The 4th Quarter of 2013 was a relatively quiet time in California from a tax legislative perspective. The Franchise Tax Board (“FTB”) held interested party meetings for potential amendments to its sales factor market sourcing rules and to clarify the treatment of a corporate partner’s interest in a partnership for income/franchise tax purposes. Additionally, California clarified the existing treatment of gain or loss generated from the sale of qualified small business stock and taxpayers continued to prevail in court on the treatment of technology transfer agreements as being exempt from California sales and use tax.

This tax alert includes information on the following:

• The FTB Proposes Amendments of Market Sourcing Rules and Corporate Partner Income Treatment
• FTB Provides Guidance on Qualified Small Business Stock Gain Exclusion/Deferral Legislation
• Technology Transfer Agreements and Exemption from Sales and Use Tax