Section 24674 Of Article 3. Year Of Inclusion From California Revenue And Taxation Code >> Division 2. >> Part 11. >> Chapter 13. >> Article 3.
24674
. (a) If, in the case of a taxpayer owning any
non-interest-bearing obligation issued at a discount and redeemable
for fixed amounts increasing at stated intervals the increase in the
redemption price of such obligation occurring in the taxable year
does not (under the method of accounting used in computing its
income) constitute income to it in such year, such taxpayer may, at
its election made in its return for any taxable year, treat such
increase as income received in such taxable year. If any such
election is made with respect to any such obligation, it shall apply
also to all such obligations owned by the taxpayer at the beginning
of the first taxable year to which it applies and to all such
obligations thereafter acquired by it and shall be binding for all
subsequent taxable years, unless on application by the taxpayer the
Franchise Tax Board permits it, subject to such conditions as the
Franchise Tax Board deems necessary, to change to a different method.
(b) In the case of any obligation--
(1) Of the United States; or
(2) Of a state, a territory, or a possession of the United
States, or any political subdivision of any of the foregoing, or of
the District of Columbia,
which is issued on a discount basis and payable without interest
at a fixed maturity date not exceeding one year from the date of
issue, the amount of discount at which such obligation is originally
sold shall not be considered to accrue until the date on which such
obligation is paid at maturity, sold, or otherwise disposed of.