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Changes to 2000 Forms

2000 Updates to Schedule R

Revision Date: 04/28/2004

Revision Details: Revision of the Schedule R Form, Sides 1 & 3, Instructions, Page 1, and the 2000 Package X, Page 869.

The Internet versions of the form and instruction have been revised. These revisions are due to the California Court of Appeal ruling that found the R&TC section 24402 deduction unconstitutional, the form and instructions have been revised to reflect the court decision rules. These changes may increase or decrease the corporate tax liabilities.

  • Schedule R - Side 1, Nonbusiness Income (Loss) from all sources, line 2, line 2:

It should read:

2 Dividends included on line 1a and not deducted on Form 100W, Side 1, line 11a; or Form 100S, Side 1, line 10...

  • Schedule R - 5, Side 3, Computation of Interest Offset, lines 9 and 12

It should read:

9 Deducted dividends from Form 100, Side 1, line 10; Form 100W, Side 1, line 10 and 11a; or Form 100S ...

12 Deducted dividends from Form 100, Side 1, line 10; Form 100W, Side 1, line 10 and line 11a; or Form 100S ...

  • Schedule R-6 Contributions Adjustment, line 3

It should read:

3 Portion of dividends deductible under R&TC Section 24411 from Side 1 of the Form 100W, ...

  • Schedule R Instructions, Page 1, before General Information, add the following:

It should read:

What's Changed

Forms, Schedules, and instructions impacted by the court decision in Farmer Bros. Co. v. Franchise Tax Board (2003) have been revised to disallow any deduction taken based on R & TC Section 24402. In Farmer Bros. Col. V. Franchise Tax Board (2003) 108 Cal App 4th, 134 Cal Rptr. 2nd 390, the California Court of Appeal found that the R&TC Section 24402 deductible dividend provision discriminated against interstate commerce in violation of the Commerce Clause of the United States Constitution. R&TC Section 24402 provided for a deduction to the extent that the dividend payer was taxable in California. A statute that is held to be unconstitutional is invalid and unenforceable. Therefore, the deduction is not available.

Forms, Schedules, and instructions impacted by the court decision in Ceridian v. Franchise Tax Board (2000) have been revised to disallow any deduction taken based on Revenue and Taxation Code (R&TC 24410. In Ceridian v. Franchise Tax Board (2000) 85 Cal. App. 4th 875, the Court of Appeal has determined that R& TC Section 24410, which provides a limited deduction for dividends received from an insurance company, is unconstitutional. As such, the statute is invalid and unenforceable. Therefore, the deduction is not available.

A revised copy is available to download - April 28, 2004.

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