§ 8000. Definitions.

For purposes of this article, the following definitions shall apply:

(a)(1) “Aggregate employee compensation package” means the sum of the salaries for each new full-time employee employed in this state by the applicant, as determined pursuant to paragraph (2), for the first taxable year in which the agreement is effective and the four subsequent taxable years.

(2) The number of new full-time employees shall be determined on an annual full-time equivalent basis and shall be compared with the total number of full-time employees employed in this state by the applicant during the base year, determined on an annual full-time equivalent basis.

(b) “Aggregate investment package” means the sum of the investment for the first taxable year in which the agreement is effective and the four subsequent taxable years, in addition to any investment up to one year prior to the application date.

(c) “Agreement” or “California competes tax credit agreement” means the agreement as negotiated between the applicant and GO-Biz prescribing the terms and conditions that must be met in order to award the applicant an allocation.

(d) “Allocation” means the portion of the allocated tax credit for the then-current fiscal year awarded by the committee to an applicant.

(e) “Allocation period” means the taxable years the credit requested by the applicant will be allowed.

(f) “Annual full-time equivalent” means either of the following:

(1) In the case of a full-time employee paid hourly wages, “annual full-time equivalent” means the total number of hours worked for the applicant by the employee during the taxable year, not to exceed 1,750 hours per employee, divided by 1,750.

(2) In the case of a salaried full-time employee, “annual full-time equivalent” means the total number of weeks worked for the applicant by the employee during the taxable year, not to exceed 50, divided by 50.

(3) For purposes of this subdivision, the use of the term “worked” means the number of hours or weeks for which an employee receives paid wages including, but not be limited to paid vacation, sick leave, or holidays.

(g) “Applicant” means any taxpayer, including but not limited to an individual, corporation, or partnership, submitting a California competes tax credit application to GO-Biz for tax credit allocation consideration and must be a person or entity legally authorized to do business in California or that shall incorporate, qualify, or register with the Secretary of State to do business in California prior to the execution of the California competes tax credit agreement.

(h) “Application” means the request by an applicant for a tax credit allocation by submitting the information as specified in the application form.

(i) “Application form” means the California competes tax credit application form which shall contain the information requested in section 8030 and shall be available on the website.

(j) “Application period” means the period during a fiscal year designated by the director when applications shall be accepted, reviewed, and awarded.

(k) “Base year” means the 2013 taxable year, for an applicant who first hires an employee in California pursuant to an agreement in the 2014 taxable year. In the case of an applicant who first hires an employee in California pursuant to an agreement in a taxable year beginning on or after January 1, 2015, the base year means the taxable year immediately preceding the taxable year in which the employee was first hired by the applicant in California. For applicants who first commence doing business in California during the taxable year in which an application is filed, the number of full-time employees for the base year shall be zero.

(l) “Benefits” means health, medical, dental, and vision premiums paid by an applicant on behalf of any of the following:

(1) an employee;

(2) an employee's spouse;

(3) an employee's dependents.

(m) “California competes credit” or “credit” means the total amount of tax credit requested by an applicant in the application.

(n) “California competes tax credit committee” or “committee” means the committee established under Revenue and Taxation Code section 18410.2.

(o) “Current assets” means the value of all assets of the applicant that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other liquid assets that can be readily converted to cash.

(p) “Current Liabilities” means the applicant's debts or obligations that are due within one year. Current liabilities appear on the applicant's balance sheet and include short-term debt (less than one-year), accounts payable, accrued liabilities and other debts.

(q) “Director” means the director of GO-Biz, or his or her designee.

(r) “Directly related” means actions, purchases, or the like made in connection with the project that would not have been otherwise purchased or incurred but for the project.

(s) “Economic impact” means the impact of a project or business on the state, a region, or locality, and may include, but not be limited to, the review of the type of industry, type of employment created, potential for growth, saturation in a particular market or saturation of a type of industry or employment in the state or a particular region or locality, indirect employment creation, temporary employment and any other similar factors.

(t) “Fringe benefits” means any taxable or non-taxable amenity provided to the employee by the applicant including, but not limited to, group-term life insurance coverage, childcare and assistance reimbursement, employee discounts, personal use of a company owned vehicle, paid parking, public transportation supplement, gym subsidy, and education reimbursement.

(u) “Full-time employee” means an individual that is paid wages for services in this state of not less than an average of 35 hours per week.

(v) “GO-Biz” means the Governor's Office of Business and Economic Development.

(w) “Investment” means the amount paid for all personal property and real property acquired or leased by the applicant no more than one year prior to the date the application is filed that is directly related to the project and any other personal property or real property acquired or leased on and after the date the application is filed that is directly related to the project.

(x) “Material litigation” means any litigation that, according to generally accepted accounting principles, is deemed significant to an applicant's financial health and would be required to be referenced in the applicant's annual audited financial statements (if audited financial statements are required), or would be the type of information that is reported to shareholders, members, or similar individuals, or, in documents about the financial condition of the applicant, would be deemed material information that an investor or person providing any capital or investment in the entity would deem material in making a financial decision regarding the applicant.

(y) “Personal property” means property, other than real property, placed in service in this state by the applicant, that is tangible, movable property, including, but not limited to, vehicles, movable fixtures, equipment, electronic devices purchased for the business use of the applicant, intangible property, including, but not limited to, software licenses, intellectual property acquired in connection with the project that has a quantifiable value, and other business assets which are subject to depreciation under Internal Revenue Code section 167(a), or depreciable property that will be expensed under Internal Revenue Code section 179.

(z) “Project” means the applicant's proposed business venture, investment, or expansion in this state that is the basis for the allocation.

(aa) “Project financing” means financing that the applicant may rely on to fund the project which may include, but not be limited to, loans through banks or other financial institutions, lines of credit, stock issuance, private equity, grants, venture capitalist investment, or any other form of financing.

(bb) “Real property” means any property located in this state that is attached directly to land, as well as the land itself, that is used in connection with the project. Real property includes, but is not limited to all, land, structures, firmly attached and integrated equipment (such as light fixtures or a well pump), anything growing on the land, and all other “interests” in the property which may be the right to future ownership (remainder), right to occupy for a period of time (tenancy or lease), or an easement across another's property. With the exception of the land itself, real property includes structures and other business assets affixed to the land that are subject to depreciation under Internal Revenue Code section 167(a), or depreciable property expensed under Internal Revenue Code section 179. Real property also includes capitalized costs related to new construction, reconstruction, or expansion of buildings or other structures which will be used in the applicant's trade or business in connection with the project and will be subject to depreciation under Internal Revenue Code section 167(a) or is depreciable property that will be expensed under Internal Revenue Code section 179. Real property does not include idle bare land held for investment purposes.

(cc) “Salary” means the amount of monetary compensation a full-time employee is paid by the applicant per year and does not include tips, overtime, bonuses, benefits or other compensation of any kind.

(dd) “Small business” means a trade or business that has aggregate gross receipts, less returns and allowances reportable to this state, of less than two million dollars ($2,000,000) during the previous taxable year. “Gross receipts, less returns and allowances reportable to this state,” means the sum of the gross receipts from the production of business income, as defined in Revenue and Taxation Code section 25120(a), and the gross receipts from the production of nonbusiness income, as defined in Revenue and Taxation code section 25120(d).

(ee) “Strategic importance” means the value of the type of business to be developed in the state or a particular region or locality due to lack of current presence of the type of business or industry, the assistance to the employment market or potential-employment pool, the growth of a particular region or locality, the will of the community to accept the business or industry, and any other similar factors.

(ff) “Website” means the GO-Biz website found at www.business. ca.gov.

(gg)”Working capital” means the applicant's operating liquidity determined by subtracting the applicant's current liabilities from the applicant's current assets.

HISTORY

1. New chapter 13, article 1 (sections 8000-8070) and section filed 2-20-2014 as an emergency; operative 2-20-2014 (Register 2014, No. 8). A Certificate of Compliance must be transmitted to OAL by 8-19-2014 or emergency language will be repealed by operation of law on the following day.

Note

Note: Authority cited: Sections 17059.2 and 23689, Revenue and Taxation Code. Reference: Sections 17059.2, 18410.2 and 23689, Revenue and Taxation Code.