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Changes to 2004 Forms

Updates to 2004 3805Z Booklet

Revision Date: 12/20/2007

Revision Details: Our current instructions instruct the taxpayer to add the amount of sale or use tax credit into income, which results in an incorrect amount of tax liability. This revision will allow the taxpayer to report the correct amount of income, which results in a correct amount of tax liability. R&TC Sections 17053.70 and 23612.2 allows a credit against the tax for the taxable year an amount equal to the sales or use tax paid or incurred during the taxable year by the taxpayer in connection with the taxpayer’s purchase of qualified property. Taxpayer means a taxpayer engaged in a trade or business within an enterprise zone. Also, any taxpayer that elects to claim this credit cannot increase the depreciable basis of the property as required by IRC Section 164(a) with respects to sales or use tax paid or incurred in connection with the purchase of qualified property. However, the law does not provide for adding the entire amount of credit back into income. This sentence was placed under the Sale and Use Tax Section in error and should only be under the Hiring Credit Section.

  • This update is located on Page 8, 1st column, Instructions for Worksheet II, Line 2, column (c)

It should read:

For partnerships, enter the amount from line 2, column (c), on form FTB 3805Z, current year sales or use tax credit amount on Forms 565 and 568, Schedule K, line 14 and the distributive share of the credit to partners and members on Schedule K-1 line 14.

The revised form is available for download.

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