Details of Public Law 119-21, section 70523 , One Big Beautiful Bill Act

This provision modifies the depreciation adjustment to also require taxpayers to reduce their adjusted financial statement income by any capital expenditure deductions and any allowable deductions for intangible drilling and development costs in the cases of oil and gas wells and geothermal wells used to calculate their taxable income for the year.

In addition, a taxpayer will be required to disregard, for purposes of their adjusted financial statement income, any amounts of depletion expenses taken into account when a taxpayer calculates their applicable financial statement income with respect to the intangible drilling and development costs of the property.

California law does not conform to the federal adjusted financial statement income under the PITL and CTL, as of the specified date of January 1, 2025. As a result, California does not conform to the modifications made under this provision.