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Changes to 2009 Forms

Updates to the 568 Booklet on 08/27/2010 –– Limited Liability Company Tax Booklet

We replaced text on the 568 Booklet on:

  1. Page 3, Column 1, What’s New - Backup Withholding paragraph
  2. Page 3, Column 2, Important Information - Installment Sales paragraph
  3. Page 3, Column 2, Important Information - New paragraph will be added

Previous Version

  1. Backup Withholding - For taxable years beginning on or after January 1, 2010, with certain limited exceptions, payers that are required to withhold and remit backup withholding to the Internal Revenue Service (IRS) are also required to withhold and remit to the Franchise Tax Board (FTB). The California backup withholding rate is 7% of the payment. For California purposes, dividends, interests, and any financial institutions release of loan funds made in the normal course of business are exempt from backup withholding. For additional information on California backup withholding, go to ftb.ca.gov and search for backup withholding.

  2. For taxable years beginning on or after January 1, 2009, buyers are required to withhold on each installment sale payment if the sale of California real property is structured as an installment sale.

  3. N/A: We are adding an additional paragraph because of the Conformity Act of 2010 (SB 401).

Revised Version

  1. Backup Withholding - Beginning on or after January 1, 2010, with certain limited exceptions, payers that are required to withhold and remit backup withholding to the Internal Revenue Service (IRS) are also required to withhold and remit to the Franchise Tax Board (FTB). The California backup withholding rate is 7% of the payment. For California purposes, dividends, interests, and any financial institutions release of loan funds made in the normal course of business are exempt from backup withholding.

    If the LLC (payee) has backup withholding, the LLC (payee) must contact the FTB to provide a valid Taxpayer Identification Number, which is either the Secretary of State (SOS) file number or the federal employer identification number (FEIN), before filing the tax return. Failure to provide the SOS number or FEIN may result in a denial of the backup withholding credit. For more information, go to ftb.ca.gov and search for backup withholding.


  2. For installment sales occurring on or after January 1, 2009, buyers are required to withhold on each installment sale payment if the sale of California real property is structured as an installment sale.

  3. Income Exclusion of Federal Energy Grants
    Federal energy grants provided in lieu of federal energy credits are excluded from California gross income and alternative minimum taxable income of individuals and businesses. The income exclusion is applicable for any taxable year and is thus retroactive in its application.

Reason for the changes

  1. ABX 4 18 was chaptered on 7/28/09 and added R&TC Section 18664 regarding backup withholding. This revision will make the backup withholding paragraph in agreement with the language in ABX 4 18.

  2. AB 3078 was chaptered on 9/28/08 and amended R&TC Section 18662(i)(1) regarding installment sales. This revision will make the installment sales paragraph in agreement with the language in AB 3078.

  3. The Conformity Act of 2010 (SB 401) placed California in conformity with federal law to exclude from gross income and alternative minimum taxable income any federal grant received for specified energy property.

Impact

  1. 1. No tax impact.

  2. 2. No tax impact. This revision will allow buyers to withhold for installment sales occurring beginning on or after January 1, 2009, instead of for taxable years beginning on or after January 1, 2009.

  3. 3. If a taxpayer excluded the federal specified energy property grant from the gross income for federal purposes and included it in the gross income for CA purposes, the taxpayer will overstate its CA gross income. This revision will allow a taxpayer to exclude the federal grant amount from CA gross income; thus, will reduce the tax liability.

Updates to the 568 Booklet on 03/25/2010 – – Limited Liability Company Tax Booklet

We replaced text on the 568 Booklet on Page 3, Column 1, What’s New, 1st paragraph

Previous Version

N/A (addition of new paragraph)

Revised Version

Charitable Contributions for 2010 Haiti Disaster - California law conforms to the federal law which allows a 2009 charitable contribution deduction for cash contributions made after January 11, 2010, and before March 1, 2010, for the relief of victims in areas affected by the earthquake in Haiti on January 12, 2010. Limited Liability Companies (LLCs) may claim the deduction on the 2009 or 2010 California tax return. LLCs may choose to claim the deduction in different taxable years for federal and California purposes.

Reason for the changes

On March 15, 2010, California passed AB 347 which conforms to the new federal law that allows an LLC to deduct the 2010 cash contributions for Haiti relief on the 2009 or 2010 California tax return.

Impact

There is no tax impact to the Limited Liability Company.


Updates to the 568 Booklet on 12/23/2009 – – Limited Liability Company Tax Booklet

We replaced text on: Page 6, Column 2, Section F - Limited Liability Company Tax and Fee, LLC Fee Schedule

Previous Version

If total California annual income from

Form  568, Side 1, line 1 is: The fee is:
Equal to or over – but not over –  
$ 250,000 $ 499,999 $ 900
500,000 999,999 2,500
1,000,000 4,999,999 6,000
5,000,000 and over 11,700

Revised Version

If total California annual income from

Form 568, Side 1, line 1 is: The fee is:
Equal to or over – but not over –  
$ 250,000 $ 499,999 $ 900
500,000 999,999 2,500
1,000,000 4,999,999 6,000
5,000,000 and over 11,790

Reason for the changes

If the total California annual income is $5,000,000 or more, the LLC fee should be $11,790, not $11,700.

Impact

Taxpayers may report an LLC fee of $11,700 instead of the correct LLC fee amount of $11,790. This may cause the tax liability to be underreported.

Note: This only impacts paper products. The Internet version was not affected.

Back to Tax Form Changes for 2009