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Changes to 2006 Form

2006 – 565 Partnership Tax Booklet

The revised Internet version is available for download as of 04/30/2008

Revision Details:

To correct the requirements for a Limited Partnership (LP) not subject to the annual tax. Currently the instructions use the word “or,” which means that the LP only has to meet one of the three conditions. If the LP meets all 3 of the conditions listed, the LP is not subject to the annual tax:

  • It is not doing business in California.
  • It is not registered in California.
  • It is not organized in California
  • 2006 – 565 Partnership Tax Booklet, page 6, column 1, Heading F–Annual Tax, Sentence 3 and page 363 of the Package X.

Previously read:

A limited partnership that is filing ONLY to report California source income and is NOT:

  • Doing business in California;
  • Registered with the SOS; or
  • Organized in California;
  • is NOT subject to the annual tax.

Revised to:

A limited partnership that is filing ONLY to report California source income and is NOT:

  • Doing business in California;
  • Registered with the SOS; and
  • Organized in California;
  • is NOT subject to the annual tax.

This will have a minor tax impact since it refers to only LP’s that are not doing business in California, not registered in California, and not organized in California.


2006 Update to 565 Booklet-Partnership Return of Income

Revision Date: 03/14/2007

Revision Details: Current instruction includes lines 3a, 3b, and 3c in the summation on line 23a; however, lines 3a and 3b should not be part of the calculation as it duplicates the net income or net loss. Due to limited space on the return, sentences have been revised in order to fit.

  • Form 565, Side 3, Schedule K, Line 23a, flat; Form 565 Booklet, pages 21 and 25; and page 358 of the 2006 Package X.

The taxpayer reports gross receipts, deductions and net income on lines 3a, 3b, and line 3c respectively. Line 23a instructs taxpayers to combine lines 1 through 7; however, taxpayers should not include line 3a and 3b in the summation. If the taxpayer is reporting positive income from other rental activities and reports gross receipts, deductions, and net income on lines 3a, 3b, and 3c and in the summation on line 23a, the taxpayer's income is overstated, resulting in additional tax. If the taxpayer is reporting a loss from other rental activities and reports the loss, deductions and net loss on line 3a, 3b, and 3c and in the summation of line 23a, the taxpayer's loss is overstated, resulting in a lower tax liability.

It should read:

Total distributive income/payment items. Combine lines 1, 2, and 3c through 7b. From the result, subtract the sum of lines 8 through 12a and 16a.

The revised internet version is available for download.

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