§ 23696

(a) Notwithstanding anything to the contrary in Sections 23685 and 23695, and in Section 23698, as that section read on January 1, 2025, a credit, or any portion thereof, allowed under Section 23685, 23695, or 23698 and generated by a disregarded single member limited liability company shall not be ineligible for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation, based on either of the following:

(1) The disregarded single member limited liability company is not considered a qualified taxpayer, as defined in subdivision (b) of Sections 23685 and 23695 and subdivision (b) of 23698, as that section read on January 1, 2025.

(2) The amount of credit allowed under Section 23685, 23695, or 23698 does not exceed the tax liability of the disregarded single member limited liability company for purposes of paragraph (1) of subdivision (c) of Sections 23685 or 23695 or paragraph (1) of subdivision (c) of Section 23698, as that section read on January 1, 2025, respectively.

(b) For purposes of this section, “affiliated corporation” has the same meaning as defined in paragraph (1) of subdivision (c) of Sections 23685 and 23695 and paragraph (1) of subdivision (c) of Section 23698, as that section read on January 1, 2025.

(c) This section shall apply only when the credits affected by this section were assigned and claimed on a tax return timely filed with the Franchise Tax Board for taxable years beginning on or before January 1, 2025.

(Amended by Stats. 2025, Ch. 462, Sec. 4. (SB 863) Effective January 1, 2026.)