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Changes to 2010 Forms

Updates to the Schedule CA (540) Instructions on 02/15/2013 –– Instructions for 540 Schedule CA, California Adjustments - Residents

We replaced text on Page 3, Column 2, Line 13, Bullet 1.

Previous Version

Gain on the sale of qualified small business stock which qualifies for the gain exclusion under IRC Section 1202.

Revised Version

Gain on the sale of qualified small business stock under IRC Section 1045 and IRC Section 1202.

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

This 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.

Back to Tax Form Changes for 2010