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Changes to 2007 Form

Updates to 2007 Schedule K-1 (100S) Instructions - Shareholders Share of Income, Deductions, Credits, etc.

The revised Internet version is available for download as of 03/06/2008.

Revision Details: The instructions are incorrect because they reference the incorrect lines of Schedule CA (540 or 540NR) and federal Form 4684.
Similar revisions were made to the 2004 - 2007 Schedule K-1 (100S) instructions.

  • Page 39 of the booklet, page 3, 1st column, Line 10b, 3rd paragraph, 6th bullet
  • Page 3, 2nd column, Line 12a, 2nd paragraph and page 100 of the Package X

Previously read:

Line 10b-Other income (loss)
The S corporation will give you a schedule that shows the California amounts to be entered on federal Form 4684, Casualties and Thefts, line 37, column (b)(i), column (b)(ii), and column (c).

Line 12a-Charitable contributions
If there is an amount on Schedule K-1 (100S), line 12a, column (c ), enter this amount on Schedule CA (540 or 540NR), line 39.

Revised to:

Line 10b-Other income (loss)
The S corporation will give you a schedule that shows the California amounts to be entered on federal Form 4684, Casualties and Thefts, line 34, column (b)(i), column (b)(ii), and column (c).

Line 12a-Charitable contributions
If there is an amount on Schedule K-I (100S), line 12a, column (c ), enter this amount on Schedule CA (540 or 540NR), line 41

Instructions incorrectly instruct taxpayer's to enter the "other income (loss)" from involuntary conversions on the incorrect line of federal Form 4684. The incorrect line reference may cause taxpayer's to compute the incorrect amount of casualty or theft. lnstructions also incorrectly instruct taxpayer's to enter the K-I "Charitable contributions" in the "Total of federal Schedule A line instead of the "Other adjustments" line of the Schedule CA (540 or 540NR). The incorrect line reference may cause taxpayer's to compute the incorrect California taxable income.

These revisions will help taxpayer's report the correct amount of income, which will result in a correct tax liability.


Updates to 2007 Form 100S, S Corporation Franchise or Income Tax Return

The revised Internet version is available for download as of 02/29/2008.

Revision Details: 1 & 5. The instructions under Important lnformation and Sch. M-I sections are incorrect because they reference Schedule M-3 (Form 1120) instead of Schedule M-3 (Form 1120s).
2. The instructions under the General lnformation are incorrect because they reference federal Forms 1120 and 1120A instead of federal Form 1120s. Note: Federal Form 1120 is for C Corporation, and federal Form 1120A was obsolete in 2007.
3. The instructions for the Excess Net Passive lncome and lncome Tax Worksheet are incorrect because they instruct the taxpayer to enter the taxable income from Form 100 by completing line 1 through line 17, instead of line 1 through line 18.
4. The instructions for line 17d are incorrect because they do not instruct the taxpayers to the correct Schedule K line references. Line 17d is a catch-all line for amounts that were not included in lines 1 through 17c. The correct line references are lines I through 17b and line 18a-e.

  1. Page 3, 1st column, Important Information section, 2nd bulleted item
  2. Page 6, 2nd column, Net lncome Computation section
  3. Page 12, Excess Passive lncome and lncome Tax Worksheet, last sentence
  4. Page 18, 1st column, Line 17d-Other items and amounts (Schedule K only), 2nd paragraph
  5. Page 19, 2nd column, Schedule M-I, 3rd paragraph, first and second bullets and on page 72, 75, 81, 87, and 88 of the Package X

Previously read:

  1. Corporations with total assets of $10 million or more must complete the California Schedule M-I, and attach a copy of the federal Schedule M-3 (Form 1120).
  2. Transfer the information from the federal Form 1120 or Form 1120A, Page 1, U.S. Corporation lncome Tax Return, to Form IOOS.
  3. **Taxable income is defined in federal Treas. Regulations Section 1.1374-1A(d). Figure taxable income by completing line 1 through line 17 of Form 100.
  4. If the S corporation has supplemental information not included in lines 1 through 17c, write "See attached"
  5. S corporation with total assets of $10 million or more ..........................

A copy of the Schedule M-3 (Form 1120) and related attachments to the California Franchise or lncome Tax Return.

A complete copy of the federal return

FTB will accept the Schedule M-3 (Form 1120) in a spreadsheet format if more convenient.

Revised to:

  1. Corporations with total assets of $10 million or more must complete the California Schedule M-I, and attach a copy of the federal Schedule M-3 (Form 1120S).
  2. Transfer the information from the federal Form 1120S U.S. lncome Tax Return for an S Corporation Page 1, to Form 100S
  3. **Taxable income is defined in federal Treas. Regulations Section 1.1374-1A(d). Figure taxable income by completing line 1 through line 18 of Form 100.
  4. If the S corporation has supplemental information not included in lines 1 through 17b and lines 18a-e, write "See attached"
  5. S corporation with total assets of $10 million or more ..........................

A copy of the Schedule M-3 (Form 1120S) and related attachments to the California Franchise or lncome Tax Return.

A complete copy of the federal return.

FTB will accept the Schedule M-3 (Form 1120S) in a spreadsheet format if more convenient.

The above revisions do not impact tax liability.


Updates to 2007 100S, CA S Corporation Franchise or Income Tax Return

The revised Internet version is available for download as of 01/24/2008.

Revision Details: The current instructions for the above lines do not include the correct Schedule K line references.

This update is located on Form 100S:

  • Side 4, Schedule M-1, line 3 and line 6, page 24 of the booklet and page 69 of the package X.
  • Also on Side 5, Schedule K, line 17d, page 25 of the booklet and page 70 of the package X.

Previously read:

Schedule M-1, Line 3 Expenses recorded on books this year not included on Schedule K, line 1 through line 12b and line 12d1 (itemize)

Schedule M-1, Line 6 Deductions included on Schedule K, lines 1 through 12b and line 12d1, not charged against book income this year (itemize)

Schedule K, Line 17d Other items and amounts not included in lines 1 through 17c above that are required to be reported separately to shareholders. Attach schedule.

Revised to:

Schedule M-1, Line 3 Expenses recorded on books this year not included on Schedule K, line 1 through line 12f (itemize)

Schedule M-1, Line 6 Deductions included on Schedule K, line 1 through line 12f, not charged against book income this year (itemize)

Schedule K, Line 17d Other items and amounts not included in lines 1 through 17b and lines 18a-e that are required to be reported separately to shareholders. Attach schedule.


Updates to 2007 Schedule D (100S) - S Corporation Capital Gains and Losses and Built-In Gains

The revised Internet version is available for download as of 01/15/2008

Revision Details: The current line references on Section A, Part II, Line 6c and Section B, Part II, Line 7 are incorrect because both sections make a reference to Schedule K line 8a instead of line 8. There is no line 8a on Schedule K.

  • Page 28 in 100S booklet, Schedule D (100S), Section A, Part II, Line 6c and Section B, Part II, Line 7, and page 91 in the Package X

Previously read:

SECTION A, Part II, 6c: Subtract line 6b from line 6a. Enter this amount on Form 100S, Schedule K, column (d), line 8a or line 10b.

SECTION B, Part II, 7: Net long-term capital gain (loss). Combine line 4, column (f) through line 6. Enter here and on Form 100S, Schedule K, column (d), line 8a or line 10b.

Revised to:

SECTION A, Part II, 6c: Subtract line 6b from line 6a. Enter this amount on Form 100S, Schedule K, column (d), line 8 or line 10b.

SECTION B, Part II, 7: Net long-term capital gain (loss). Combine line 4, column (f) through line 6. Enter here and on Form 100S, Schedule K, column (d), line 8 or line 10b.

This revision will provide the correct line references and help the taxpayer to report the Net long-term capital gain (loss) from Schedule D (100S) on the appropriate line on the Form 100S, Schedule K, which will result in the correct amount of tax liability.

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