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Thus, petitioner argues that the 1972 amendments did not
accelerate the accrual of its California franchise tax and that
section 461(d)(1) and the cases interpreting that section with
respect to California law are inapplicable. See Epoch Food
Serv., Inc. v. Commissioner, supra; Central Inv. Corp. v.
Commissioner, supra; see also Hitachi Sales Corp. of Am. v.
Commissioner, T.C. Memo. 1992-504.
The general rule for a taxpayer that commenced business in
California before 1972 was that the franchise tax for the
taxpayer’s first taxable year was based upon the income received
during that year and that the income for the first taxable year
also served as the measure of the franchise tax for the
taxpayer’s second taxable year. Cal. Rev. & Tax. Code sec.
23222(a) (West 1992). Thereafter, the tax due for each taxable
year was based on the income earned in the next preceding income
year. Id. sec. 23151(a). However, a special rule applied where
the commencing corporation’s first taxable year was less than 12
months:
In every case in which the first taxable year of a
taxpayer constitutes a period of less than 12 months,
or in which a taxpayer does business for a period of
less than 12 months during its first taxable year, said
taxpayer shall pay as a prepayment of the tax for its
second taxable year a tax based on the income for the
first taxable year computed under the law and at the
rate applicable to the second taxable year, the same to
be due and payable at the same times and in the same
manner as if that amount were the entire amount of its
tax for that year; and upon the filing of its tax
return within 2 months and 15 days after the close of
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