Tax Attorney in Chico, California

The Craft Beverage Modernization Act (CBMA) provisions inside 26 USC §5051 set a reduced federal beer excise rate of $3.50 per barrel on the first 60,000 barrels produced and removed by a domestic brewer that produces 2 million barrels or less in a calendar year. The rate climbs to $16 per barrel for production between 60,000 and 6 million barrels, before reaching the standard $18 rate above 6 million. Sierra Nevada Brewing Company, headquartered at 1075 East 20th Street in Chico, sits in the second tier — well above the 60,000-barrel small-brewer ceiling but inside the 6-million-barrel midsize cap. The credit is claimed on the monthly or semi-monthly TTB Form 5000.24 excise return, with the quarterly Form 5130.9 Brewer's Report of Operations filed in parallel. The §5051(a)(2)(C) control-group aggregation rule treats two or more breweries under common ownership as a single producer for the production-tier calculation — Sierra Nevada's Mills River, North Carolina facility and the Chico flagship aggregate for the federal calculation. We represent brewer permittees in TTB excise audits where aggregation, taxable-removal timing under 27 CFR §25.158, or barrel-aged Bigfoot, Ovila, and Hop Devil program record-keeping under 27 CFR Part 25 is the issue.

For federal purposes, no — for most categories, after the Fire Victims Trust Tax Exclusion Act (P.L. 118-127, signed into law December 2024). The Act excludes from federal gross income amounts received by Camp Fire claimants from the PG&E Fire Victim Trust attributable to losses tied to the 2015 Butte Fire, the 2017 North Bay Fires, and the 2018 Camp Fire — covering loss of property, loss of business income, emotional distress and personal physical injury under §104(a)(2), and most categories that the IRS would otherwise tax under §61. Punitive damages and interest components remain taxable. Before the 2024 Act, the classification ran the §104(a)(2) versus §61 fight you may have lived through — physical-injury and emotional-distress allocations excludable under §104(a)(2) if the emotional distress originated from a physical injury or physical sickness, with the rest taxable as gross income. California excluded its share of the Fire Victim Trust settlement at the state level earlier (AB 1249, effective for tax years 2020-2027). Amended returns under §6511 may recover federal tax paid on Trust distributions in prior years — three years from filing or two from payment whichever is later. We handle the Form 1040-X amended returns, the §104(a)(2) allocation analysis where you received pre-2024-Act distributions, and the FTB Schedule CA conformity reconciliation.

Under IRC §139, qualified disaster-relief payments received from any source — federal, state, employer, charity, or private — that reimburse reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster are excluded from federal gross income. The 2018 Camp Fire was a federally declared disaster (FEMA-4407-DR), which made every Camp Fire survivor eligible for §139 treatment on relief payments. The §139 exclusion covers FEMA Individual Assistance grants, American Red Cross direct cash assistance, employer disaster-relief payments under qualifying programs, charitable assistance from the North Valley Community Foundation Camp Fire Relief Fund, Butte Strong Fund distributions, and similar payments. §139(b) also covers reimbursement for expenses incurred for the repair or rehabilitation of a personal residence, the contents of a personal residence, and reasonable and necessary funeral expenses. The exclusion is automatic — no election, no special form. Where the payment was reported on a Form 1099 in error, the recipient excludes the §139 amount on Schedule 1 with a notation. We coordinate the §139 exclusion alongside the §165(i) casualty-loss claim and the §1033 involuntary-conversion deferral, which often run on the same parcel and the same year.

Probably not new claims in 2026, but the prior-year election was central to early Camp Fire returns and remains relevant on amended returns under §6511. IRC §165(i) lets a taxpayer in a federally declared disaster area elect to take the casualty loss on the prior-year return rather than the loss year. For the 2018 Camp Fire, this meant electing on a 2017 Form 1040-X — the prior-year election had to be made on a 2017 amended return filed within six months of the regular 2018 return due date, and the §6511 amended-return statute generally runs three years from the filing of the original return. Where the prior-year election generates a higher refund — because 2017 marginal rate was higher than 2018 — the election was the right call. The §165(h) personal-casualty loss limit (10% of AGI floor plus $100 per-event reduction) applies for personal-use property; business and income-producing-property casualty is not subject to the AGI floor. The IRS Notice 2018-66 set the §165(i) procedures for Camp Fire returns. If you took the prior-year election and the IRS later challenged it, or if you missed the election and want to evaluate a §6511 amended-return claim now, that is the analysis we run.

IRC §1033(a)(2) lets the owner of involuntarily converted property — destroyed by fire, condemned, or stolen — defer gain by reinvesting insurance or other proceeds in qualifying replacement property within the §1033(a)(2)(B) replacement window. The standard window is two years, expanded to three for real property condemned, and expanded to four years under §1033(h)(1)(B) for property destroyed in a federally declared disaster area like the 2018 Camp Fire. The basis of the replacement property carries the deferred gain. Camp Fire survivors who collected insurance on a destroyed Paradise residence and rebuilt or purchased qualifying replacement housing within the four-year window deferred any gain (insurance proceeds minus adjusted basis) into the replacement property's basis. For survivors who took the gain rather than reinvesting — or who let the four-year window run with §1033(h)(1)(B) extensions to 2022, 2023, and beyond — the calculation reverts to standard gain recognition. The §1033 deferral pairs with the §121 principal-residence exclusion ($250,000 single, $500,000 married filing jointly) where applicable; both can run on the same disposition with careful allocation. We model the §1033 versus §121 versus straight gain-recognition decision against insurance-recovery facts and replacement-property plans.

Under California's AB 5 codified at Labor Code §2775 and the ABC test from Dynamex Operations West, you are generally presumed an employee unless the hiring entity proves all three ABC factors: (A) free from control and direction, (B) performing work outside the usual course of the hirer's business, and (C) customarily engaged in an independently established trade or occupation of the same nature. California State University Chico — a teaching institution whose usual course of business is instruction — almost never satisfies prong (B) for adjunct instructors. The federal IRS test under §3121(d)(2) and the §530 safe-harbor rules treat the analysis under common-law factors. Where the CSU has been issuing a 1099-NEC to an adjunct who under California law should have been on a W-2, the EDD can reclassify the worker on audit and assess back UI, ETT, SDI, and PIT for three years plus penalties under UIC §1126. The federal piece exposes the worker to self-employment tax through Schedule SE that an employee would not owe. Reclassification onto W-2 retroactively triggers FICA gross-up litigation. We handle the SS-8 federal determination, the EDD audit defense, and the AB 5 analysis. CSU Chico has historically used both classifications across departments — the facts of each engagement matter.

CSU faculty participate in CalSTRS (the California State Teachers' Retirement System) as the primary defined-benefit plan, with CalPERS as an alternative for certain classifications. The §403(b) Tax Deferred Account (TDA) is the supplemental defined-contribution vehicle for CSU employees; the §457(b) Deferred Compensation Plan administered by CalHR Savings Plus runs in parallel. For 2026, the §402(g) elective-deferral limit on the §403(b) is $23,500, with an additional $7,500 age-50 catch-up. The §457(b) carries its own separate $23,500 limit with the same $7,500 catch-up — meaning a CSU Chico professor age 50+ can defer up to $62,000 across both plans, before any §415(c) overall limit considerations on the §403(b) employer side. The §403(b)(11)(B) 15-year-of-service catch-up provides an additional $3,000-per-year deferral (capped at $15,000 lifetime) for employees with 15 or more years of CSU service. We coordinate the §403(b) / §457(b) tax planning with CalSTRS pension election timing, post-retirement §72 rollover decisions, and out-of-state residency planning for retirees relocating to Reno, Boise, or Florida where the FTB residency audit under R&TC §17014 is a real risk.

Blue Diamond Growers is a Section 521 exempt farmers' cooperative under the Internal Revenue Code, with patronage dividends distributed to grower-members reported on Form 1099-PATR under IRC §1382 and §1385. The patronage dividend is generally treated as ordinary farm income in the year received and is reported on Schedule F (Profit or Loss from Farming) as other farm income — not capital gain. The cooperative may pay a portion as a qualified written notice of allocation that is taxable in the year of allocation rather than the year of cash distribution, with later cash redemption of the allocation triggering no further income. Per-unit retains (the §1388(f) per-unit retain allocation) follow parallel rules. The Tax Cuts and Jobs Act §199A(g) Domestic Production Activities Deduction for cooperatives — the post-TCJA replacement for the legacy §199 DPAD — passes through to grower-members. Almond growers on Butte County parcels who also operate qualifying farming businesses receive an additional §199A(a) qualified business income deduction on Schedule F income. We coordinate the §1382 patronage reporting, the §199A(g) cooperative pass-through, and the §175 soil-and-water conservation expense election on parcel-level capital expenditure.

IRC §175 lets qualifying farmers — taxpayers engaged in the business of farming Schedule F operations — elect to currently deduct expenditures for soil-and-water conservation rather than capitalizing them into land basis. Qualifying expenditures include terracing, contour furrowing, drainage ditches, earthen dams, water-diversion structures, eradication of brush, and the planting of windbreaks. Butte County almond orchards in the Durham, Dayton, Nelson, and Richvale areas frequently carry §175-eligible work — particularly irrigation modernization, drainage on the heavier valley clays, and erosion control on the foothill margins. The §175 deduction is capped at 25 percent of the taxpayer's gross income from farming, with five-year carryover for excess. The work must be consistent with a USDA Natural Resources Conservation Service plan or a comparable state-approved conservation plan to qualify. Without the §175 election, the same expenditures get capitalized to the land basis under §263A or as a land improvement under §168 — slower recovery, no current deduction. The election is annual; we run the §175 versus capitalize analysis each year against expected farming gross income.

Yes, often substantially. IRC §1301 lets a Schedule F or Schedule J farming taxpayer elect to compute current-year tax on elected farm income by spreading that income across the three prior base-period years for rate-bracket purposes. The elected farm income is not actually moved to those years for any other purpose — only the marginal-rate calculation uses the three-year average. For a Butte County almond grower whose 2025 crop sold into a stronger price environment after lighter 2023 and 2024 yields tied to drought, frost damage at bloom, or grade-down on shell-out, the §1301 election can pull a meaningful share of the 2025 income into the 22% and 24% federal brackets rather than the 32% or 35% brackets the year would otherwise hit. The election is irrevocable once made for a year and is filed on Schedule J. California does not conform to §1301, so the federal benefit is one-sided — but California's progressive structure under R&TC §17041 has more compressed brackets above $700,000 of taxable income, so the federal-only impact is what drives the math. We run the §1301 computation each year as part of the year-end farm-tax review.

Enloe Medical Center at 1531 Esplanade is a nonprofit hospital under IRC §501(c)(3), and contract physician arrangements at §501(c)(3) hospitals trigger several federal-tax considerations on both sides. On the hospital side, payments to a physician for services substantially related to the exempt healthcare purpose are not unrelated business income; payments tied to ancillary services that don't further the exempt purpose can produce UBIT under §511-514. The hospital structures the engagement to keep the relationship inside the exempt-purpose envelope. On the physician side, the 1099-NEC contract income flows to Schedule C with full self-employment tax under §1401, deductibility of business expenses (malpractice premiums, CME, association dues, the medical-license fee, certain home-office allocations for record-keeping work), and §199A(a) qualified business income deduction subject to the specified service trade or business limitation for medical professionals at the income-threshold phase-out (the 2026 phase-out begins at $241,950 single and $483,900 married filing jointly). Adventist Health Feather River — the Paradise hospital that closed after the 2018 Camp Fire and whose patient base substantially migrated to Enloe — and the broader North Valley health corridor add referral and call-coverage layers that affect the §183 hobby-loss analysis and the §469 passive activity rules for physician investors in surgical centers and imaging joint ventures.

Post-O'Bannon and post-Alston, NCAA Division II student-athletes at California State University Chico are eligible to receive name-image-likeness compensation. NIL income to a student-athlete is ordinary self-employment income reported on Schedule C with Schedule SE self-employment tax under §1401, subject to deduction of business expenses (agent fees, marketing expenses, travel tied to NIL activities). The §3121(b)(10) student-FICA exemption — which excludes wages from FICA for students enrolled and regularly attending classes whose employment is incident to their student status — does not apply to NIL payments because the payments are not wages from the school. For California purposes, AB 2747 and follow-on legislation set the framework. The income is California-source under R&TC §17041 to the extent attributable to performances or activities in California. Student-athletes on full athletic aid receive Form 1098-T reporting tuition, fees, and scholarship amounts; §117 excludes the portion applied to qualified tuition and required fees, with the balance taxable under §117(c) as compensation for services if the aid is conditioned on services. The §86 Social Security worksheet does not apply to most college-age athletes. We handle the Schedule C setup, the quarterly estimated-tax payments under §6654, and the NIL-collective LLC structuring questions that arise on six-figure deals.

Short-term-rental income earned in the residential neighborhoods around Bidwell Mansion State Historic Park, Annie's Glen at the western edge of Bidwell Park, and the Lower and Upper Bidwell Park residential margins runs through several federal tax frames. If average rental periods are seven days or less, the activity is generally not a rental activity under §469(c)(7) — it's treated as a trade or business reported on Schedule C, with full self-employment tax under §1401 on net income. If average rental periods exceed seven days, the activity is a rental under §469 and reports on Schedule E without SE tax, subject to passive activity loss limits. The §280A vacation-home rules apply where the host uses the property personally for more than the greater of 14 days or 10 percent of the rental days. Transient occupancy tax sits at the City of Chico level. The City of Chico business license — Chapter 3R of the Chico Municipal Code — is required. CDTFA's hotel-and-motel sales-tax treatment does not generally apply to short-term residential rentals, but the local TOT does. For larger operators with multiple Chico-area properties, the §199A qualified business income deduction, cost-segregation studies on the underlying real property, and §168(k) bonus depreciation on furniture and fixtures change the math meaningfully.

The FTB does not operate a field office in Chico. The closest FTB field office for Chico residents and businesses is the Sacramento office at 3321 Power Inn Road, Sacramento CA 95826 — approximately 90 miles south on Highway 99 and Highway 70. Residency audits under R&TC §17014 on Chico-to-Reno, Chico-to-Boise, and Chico-to-Texas departures route through Sacramento. Notice of Proposed Assessment protests under R&TC §19041, FTB Settlement Bureau review under §19443, and walk-in services for individual taxpayers happen there. Most resolution work for North State clients runs by phone, secure portal through MyFTB, and written submission; in-person hearings happen at Sacramento when calendaring requires it. Verify current public hours through ftb.ca.gov/help/contact/locations.html before any walk-in trip.

The United States Tax Court holds trial sessions for North State petitioners at the Robert T. Matsui Federal Courthouse, 501 I Street, Sacramento CA 95814 — approximately 90 miles south of Chico on Highway 99 and Highway 70. A Chico petitioner designates 'Sacramento, California' as the place of trial on the petition under Tax Court Rule 140. The court also calendars sessions in San Francisco at the Phillip Burton Federal Building (450 Golden Gate Avenue) and Fresno at the Robert E. Coyle Federal Courthouse (2500 Tulare Street); Chico petitioners may designate either where docket timing or witness logistics favor those venues. The petition itself is filed electronically through DAWSON or by mail to the Tax Court in Washington, D.C. The 90-day petition window under IRC §6213(a) is jurisdictional and the Tax Court cannot extend it.

Butte County sits inside the U.S. District Court for the Eastern District of California (EDCA), with the primary courthouse at the Robert T. Matsui Federal Courthouse, 501 I Street, Suite 4-200, Sacramento CA 95814. Federal refund suits under 28 USC §1346(a)(1), federal criminal-tax matters under 26 USC §7201-§7212, and federal civil-tax injunctive matters out of Chico file in Sacramento. EDCA also maintains a Fresno division for the southern San Joaquin Valley; Chico cases route to Sacramento. Appeals go to the Ninth Circuit Court of Appeals in San Francisco. The California Court of Appeal, Third Appellate District at 914 Capitol Mall, Sacramento, hears appeals from Butte County Superior Court — including R&TC §19382 / §19385 refund-suit appeals from the FTB. The California Supreme Court hears further review by certiorari from the Third District. The 3rd DCA covers a large North State swath including Butte, Glenn, Lassen, Modoc, Plumas, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Yolo, and Yuba counties, among others.

For non-filers, the IRS generally accepts six years of back returns under IRM 1.2.1.6.18 as the compliance bar. The FTB looks back four years by default under R&TC §19057, longer for non-filed or fraud years. Estimated payments toward unfiled years protect the §6511 refund-claim window — refunds older than three years from filing or two from payment (whichever is later) are forfeited. The sequence for a Chico taxpayer is: (1) pull IRS Account Transcripts and Wage-and-Income Transcripts across all open years to confirm what the IRS already knows; (2) pull FTB MyFTB records to confirm what the FTB has; (3) prepare and file the six federal years and at least the four California years, with the §165(i) Camp Fire prior-year election analysis baked in if those years are still open; (4) once compliance is current, request a Collection Information Statement-based resolution sized to the facts. Filing the missing returns first is what unlocks every relief option. The §7201 felony exposure for willful failure to file rises with the count of unfiled years and the dollar size of the implied liability — including the §139 / §165(i) / §1033 Camp Fire benefits the taxpayer may have foregone by not filing.