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Changes to 2002 Forms

2002 Updates to Publication 1061

Revision Date: 06/03/2004

Revision Details: Corporations Filing a Combined Report Booklet, Pages 3, 6, 9, 12 and 14

The Internet version of the instructions has been revised. In Farmer Bros. Co. v. Franchise Tax Board (2003) 108 Cal App 4th, 134 Cal Rptr. 2nd 390, the California Court of Appeal found that the R&TC Section 24402 deductible dividend provision discriminated against interstate commerce in violation of the Commerce Clause of the United States Constitution. R&TC Section 24402 provided for a deduction to the extent that the dividend payer was taxable in California. A statue that is held to be unconstitutional is invalid and unenforceable. Therefore, the deduction is not available.

  • Page 3, 1st column, should add the following new paragraph above Introduction:

It should read:

What's Changed

In Farmer Bros. Co. v. Franchise Tax Board (2003) 108 Call App 4th, 134 Cal Rptr. 2nd 390, the California Court of Appeal found that the R&TC Section 24402 deductible dividend provision discriminated against interstate commerce in violation of the Commerce Clause of the United States Constitution. R&TC Section 24402 provided for a deduction to the extent that the dividend payer was taxable in California. A statue that is held to be unconstitutional is invalid and unenforceable. Therefore, the deduction is not available.

  • Page 6, 2nd column, under Dividend paragraph,

It should read:

...are not eliminated from the income of the recipient corporation (although such dividends may be subject to deduction under R&TC Section 24411)

  • Page 9, 3rd column, Example of Combined Report Computations and Schedules, note added:

It should read:

Note: This example and schedules that follow have not been updated to reflect the Farmer Bros. Co. v. Franchise Tax Board court decision regarding R&TC Section 24402 deductible dividend provision. For an updated example, get 2003 (REV. 04-04) version of FTB Pub. 1061, Guidelines for Corporations Filing A Combined Report.

  • Page 12, Schedule 1, revise Other dividends line, and add note at the end of the schedule

It should read:

Other dividends (Sec. 24402)*

*Note: This schedule has not been updated to reflect the Farmer Bros. Co. v. Franchise Tax Board court decision regarding R&TC Section 24402 deductible dividend provision.

  • Page 14, Schedule 3, revise line 9c, and add note at the end of the schedule

It should read:

9c Other dividends (R&TC Section 24402)*

*Note: This schedule has not been updated to reflect the Farmer Bros. Co. v. Franchise Tax Board court decision regarding R&TC Section 24402 deductible dividend provision.

A revised copy is available to download - April 30, 2004.

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