Cal. Code Regs. Tit. 18, §§ 17053.49-9
(See Regulation Section 17053.49-0 for Table of Contents.)
Except as provided in this regulation, the amount of MIC that may be carried over to the following year, and succeeding years, including carryforwards from any and all prior years, is not limited.
EXAMPLE 1: Assume that as of the last day of its 1996 taxable year G, a qualified taxpayer, is a "small business" for purposes of the MIC. During G's 1996 taxable year, G purchased a machine that was qualified property for $500, thereby entitling G to a $30 MIC. Assume that the entire $30 MIC exceeds the "net tax," so that G is required to carry forward the $30 MIC. Under these facts, G is entitled to carry forward the unused $30 MIC to each of its ten (10) succeeding taxable years, if necessary, until the MIC is exhausted, regardless of whether G is a small business in any of its succeeding taxable years.
EXAMPLE 2: Assume the same facts as in EXAMPLE 1, except that G purchases another machine that is qualified property in its 1997 taxable year for $750, thereby entitling G to a $45 MIC. Assume that in G's 1997 taxable year G is no longer treated as a "small business" for purposes of the MIC. Assume further that the entire $45 MIC for 1997 exceeds the "tax," so that G is required to carry forward the $45 MIC. Under these facts, G is entitled to carry forward the unused $45 MIC to each of its eight (8) succeeding taxable years, if necessary, until the MIC is exhausted, regardless of whether G is a small business in any of its succeeding years.
EXAMPLE 1: Assume that as of the last day of its 1994 taxable year H, a qualified taxpayer filing on a calendar year basis, is a "small business" for purpose of the MIC. During H's 1994 taxable year, H purchased a machine that was qualified property for $800, thereby entitling H to a $48 MIC. Under the rules of subsection (b) of Regulation 17053.49-1, H may not claim the credit until its first taxable year beginning on or after January 1, 1995. Assume that in H's 1995 taxable year the entire $48 MIC exceeds the "net tax," so that H is required to carry forward the $48 MIC. Under these facts, H is entitled to carry forward the unused $48 MIC to each of its ten (10) taxable years succeeding the taxable year in which the credit could first be claimed (1995), if necessary, until the MIC is exhausted, regardless of whether H is a small business in any of its succeeding taxable years.
EXAMPLE 2: Assume the same facts as in EXAMPLE 1, except that for its 1995 taxable year H is no longer treated as a "small business" for purposes of the MIC. Under these facts, the result is the same as in EXAMPLE 1 since the determination of whether H is a small business for purposes of the MIC is made as of the last day of the taxable year in which the MIC was allowed (1994), rather than the last day of the taxable year in which the MIC could first be claimed (1995).
EXAMPLE 3: Assume the same facts as in EXAMPLE 2, except that for its 1994 taxable year H was not a "small business" for purposes of the MIC but was a "small business" for purposes of the MIC for H's 1995 taxable year. Under these facts, H is entitled to carry forward the unused MIC for the eight (8) taxable years succeeding 1995 (the taxable year in which the MIC could first be claimed), even though H was a small business in 1995, since H was not a small business in the taxable year in which the MIC was allowed (1994).
Cal. Code Regs. Tit. 18, §§ 17053.49-9
Note: Authority cited: Section 19503, Revenue and Taxation Code. Reference: Section 17053.49, Revenue and Taxation Code.