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Changes to 2003 Forms

2003 Updates to Publication 1061

Revision Date: 06/03/2004

Revision Details: FTB Pub. 1061, Corporations Filing a Combined Report Booklet, Pages 3, 6, 10-13, 16, 17, 20, 22-26

In Farmer Bros. Co. 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 statue that is held to be unconstitutional is invalid and unenforceable. Therefore, the deduction is not available.

  • Page 3, first column, should add the following new paragraph above the Introduction

It should read:

What's New

In Farmer Bros. Co. v. Franchise Tax Board (2003) 108 Call 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 statue that is held to be unconstitutional is invalid and unenforceable. Therefore, the deduction is not available.

  • Page 6, second column, under Dividends

It should read:

... are not eliminated from the income of the recipient corporation (although such dividends may be subject to deduction under R&TC Section 24411).

  • Page 10, Example of Combined report Computations and Schedules, 3rd column, 2nd paragraph

It should read:

...$150,000 from nonbusiness investments and a $30,000 partnership loss from a nonunitary oil and gas limited partnership...

  • Page 11, Example of Combined report Computations and Schedules; 1st column, under Corporation D

It should read:

...Because Corporation D's return is due on December 15...

  • 3rd column, under Schedule 5

It should read:

...The aggregate tax amount that would be reported on the group return would be $31,133 ($23,262 for Corporation A, and $7,871 for Corporation E).

  • Page 12, Schedule1, 1-A, column CORP B

It should read:

Reference to footnote (1) has been moved from Depreciation line to Interest line

  • Page 13, Schedule1, 1-B

It should read:

Other dividends (See 24402) line has been removed.

CORP A, TOTAL BEFORE ADJUSTMENT, and DEFERRED INCOME and RESTORATION ADJUSTMENTS column amounts have been revised for the following lines:

  • Total Deductions
  • NET INCOME AFTER STATE ADJUSTMENTS
  • Dividends not deducted above
  • Page 17, Schedule 4

It should read:

Line 9c, Other dividends deducted ((R&TC Sections 24402 and 24410), has been removed.

Amounts have been revised for lines 10, 11, and 12.

  • Page 23, Schedule 5

It should read:

CORP A column amounts have been revised for the following lines:

  • Dividends
  • Total
  • Net income before contributions adjustments
  • Net income for tax purposes
  • Franchise Tax (8.84%...
  • Alternative Minimum Tax (from...
  • TOTAL TAX
  • Page 24, Schedule 6, 6-A

It should read:

CORP A, TOTAL BEFORE ADJUSTMENT, and COMBINED column amounts have been revised for the following lines:

  • 1 NET INCOME AFTER STATE ADJUSTMENTS
  • 3 TOTAL AMTI
  • 4a Dividends
  • 8 Dividends
  • 10 PRE-ADJUSTED AMTI
  • 12 ALTERNATIVE MINIMUM TAXABLE INCOME
  • Page 25, Schedule 6, 6-B

It should read:

CORP A, TOTAL BEFORE ADJUSTMENT, and COMBINED column amounts have been revised for the following lines:

  • 1 TOTAL AMTI (from...
  • 3 Pre-apportioned ACE
  • 4a Dividends
  • 8 Dividends
  • 10 ADJUSTED CURRENT EARNINGS
  • 11 PRE-ADJUSTED AMTI (Schedule...
  • Page 26, Schedule 6, 6-C

It should read:

CORP A column amounts have been revised for the following lines:

  • CORP A
  • AMTI ADJUSTED FOR EACH CORP...
  • Less exemption...
  • AMTI subject to tax
  • Tentative minimum tax...
  • Less regular franchise or...
  • ALTERNATIVE MINIMUM TAX

The revised internet version is available for download.

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