Section 24436 - Illegal Activities-Denial of DeductionsAny taxpayer who engages in any illegal activities as defined in Chapters 9, 10 and 10.5 of Title IX of Part 1 of the Penal Code shall be denied all deductions from gross income attributable to such activities. Illegal activities include, but are not limited to the following:
(a) Conducting a lottery, preparing a lottery, selling or disposing of lottery tickets, aiding the conduct of a lottery, keeping a lottery office, insuring or offering to insure lottery tickets, letting or permitting the use of a building or vessel for lottery purposes, dealing, playing or carrying on or conducting any game of faro, monte, roulette, lansquenet, rouge-et-noir, rondo, tan, fan-tan, stud-horse poker, seven-and-a-half, twenty-one, hokey-pokey, or any banking or percentage game, possession or maintenance of any slot or card machine, contrivance, appliance or mechanical device, upon the result of action of which money or other valuable thing is staked or hazarded, any card dice, or any dice having more than six faces or bases each, upon the result of action of which money or any other valuable thing is staked or hazarded, knowingly permitting any of the above games to be played, conducted or dealt in any house owned or rented by any taxpayer.(b) Pool-selling or book-making; stake-holding or registering of bets or wagers upon the result of any trial or contest of skill, speed or power of man or beast or permitting the use of any controlled property for any of the purposes above mentioned; laying, making, offering or accepting any bet or bets upon the result of a contest of skill, speed or power of endurance of man or beast.(c) Touting or attempting or conspiring to commit touting. The same rule applies in respect of any deduction attributable to any other business activity which is connected or associated with, or tends to promote or further any illegal activities. Every business activity which is carried on by any taxpayer, or by another under its direction or control, on the same premises where the illegal activities are conducted, tends to promote or further such illegal activities.
The same rule further applies to every business activity carried on by any taxpayer or by another under its direction or control, on the premises other than where the illegal activities are conducted and which tends to promote or further such illegal activities.
On and after May 3, 1951, all deductions from gross income attributable to such illegal activities shall be denied.
Cal. Code Regs. Tit. 18, § 24436
1. Renumbered from Reg. 24203 in Subchapter 3 (Register 71, No. 2).1. Renumbered from Reg. 24203 in Subchapter 3 (Register 71, No. 2).