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Changes to 2007 Form

2007 Schedule D (568)/3885L –Capital Gain or Loss/Depreciation and Amortization Instructions

The revised Internet version is available for download as of 05/23/2008

Revision Details:

The IRS added a new depreciation Form 4562-FY for 2007 fiscal year filers based on the changes from the Economic Stimulus Act of 2008. This form is used by entities that are on a fiscal year and want to claim an additional first year depreciation allowance for qualified property placed in service after 12/31/07.
The existing California form and instructions do not include reference to the new federal Form 4562-FY. We are revising the form and instructions to include the reference to the new federal Form 4562-FY.

  1. Instructions for Form FTB 3885L, Page 2 Flat/Page 42 Booklet, Election to Expense Certain Tangible Property (IRC Section 179) Worksheet
  2. Instructions for Form FTB 3885L, Page 2 Flat/Page 42 Booklet, Election to Expense Certain Tangible Property (IRC Section 179) Worksheet, line 7
  3. Instructions for Form FTB 3885L, Page 2 Flat/Page 42 Booklet, Election to Expense Certain Tangible Property (IRC Section 179) Worksheet, line 10 and page 392 of the Package X.

Previously read:

1.Follow the instructions on federal Form 4562 for listed property.
2. Listed property. Used federal Form 4562, Part V, line 29. Make any adjustments for California law and basis differences.
3.10 Carryover of disallowed deduction from 2006. See instructions for line 10 through 13 on federal Form 4562.

Revised to:

1.Follow the instructions on federal Form 4562 or 4562-FY for listed property.
2.Listed property. Used federal Form 4562 or 4562-FY, Part V, line 29. Make any adjustments for California law and basis differences.
3.10 Carryover of disallowed deduction from 2006. See instructions for line 10 through 13 on federal Form 4562 or 4562-FY.

If the taxpayer is required to complete the federal Form 4562-FY to claim the additional depreciation allowable based on changes made by the Economic Stimulus Act of 2008, and CA 3885P doesn’t make reference to the new federal Form 4562-FY, the taxpayer may enter zero on the Election to Expense Certain Tangible Property (IRC Section 179) Worksheet, line 7. This may overstate the California depreciation deduction and understate their taxable income and tax liability.


Updates to 2007 568 Limited Liability Company Form and Instructions

The revised Internet version is available for download as of 03/19/2008

Revision Details:

Currently Form 568 allows a space for the owner of the Single Member LLC (SMLLC) to enter a Federal Taxpayer Identification Number (TIN), a Social Security Number (SSN), or a Secretary of State (SOS) File Number. These spaces allow for an individual (540), partnership (565), LLC (568), or Trust or Estate (541) owner to enter their respective identification numbers. However, since an SMLLC may also be owned by a corporation (100 or 100S), the form needs to allow a space for the corporation owner to enter their Federal Employee Identification Number (FEIN) or a California Corporation Number (CA Corp no.). On the paper version of the form the owner can enter any identification number, but when the owner e-files, the schemas do not allow a filer to enter anything besides an SOS File no. This revision will allow e-File to revise their schemas to allow for more than one type of entity ID in this field.

  • 1) Form 568 Limited Liability Company Return of Income, Side 1, Single Member LLC Information and Consent, SOS File No. field, Booklet Page 23 and 29
    2) 568 Limited Liability Company Tax Booklet, Page 13, Column 3, Single Member LLC Information and Consent Instructions, paragraph 1

Previously read:

1) SOS File No.
2) Please complete all requested information. If the owner has both a federal Taxpayer Identification Number (TIN) and a California SOS file number, enter both. Provide the identification numbers of the entity that will report the items of income, deductions, credits, etc., of the disregarded entity and the type of return the owner will file.

Revised to:

1) FEIN/ CA Corp no./ SOS File no.
2) Please complete all requested information. Provide the identification numbers of the entity (Federal TIN/SSN or FEIN/CA Corp No./SOS File no.) that will report the items of income, deductions, credits, etc., of the disregarded entity and the type of return the owner will file.

This will have no tax impact.


Updates to 2007 568 Limited Liability Company Tax Booklet

The revised Internet version is available for download as of 03/14/2008

Revision Details: To correct the taxable year referenced from 01/01/2007 to 01/01/2006. Based on R&TC Sections 17937, 17947, and 17948.3 that were added by AB 2341, the changes implemented regarding cancelling a Limited Liability Company and the annual tax are applicable to taxable years beginning on or after January 1, 2006.

  • This update is located on 568 Limited Liability Company Booklet, Page 7, Column 3, paragraph 1, sentence 1 and page 373 of the Package X.

Previously read:

For taxable years beginning on or after January 1, 2007, the Annual Tax will not be assessed if the LLC meets all of the following requirements:

Revised to:

For taxable years beginning on or after January 1, 2006, the Annual Tax will not be assessed if the LLC meets all of the following requirements:

This revision will have a low tax impact. Based on the current language in the booklet, LLC’s may possibly pay the annual tax for 2006 when they are not required to. However, the annual tax would be refunded to the LLC if the payment was not needed based on the Final filing requirements.


Updates to 2007 Form 568 Booklet – Limited Liability Company Tax Booklet

The revised Internet version is available for download as of 02/26/2008

Revision Details: (1) The reference to Schedule M-3 (1068) is incorrect. There is no federal form 1068, the correct federal form reference should be to the Schedule M-3 (1065). (2) The reference to credit form FTB 3505 is incorrect. There is no FTB 3505, the correct reference to the Natural Heritage Preservation Credit form is FTB 3503

  • This update is located on (1) 2007 568 Limited Liability Company Tax Booklet, Page 2, Column 3, Heading 2: Reconciliation of lncome and page 368 of the Package X (2) 2007 568 Limited Liability Company Tax Booklet, Page 17, Column2, Heading 1 : Line 15f-Other Credits, Bullet 12 and on page 383 of the Package X

Previously read:

(1) Reconciliation of lncome For taxable years beginning on or after January 1, 2006, the lnternal Revenue Service (IRS) requires certain LLCs to complete Schedule M-3 (1068), Net lncome (Loss) Reconciliation for Certain Partnerships, instead of Schedule M-I , Reconciliation of lncome (Loss) per Books With lncome Per Return.

(2)

  • Natural Heritage Preservation Credit. Get form FTB 3505.

Revised to:

(1) Reconciliation of lncome
For taxable years beginning on or after January 1, 2006, the lnternal Revenue Service (IRS) requires certain LLCs to complete Schedule M-3 (1065), Net lncome (Loss) Reconciliation for Certain Partnerships, instead of Schedule M-I, Reconciliation of lncome (Loss) per Books With lncome Per Return.

(2)

  • Natural Heritage preservation Credit. 'Get form FTB 3503.

(1) There is no tax impact.

(2) There is no tax impact.

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