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STATE OF CALIFORNIA

STEVE WESTLY

Chair

FRANCHISE TAX BOARD - Legal Branch

PO Box 1720

CAROLE MIGDEN

Rancho Cordova CA 95741-1720

Member

(916) 845-3309 Fax (916) 845-3648

STEVE PEACE

Member

October 24, 2003

FTB NOTICE 2003- 9

SUBJECT: Revenue Procedure 2003-33 – Automatic Extensions to Make Internal

Revenue Code Section 338 Elections

The Internal Revenue Service (hereinafter "IRS") issued Revenue Procedure (hereinafter

"Rev. Proc.") 2003-33 (2003-16 I.R.B. 803) on April 21, 2003, generally effective for

Internal Revenue Code (hereinafter "IRC") section 338 elections filed after April 2, 2003.

Rev. Proc. 2003-33 grants a twelve-month extension of time to file an election under IRC

section 338 from the date of discovery of the failure to file a timely election under that

section to any person described in Section 4 of Rev. Proc. 2003-33 that complies with the

requirements set forth in Section 5 thereof. Rev. Proc. 2003-33 was issued pursuant to

Treasury Regulation (hereinafter "Treas. Reg.") section 301.9100-3, which regulation was

promulgated under the authority of IRC section 7805.

Revenue and Taxation (hereinafter "Rev. and Tax.") Code section 23051.5, subdivision

(d), states that when applying the IRC, regulations promulgated in final form or issued as

temporary regulations shall be applicable to the extent that they do not conflict with part

11 of the Rev. and Tax. Code or with regulations issued by the Franchise Tax Board

(hereinafter "FTB"). Rev. and Tax. Code section 23051.5, subdivision (e)(1), states that

whenever a taxpayer is allowed to make an election under the Rev. and Tax. Code, a

proper election filed with the IRS in accordance with the IRC or regulations issued by the

Secretary shall be deemed a proper election for purposes of part 11 of the Rev. and Tax.

Code, unless otherwise expressly provided in that part or in regulations issued by the

FTB. Rev. and Tax. Code section 23051.5, subdivision (e)(3), states that to obtain

treatment other than that elected for federal purposes, a separate election shall be filed

with the FTB at the time and in the manner which may be required by the FTB.

If a taxpayer makes a proper federal election under IRC section 338 for federal income

tax purposes, the election will be deemed a proper election for California tax purposes,

unless the taxpayer makes a separate California election. If, in making a proper federal

election under IRC section 338, the taxpayer receives an extension of time to make the

election pursuant to Rev. Proc. 2003-33 or other relevant authority, the election will still be

proper for California tax purposes. Although the federal election is made pursuant to

A separate election is one in which the taxpayer either chooses not to make the same

election for California tax purposes as the taxpayer made for federal income tax purposes

or chooses to make an election for California tax purposes that the taxpayer has not

made for federal income tax purposes. In both situations, the election must be allowable

under both federal and California tax law.

Ftb Notices 2003_9 - Revenue Procedure 2003-33 Form - California Franchise Tax Board

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