Income/Franchise:
California: Taxpayers Reminded About Limited Time Resolution for Some Eligible Transactions Subject to NEST Penalty
Tax News, Cal. Fran. Tax Bd. (August 2023). In the “Chief Counsel Corner” section of the California Franchise Tax Board (FTB)’s monthly “Tax News” newsletter, taxpayers are reminded about FTB Notice 2023-02, which was issued a few months ago and announced the creation of a resolution process that allows certain eligible taxpayers to resolve “eligible transactions” that may be subject to the non-economic substance transaction (NEST) understatement penalty under Cal. Revenue and Taxation Code (RTC) section 19774 by providing reduced penalties [see State Tax Matters, Issue 2023-23, for more details about FTB Notice 2023-02]. According to the FTB, eligible taxpayers may participate in the FTB Notice 2023-02 resolution from July 10, 2023, through November 17, 2023, by submitting a FTB Notice 2023-02 closing agreement that reverses the tax benefits and the deductions for related transaction costs attributable to the transactions. The FTB then proceeds to “share some information about micro-captive insurance and syndication conservation easement transactions” in light of this limited time resolution. Please contact us with any questions.
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