Two QSB Relief Bills on Governor Brown’s Desk

The California legislature heard from business owners, and the business owners were angry. Their anger had to do with how California’s Franchise Tax Board decided to implement a court decision on Qualified Small Business Stock. The FTB decided that the best method would be retroactive tax increases on QSB sales.

The California legislature, to their credit, passed two separate relief measures. The first would do away with the retroactivity in full; the second would eliminate 76% of the tax. Why would such transactions be taxed at a 24% rate? The theory is the state might have to issue refunds; collecting some tax would pay for the refunds.

It will be up to Governor Brown as to which bill he will sign. Of course, he could veto both measures, in which case the fight would likely move to the courts. Vetoing both measures would also cement California’s place at the bottom of states that are friendly toward small businesses.


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