Changes to 2012 Forms
Updates to the Schedule K-1 (100S) Instructions on 03/12/2014 –– Instructions for 100S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc.
We replaced text on:
- Page 1, Column 1, "What’s New" section
- Page 3, Column 2, Line 10b, Bullet 9
- Qualified Small Business Stock – The California Court of Appeals has determined that provisions of R&TC Sections 18038.5 and 18152.5 are unconstitutional and therefore are invalid and unenforceable. See Schedule CA (540), line 13 instructions for more information if you reported a federal qualified small business stock (QSBS) deferral or exclusion on your federal Form 1040.
- Note: new text added.
- Note: text deleted.
- Eligible gain from the sale or exchange of qualified small business stock (as defined in R&TC Section 18152.5). The S corporation should also give you the name of the corporation that issued the stock and your pro-rata share of the basis of that stock.
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.
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.
Updates to the Schedule K-1 (100S) Instructions on 02/12/2013 –– Instructions for 100S Schedule K-1, Shareholder's Share of Income, Deductions, Credits, etc.
We replaced text on Page 3, Column 1, Line 10b, Other income (loss), Bullet 9.
Any gain from the sale or exchange of qualified small business stock under IRC Section 1202.
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.
Taxpayers are required to report the gain from sale of QSBS on the “Capital gain line” instead of being reported on the “Other income line.”
No tax impact.
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