Chief Counsel Rulings

Chief Counsel Rulings are taxpayer-specific rulings furnished by the Franchise Tax Board in response to requests made by taxpayers and/or their authorized representatives. To protect internal proprietary information and taxpayers' privacy, these rulings have been redacted to exclude information exempt from disclosure. Asterisks (******) indicate redaction of confidential and/or proprietary information.

We list all Chief Counsel Rulings by year and update the list when new rulings are published.

2024

• Chief Counsel Ruling 2024-01 – Guidance pertaining to whether a taxpayer’s products may qualify as a pilot model under Revenue and Taxation Code section 24365

2021

• Chief Counsel Ruling 2021-01 – Guidance pertaining to the treatment of the disposition of insurance company stock for California tax purposes in the context of an IRC section 338(h)(10) election

2020

• Chief Counsel Ruling 2020-02 – Guidance as to the assignment of sales of tangible personal property for California franchise and income tax purposes
• Chief Counsel Ruling 2020-01 – Guidance as to the assignment of sales of tangible personal property for California franchise and income tax purposes

2019

• Chief Counsel Ruling 2019-03 – Guidance on the sourcing of income paid by a company to its independent directors for California tax purposes
• Chief Counsel Ruling 2019-02 – Guidance on whether gain realized from a deemed asset sale pursuant to an Internal Revenue Code section 338(g) election must be apportioned using the target's apportionment formula
• Chief Counsel Ruling 2019-01 – Guidance on whether dividends paid out of pre-merger earnings and profits constitute "unitary income" within the meaning of Revenue and Taxation Code section 25106 for Parent in order to qualify for elimination from income under Section 25106

2018

• Chief Counsel Ruling 2018-01 – Guidance on whether performing mortgage servicing activity constitutes dealing in money or moneyed capital, and whether certain hedging contracts constitute moneyed capital, within the meaning of California Code of Regulations, title 18, section 23183

2017

• Chief Counsel Ruling 2017-03 – Guidance on whether a taxpayer's sales of its United States businesses were "substantial" and "occasional" within the meaning of California Code of Regulations, title 18, section 25137(c)(1)(A)
• Chief Counsel Ruling 2017-02 – Guidance pertaining to the treatment of goodwill for purposes of applying the "deemed water's-edge election" business asset test per California Revenue and Taxation Code section 25113(c)(2)
• Chief Counsel Ruling 2017-01 – Guidance as to whether a taxpayer’s service is marketing or non-marketing and how to determine where the benefit of the service is received when a taxpayer’s service is relieving its customer’s obligations to another party. California Code of Regulations, section 25136-2. (This Chief Counsel Ruling has been rescinded pursuant to Legal Ruling 2022-01 [Subject: Numerator Assignment of Gross Receipts from Sales of Services to Business Entities] issued on March 25, 2022.)

2016

• Chief Counsel Ruling 2016-05 – Guidance pertaining to the treatment of the disposition of insurance company stock for California tax purposes in the context of an IRC section 338(h)(10) election
• Chief Counsel Ruling 2016-04 – Whether a non-California credit union and its non-California single member LLC have California filing requirements and an obligation to pay all applicable taxes and fees
• Chief Counsel Ruling 2016-03 – Guidance with respect to the operation of Revenue and Taxation Code sections 23101and 25122; California Code of Regulations, title 18, section 25136-2; and Public Law 86-272
• Chief Counsel Ruling 2016-02 – Whether a Regulated Investment Company (RIC) organized as a business trust is properly treated as a corporation for purposes of the minimum franchise tax imposed under Revenue and Taxation Code section 23153
• Chief Counsel Ruling 2016-01 – Whether a Regulated Investment Company (RIC) organized as a business trust is properly treated as a corporation for purposes of the minimum franchise tax imposed under Revenue and Taxation Code section 23153

2015

• Chief Counsel Ruling 2015-03 –¹⁸ Application of market-based sourcing rules for non-marketing services under California Revenue and Taxation Code section 25136 and California Code of Regulations, title 18, section 25136-2. (This Chief Counsel Ruling has been rescinded pursuant to Legal Ruling 2022-01 [Subject: Numerator Assignment of Gross Receipts from Sales of Services to Business Entities] issued on March 25, 2022.)
• Chief Counsel Ruling 2015-02 – California filing requirements of a California single member limited liability company that is disregarded for federal tax purposes, as well as its sole owner, which is a tax-exempt entity
• Chief Counsel Ruling 2015-01 – California franchise tax consequences of the sale of one of two lines of business and whether the sale was both "substantial" and "occasional" under California Code of Regulations, title 18, section 25137(c)(1)(A)

2014

• Chief Counsel Ruling 2014-03 – Guidance to be treated as a cooperative and to be eligible for a California Revenue and Taxation Code section 24405 deduction
• Chief Counsel Ruling 2014-02 – Guidance on whether a series of asset sales are "occasional" within the meaning of California Code of Regulations, title 18, section 25137, subsection (c)(1)(A)
• Chief Counsel Ruling 2014-01 – How to properly source income received from a Restricted Stock Unit plan when a taxpayer lived in California on the date of grant, but became a nonresident of California prior to the vesting date

2013

• Chief Counsel Ruling 2013-04 – Guidance on the proper California taxation of income of a nonresident taxpayer received from a limited liability company
• Chief Counsel Ruling 2013-03 – Sales within California pursuant to Revenue and Taxation Code section 25135
• Chief Counsel Ruling 2013-02 – How to properly source income received from a Restricted Stock Unit plan when a taxpayer lived in California on the date of grant, but became a nonresident of California prior to the vesting date
• Chief Counsel Ruling 2013-01 – Operation of California Code of Regulations, title 18, section 25137-8.2 pertaining to Corporations and Affiliates

2012

• Chief Counsel Ruling 2012-08 – Application of California Revenue and Taxation Code section 25106(a)(2)(A)
• Chief Counsel Ruling 2012-07 – Doing business in California for purposes of California Revenue and Taxation Code section 23101
• Chief Counsel Ruling 2012-06 – Guidance about the application of Treasury Regulation section 1.337(d)-2 for California purposes pertaining to worthless stock loss attributable to members of a combined reporting group
• Chief Counsel Ruling 2012-05 – California franchise tax consequences of sales to third parties and the applicability of Revenue and Taxation Code section 25128
• Chief Counsel Ruling 2012-04 – Agricultural business activities within the meaning of Revenue and Taxation Code section 25128(d)(2)
• Chief Counsel Ruling 2012-03 – Seeking guidance with respect to the operation of Revenue and Taxation Code sections 23101, 25122 and 25135
• Chief Counsel Ruling 2012-02 – Whether the gain from the sale of a partnership interest by a member of a combined reporting group to a unitary partnership will be deferred as a result of the intercompany transaction combined reporting regulations contain in California Code of Regulations, Title 18, Section 25106.5-1
• Chief Counsel Ruling 2012-01 – Application of RTC sections 25120 and 25137 standard apportionment formula contained in RTC sections 25130 through 25136

2011

• Chief Counsel Ruling 2011-01 – Billing Address of Company's Customer Used as Reasonable Proxy for Customers' "Commercial Domicile" for Purposes of Applying California Code of Regulations, title 18, section 25136(d)(3)(D) (08.23.11)

2010

• Chief Counsel Ruling 2010-2 – Whether the Regulation Governing the Allocation and Apportionment of Income for Franchisors (Cal. Code Regs., tit. 18, § 25137-3) Applies to the Allocation and Apportionment of Income Earned from Licensing Activity (05.11.10)
• Chief Counsel Ruling 2010-1 – Whether Certain Investments are "Qualifying Investment Securities" Within the Meaning of Sections 17955(c)(3)(A) and 23040.1(d)(4)(a) of the California Revenue and Taxation Code (03.25.10)

2009

• Chief Counsel Ruling 2009-2 – Request of Distributing 1, Inc. (and its Shareholders and Affiliates) Regarding a Series of Transactions Involving Sections 355 and 368 of the Internal Revenue Code of 1986 (08.28.09)
• Chief Counsel Ruling 2009-1 – Distribution of Stock Controlled to Its Majority Shareholder in a Transaction Intended to Qualify for Nonrecognition Treatment Under Section 355 of the Internal Revenue Code (02.20.09)

2008

• Chief Counsel Ruling 2008-2 – Seek Guidance as to How Gains Resulting From a California-Only Election Made Pursuant to Internal Revenue Code Section 338(g) are Apportioned and Reported for California Tax Purposes When a Taxpayer is not a Member of the Seller's Federal Consolidated Return Group (09.15.08)
• Chief Counsel Ruling 2008-1 – Distribution Involving Section 355 of the Internal Revenue Code of 1986 and the Application of Section 19774 of the California Revenue and Taxation Code to the Proposed Distribution (08.11.08)

2007

• Chief Counsel Ruling 2007-5 – Applicability of California Revenue and Taxation Code Section 25106 to Certain Dividend Transactions, as well as the Proper Earnings and Profits Ordering Rule for Dividend Payments (02.22.08)
• Chief Counsel Ruling 2007-4 – Applicability of Revenue and Taxation Code Section 25106 to the Third in a Series of Three Distribution Transactions, as well as the Proper Earnings and Profits Ordering Rule for Dividend Payments (01.03.08)
• Chief Counsel Ruling 2007-3 – Series of Transactions Involving Sections 332, 351, 355, and 368 of the Internal Revenue Code and the Application of Section 19744 of the California Revenue and Taxation Code (07.17.07)
• Chief Counsel Ruling 2007-2 – Apportionment Treatment of Receipts Generated from Investment Activities Conducted by Third Party Investors (06.04.07)
• Chief Counsel Ruling 2007-1 – Application of the Test for Determining Whether a Corporation will be Treated as a "Financial Corporation" under Revenue and Taxation Code Section 23183 and its Regulations (03.12.07)

2006

• Chief Counsel Ruling 2006-0001 – Opinion as to the Applicability of California Revenue and Taxation Code Section 25106 to Certain Dividend Transactions as well as the Proper Earnings and Profits Ordering Rule for Dividend Payments (02.28.06)

2005

• Chief Counsel Ruling 2005-0008 – Application of Revenue and Taxation Code Section 17041(i)(3) with Respect to Capital Loss Carry Forwards from the Sale of Stock and Gain on the Sale of California Residence Upon Establishing Residency in a State Other Than California (09.20.05)
• Chief Counsel Ruling 2005-0007 – Combined Reporting - Taxpayers Under Revenue and Taxation Code Section 23037 (08.25.05)
• Chief Counsel Ruling 2005-06 – Amnesty Applications for Trusts that had not Previously Filed California Tax Returns (05.16.05)
• Chief Counsel Ruling 2005-0005 – Taxability of Certain Dividends and Whether Such Dividends are Properly Eliminated Under California Revenue and Taxation Code Section 25106 (08.05.05)

2004

• Chief Counsel Ruling 2004-001 – Banks or Financial Corporations within the Meaning of Revenue and Taxation Code Sections 23181 and 23183 and California Code of Regulations, Title 18, Section 2517-4.2 (09.13.04)

2003

• Chief Counsel Ruling 20030318 – Determination Regarding Eligibility to Claim the "Teacher Retention Credit" on the California Personal Income Tax Return (03.29.04)
• Chief Counsel Ruling 20030285 – Valid S Corporation Election for California Corporate Income/Franchise Tax Purposes as of April 1, 1997 (12.29.03)

2002

• Chief Counsel Ruling 2002-0731 – Once a Partnership Multi-Year Audit by the Internal Revenue Service Concludes, Can One Amended Return be Filed Per Year for Each Resident Partner? (09.29.03)
• Chief Counsel Ruling 2002-02 – Date Upon Which a Water's-Edge Election will Expire (11.13.02)
• Chief Counsel Ruling 201374 – Liquidation on a Tax-Free Basis, Pursuant to Internal Revenue Code Section 332 and Conforming Provisions of the Revenue and Taxation Code (05.03.02)

2001

• Chief Counsel Ruling 2001-1231 – Minimum Franchise Tax (12.05.01)
• Chief Counsel Ruling 2001-1278 – Application of a Federal Closing Agreement Executed on Behalf of the Commissioner of Internal Revenue in Which a Taxpayer Agrees to Pay a Compliance Fee to the Internal Revenue Service with Respect to Certain Errors on Forms 1099-B (10.31.01)
• Chief Counsel Ruling 201257 – Internal Revenue Code Section 59(e) Election for California Franchise Tax Purposes When Not Making the Same Election for Federal Income Tax Purposes (10.23.01)
• Chief Counsel Ruling 01-201181 – Whether Amounts Received as a Consequence of Dismissal of a Lawsuit Alleging Wrongful Termination of Employment are Subject to California Income Tax (10.15.01)
• Chief Counsel Ruling 20-0322 – Rules for Determining the Source of Income for Allowing a Resident Credit for Net Income Taxes Paid to Another State (05.03.01)
• Chief Counsel Ruling 20-0322 – Amount of Federal Credit Allowed for Federal Income Tax Purposes Under Internal Revenue Code Section 1397E (02.23.01)

2000

• Chief Counsel Ruling 20-0531 – Whether Distributive Share of Partnership Income Constitutes Income from Qualifying Investment Securities Within the Meaning of Revenue and Taxation Code Section 17955 (12.28.00)
• Chief Counsel Ruling 20-0176 – Method of Accounting for Bad Debts, Revenue Procedure 85-8, 1985-1 C.B. 495 (12.18.00)
• Chief Counsel Ruling 2000-0236 – Will a Limited Partnership be Considered a "Financial Corporation" for California Franchise Tax Purposes under Revenue and Taxation Code Section 23183? (10.11.00)
• Chief Counsel Ruling 2000-02 – Should the Electricity Procured Through the California Power Exchange (PX) Solely on Behalf of California Default Electrical Consumers Required to be Sold at the PX Price Without a Profit Markup, be Treated as a Purchase and a Subsequent Resale of Electricity to Those Consumers? (07.28.00)
• Chief Counsel Ruling 99-0571 – California's Conformity to the Basis Provisions of Internal Revenue Code Section 1031 Regarding Exchange of Real Property (07.17.00)
• Chief Counsel Ruling 2000-01 – Application of Revenue and Taxation Code Section 17014, Subdivision (d) (06.06.00)