(a)

(1) A taxpayer subject to the tax imposed under

Part 11 (commencing with

Section 23001) with an understatement of tax for any taxable year shall be subject to the penalty imposed under this

section if that understatement exceeds the greater of the following: (

A) One million dollars ($1,000,000). (

B) Twenty percent of the tax shown on an original return or shown on an amended return filed on or before the original or extended due date of the return for the taxable year.

(2) For taxpayers that are required to be included in a combined report under

Section or authorized to be included in a combined report under

Section 25101.15, the threshold amount prescribed in subparagraph (

A) or subparagraph (

B) of paragraph (1) shall apply to the aggregate amount of tax liability under

Part 11 (commencing with

Section 23001) for all taxpayers that are required to be or authorized to be included in a combined report. (b)

(1) The penalty under this

section shall be an amount equal to percent of any understatement of tax. For purposes of this section, “understatement of tax” means the amount by which the tax imposed by

Part 11 (commencing with

Section 23001) exceeds the amount of tax shown on an original return or shown on an amended return filed on or before the original or extended due date of the return for the taxable year.

(2) For any taxable year beginning before January 1, 2008, the amount of tax paid on or before May 31, 2009, and shown on an amended return filed on or before May 31, 2009, shall be treated as the amount of tax shown on an original return for purposes of this section.

(3) The amount of additional tax shown on the first amended return reflecting a proper election under

Section of the Internal Revenue Code, relating to certain stock purchases treated as asset acquisitions, shall be treated as if that amount was included in the amount of tax shown on an original return for purposes of this section. (

c) The penalty imposed by this

section shall be in addition to any other penalty imposed under

Part 11 (commencing with

Section 23001) or this part. (

d) Article 3 (commencing with

Section 19031), relating to deficiency assessments, shall not apply with respect to the assessment or collection of any penalty imposed by subdivision (a). (

e) A refund or credit for any amounts paid to satisfy a penalty imposed under this

section may be allowed only on the grounds that the amount of the penalty was not properly computed by the Franchise Tax Board. (

f) No penalty shall be imposed under this

section on any understatement to the extent that the understatement is attributable to any of the following: (1) (

A) A change in law that is enacted, promulgated, issued, or becomes final after the earlier of either of the following dates: (

i) The date the taxpayer files the return for the taxable year for which the change is operative. (ii) The extended due date for the return of the taxpayer for the taxable year for which the change is operative. (

B) For purposes of this paragraph, a “change of law” means a statutory change or an

interpretation of law or rule of law by regulation, legal ruling of counsel, within the meaning of subdivision (

b) of

Section 11340.9 of the Government Code, or a published federal or California court decision. (

C) The Franchise Tax Board shall implement this paragraph in a reasonable manner.

(2) The imposition of an alternative apportionment or allocation method by the Franchise Tax Board under the authority of

Section because the standard allocation and apportionment provisions of

Article 2 (commencing with

Section 25120) and the regulations thereunder do not fairly represent the extent of the taxpayer’s business activity in this state.

(3) A change to the taxpayer’s federal accounting method pursuant to

Section of the Internal Revenue Code, relating to general rule for methods of accounting, that is applicable for purposes of

Part 11 (commencing with

Section 23001), but only to the extent of understatements for taxable years where the due date of the return, without regard to any extension of time for filing the return, is before the date of consent of the secretary to that change of accounting method. (

g) No penalty shall be imposed under this

section to the extent that a taxpayer’s understatement is attributable to the taxpayer’s reasonable reliance on written advice of the Franchise Tax Board, but only if the written advice was a legal ruling by the Chief Counsel, within the meaning of paragraph (1) of subdivision (

a) of

Section 21012. (h)

(1) This

section shall apply to each taxable year beginning on or after January 1, 2003, for which the statute of limitations on assessment has not expired.

(2) The amendments made to this

section by

Chapter of the Statutes of shall apply to each taxable year beginning on or after January 1, 2010. (3) (

A) Except as otherwise provided, the amendments made to this

section by the act adding this paragraph shall apply to each taxable year beginning on or after January 1, 2015. (

B) The provisions of paragraph (2) of subdivision (f), as added by the act adding this paragraph, shall apply to understatements for any taxable year for which the statute of limitations on assessments has not expired as of the effective date of the act adding this paragraph.