Cal. Code Regs. Tit. 18, §§ 24345-1

Current through Register 2024 Notice Reg. No. 40, October 4, 2024

Section 24345-1 - Deduction for Taxes or Licenses in General

(a) Taxes or licenses which may be deducted include ad valorem property taxes (but see Regulation 24345-2, respecting special assessments), automobile registration fees, city license fees, import or customs duties paid to federal customs officers, liquor or alcoholic beverage license fees, and other business, privilege or excise taxes paid to the United States or to a state. Postage is not a tax and may be deducted only insofar as it constitutes a business expense.

(b) Double deductions are not permitted. Accordingly, if taxes are deducted as a business expense or are added to the cost of the property with respect to which they are imposed, they may not be deducted separately as taxes.

(c) For income years beginning before January 1, 1961, taxes on property could be deducted only by the one owning the property, or in possession of the property under a contract to purchase at the time the taxes became a lien.

Generally, taxes on property in California become a lien on the first Monday in March of each year. An exception exists in the case of taxes of certain cities having a lien date other than the first Monday in March.

Although a purchaser of property may not deduct taxes which become a lien on the property prior to the time it was purchased, even though paid by the purchaser, the purchaser may add any such taxes paid by it to the cost of the property, and thus increase the basis of the property for the purpose of computing depreciation, gain or loss, etc.

See Section 24346 for apportionment of taxes on real property between seller and purchaser for income years beginning after December 31, 1960.

Cal. Code Regs. Tit. 18, §§ 24345-1

1. New Reg. 24345(a) filed 12-14-64; effective thirtieth day thereafter (Register 64, No. 25).
2. Renumbering and amendment of Section 24345(a) to Section 24345-1 filed 9-3-82; effective thirtieth day thereafter (Register 82, No. 37.)

Note: Authority cited: Section 26422, Revenue and Taxation Code. Reference: Section 24345, Revenue and Taxation Code.