 1997 97 - 7 - watt

Section 18405.1 is added to the Revenue and Taxation Code to read:

18405.1 (a) Notwithstanding Section 18405, the Franchise Tax Board may, in its discretion, permit elections made under Section 25111 or Section 25111.2 to be perfected during the period of limitations prescribed under Sections 19057 and 19306 for the applicable income year. The statute of limitations of all taxpayers in a water’s-edge group whose income year falls, in part or in whole, within the period of the election shall remain open to receive adjustments, under claim or deficiency consistent with that perfection of the election.

(b) For elections made for income years beginning on or after January 1, 1998, the perfection of elections authorized by subdivision (a) shall be limited to those failures to comply with the provisions of Section 25111.2 which arise as a result of unusual and unforeseen circumstances and shall not include perfection of errors or omissions for which there is no reasonable cause.

(c) Subdivision (a) shall not apply to the 1988 income year of any taxpayer whose water’s-edge election has been perfected pursuant to section 18405.

Section 24411 of the Revenue and Taxation Code is amended to read:

24411 (a) For purposes of those taxpayers electing to compute income under Section 25110, or which are subject to an election pursant to Section 25111.2, 100 percent of the qualifying dividends described in subdivision (c) and 75 percent of other qualifying dividends to the extent not otherwise allowed as a deduction or eliminated from income. "Qualifying dividends" means those received by the water's-edge group from corporations if both of the following conditions are satisfied:

(1) The average of the property, payroll, and sales factors within the United States for the corporation is less than 20 percent.

(2) More than 50 percent of the total combined voting power of all classes of stock entitled to vote is owned directly or indirectly by the water's-edge group.

(b) The water's-edge group consists of banks or corporations whose income and apportionment factors are taken into account pursuant to Section 25110.

(c) Dividends derived from a construction project, the location of which is not subject to the taxpayer's control.

For purposes of this subdivision:

(1) "Construction project" means any activity which meets the following requirements:

(A) Is undertaken for any entity, including a governmental entity, which is not affiliated with the taxpayer.

(B) The majority of its cost of performance is attributable to an addition to real property or an alteration of land or any improvement thereto as those terms are utilized for purposes of this code.

"Construction project" does not include the operation, rental, leasing, or depletion of real property, land, or any improvement thereto.

(2) "Location of which is not subject to the taxpayer's control" means that the place at which the majority of the construction takes place results from the nature or character of the construction project and not as a result of the terms of the contract or agreement governing the construction project.

Section 25110 of the Revenue and Taxation Code is amended to read:

25110 (a) Notwithstanding Section 25101, for income years beginning before December 31, 1997, a qualified taxpayer, as defined in paragraph (2) of subdivision (b) which is subject to the tax imposed under this part, may elect to determine its income derived from or attributable to sources within this state pursuant to a water's-edge election, or a qualified taxpayer which is subject to a water's-edge election pursuant to Section 25111.2, in accordance with the provisions of this part, as modified by this article. A taxpayer which makes a water's-edge election shall take into account the income and apportionment factors of the following affiliated entities only:

(1) Domestic international sales corporations, as described in Sections 991 to 994, inclusive, of the Internal Revenue Code and foreign sales corporations as described in Sections 921 to 927, inclusive, of the Internal Revenue Code.

(2) Any corporation, regardless of the place where it is incorporated if the average of its property, payroll, and sales factors within the United States is 20 percent or more.

(3) Banks and corporations which are incorporated in the United States, excluding corporations making an election pursuant to Sections 931 to 936, inclusive, of the Internal Revenue Code, of which more than 50 percent of their voting stock is owned or controlled directly or indirectly by the same interests.

(4) A bank or corporation which is not described in paragraphs (1) to (3), inclusive, or paragraph (5), but only to the extent of its income derived from or attributable to sources within the United States and its factors assignable to a location within the United States in accordance with paragraph (3) of subdivision (b). Income of such a bank or corporation derived from or attributable to sources within the United States as determined by federal income tax laws shall be limited to and determined from the books of account maintained by the bank or corporation with respect to its activities conducted within the United States.

(5) Export trade corporations, as described in Sections 970 to 972, inclusive, of the Internal Revenue Code.

(6) Any affiliated bank or corporation which is a "controlled foreign corporation," as defined in Section 957 of the Internal Revenue Code, if all or part of the income of that affiliate is defined in Section 952 of Subpart F of the Internal Revenue Code (" Subpart F income"). The income and apportionment factors of any affiliate to be included under this paragraph shall be determined by multiplying the income and apportionment factors of that affiliate without application of this paragraph by a fraction (not to exceed one), the numerator of which is the "Subpart F income" of that bank or corporation for that income year and the denominator of which is the "earnings and profits" of that bank or corporation for that income year, as defined in Section 964 of the Internal Revenue Code.

(7) (A) The income and factors of the above-enumerated banks and corporations shall be taken into account only if the income and factors would have been taken into account under Section 25101 if this section had not been enacted.

(B) The income and factors of a bank or corporation which is not described in paragraphs (1) to (3), inclusive, and paragraph (5) and which is an electing taxpayer under this subdivision shall be taken into account in determining its income only to the extent set forth in paragraph (4).

(b) For purposes of this article and Section 24411:

(1) An "affiliated bank or corporation" means a bank or corporation that is a member of a commonly controlled group as defined in Section 25105.

(2) A "qualified taxpayer" means a bank or corporation which does both of the following:

(A) Files with the state tax return on which the water's-edge election is made a consent to the taking of depositions at the time and place most reasonably convenient to all parties from key domestic corporate individuals and to the acceptance of subpoenas duces tecum requiring reasonable production of documents to the Franchise Tax Board as provided in Section 19504 or by the State Board of Equalization as provided in Title 18, California Code of Regulations, Section 5005, or by the courts of this state as provided in Chapter 2 (commencing with Section 1985) of Title 3 of Part 4 of, and Section 2025 of, the Code of Civil Procedure. The consent relates to issues of jurisdiction and service and does not waive any defenses a taxpayer may otherwise have. The consent shall remain in effect so long as the water's-edge election is in effect and shall be limited to providing that information necessary to review or to adjust income or deductions in a manner authorized under Sections 482, 861, Subpart F of Part III of Subchapter N, or similar provisions of the Internal Revenue Code, together with the regulations adopted pursuant to those provisions, and for the conduct of an investigation with respect to any unitary business in which the taxpayer may be involved.

(B) Agrees that for purposes of this article, dividends received by any bank or corporation whose income and apportionment factors are taken into account pursuant to subdivision (a) from either of the following are functionally related dividends and shall be presumed to be business income:

(i) A bank or corporation of which more than 50 percent of the voting stock is owned, directly or indirectly, by members of the unitary group and which is engaged in the same general line of business.

(ii) Any bank or corporation which is either a significant source of supply for the unitary business or a significant purchaser of the output of the unitary business, or which sells a significant part of its output or obtains a significant part of its raw materials or input from the unitary business. "Significant," as used in this subparagraph, means an amount of 15 percent or more of either input or output.

All other dividends shall be classified as business or nonbusiness income without regard to this subparagraph.

(3) The definitions and locations of property, payroll, and sales shall be determined under the laws and regulations which set forth the apportionment formulas used by the individual states to assign net income subject to taxes on or measured by net income in that state. If a state does not impose a tax on or measured by net income or does not have laws or regulations with respect to the assignment of property, payroll, and sales, the laws and regulations provided in Article 2 (commencing with Section 25120) shall apply.

Sales shall be considered to be made to a state only if the bank or corporation making the sale may otherwise be subject to a tax on or measured by net income under the Constitution or laws of the United States, and shall not include sales made to a bank or corporation whose income and apportionment factors are taken into account pursuant to subdivision (a) in determining the amount of income of the taxpayer derived from or attributable to sources within this state.

(4) "The United States" means the 50 states of the United States and the District of Columbia.

(c) All references in this part to income determined pursuant to Section 25101 shall also mean income determined pursuant to this section.

Section 25111 of the Revenue and Taxation Code is amended to read:

25111 (a) For income years beginning on or before December 31, 1997, the making of a water’s-edge election as provided for in Section 25110 shall be made by contract with the Franchise Tax Board in the original return for a year and shall be effective only if every taxpayer which is a member of the water’s-edge group and which is subject to tax under this part makes the election. A single taxpayer which is engaged in more than one business activity subject to allocation and apportionment as provided in Article 2 (commencing with Section 25120) of Chapter 17 may make a separate election for each business. The form and manner of making the water’s-edge election shall be prescribed by the Franchise Tax Board. Each contract making a water’s-edge election shall be for an initial term of 84 months, except as provided in subdivision (b). Each contract shall provide that on the anniversary date of the contract or any other annual date specified by the contract a year shall be added automatically to the initial term unless notice of nonrenewal is given as provided in subdivision (d). An affiliated bank or corporation which is a member of the water’s-edge group and subsequently becomes subject to tax under this part or is a nonelecting taxpayer which is subsequently proved to be a member of the water’s-edge group pursuant to Franchise Tax Board audit determination, as evidenced by a notice of deficiency proposed to be assessed or a notice of tax change, shall be deemed to have elected.

No water’s-edge election shall be made for an income year beginning prior to January 1, 1988.

(b) A water’s-edge election may be terminated by a taxpayer prior to the end of the 84 -month period if any of the following occurs:

(1) The taxpayer is acquired directly or indirectly by a nonelecting entity which alone or together with those affiliates included in its combined report is larger than the taxpayer as measured by equity capital.

(2) With the permission of the Franchise Tax Board.

(c) In granting a change of election, the Franchise Tax Board shall impose any conditions which are necessary to prevent the avoidance of tax or clearly reflect income for the period the election was, or was purported to be, in effect. These conditions may include a requirement that income, including dividends paid from income earned while a water’s-edge election was in effect, which would have been included in determining the income of the taxpayer from sources within and without this state pursuant to Section 25101 but for the water’s-edge election shall be included in income in the year in which the election is changed.

(d) If the taxpayer desires in any year not to renew the election, the taxpayer shall serve written notice of nonrenewal upon the board at least 90 days in advance of the annual renewal date. Unless that written notice is provided to the board, the election shall be considered renewed as provided in subdivision (a).

(e) If the taxpayer serves notice of intent in any year not to renew the existing water’s-edge election, that existing election shall remain in effect for the balance of the period remaining since the original election or the last renewal of the election, as the case may be.

(f) Notwithstanding subdivisions (a), (d) and (e) all water’s-edge contracts made pursuant to this section in existence on December 31, 1997, shall remain in effect for the balance of the contract period remaining at that date. No additional year shall be added to the contract term after December 31, 1997, whether or not a notice of nonrenewal has been filed.

(g) Notwithstanding subdivision (b), a taxpayer may terminate its election under this section prior to the expiration of the contract period by entering into a new 84 month water’s-edge election pursuant to the provisions of Section 25111.2.

(h) A bank or corporation which has made an election under this section which is acquired by a commonly controlled group which has made a water’s-edge election under Section 25111.2 shall be bound by the provisions of Section 25111.2 as to the effect of its election under this section as though the election had been made under Section 25111.2.

(i) This section shall sunset on December 31, 2004 and shall have no further force or effect after that date.

Section 25111.2 is added to the Revenue and Taxation Code to read:

25111.2. (a) For purposes of this section:

(1) "Brother-sister parent corporation" is a parent corporation that is a member of a commonly controlled group, some of whose members are not connected through stock ownership with that parent within the meaning of subdivision (b) of Section 25105.

(2) "Corporation" has the same meaning as set forth in paragraph (1) of subdivision (f) of Section 25105.

(3) "Parent corporation" has the same meaning as the same term in paragraph (1) of subdivision (b) of Section 25105.

(4) "Top tier corporation" means a member of a commonly controlled group and is either a parent corporation, a brother-sister parent corporation, or any other member of the group that is not connected through stock ownership with a parent corporation, within the meaning of paragraph (1) of subdivision (b) of Section 25105. For purposes of this section, a corporation so described is a top tier corporation whether or not it is doing business in or deriving income from sources within this state, or whether or not its income and apportionment factors are excluded from a combined report pursuant to a water’s-edge election under this section or Section 25111 or any other provision of law.

(5) A newly created corporation shall be deemed to be acquired by its shareholders.

(b) Except as otherwise provided, a top tier corporation or group of commonly controlled top tier corporations may on behalf of the corporations that are part of the commonly controlled group, as described in Section 25105, elect to determine the income of all members of the group, derived from or attributable to sources within this state on a water’s-edge basis as provided for in Section 25110.

(1) Only a top tier corporation may make the election provided by this section. If there is more than one top tier corporation in the commonly controlled group, for any election to be effective, all top tier corporations shall elect.

(2) The election period begins, effective for all members of the group, commencing on the day which is the first day of the designated income year of a taxpayer member, and remains in effect for 84 months thereafter. The designated income year is an income year of a specific member of a commonly controlled group, which is subject to taxation under this part and is designated by the top tier corporation or top tier corporations, with the filing of the election. A designated income year shall not begin before January 1, 1998

(3) The election of all top tier corporations of a commonly controlled group shall be filed, in the form and manner prescribed by the Franchise Tax Board, at any time within 6 months after the first day of the designated income year described in paragraph2.

(4) At the expiration of each 84-month election period the election is automatically renewed for an additional 84-month period unless written notice of nonrenewal, in a form and manner prescribed by the Franchise Tax Board, is filed by one or more of the top tier corporations or an electing single corporation as described in subdivision (h) on or before the last day of the election period. An election may be automatically renewed for an unlimited number of successive 84 month periods.

(5) The Franchise Tax Board may grant a request to terminate an election under this section prior to the expiration of the 84-month period for good cause. For purposes of this paragraph, good cause means a demonstration that the requirement that the group file on a water’s-edge basis for the unexpired period of the election term will result in a significant disadvantage and that the disadvantage is the consequence of a significant and extraordinary event which could not have been foreseen or anticipated at the time the election was made.

(6) If an election is terminated under paragraph (5), or is not renewed, another election may not be made under this section for any income year beginning within 60 months after the last day of the election period that was terminated or not renewed. The Franchise Tax Board may waive the application of this paragraph for good cause.

(7) Appropriate accounting adjustments, as prescribed by regulation, shall be made to account for the effects of a termination or nonrenewal of an election made under this section.

(c) (1) If a member of a commonly controlled group, other than a top tier corporation, is subject to an election under this section and later ceases to be a member of the group, the effect of the election shall immediately terminate as to the departing member, but remain in effect as to the remaining members. If the departing member becomes acquired by a member of another commonly controlled group subject to its own election under this section, the departing corporation shall be included in the election of the acquiring group for the remaining term of that group’s election.

(2) If a top tier corporation that has elected under this section becomes a member of a new commonly controlled group and is not a top tier corporation with respect to that group, except as provided in paragraph (5), all of the following shall apply:

(A) If the top tier corporations of the new commonly controlled group have not elected under this section, the elections under this section for members of the new commonly controlled group immediately terminate.

(B) If the top tier corporations of the new commonly controlled group are subject to their own election under this section, the former top tier corporation and all members of the new commonly controlled group are subject to that election.

(3) If a top tier corporation subject to an election under this section becomes a member of a new commonly controlled group and is one of two or more top tier corporations of that group, all of the following shall apply:

(A) If one or more of the top tier corporations in the new commonly controlled group have not elected under this section, all elections under this section immediately terminate for all members of the new commonly controlled group.

(B) If all of the top tier corporations in the new commonly controlled group are subject to different elections under this section, the longest of the remaining election periods shall be applicable to all members of the new commonly controlled group and the top tier corporations of the new group shall be considered to be under a common election.

(4) If two or more top tier corporations in a commonly controlled group are subject to an election under this section, and one or more top tier corporations cease to be members of that group, all of the following shall apply:

(A) If a top tier corporation in the former commonly controlled group is the only top tier corporation in the new commonly controlled group, the election for that top tier corporation and the new group continues in effect for the remaining period of the original election.

(B) If two or more top tier corporations in the former commonly controlled group are the only top tier corporations in the new commonly controlled group, the election for those top tier corporations and the new group continues in effect for the remaining period of the original election.

(5) The Franchise Tax Board may prescribe regulations, similar to those promulgated under Section 1502 of the Internal Revenue Code pertaining to reverse acquisitions, under which circumstances described by paragraph (2), or by paragraph (2) of subdivision (g ), shall be treated as an acquisition by the former top tier corporation, as defined in subdivision (a)(4), or by the electing single corporation, as described in subdivision (h).

(d) Except as otherwise provided in this subdivision, subdivision (c) shall apply to an organization or reorganization described by Subchapter C of Chapter I of Subtitle A of the Internal Revenue Code.

(1) If all corporations in the commonly controlled group in existence immediately after the organization or reorganization were either of the following, then the election under this section shall remain in effect for all members of the new commonly controlled group, and any new top tier corporations which result from the organization or reorganization shall thereafter be treated as the electing top tier corporations for the commonly controlled group for the remaining period of the election:

(A) Members of a single commonly controlled group subject to an election under this section immediately before the organization or reorganization.

(B) Formed or availed of to acquire stock or assets substantially all of which, prior to the organization or reorganization, were stock or assets of a member of the commonly controlled group subject to an election under this section.

(2) In the event of the merger or consolidation of a top tier corporation into another top tier corporation, an election of a top tier corporation under this section shall be treated as a tax attribute similar to that described by Section 381 of the Internal Revenue Code, and the electing or nonelecting status of the surviving corporation shall be determined as provided by ruling or regulation.

(e) If two or more members of a commonly controlled group are or become subject to an election under this section, and report income on the basis of different income years, or if a corporation becomes a new member of the commonly controlled group after the first day of the election, all of the following shall apply:

(1) The income and apportionment factors of each member shall be included in the water’s-edge combined report permitted by an election under this section only for that portion of that member’s income years occurring on and after the later of the following:

(A) The first day of the election.

(B) The date the member became a member of the commonly controlled group.

(2) The income and apportionment factors of the members of the group for the portion of their income years occurring prior to the date determined under paragraph (1) shall be included in a combined report to the extent permitted or required without regard to this section.

(f) If a commonly controlled group terminates or does not renew an election under this section, and two or more members of the commonly controlled group report income on the basis of different income years, the income and apportionment factors of the members shall be included in the water’s-edge combined report permitted by an election under this section only for that portion of their income years inclusive through the last day of the election.

(g) If a top tier corporation provides notice of nonrenewal of an election under paragraph (4) of subdivision (b), and the election period does not end on the last day of an income year of a member of the group, all top tier corporations in the commonly controlled group may, with permission of the Franchise Tax Board, extend the election period, not to exceed one year, until the last day of an income year of a member.

(h) A single corporation may elect under this section to file on a water’s-edge basis. In the event that one or more additional corporations later become members of a commonly controlled group with the corporation electing under this subdivision, the election shall immediately terminate, unless either of the following occurs:

(1) The electing corporation is a top tier corporation with respect to the new members of the group. In that case, the electing corporation shall be treated as a top tier corporation which has elected under this section, and paragraph (3) of subdivision (c) shall apply.

(2) The acquisition is a reverse acquisition described in paragraph (5) of subdivision (c). In that case paragraph (1) shall apply.

(i) In the event of a termination described in subdivision (c) or (h), the top tier corporations of a commonly controlled group in existence immediately after the termination may make an election under this section for a new 84 month period (commencing immediately with the date of the termination). The election shall be filed by the top tier corporations within three months of the date of termination. If the top tier corporations do not make an election under this subdivision, a new 84 month election may be made under this section commencing with the first day of a new income year. Neither election may be made under this subdivision if any member of the group is prevented from participating in an election for a 60 month period under paragraph (6) of subdivision (b) or this subdivision. The Franchise Tax Board may waive the application of this subdivision for good cause.

(j) The Franchise Tax Board may prescribe any regulations as may be necessary or appropriate to carry out the purposes of this section, including but not limited to, regulations that treat an election under this section as remaining in effect, if a purported termination was caused by a transaction undertaken for the principle purpose of avoiding an election under this section.

Section 25112 of the Revenue and Taxation Code is amended to read:

25112 (a) If a taxpayer electing to file under Section 25110, or subject to an election pursuant to Section 25111.2 fails to supply any information described in subdivision (b), the taxpayer shall pay a penalty of one thousand dollars ($1,000) for each income year with respect to which the failure occurs.

(b) A taxpayer electing to file pursuant to Section 25110, or subject to an election pursuant to Section 25111.2 shall do all of the following:

(1) Retain and make available to the Franchise Tax Board, upon request, the documents and information, including any questionnaires completed and submitted to the Internal Revenue Service or qualified states, that are necessary to audit issues involving attribution of income to the United States or foreign jurisdictions under Sections 482, 861, 863, 902, and 904, and Subpart F of Part III of Subchapter N, or similar sections of the Internal Revenue Code.

(2) Identify, upon request, principal officers or employees who have substantial knowledge of, and access to, documents and records that discuss pricing policies, profit centers, cost centers, and the methods of allocating income and expense among these centers. The information shall include the employees' titles and addresses.

(3) Retain and make available, upon request, all documents and correspondence ordinarily available to a bank or corporation included in the water's-edge election which are submitted to, or obtained from, the Internal Revenue Service, foreign countries or their territories or possessions, and competent authority pertaining to ruling requests, rulings, settlement resolutions, and competing claims involving jurisdictional assignment and sourcing of income that affect the assignment of income to the United States. The documents shall include all ruling requests and rulings on reorganizations involving foreign incorporation of branches, all ruling requests and rulings on changing a bank or corporation's jurisdictional incorporation, and all documents that are ordinarily available to a bank or corporation included in the water's-edge election that pertain to the determination of foreign tax liability, including examination reports issued by foreign taxing administrations. If the documents have been translated, the translations shall be furnished.

(4) Retain and make available, upon request, information filed with the Internal Revenue Service to comply with Sections 6038, 6038A, 6038B, 6038C, and 6041 of the Internal Revenue Code.

(5) Upon request, prepare and make available for each bank or corporation organized or created under the laws of the United States or a political subdivision thereof, of which 50 percent or more of its voting stock is directly or indirectly owned or controlled, the information which would be included in the forms described in paragraph (5) if those forms were required for United States corporations.

(6) Retain and make available, upon request, all state tax returns filed by each bank or corporation included under subdivision (a) in each state, including the District of Columbia.

(7) Comply with reasonable requests for information necessary to determine or verify its net income, apportionment factors, or the geographic source of that income pursuant to the Internal Revenue Code.

(8) For purposes of this subdivision, information for any year shall be retained for that period of time in which the taxpayer's income or franchise tax liability to this state may be subject to adjustment, including all periods in which additional income or franchise taxes may be assessed or during which an appeal is pending before the State Board of Equalization or a lawsuit is pending in the courts of this state or the United States with respect to California franchise or income tax.

(c) If the failure continues for more than 90 days after the date on which the Franchise Tax Board mails notice of that failure to the taxpayer, the taxpayer shall pay a penalty (in addition to the amount required under subdivision (a)) of one thousand dollars ($1,000) for each 30-day period (or fraction thereof) during which the failure continues after the expiration of the 90-day period. The increase in any penalty under this subdivision shall not exceed twenty-four thousand dollars ($24,000).

(d) If the taxpayer fails to comply substantially with any formal document request arising out of the examination of the tax treatment of any item (hereafter in this section referred to as the "examined item") before the 90th day after the date of the mailing of the request, any court having jurisdiction of a civil proceeding in which the tax treatment of the examined item is an issue may, upon motion by the Franchise Tax Board, prohibit the introduction by the taxpayer of documentation covered by that request.

(e) For purposes of this section, the time in which information is to be furnished (and the beginning of the 90-day period after notice by the Franchise Tax Board) shall be treated as beginning not earlier than the last day on which reasonable cause existed for failure to furnish the information.

(f) This section shall not apply with respect to any requested documentation if the taxpayer establishes that the failure to provide the documentation, as requested by the Franchise Tax Board, is due to reasonable cause. For purposes of subdivision (d), the fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the requested documentation is not reasonable cause unless, after in-camera review of the documentation, the court finds otherwise.

(g) For purposes of this section, the term "formal document request" means any request (made after the normal request procedures have failed to produce the requested documentation) for the production of documentation which is mailed by registered or certified mail to the taxpayer at its last known address and which sets forth all of the following:

(1) The time and place for the production of the documentation.

(2) A statement of the reason the documentation previously produced (if any) is not sufficient.

(3) A description of the documentation being sought.

(4) The consequences to the taxpayer of the failure to produce the documentation described in this section.

(h) Notwithstanding any other law or rule of law, any taxpayer to whom a formal document request is mailed may begin a proceeding to quash that request not later than the 90th day after the date the request was mailed. In that proceeding, the Franchise Tax Board may seek to compel compliance with the request.

(i) The superior courts of the State of California for the Counties of Los Angeles, Sacramento, and San Diego, and for the City and County of San Francisco shall have jurisdiction to hear any proceeding brought under subdivision (h). An order denying the petition shall be deemed a final order which may be appealed. The running of the 90-day period referred to in subdivision (c) shall be suspended during any period during which a proceeding brought under subdivision (h) is pending.

(j) For purposes of this section, "documentation" means any documentation which may be relevant or material to the tax treatment of the examined item.

(k) The Franchise Tax Board, and any court having jurisdiction over a proceeding under subdivision (g), may extend the 90-day period referred to in subdivision (b).

(l) If any bank or corporation takes any action as provided in subdivision (h), the running of any period of limitations under Sections 19057 to 19067, inclusive (relating to the assessment and collection of tax), or under Section 19704 (relating to criminal prosecutions) with respect to that bank or corporation shall be suspended for the period during which the proceedings under subdivision (h) and appeals thereto are pending.