SB 876 Summary

• Allows qualified investors who suffered losses from criminally fraudulent investment arrangements to deduct those losses as theft losses and carry back or forward the resulting net operating losses, conforming to IRS Revenue Procedure 2009-20

• Provides a safe harbor preventing the Franchise Tax Board from challenging the tax year in which the theft loss is claimed if the taxpayer follows federal procedures for determining the discovery year

• Applies to both personal income tax (Section 17207.7) and corporation tax (Section 24347.7) for taxable years beginning January 1, 2008 or later

• Extends the carryover period for net operating losses denied during 2008-2009 by one or two years depending on when the loss occurred

• Exempts losses from the general restrictions on net operating loss deductions for small businesses with less than $500,000 in net business income