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Changes to 2012 Forms

Updates to the 100S Booklet on 03/02/2014 –– California S Corporation Franchise or Income Tax Booklet

We replaced text on:

  1. Page 5, Column 1, Nonconformity list, Bullet 5
  2. Page 17, Column 1, Line 10b

Previous Version

  1. The qualified small business stock deferral and gain exclusion under IRC Section 1045 and IRC Section 1202.
  2. Note: new text added.

Revised Version

  1. The change in the percentage of the gain exclusion for the sale of qualified small business stock acquired after February 17, 2009 and before January 1, 2011.
  2. f. Eligible gain from the sale or exchange of qualified small business stock (defined in R&TC Section 18152.5). Also report on an attachment to Schedule K and Schedule K-1 (100S) the name of the corporation that issued the stock and the adjusted basis of that stock.

    The exclusion allowed under R&TC Section 18152.5 for small business stock is not allowed for an S corporation but is allowed for the shareholder.

Reason for the changes

AB 1412 (Stats. 2013, ch. 546), signed by the Governor on October 4, 2013, retroactively allows the Qualified Small Business Stock (QSBS) deferral and 50 percent gain exclusion for tax years 2008 through 2012.

Impact

This revision may decrease the tax liability for taxpayers who did not report a QSBS exclusion or deferral for taxable years beginning on or after January 1, 2008.

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Updates to the 100S Booklet on 03/21/2013 –– California S Corporation Franchise or Income Tax Booklet

We replaced text on Page 15, Column 3, Line 40 instructions, Paragraph 3.

Previous Version

To cancel the DDR, call the FTB at 800.852.5711. The FTB is not responsible when a financial institution rejects a direct deposit. If the FTB, the bank, or financial institution rejects the direct deposit due to an error in the routing number or account number, the FTB will issue a paper check.

Revised Version

To cancel the DDR, call the FTB at 916.845.0353. The FTB is not responsible when a financial institution rejects a direct deposit. If the FTB, the bank, or financial institution rejects the direct deposit due to an error in the routing number or account number, the FTB will issue a paper check.

Reason for the changes

The 800.852.5711 is a taxpayer service number that is not a direct line. The direct line for taxpayers to call to cancel the direct deposit of refund is 916.845.0353.

Impact

No tax impact.

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Updates to the 100S Booklet on 02/12/2013 –– California S Corporation Franchise or Income Tax Booklet.

We replaced text.

  1. Page 17, Column 1, Line 10b, item f and next paragraph
  2. Page 31, Column 3, Part III – Tax on Built-In Gains, Paragraph 1

Previous Version

  1. Any gain from the sale or exchange of qualified small business stock under IRC Section 1045 and IRC Section 1202.

    The exclusion allowed under R&TC Section 18152.5 for small business stock is not allowed for an S corporation but is allowed for the shareholder.
  2. California does not conform to the reduced holding periods for tax on built-in gains applicable to tax years beginning in 2009 through 201 1 under federal law. The recognition period under California law is 10 years.

Revised Version

  1. Note: text deleted.
  2. California does not conform to the reduced holding periods for tax on built-in gains applicable to tax years beginning in 2009 through 201 2 under federal law. The recognition period under California law is 10 years.

Reason for the changes

  1. 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.
  2. The 2012 Taxpayer Relief Act provides for S corporation tax years beginning in 2012 and 2013, the recognition period is limited to five years. California does not conform to this federal change.

Impact

  1. 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.
  2. No tax impact.

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