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Changes to 2009 Forms

2009 593 Booklet Updates

Updates to the 593 Booklet on 05/18/2009–– Real Estate Withholding Booklet

We replaced text on:

  1. 593 Booklet, Page 2, What’s New Paragraph, Withholding Rates
  2. 593 Booklet, Page 2, What’s New Paragraph, Installment Sales
  3. Form 593-E, Line 17, Optional Gain on Sale Withholding Amount (and also on the Form 593-E in the 593 Booklet, on Page 6)

Previous Version

  1. 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.
  2. 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.
  3. 17 Optional Gain on Sale Withholding Amount. Check the applicable box for the filing type.

Individual 9.3% Corporation 8.84%Bank and Financial Corporation 10.84%

Non-California Partnership 9.3% S Corporation 10.8%Financial S Corporation 12.8%

Revised Version

  1. 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.
  2. 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.
  3. 17 Optional Gain on Sale Withholding Amount. Check the applicable box for the filing type.

Individual 9.55% Corporation 8.84%Bank and Financial Corporation 10.84%

Non-California Partnership 9.55% 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.


Updates to the 2009 593 Booklet -- Real Estate Withholding Booklet

The revised Internet version is available for download as of 01/12/2009.

Revision Details: Currently Question 1 on Form 593-C references Section 12 of the Internal Revenue Code (IRC). This is incorrect. The correct IRC Section reference in Question 1 should be IRC Section 121.

  • Booklet – 593 Booklet, Page 3, Form 593-C, Part II, Question 1
  • Flat – Form 593-C, Part II, Question 1

Previously read:

The property qualifies as the seller’s (or decedent’s, if being sold by the decedent’s estate) principal residence within the meaning of Internal Revenue Code (IRC) Section 12.

Revised to:

The property qualifies as the seller’s (or decedent’s, if being sold by the decedent’s estate) principal residence within the meaning of Internal Revenue Code (IRC) Section 121.

Back to Tax Form Changes for 2009