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Changes to 2010 Forms

Updates to the Form 540/540A Instructions on 02/15/2013 –– Instructions for 540/540A Forms, California Resident Income Tax Returns

We replaced text on Page 11, Column 2, Box A, last bullet.

Previous Version

Excluded gain on the sale of qualified small business stock

Revised Version

Note: text deleted.

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.

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Updates to the Form 540/540A Instructions on 02/18/2011 — Instructions for 540/540A Forms, California Resident Income Tax Returns

We replaced text on the Form 540/540A Instructions on Page 15, Instructions for line 112 (Form 540), Interest and Penalties, Late Filing of Tax Return.

Previous Version

Late Filing of Tax Return. If you do not file your tax return by October 17, 2011, you will incur a late filing penalty plus interest from the original due date of the tax return. The maximum total penalty is 25% of the tax not paid if the tax return is filed after October 17, 2011. The minimum penalty for filing a tax return more than 60 days late is $100 or 100% of the balance due, whichever is less.

Revised Version

Late Filing of Tax Return. If you do not file your tax return by October 17, 2011, you will incur a late filing penalty plus interest from the original due date of the tax return. The maximum total penalty is 25% of the tax not paid if the tax return is filed after October 17, 2011. The minimum penalty for filing a tax return more than 60 days late is $135 or 100% of the balance due, whichever is less.

Reason for the changes

To correct the amount of the minimum penalty charge for filing a late return.

Impact

This revision does not affect a taxpayer’s tax liability. However it will require the taxpayer to pay an increased amount of penalty.

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