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Changes to 2009 Forms

Updates to the Form 593 on 05/18/2009 –– Real Estate Withholding Tax Statement

We replaced text on the Form 593, on:

  1. Form 593 Copy A, Copy B, and Copy C, Part II Escrow or Exchange Information, Line 4, Optional Gain on Sale  Election, B, C, F, G
  2. Form 593 Instructions, Page 1, Column 1, What's New paragraph, Withholding Rates
  3. Form 593 Instructions, Page 1, Column 1, What’s New Paragraph, Installment Sales
  4. Form 593 Instructions, Page 3, Column 2, Tax Rates

Previous Version

  1. Optional Gain on Sale Election (Signature required below)
    B Individual 9.3% x Gain on Sale
    C Non-California Partnership 9.3% x Gain on Sale
    F S Corporation 10.8% x Gain on Sale
    G Financial S Corporation 12.8% x Gain on Sale
  2. Withholding Rates – For taxable years beginning on or after January 1, 2009, Non-California Partnerships will be subject to withholding requirements on a sale of California real property at a rate of 3 1/3% of sales proceeds or 9.3% of gain. The alternative withholding rates for the sale of California real property by S corporations will be increased to 10.8% and 12.8% for Financial S corporations.
  3. Installment Sales – For taxable years beginning on or after January 1, 2009, buyers will be required to withhold on the principal portion of each installment payment if the sale of California real property is structured as an installment sale.
  4. *Tax Rates
    Individual 9.3%
    Non-California Partnership 9.3%
    Corporation 8.84%
    Bank and Financial Corporation 10.84%
    S Corporation 10.8%
    Financial S Corporation 12.8%

Revised Version

  1. Optional Gain on Sale Election (Signature required below)
    B Individual 9.55% x Gain on Sale
    C Non-California Partnership 9.55% x Gain on Sale
    F S Corporation 11.05% x Gain on Sale
    G Financial S Corporation 13.05% x Gain on Sale
  2. Increase in Rates – For taxable years beginning on or after January 1, 2009, the maximum personal income tax rate is increased to 9.55%. In addition, non-California Partnerships are subject to withholding requirements on a sale of California real property at a rate of 3 1/3% of sales proceeds or 9.55% of gain. The alternative withholding rates for the sale of California real property by S corporations is increased to 11.05% and 13.05% for Financial S corporations.
  3. Installment Sales – For taxable years beginning on or after January 1, 2009, buyers are required to withhold on the principal portion of each installment payment if the sale of California real property is structured as an installment sale.
  4. *Tax Rates
    Individual 9.55%
    Non-California Partnership 9.55%
    Corporation 8.84%
    Bank and Financial Corporation 10.84%
    S Corporation 11.05%
    Financial S Corporation 13.05%

Reason for the changes

Based on AB X3 3, California income tax rates will increase by .25%, for tax years beginning on or after January 1, 2009. The real estate withholding forms were already finalized for 2009, before this legislation was introduced and signed, and therefore the 2009 forms need to be revised to reflect the change of the increase in rates.

Tax Impact

Taxpayers may be under withheld which may increase tax liability; however, taxpayers that are under withheld will not be assessed an underpayment of estimated tax or underpayment of tax penalty to the extent that underpayment was created or increased by the change in the tax rate.

Back to Tax Form Changes for 2009