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Changes to 2008 Forms

Updates to the 3805Z Booklet on 02/24/2014 –– Enterprise Zone Business Booklet

We replaced text on Page 18, Worksheet VI, Section A, Line 6.

Previous Version

6. Enter the amount from form FTB 3805V, Part 1, Section A, line 18

Revised Version

6. Enter the amount from form FTB 3805V, Part 1, Section A, line 20

Reason for the changes

AB 1412 (Stats. 2013, ch. 546), signed by the Governor on October 4, 2013, retroactively allows the Qualified Small Business Stock (QSBS) deferral and 50 percent gain exclusion for tax years 2008 through 2012. The FTB 3805Z Booklet, Worksheet VI is indirectly affected by AB 1412 changes. Worksheet VI references form FTB 3805V which had line number changes due to AB 1412.

Impact

No tax impact.

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Updates to the 3805Z Booklet on 02/22/2013 –– Enterprise Zone Business Booklet

We replaced text on Page 18, Worksheet VI, Section A, Line 6.

Previous Version

Enter the amount from form FTB 3805V, Part 1, Section A, Line 20

Revised Version

Enter the amount from form FTB 3805V, Part 1, Section A, Line 18

Reason for the changes

The Court of Appeal’s held in Cutler v. Franchise Tax Board (2012) 208 Cal. App. 4th 1247, that the qualified small business stock exclusion and deferral statutes under California Revenue and Taxation Code (R&TC) Sections 18152.5 and 18038.5 are unconstitutional. These sections are now invalid and unenforceable.

Impact

The revision increases the tax liability for taxpayers who reported a qualified small business stock exclusion or deferral for taxable years beginning on or after January 1, 2008.

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Updates to the 3805Z Booklet on 01/22/2010 -- Enterprise Zone Business Booklet

We replaced text on the 3805Z Booklet on Page 17, Section C – Computation of NOL Carryover and Carryover Limitations – Individuals, Exempt Trusts, and Corporations.

Previously Version:

Individuals use the California Schedules CA (540) or CA (540NR) line 12 and line 18; the federal Schedule E, line 26, line 32, and line 40; and the federal Form 4797, line 9.

Revised Version:

Individuals use the California Schedules CA (540) or CA (540NR) line 12, line 14, and line 18; the federal Schedule E, line 26, line 32, and line 40; and the federal Form 4797, line 9.

Reason for the changes

Net business income includes recapture amounts resulting from the sale of business property. We added line 14 to include the recapture amounts from the sale of depreciable business assets.

Impact

This change includes recapture amounts in the net business income computation. This may result in an increased tax liability if the taxpayer meets the criteria for a NOL carryover suspension and credit limitation.

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Updates to the 3805Z Booklet on 03/16/2009 –– Enterprise Zone Business Booklet

We replaced text on the 3805Z Booklet, on:

  1. Page 3, column 1, under the New Conditionally Designated Zones paragraph
  2. Page 3, column 2, last sentence of the Conditional Designation paragraph

Previously Version

  1. Before filing form FTB 3805Z, go to hcd.ca.gov and search for eda for updated conditional zone date chart information.
  2. Before filing form FTB 3805Z, go to hcd.ca.gov and search for eda for updated conditional zone date chart information.

Revised Version

  1. Before filing form FTB 3805Z, go to hcd.ca.gov and search for eda to find the Directory of 2009 Zone Contacts for assistance with conditional zone dates.
  2. Before filing form FTB 3805Z, go to hcd.ca.gov and search for eda to find the Directory of 2009 Zone Contacts for assistance with conditional zone dates.

Reason for the changes

Currently, the instructions in the booklet refer the taxpayer to search the HCD website for eda for updated conditional zone date chart information. However, since the HCD has not posted the dates to the website, taxpayers should search eda for the directory of zone managers for the phone number of the manager of their specific zone. This will allow taxpayers to call in for the correct dates, if available.

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Updates to the 2008 3805Z Booklet -- Enterprise Zone Business Booklet

The revised Internet version is available for download as of 01/27/2009.

Revision Details: Form 3805Z booklet instructions currently state that for NOLs incurred in taxable years beginning on or after January 1, 2010, the carryover period is extended from 10 taxable years to 20 taxable years following the year of the loss. Based on the new rules under the R&TC Sections 17276.10 and 24416.10, the 20 years carryover should apply for NOLs incurred in taxable years beginning on or after January 1, 2008, not 2010. Therefore, the taxable year referenced is changed from 2010 to 2008.

  • Page 17, column 3, paragraph 5.

Previously read:

For NOLs incurred in taxable years beginning on or after January 1, 2010, California has extended the NOL carryover period from 10 to 20 taxable years following the year of the loss.

Revised to:

For NOLs incurred in taxable years beginning on or after January 1, 2008, California has extended the NOL carryover period from 10 to 20 taxable years following the year of the loss

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The revised Internet version is available for download as of 01/14/2009.

Revision Details: Currently line 15 references EZ NOL carryover beginning in 2000. Worksheet VI, Section C, column (a) provides the description of the EZ NOL carryover year in chronological order from oldest carryover year (1991) to the most recent year (2008). Column (a), line 15 would normally reference EZ NOL carryover beginning in 1998; however the year on line 15 was 2000, which was incorrect. Line 15 should reference EZ NOL carryover beginning in 1998.

  • Page 20, Worksheet VI, Section C, line 15

Previously read:

15 EZ NOL carryover beginning in 2000

Revised to:

15 EZ NOL carryover beginning in 1998

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