California Revenue & Taxation Code
Cal. Rev. & Tax. Code § 23361
“Affiliated group” means one or more chains of corporations connected through stock ownership with a common parent corporation if during the period when the income was accrued or realized and on the 16th day of the first month after the close of the taxable year—
# (a)
At least 80 percent of the stock of each of the corporations, except the common parent corporation, is owned directly by one or more of the other corporations; and
# (b)
The common parent corporation owns directly at least 80 percent of the stock of at least one of the other corporations; and
# (c)
Each of the corporations except the common parent corporation is either (1) a corporation whose principal business is that of a common carrier by railroad or (2) a corporation the assets of which consist principally of stock in such corporations and which does not itself operate a business other than that of a common carrier by railroad. For the purpose of determining whether the principal business of a corporation is that of a common carrier by railroad, if a common carrier by railroad has leased its railroad properties and such properties are operated as such by another common carrier by railroad, the business of receiving rents for such railroad properties shall be considered as the business of a common carrier by railroad.
The provisions of this section shall not preclude the application of Chapter 17 (commencing with Section 25101) of this part.
Except in paragraph (c), “stock” does not include nonvoting stock which is limited and preferred as to dividends.
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