California Business Form Help
The following information has been provided to assist in the preparation of California Business Returns.
California Corporation Franchise or Income Tax Return help. CrossLink supports the Federal Reconciliation Method of figuring California taxable income.
Provide the California Corporation Number and the California Secretary of State File Number (if any) for the filer. If the mailing address includes a private mailbox number or a suite, room, floor, building, or unit number designation, enter this information in the appropriate box and select the applicable code.
Check the appropriate box indicating whether this corporation is financial or nonfinancial in nature to ensure the correct tax rate is applied. If the corporation is subject to the franchise tax, as outlined in the three-part checklist, select the correct box. If the corporation is a domestic qualified inactive gold or quicksilver mining operation that qualifies for the reduced franchise tax, indicate this in the applicable checkbox. If this corporation is otherwise exempt from California franchise tax, check the box and select the correct type of reason.
Most of the California state additions will calculate automatically based on information provided on the federal return and the Income Statement. Adjustments resulting from Form 3885, Schedule D, Schedule D-1, and Schedule H will all flow here when the appropriate forms have been completed.
Additions to Income:
Direct entry is required for any adjustments relating to net income from corporations not included in the federal consolidated return. A worksheet is available to list any other additions to income.
Subtractions from Income:
Direct entry is available for EZ, LAMBRA, and TTA business expense or EZ net interest deduction. Worksheets are available to calculate the allowable deduction for charitable contributions and to list any other subtractions from income. Note that California rules allow the exclusion of interest on obligations of the U.S. Government or California only if the corporation is subject to income tax instead of franchise tax.
If this corporation has operations in multiple states, complete Schedule R to determine California net income or loss for state purposes. If utilizing an NOL carryover deduction or disaster loss carryover deduction from prior years, complete Form 3805Q and the information will flow to this section. Pierce’s disease, EZ, LARZ, TTA, and LAMBRA NOL carryover deductions can be directly entered.
Complete Form 3527 if this corporation is eligible for the New Jobs Credit and the applicable information will flow to this section. Any additional credits can be claimed on Schedule P. Alternative minimum tax will also flow to this section from Schedule P.
Payments of estimated tax, amounts paid with an extension, and prior year overpayment credited to the state of California will flow from the State Taxes Paid Worksheet on the Income Statement when the state ID entered is “CA”. Any extension paid on Form 3539 will supersede the amount entered on the State Taxes Paid Worksheet and will flow to the line showing amounts paid with extension.
Any amounts withheld for this corporation and listed on Form 592-B will flow to this section. Override to include any amounts withheld on Form 593.
A worksheet is available to figure any use tax due to California. Amounts recorded in Schedule J will be reflected in the total tax due or overpayment. If an overpayment is present, any or all of it can be applied to the next year’s tax. Penalties for underpayment of estimated tax will carry from Form 5806 to this section and be reflected in either the total tax due or overpayment.
Banking information can be entered in this section for both balance due and refunds ONLY if filing the California return electronically. If filing a paper return, only information for the direct deposit of refunds should be entered in this section. Regardless of whether the return will be filed electronically, the banking information will print only if there is a refund present in the return that can be direct deposited. Checking the box to use the banking information provided on the Client Data Screen will transfer that banking information to this section and replace any information already present.
Note: any banking information here will be reflected on Form 8453-C, and any banking information entered on Form 8453-C will be reflected here. The two forms cannot reflect different banking information.
Answer all applicable questions on Schedule Q. Information from the Client Data Screen and the federal return will flow to the applicable fields in this section.
Enter the nature of the tax, the taxing authority, the total tax, and the amount of the tax that is not deductible for California purposes. Check the box in Column A for each line reported where the tax listed is based on income or profits.
Schedule F will calculate from the income and deductions listed on Form 1120, page 1. The specific deduction allowed under R&TC Section 23701r or 23701t should be directly entered if applicable.
Schedule J should be used to report any add-on taxes and recaptures other than franchise and income taxes that should be included on the return. The total of Schedule J will flow to the Refund or Amount Due section of the return and adjust the balance due or refund accordingly.
Schedule V is calculated from federal Form 1125-A. If the corporation has a California seller’s permit number, enter it in the available field.
If the corporation’s total receipts and total assets at the end of the taxable year are less than $250,000, the corporation is not required to complete Schedule L, M-1, or M-2. If these requirements are met, these schedules will clear unless the corporation wishes to voluntarily complete them. If filing the schedules voluntarily, select the box at the top of Schedule L to force the values into the fields. These schedules will automatically complete if the exception is not met.
For corporations that file federal Schedule M-3, attach a copy to the submitted return in addition to completing Schedule M-1.
Schedule M-1 will automatically adjust to accommodate most items entered on the State Adjustments section of Form 100; overriding may be required to ensure a balanced Schedule M-1.
Data entered on federal Schedule D will flow to California Schedule D. Adjustments can be made here and will be reflected on the State Adjustments section of Form 100. Applicable data from sale of capital assets reported on California Forms 3805E and D-1 will flow to California Schedule D as well.
Use Form 100X to amend a Form 100, California Corporation Franchise or Income Tax Return.
Answer all applicable questions on Form 100X. Income and deductions as originally reported will appear in Column A, and any adjustments can be recorded in Column B. Any adjustments made should be explained in the Explanation of Changes section.
Form 100X is not eligible for electronic filing. If amending a Form 100, print this form out and submit it as a paper return.
Use California Schedule H to figure the allowable elimination or deduction of dividend income under R&TC Section 25106 or R&TC Section 24410. Worksheets are available to list more than three excludible/deductible items under each section.
Use California Schedule P to figure the alternative minimum tax for California purposes, and to figure allowable credits against California tax.
Use this section to figure any applicable California alternative minimum tax. Depreciation and amortization adjustments are figured based on information entered on the Asset Worksheet. Use the attached worksheet to determine Adjusted Current Earnings. If Schedule R is used, the ACE will be adjusted accordingly.
Use this section to report credits for which the corporation is eligible. Press F3 on the “Code” fields to bring up a list of available credits for the tax year. Any credit that has a predefined line can be directly entered.
Note that amounts figured on Form 3527 will automatically populate the first line on Section B and replace anything in these fields. If using Form 3527, be sure to list any additional applicable credits starting on the second line.
If AMT was calculated on the prior year return, enter the total AMT from the prior year’s Schedule P after any applicable credits were taken. If last year’s return showed a credit for prior year AMT carryover in Section A, enter that amount in this section as well.
California S Corporation Franchise or Income Tax Return help. CrossLink supports the Federal Reconciliation Method of figuring California taxable income.
Provide the California Corporation Number and the California Secretary of State File Number (if any) for the filer. If the mailing address includes a private mailbox number or a suite, room, floor, building, or unit number designation, enter this information in the appropriate box and select the applicable code.
Check the appropriate box indicating whether this S corporation is financial or nonfinancial in nature to ensure the correct tax rate is applied. If the corporation is subject to the franchise tax, as outlined in the three-part checklist, select the correct box. If this corporation is otherwise exempt from California franchise tax, check the box and select the correct type of reason.
Most of the California state additions will calculate automatically based on information provided on the federal return and the Income Statement. Adjustments resulting from Schedule B, Schedule D, Schedule D-1, and Schedule H will all flow here when the appropriate forms have been completed.
Additions to Income:
A worksheet is available to list any other additions to income.
Subtractions from Income:
Direct entry is available for EZ, LAMBRA, and TTA business expense or EZ net interest deduction. Worksheets are available to calculate the allowable deduction for charitable contributions and to list any other subtractions from income. Note that California rules allow the exclusion of interest on obligations of the U.S. Government or California only if the corporation is subject to income tax instead of franchise tax.
If this corporation has operations in multiple states, complete Schedule R to determine California net income or loss for state purposes. If utilizing an NOL carryover deduction or disaster loss carryover deduction from prior years, complete Form 3805Q and the information will flow to this section. Pierce’s disease, EZ, LARZ, TTA, and LAMBRA NOL carryover deductions can be directly entered. The deduction allowed under R&TC Section 23802(e) can also be directly entered.
Complete Form 3527 if this corporation is eligible for the New Jobs Credit and the applicable information will flow to this section. Any additional credits can be claimed on Schedule C. Complete Schedule D to determine any built-in gains tax. Link to the available worksheet to figure any applicable tax on excess net passive income.
Payments of estimated tax, amounts paid with an extension, and prior year overpayment credited to the state of California will flow from the State Taxes Paid Worksheet on the Income Statement when the state ID entered is “CA”. Any extension paid on Form 3539 will supersede the amount entered on the State Taxes Paid Worksheet and will flow to the line showing amounts paid with extension.
Any amounts withheld for this corporation and listed on Form 592-B will flow to this section. Override to include any amounts withheld on Form 593.
A worksheet is available to figure any use tax due to California. Amounts recorded in Schedule J will be reflected in the total tax due or overpayment. If an overpayment is present, any or all of it can be applied to the next year’s tax. Penalties for underpayment of estimated tax will carry from Form 5806 to this section and be reflected in either the total tax due or overpayment.
Banking information can be entered in this section for both balance due and refunds ONLY if filing the California return electronically. If filing a paper return, only information for the direct deposit of refunds should be entered in this section. Regardless of whether the return will be filed electronically, the banking information will print only if there is a refund present in the return that can be direct deposited. Checking the box to use the banking information provided on the Client Data Screen will transfer that banking information to this section and replace any information already present.
Note: any banking information here will be reflected on Form 8453-C, and any banking information entered on Form 8453-C will be reflected here. The two forms cannot reflect different banking information.
Answer all applicable questions on Schedule Q. Information from the Client Data Screen and the federal return will flow to the applicable fields in this section.
Schedule J should be used to report any add-on taxes and recaptures other than franchise and income taxes that should be included on the return. The total of Schedule J will flow to the Refund or Amount Due section of the return and adjust the balance due or refund accordingly.
Schedule F will calculate from the income and deductions listed on Form 1120S, page 1.
If the S corporation’s total receipts and total assets at the end of the taxable year are less than $250,000, the corporation is not required to complete Schedule L or M-1. If these requirements are met, these schedules will clear unless the S corporation wishes to voluntarily complete them. If filing the schedules voluntarily, select the box at the top of Schedule L to force the values into the fields. These schedules will automatically complete if the exception is not met.
For corporations that file federal Schedule M-3, attach a copy to the submitted return in addition to completing Schedule M-1.
Schedule M-1 will automatically adjust to accommodate most items entered on the State Adjustments section of Form 100S; overriding may be required to ensure a balanced Schedule M-1.
The computation of the California Accumulated Adjustments Account (AAA) and Other Adjustments Account (OAA) is similar to the federal computation applying California amounts. Get the instructions for federal Form 1120S and IRC Section 1368 for more information. Worksheets are available to itemize other additions or reductions to the accumulated adjustments account.
Schedule V is calculated from federal Form 1125-A. If the S corporation has a California seller’s permit number, enter it in the available field.
Schedule K should be used to reconcile items listed on federal Schedule K to California amounts. A worksheet is available to itemize adjustments to ordinary income or loss and net rental real estate income or loss. Adjustments for amortization/depreciation and state tax adjustments will calculate automatically. Credits claimed on the return will flow to the Credits section of Schedule K to be distributed to the respective shareholders.
The analysis will complete based on the information entered on each Schedule K-1 (Form 565).
Use Schedule B (Form 100S) to reconcile depreciation and amortization claimed on the federal return to California rules. A worksheet is available from line 5 to determine the Section 179 expense for California.
To carry information to form FTB 3885, complete the state column for each asset on the asset worksheet using California rules.
California differences:
(1) The first-year depreciation deduction allowed for new luxury autos or certain passenger automobiles acquired and placed in service in 2010 through 2012.
(2) The IRC Section 613A(d)(4) relating to the exclusion of certain refiners. See R&TC Section 24831.3 for more information.
(3) The IRC Section 168(k) relating to the 50% bonus depreciation deduction for assets acquired in tax years 2008 through 2012 and placed in service before 2013 (or before 2014 for certain qualifying property). For property acquired and placed in service after Sept. 8, 2010, and before 2012 (before 2013 in the case of certain qualifying property), the bonus depreciation deduction is 100%.
(4) The enhanced IRC Section 179 expensing election for assets placed in service in 2010 through 2012 taxable year.
(5) The federal changes regarding treatment of distribution costs and treatment of participations and residuals for purpose of computing depreciation under the income forecast method.
(6) For years prior to 1987, California did not allow depreciation under the federal accelerated cost recovery system (ACRS). California also does not allow depreciation under modified accelerated cost recovery system (MACRS) for assets placed in service while the S corporation was taxed as a C corporation. This is a change of accounting method for which the taxpayer must request the Franchise Tax Board’s (FTB’s) consent.
(7) The additional first-year depreciation of certain qualified property placed in service after October 3, 2008, and the election to claim additional research and minimum tax credits in lieu of claiming the bonus depreciation.
(8) The accelerated recovery period for depreciation of smart meters and smart grid systems.
California conforms to the following:
(1) The sport utility vehicles (SUVs) and minivans built on a truck chassis are included in the definition of trucks and vans when applying the 6,000 pound gross weight limit. See federal Rev. Proc. 2003-75 for more information.
(2) The useful life of seven years of any Alaska natural gas pipeline property.
(3) The income forecast method and the exemption of limits on depreciation for incremental costs of clean fuel vehicles.
(4) The federal Class Life Asset Depreciation Range (ADR) System provisions, which specifies a useful life for various types of property. However, California law does not allow the corporation to choose a depreciation period that varies from the specified asset guideline system.
(5) Under Cal. Code Regs., tit. 18, section 24349(l), California conforms to the federal useful lives of property.
Data entered on federal Schedule D will flow to California Schedule D, Section B. Adjustments can be made here and will be reflected on the State Adjustments section of Form 100S. Applicable data from sale of capital assets reported on California Forms 3805E and D-1 will flow to California Schedule D as well.
If the S corporation is subject to the tax on built-in gains, itemize gains or losses applicable to California in Section A, part III. Transactions listed on federal Schedule D will flow to this section if the agency code is “CA”. A worksheet is also available to determine the taxable income for figuring the tax.
Use California Schedule H to figure the allowable elimination or deduction of dividend income under R&TC Section 25106, R&TC Section 24411, or R&TC Section 24410. Worksheets are available to list more than three excludible/deductible items under each section.
Complete a Schedule K-1 (Form 100S) for each shareholder of the S corporation. Information will flow to each K-1 from the corresponding federal Schedule K-1.
Adjustments in column C will calculate based on adjustments entered on Schedule K of Form 100S. California source amounts will reflect the California apportionment ratio from Schedule R; if the shareholder is a California resident, the full amount of column D will appear in column E; if the shareholder is a nonresident, column D will be apportioned to column E.
Complete the “Other Shareholder Information” section and “Apportioning Unitary Shareholders” sections if applicable.
Use California Schedule QS to provide information about qualified subchapter S subsidiaries that are associated with the taxpayer filing Form 100S.
California Partnership Return of Income help. LLCs classified as partnerships must NOT use Form 565; instead they must use Form 568.
Provide the California Secretary of State File Number (if any) and the date that business started in California for the filer. If the mailing address includes a private mailbox number or a suite, room, floor, building, or unit number designation, enter this information in the appropriate box and select the applicable code.
If the partnership is subject to the annual tax, as outlined in the three-part checklist, select the correct box. The annual tax will only calculate for those entities whose organizational structure mandates payment of the annual tax (Limited Partnerships, Limited Liability Partnerships, and REMICs).
Most of the California income and deductions will calculate automatically based on information provided on the federal return and the Income Statement. Adjustments resulting from Schedule D-1, Schedule F (1040), and Form 3885P will all flow here when the appropriate forms have been completed.
Amounts paid with an extension will flow from the State Taxes Paid Worksheet on the Income Statement when the state ID entered is “CA”. Any extension paid on Form 3538 will supersede the amount entered on the State Taxes Paid Worksheet and will flow to the line showing amounts paid with extension.
Any amounts withheld for this partnership and listed on Form 592-B will flow to this section. Override to include any amounts withheld on Form 593.
A worksheet is available to figure any use tax due to California. Directly enter any penalties and interest in this section and it will be reflected in either the total tax due or refund.
Schedule A is calculated entirely from federal Form 1125-A. If any adjustments need to be made, override the applicable lines.
Answer all applicable questions in this section. Information from the Client Data Screen and the federal return will flow to the applicable fields.
Schedule K should be used to reconcile items listed on federal Schedule K to California amounts. A worksheet is available to itemize adjustments to ordinary income or loss and net rental real estate income or loss. Adjustments for amortization/depreciation and state tax adjustments will calculate automatically. Credits claimed on the return will flow to the Credits section of Schedule K to be distributed to the respective partners.
If (1) the partnership’s total receipts for the taxable year are less than $250,000, (2) the partnership’s total assets at the end of the taxable year are less than $1 million, AND (3) Schedules K-1 (Form 1065) are filed with the return and furnished on or before the due date (including extensions) for the partnership return, the partnership is not required to complete Schedule L, M-1, and M-2, or Item G on Form 565, or Item J on Schedule K-1 (Form 565). If these requirements are met, these schedules will clear unless the partnership wishes to voluntarily complete them. If filing the schedules voluntarily, select the box at the top of Schedule L to force the values into the fields. These schedules will automatically complete if the exception is not met.
Schedule M-1 will automatically adjust to accommodate most items entered on the State Adjustments section of Form 565; overriding may be required to ensure a balanced Schedule M-1.
Data entered on federal Schedule D will flow to California Schedule D. Adjustments can be made here and will be reflected on the Form 565. Applicable data from sale of capital assets reported on California Forms 3805E and D-1 will flow to California Schedule D as well.
Use Schedule EO, Pass-Through Entity Ownership, to report all partnership, limited liability company (LLC) taxable as partnerships, and disregarded entity ownership interests held by the taxpayer.
Complete a Schedule K-1 (Form 565) for each partner of the partnership. Information will flow to each K-1 from the corresponding federal Schedule K-1.
Adjustments in column C will calculate based on adjustments entered on Schedule K of Form 565. California source amounts will reflect the California apportionment ratio from Schedule R; if the partner is a California resident, the full amount of column D will appear in column E; if the partner is a nonresident, column D will be apportioned to column E.
California Limited Liability Company Return of Income help. LLCs classified as partnerships MUST use Form 568; they are not allowed to use Form 565.
Provide the California Secretary of State File Number (if any) and the date business started in California for the filer. If the mailing address includes a private mailbox number or a suite, room, floor, building, or unit number designation, enter this information in the appropriate box and select the applicable code.
The California LLC Income Worksheet (Schedule IW) will automatically load into the return and can be accessed from Line 1 of this section. Most of Schedule IW will calculate based on information in the federal return and information entered on the Multistate Apportionment Information form. Some information will require direct entry.
The Limited Liability Company fee will calculate based on the total income figured on Schedule IW. The nonconsenting nonresident members’ tax figured on Schedule T will flow to this section as well.
Any overpayments from last year, amounts paid with the prior year’s FTB 3522 and FTB 3536, and amounts paid with an extension will flow from the State Taxes Paid Worksheet on the Income Statement when the state ID entered is “CA”. Any extension paid on Form 3537 will supersede the amount entered on the State Taxes Paid Worksheet and will flow to the line showing amounts paid with extension.
Any amounts withheld for this LLC and listed on Form 592-B will flow to this section. Override to include any amounts withheld on Form 593.
CrossLink does not currently support filing of Form 568 with Schedule C (1040) disregarded entities. This section should be left blank for non-SMLLC filers.
Answer all applicable questions in this section. Information from the Client Data Screen and the federal return will flow to the applicable fields.
Schedule A is calculated entirely from federal Form 1125-A. If any adjustments need to be made, override the applicable lines.
Most of the California income and deductions will calculate automatically based on information provided on the federal return and the Income Statement. Adjustments resulting from Schedule D-1, Schedule F (1040), and Form 3885L will all flow here when the appropriate forms have been completed.
Schedule T will populate with the information of each nonresident LLC member who has not signed Form 3832, Limited Liability Company Nonresident Members’ Consent. Check the box on Schedule K-1 (568) for each nonresident member who has not signed Form 3832, and the appropriate information will calculate to Schedule T. Indicate any amounts withheld for the nonconsenting member in column (F).
Schedule K should be used to reconcile items listed on federal Schedule K to California amounts. A worksheet is available to itemize adjustments to ordinary income or loss and net rental real estate income or loss. Adjustments for amortization/depreciation and state tax adjustments will calculate automatically. Credits claimed on the return will flow to the Credits section of Schedule K to be distributed to the respective members.
If Question 6a through Question 6c on federal Form 1065, Schedule B, are all answered “Yes” and the LLC has 10 or fewer members, the LLC is not required to complete Schedules L, M-1, M-2, or Item G on Side 1 of Form 568 or Item I on Schedule K-1 (568). If these requirements are met, these schedules will clear unless the partnership wishes to voluntarily complete them. If filing the schedules voluntarily, select the box at the top of Schedule L to force the values into the fields. These schedules will automatically complete if the exception is not met.
Schedule M-1 will automatically adjust to accommodate most items entered on the California Adjustments section of Schedule K; overriding may be required to ensure a balanced Schedule M-1.
Complete Schedule O if “initial return” is checked in Question H of Form 568.
Schedule O is a summary of the entities liquidated to capitalize the LLC and the amount of gains recognized in such liquidations.
Include the complete names and identification numbers of all entities liquidated. Check the appropriate box for the type of entity liquidated. Include the amount of liquidation gains recognized in order to capitalize the LLC.
Data entered on federal Schedule D will flow to California Schedule D. Adjustments can be made here and will be reflected on the Form 568. Applicable data from sale of capital assets reported on California Forms 3805E and D-1 will flow to California Schedule D as well.
Use Schedule EO, Pass-Through Entity Ownership, to report all partnership, limited liability company (LLC) taxable as partnerships, and disregarded entity ownership interests held by the LLC.
Complete a Schedule K-1 (Form 568) for each member of the LLC. Information will flow to each K-1 from the corresponding federal Schedule K-1.
Check the box indicating the member has not signed Form 3832 to transfer information to Schedule T of Form 568 and include the member’s share of income in determining tax due by the LLC.
Adjustments in column C will calculate based on adjustments entered on Schedule K of Form 568. California source amounts will reflect the California apportionment ratio from Schedule R; if the member is a California resident, the full amount of column D will appear in column E; if the member is a nonresident, column D will be apportioned to column E.
Use Form 100-ES to figure and pay estimated tax for a corporation. Estimated tax is the amount of tax the corporation expects to owe for the taxable year. If the business entity does not owe any tax, do not mail this form with a zero balance.
Use Worksheet II or Worksheet III to figure any reduced installments due as a result of the use of the Annualized Current Year method or the Annualized Seasonal Income method.
Use California Schedule D-1 to report the sale of business property during the taxable year. Schedule D-1 will automatically load into the return if federal Form 4797 is used. Any adjustments for California purposes can be made here, and any differences will be reflected in the State Adjustments section of Form 100.
CA Schedule F is a copy of federal Schedule F (Form 1040) that should be used to determine profit or loss from farming under California rules. Adjustments for depreciation and amortization will automatically calculate for each farm property based on information entered on the asset worksheets. Any other fields can be adjusted to reflect California rules.
Use California Schedule R to allocate and apportion income to California. Select “Yes” to the question on Schedule Q of Form 100/100S/565 relating to apportionment of income to automatically load Schedule R. Be sure to complete the Multistate Apportionment Information form in the General section of the return.
List nonbusiness income or loss in this section. Dividends, interest, and royalties entered on the State Sales Factor Information worksheet with an income type code of “16”, “17”, or “19” will flow here automatically. Any dividends, interest, or royalties listed on the State Sales Factor Information worksheet with a code of “06”, “07”, or “09” will be apportioned on Schedule R-1.
Information from Schedule R-3 and Schedule R-4 will total in this section. Directly enter any miscellaneous nonbusiness income or loss, and the gain or loss from the sale of a nonbusiness interest.
List business income that should be apportioned to California. Business interest offset from Schedule R-5 will total to this section.
Allocate any of the nonbusiness income or loss listed earlier to California as appropriate. Interest, dividends, and royalties listed on the State Sales Factor Information worksheet with an agency code of “CA” and an income type code of “16”,”17”, or “19” will flow to this line.
Information from Schedule R-3 and Schedule R-4 applicable to California will total to this section.
Directly enter any post apportioned and allocated amounts from capital gain (loss) netting. Contributions adjustment from Schedule R-6 will flow to this line. The net income or loss for California purposes will flow to the correct line on the main California form.
Select “Yes” or “No” to determine whether the entity will complete the standard method of apportionment or the alternate Single-Sales Factor method of apportionment. Information will flow from the Multistate Apportionment Information form to the appropriate section of Schedule R-1. Total amounts will flow to column (a), and items designated with an agency code of “CA” will flow to column (b).
Amounts designated as nonbusiness income on the State Sales Factor Information worksheet will not be included in the total amounts reported on column (a). Amounts designated as nonbusiness income allocable to California will not be included in the total amounts reported on column (b). If any adjustments need to be made, override the appropriate fields.
If the entity is qualified to use the single weight sales ratio as part of the standard method of apportionment, check the applicable box.
Answer all applicable questions on Schedule R-2. Provide an explanation where the form indicates one is necessary. The nature and location of California business activities must be provided.
If the entity had net income or loss from the rental of nonbusiness property, show on Schedule R-3 the gross income and total deductions applicable to such nonbusiness property. Separate according to whether the property was within California or outside of California.
If the entity sold nonbusiness assets during the taxable year, itemize the transactions in Schedule R-4. Information recorded on the State Sales Factor Information worksheet with a code of “21”, “23”, or “25” will carry to the first line of Schedule R-4. Separate any additional information reported here according to whether the transaction involved real estate and tangible assets, or intangible assets. In each category, further separate the information according to whether the transaction was allocable to California or some other jurisdiction.
If Schedule R-1 is required and nonbusiness dividends or interest was reported, complete Schedule R-5 to determine the interest offset to report. The amount of business dividends will calculate based on total dividends less nonbusiness dividends reported earlier. If dividends were deducted on Schedule H, indicate the portion of deducted dividends attributable to business dividend income to result in net business dividend income.
If deducting charitable contributions, enter the total contributions paid, including any amounts carried over from prior years. If dividends were deducted on Schedule H, indicate the portion of deducted dividends attributable to nonbusiness dividend income. The total contributions adjustment will flow to the Net Income (Loss) for California.
Use Schedule R-7 to elect to file a Unitary Taxpayers’ Group Return. List all applicable information each section. Note that use of Schedule R-7 will prevent the return from being filed electronically.
Use FTB 3520, Power of Attorney Declaration (POA), to grant authority or to receive confidential tax information, or to represent the taxpayer before the Franchise Tax Board.
This form can also authorize an individual to receive information from FTB’s nontax programs, such as Court-Ordered Debt Collections and Vehicle Registration Collections.
You can now authorize your representative to represent you for all Franchise Tax Board (FTB) matters. This authority automatically expires four years from the date you sign this POA or if you file a new POA that revokes this authorization.
Use form FTB 3523, Research Credit, to compute and claim the research credit for increasing the research activities of a trade or business. Also use this form to claim pass-through research credits received from S corporations, estates, trusts, partnerships, and limited liability companies (LLCs).
The credit is 15% of the excess of qualified research expenses for the taxable year over the base period research expenses. Corporations are allowed the 15% credit amount plus credit for 24% of the basic research payments.
Instead of the regular credit, taxpayers may elect the alternative incremental credit in which taxpayers are assigned a smaller three-tiered fixed-base percentage and a reduced three-tiered credit rate (1.49%, 1.98%, and 2.48%).
To claim the California research credit, you do not have to claim the federal research credit. California conforms to the federal definition for qualified research expenses under IRC Section 41(b).
IRC Section 41(b) states that the “qualified research expense” means the sum of the following amounts which are paid or incurred by the taxpayer during the taxable year in carrying on any trade or business of the taxpayer:
(1) In-house research expenses and contract research expenses.
(2) “Qualified services,” means engaging in qualified research, or direct supervision or direct support of research activities.
(3) “Qualified supplies,” means any tangible property other than land or improvements to, and property of a character subject to the allowance for depreciation.
(4) “Qualified wages.
Qualified research expenses do not include any amounts paid or incurred on or after January 1, 1999, for tangible personal property eligible for the exemption from sales or use tax under R&TC Section 6378. The eligible property is tangible personal property used primarily for the following:
(1) In teleproduction or other postproduction services
(2) To maintain, repair, measure, or test any property described in item 1
Get federal Form 6765, Credit for Increasing Research Activities, for additional information on the federal definition. For the full definition of “qualified research expenses,” the taxpayer should refer to IRC Section 41(b).
Use form FTB 3527, New Jobs Credit, to figure a credit for qualified employers in the amount of $3,000 for each increase in qualified full-time employees hired in the current taxable year. The $3,000 credit is prorated based on an annual full-time equivalent basis for full-time employees employed less than a full year.
Qualified employers must have employed 20 or less employees on the last day of the preceding taxable year and must have a net increase in qualified full-time employees in the current taxable year compared to the number in the preceding taxable year. If an employer first commenced doing business in California during the current taxable year, the number of qualified full-time employees for the immediately preceding taxable year would be zero.
If the LLC does not owe a fee, do not complete or mail form FTB 3536.
Make payments online using Web Pay for Businesses. After a one-time online registration, businesses can make an immediate payment or schedule payments up to a year in advance. For more information, go to ftb.ca.gov.
If the LLC owes an estimated fee, complete the worksheet to determine an estimated tax for next year. Mail the form along with the check or money order payable to the FTB by the 15th day of the 6th month of the current taxable year (fiscal year) or June 17, 2013 (calendar year).
Do not use form FTB 3536 if you are paying the 2013 $800 annual LLC tax. Instead use the 2013 form FTB 3522, LLC Tax Voucher.
If an LLC in good standing cannot file Form 568, Limited Liability Company Return of Income, by the due date, the LLC is granted an automatic six month extension.
If the tax return is filed by the 15th day of the 10th month following the close of the taxable year (fiscal year) or by October 15, 2013 (calendar year), the automatic extension will apply.
LLCs treated as partnerships should use form FTB 3537, Payment for Automatic Extension for LLCs.
Do not use form FTB 3537 if you are paying the LLC estimated fee. Instead use the 2013 form FTB 3536, Estimated Fee for LLCs. Do not use this form if you are paying the $800 annual LLC tax for the subsequent taxable year. Instead use the 2013 form FTB 3522, LLC Tax Voucher.
Only use form FTB 3538, Payment for Automatic Extension for LPs, LLPs, and REMICs, if both of the following apply:
(1) The LP, LLP, or REMIC cannot file Form 565 by the due date.
(2) Tax is owed for the current year.
If tax is not owed, there is nothing to file at this time. Do not complete or mail this form.
Use form FTB 3539, Payment for Automatic Extension of Corps and Exempt Orgs, only if both of the following apply:
(1) The corporation cannot file its California tax return by the due date.
(2) The corporation owes tax for the current taxable year.
If the corporation does not owe tax, do not file form FTB 3539. However, the corporation must file its return by the extended due date.
Use form FTB 3540, Credit Carryover and Recapture Summary, Part I, to figure a prior year credit carryover of one or more repealed credits that no longer have separate credit forms. You do not need to complete this form if you file Schedule P (100, 100W, 540, 540NR, or 541). However, complete this form if you are required to report a credit recapture on Part II.
Personal service corporations and closely held C corporations use form FTB 3802, Corporate Passive Activity Loss and Credit Limitations, to figure the amount of any passive activity loss (PAL) or credit for the current taxable year and the amount of losses and credits from passive activities allowed on the corporation’s tax return.
Form FTB 3802 closely follows federal Form 8810. In general, if the corporation completed federal Form 8810 to determine the amount of the federal PAL and credit limitations, the corporation must also complete form FTB 3802.
Using California amounts complete federal Worksheet 1 through Worksheet 6 in the instructions for federal Form 8810 to determine the amounts to enter on form FTB 3802. Keep both the California and federal worksheets for the corporation’s records.
Link to federal Worksheet 1 from the first three lines in this section. List each activity and the receipts and deductions from each activity (up to four). Information will flow from each activity listed in Worksheet 1 to the corresponding line on Worksheet 2. Any activities showing a loss from Worksheet 2 will carry to Worksheet 3 to determine the unallowed deductions and losses attributable to each loss activity. Each loss activity will then carry to Worksheet 4 to individually limit each type of deduction or loss for each activity.
Link to federal Worksheet 5 from the first two lines in this section. List each activity and the credits attributable to each activity. The information from Worksheet 5 will then flow to Worksheet 6 where credits are identified as either allowed or unallowed.
When a taxpayer disposes of an entire interest in a passive activity through a taxable transaction, the taxpayer may elect to increase the property’s basis, immediately before the disposition, by the credit amount if both of the following circumstances are met:
(1) The taxpayer was required to reduce the property’s basis by the amount of the credit.
(2) The taxpayer was not able to apply all or part of the credit against tax liability because of the limitations imposed by the passive activity rules.
See IRC Section 469(j)(9) for more information. The amount of the unallowed credit which a taxpayer may elect to add back to the basis of property for California tax purposes may differ from the amount of unallowed credit entered on federal Form 8810, Part III, because of differences in California and federal law. Complete Part III to make the election for California tax purposes.
Use form FTB 3805E, Installment Sale Income, to report income from casual sales of real or personal property other than inventory if you will receive any payments (including installment payments from sales before 1980) in a taxable year after the year of sale.
Report the ordinary income from sales of property described in IRC Sections 1245, 1250, 179, and 291 and R&TC Sections 17267.2, 17267.6, 17268, 24356.5, 24356.6, 24356.7, and 24356.8 in full in the year of sale even if no payments were received. Figure the ordinary income to be recaptured on Schedule D-1, Part III.
Generally, California law is the same as federal law concerning installment sales. Get the instructions for federal Form 6252, Installment Sale Income, for more information on how to calculate your installment sale income. You may also refer to IRC Section 453 and R&TC Sections 17551, 17560, and 24667.
Select the appropriate box that best describes the type of asset under an installment plan. Installment income from the sale of business properties will carry to Schedule D-1; installment income from the sale of capital assets will flow to Schedule D of the filing entity.
Use form FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations-Corporations, to figure the current year NOL and to limit NOL and disaster loss carryover deductions.
Prior year NOLs:
Column (a): Enter the year the loss was incurred.
Column (b): If the loss is due to a disaster, enter the disaster code from the F3 list. If the loss is from a new business or eligible small business, enter the SIC Code for the new business or eligible small business from the Standard Industrial Classification Manual. Do not enter the code from the PBA Codes chart available in the Form 100, Form 100W, or Form 100S Tax Booklets. If the loss was from an S corporation, enter the entity’s California corporation number from Schedule K-1 (100S), Shareholder’s Share of Income, Deductions, Credits, etc. If filing electronically, enter a code type describing whether the code in Column (b) is a disaster loss code; SIC code; CA corporation number; CA Secretary of State file number; CA LLC temporary number; foreign entity ID number; EIN applied for indicator; or federal EIN.
Column (c): Enter the type of NOL: General (GEN), New Business (NB), Eligible Small Business (ESB), or Disaster (DIS). For more information see the table in General Information F, Types of NOLs. If using Pierce’s disease, or an EDA NOL, get the applicable form for the NOL type.
Column (d): Enter 100% of the initial loss for the year given in column (a).
Column (e): Enter the NOL carryover amount from the prior year form FTB 3805Q, Part II, column (h).
Current year NOLs:
If a disaster loss occurs between the date of the publication and the end of the taxable year, go to ftb.ca.gov for an updated version of this form, which will include information for any subsequent disaster loss. Then follow the line 3 instruction in the form instructions.
When a multiple member LLC has one or more members who are nonresidents of California, use form FTB 3832, Limited Liability Company Nonresident Members’ Consent, to:
(1) List the names and social security numbers (SSNs), individual taxpayer identification numbers (ITINs), or federal employer identification numbers (FEINs) of all such members.
(2) Obtain the signature of each nonresident member evidencing consent to the jurisdiction of the State of California to tax that member’s distributive share of income attributable to California sources.
If a member fails to sign form FTB 3832, the LLC is required to pay tax on the member’s distributive share of income at that member’s highest marginal rate. Any amount paid by the LLC will be considered a payment made by the member.
If you e-file, attach the signed copy of form FTB 3832 to the form FTB 8453-LLC, California e-file Return Authorization for Limited Liability Companies. Retain the signed copy in the LLC Officers’ records along with a copy of the return and other associated forms, schedules, and documents, as required by the Franchise Tax Board e-file Program.
Form 3832 will populate with information from Schedule K-1 (568) for each member who is not indicated to be a resident of California.
Use form FTB 3885, Corporation Depreciation and Amortization, to calculate California depreciation and amortization deduction for corporations, including partnerships and limited liability companies (LLCs) classified as corporations.
To carry information to form FTB 3885, complete the state column for each asset on the asset worksheet using California rules.
California differences:
(1) California does not allow IRC Section 179 expense election for off-the-shelf computer software.
(2) For California purposes, the maximum IRC Section 179 expense deduction allowed is $25,000. This amount is reduced if the cost of all IRC Section 179 property placed in service during the taxable year is more than $200,000. The total IRC Section 179 expense deduction cannot exceed the corporation’s business income.
(3) California does not conform to the first-year depreciation deduction allowed for new luxury autos or certain passenger automobiles acquired and placed in service in 2010 through 2012
(4) California does not conform to the IRC Section 613A(d)(4) relating to the exclusion of certain refiners. See R&TC Section 24831.3 for more information.
(5) The IRC Section 168(k) relating to the 50% bonus depreciation deduction for assets acquired in tax years 2008 through 2012 and placed in service before 2013 (or before 2014 for certain qualifying property). For property acquired and placed in service after September 8, 2010, and before 2012 (before 2013 in the case of certain qualifying property), the bonus depreciation deduction is 100%.
(6) The additional first-year depreciation of certain qualified property placed in service after October 3, 2008, and the election to claim additional research and minimum tax credits in lieu of claiming the bonus depreciation.
(7) The accelerated recovery period for depreciation of smart meters and smart grid systems.
(8) The ten-year useful life for grapevines planted as replacements for vines subject to Phylloxera or Pierce’s disease. California law allows a useful life of five years.
(9) The federal special class life for gas station convenience stores and similar structures.
(10) The depreciation under Modified Accelerated Cost Recovery System (MACRS) for corporations, except to the extent such depreciation is passed through from a partnership or LLC classified as a partnership.
California conforms to the following:
(1) The sport utility vehicles (SUVs) and minivans built on a truck chassis are included in the definition of trucks and vans when applying the 6,000 pound gross weight limit. See federal Rev. Proc. 2003-75 for more information.
(2) The additional first-year depreciation, OR the election to expense the cost of the property as provided in IRC Section 179, with modification.
(3) The federal Class Life Asset Depreciation Range (ADR) System provisions, which specifies a useful life for various types of property. However, California law does not allow the corporation to choose a depreciation period that varies from the specified asset guideline system.
(4) Under Cal. Code Regs., tit. 18, section 24349(l), California conforms to the federal useful lives of property.
Use form FTB 3885L, Depreciation and Amortization, to calculate California depreciation and amortization deduction for LLCs.
To carry information to form FTB 3885L, complete the state column for each asset on the asset worksheet using California rules.
California differences:
(1) California does not allow IRC Section 179 expense election for off-the-shelf computer software.
(2) For California purposes, the maximum IRC Section 179 expense deduction allowed is $25,000. This amount is reduced if the cost of all IRC Section 179 property placed in service during the taxable year is more than $200,000. The total IRC Section 179 expense deduction cannot exceed the partnership’s business income.
(3) California does not conform to the first-year depreciation deduction allowed for new luxury autos or certain passenger automobiles acquired and placed in service in 2010 through 2012
(4) California does not conform to the IRC Section 613A(d)(4) relating to the exclusion of certain refiners. See R&TC Section 24831.3 for more information.
(5) The IRC Section 168(k) relating to the 50% bonus depreciation deduction for assets acquired in tax years 2008 through 2012 and placed in service before 2013 (or before 2014 for certain qualifying property). For property acquired and placed in service after September 8, 2010, and before 2012 (before 2013 in the case of certain qualifying property), the bonus depreciation deduction is 100%.
(6) The additional first-year depreciation of certain qualified property placed in service after October 3, 2008, and the election to claim additional research and minimum tax credits in lieu of claiming the bonus depreciation.
(7) The accelerated recovery period for depreciation of smart meters and smart grid systems.
(8) The ten-year useful life for grapevines planted as replacements for vines subject to Phylloxera or Pierce’s disease. California law allows a useful life of five years.
(9) The federal special class life for gas station convenience stores and similar structures.
(10) The depreciation under Modified Accelerated Cost Recovery System (MACRS) for corporations, except to the extent such depreciation is passed through from a partnership or LLC classified as a partnership.
California conforms to the following:
(1) The sport utility vehicles (SUVs) and minivans built on a truck chassis are included in the definition of trucks and vans when applying the 6,000 pound gross weight limit. See federal Rev. Proc. 2003-75 for more information.
(2) The federal Class Life Asset Depreciation Range (ADR) System provisions, which specifies a useful life for various types of property. However, California law does not allow the corporation to choose a depreciation period that varies from the specified asset guideline system.
(3) Under Cal. Code Regs., tit. 18, section 24349(l), California conforms to the federal useful lives of property.
Use form FTB 3885P, Depreciation and Amortization, to calculate California depreciation and amortization deduction for partnerships.
To carry information to form FTB 3885P, complete the state column for each asset on the asset worksheet using California rules.
California differences:
(1) California does not allow IRC Section 179 expense election for off-the-shelf computer software.
(2) For California purposes, the maximum IRC Section 179 expense deduction allowed is $25,000. This amount is reduced if the cost of all IRC Section 179 property placed in service during the taxable year is more than $200,000. The total IRC Section 179 expense deduction cannot exceed the partnership’s business income.
(3) California does not conform to the first-year depreciation deduction allowed for new luxury autos or certain passenger automobiles acquired and placed in service in 2010 through 2012
(4) California does not conform to the IRC Section 613A(d)(4) relating to the exclusion of certain refiners. See R&TC Section 24831.3 for more information.
(5) The IRC Section 168(k) relating to the 50% bonus depreciation deduction for assets acquired in tax years 2008 through 2012 and placed in service before 2013 (or before 2014 for certain qualifying property). For property acquired and placed in service after September 8, 2010, and before 2012 (before 2013 in the case of certain qualifying property), the bonus depreciation deduction is 100%.
(6) The additional first-year depreciation of certain qualified property placed in service after October 3, 2008, and the election to claim additional research and minimum tax credits in lieu of claiming the bonus depreciation.
(7) The accelerated recovery period for depreciation of smart meters and smart grid systems.
(8) The ten-year useful life for grapevines planted as replacements for vines subject to Phylloxera or Pierce’s disease. California law allows a useful life of five years.
(9) The federal special class life for gas station convenience stores and similar structures.
(10) The depreciation under Modified Accelerated Cost Recovery System (MACRS) for corporations, except to the extent such depreciation is passed through from a partnership or LLC classified as a partnership.
California conforms to the following:
(1) The sport utility vehicles (SUVs) and minivans built on a truck chassis are included in the definition of trucks and vans when applying the 6,000 pound gross weight limit. See federal Rev. Proc. 2003-75 for more information.
(2) The federal Class Life Asset Depreciation Range (ADR) System provisions, which specifies a useful life for various types of property. However, California law does not allow the corporation to choose a depreciation period that varies from the specified asset guideline system.
(3) Under Cal. Code Regs., tit. 18, section 24349(l), California conforms to the federal useful lives of property.
Use form FTB 5806 to determine if the corporation:
(1) Paid the correct estimated tax
(2) Is subject to the penalty for underpayment of estimated tax, and to figure the amount of the penalty
The underpayment will automatically calculate based on the current year’s tax and the payments listed on the State Estimated Tax Payments worksheet on the Income Statement. If any of the exceptions are met for a period, that period will not have a penalty due. To determine whether an exception is met for any period that shows an underpayment, complete Part IV: Exception Worksheets.
If any estimated payments were made during the year, the California Underpayment Computation worksheet will load and calculate. This worksheet will show how each payment is applied to each period. The total estimated penalty due will reflect the balance calculated on the California Underpayment Computation.
Use Form 8453-C to authorize the electronic transmission of Form 100 or Form 100S. If the return shows a refund, the taxpayer can elect direct deposit of the refund by checking the box on line 6 and providing banking information in Part IV. If the return shows a balance due, OR if the taxpayer wishes to schedule electronic estimated payments for next year, electronic funds withdrawal can be elected by checking the box on line 7 and providing banking information in Part IV.
Note: both direct deposit and EFW boxes can be checked if the taxpayer shows a refund but wishes to schedule estimated payments.
Only payments with a withdrawal date listed will be scheduled for electronic filing.
Enter ERO information in Part VI. If the ERO listed in Part VI matches the information on the paid preparer section of the return, the paid preparer information on Form 8453-C will clear and the “Also paid preparer” box will check.
Use Form 8453-LLC to authorize the electronic transmission of Form 568. If the return shows a balance due, OR if the taxpayer wishes to schedule electronic estimated payments for next year, electronic funds withdrawal can be elected by checking the box on line 6 and providing banking information in Part IV.
Only payments with a withdrawal date listed will be scheduled for electronic filing.
Enter ERO information in Part VI. If the ERO listed in Part VI matches the information on the paid preparer section of the return, the paid preparer information on Form 8453-LLC will clear and the “Also paid preparer” box will check.
Use Form 8453-P to authorize the electronic transmission of Form 565. If the return shows a balance due, electronic funds withdrawal can be elected by checking the box on line 5 and providing banking information in Part III.
Only payments with a withdrawal date listed will be scheduled for electronic filing.
Enter ERO information in Part V. If the ERO listed in Part V matches the information on the paid preparer section of the return, the paid preparer information on Form 8453-P will clear and the “Also paid preparer” box will check.
CA 8825 is a copy of federal Form 8825 that should be used to determine net rental real estate income or loss under California rules. Adjustments for depreciation and amortization will automatically calculate for each property based on information entered on the asset worksheets. Any other fields can be adjusted to reflect California rules.