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State of California Franchise Tax Board

Changes to 2012 Forms

Updates to the Schedule P (540NR) Instructions on 03/05/2014 –– Instructions for 540NR Schedule P, Alternative Minimum Tax and Credit Limitations - Nonresidents and Part-Year Residents

We replaced text on:

  1. Page 2, Column 1, B – Who Must File, Bullet 4
  2. Page 3, Column 2, Line 8, second to the last paragraph
  3. Page 4, Column 1, Line 13
  4. Page 4, Column 2, Line 13f, first paragraph
  5. Page 5, Column 1, after Line 13j, Pollution control facilities
  6. Page 5, Column 1, Line 13k
  7. Page 5, Column 2, Line 13l
  8. Page 5, Column 2, Line 13l, Bullet 3
  9. Page 5, Column 2, Line 13l, last paragraph
  10. Page 6, Column 2, Line 29

Previous Version

  1. Schedule P (540NR), Part l, line 21 is more than Part II, line 22, and you have one or more adjustments on line 4 or line 7 through line 13l.
  2. Instead, include these types of depreciation when you figure adjustments for line 5, line 11, line 13f, line 13i, or line 13k, whichever applies.
  3. Line 13 – Other adjustments and preferences.
    Enter the amount of any other adjustments or preferences that apply to you on line 13a through line 13l
  4. Use line 13k for nonpassive tax shelter farm activities.
  5. Note: new text added.
  6. Line 13k – Tax shelter farm activities
  7. Line 13l – Related adjustments
  8. Line 13a through line 13k
  9. Figure the difference between AMT and regular tax amount for each item. Combine the amounts for all your related adjustments and enter the total on line 13l.
  10. Line 29 – Adjustments and preferences
    Follow instructions for Part I, line 7 through line 13l. Enter on line 29a through 29s

Revised Version

  1. Schedule P (540NR), Part l, line 21 is more than Part II, line 22, and you have one or more adjustments on line 4 or line 7 through line 13m.
  2. Instead, include these types of depreciation when you figure adjustments for line 5, line 11, line 13f, line 13k, or line 13l, whichever applies.
  3. Line 13 – Other adjustments and preferences.
    Enter the amount of any other adjustments or preferences that apply to you on line 13a through line 13m
  4. Use line 13l for nonpassive tax shelter farm activities.
  5. Line 13j – Qualified small business stock exclusion
    California law does not conform to federal law changes regarding the increase in the percentage of the gain exclusion for the sales of qualified small business stock acquired after February 17, 2009. California law allows an exclusion of 50% of any gain from the sale or exchange of qualified small business stock held for more than 5 years. For California purposes, 80% of the issuing corporation’s payroll must be attributable to employment located within California (at time of issuance). Also, at least 80% of the value of the corporation’s assets must be used by the corporation to actively conduct one or more qualified trades or businesses.

    R&TC Section 18038.5 also provides for the deferral of gain from the sale of small business stock that has been held for six months or more, if qualified replacement stock is purchased within 60 days after the sale giving rise to the gain. Report gain deferred from the sale of qualified small business stock in accordance with the instructions contained in Revenue Procedure 98-48.

    For more information, go to ftb.ca.gov and search for qsbs.
  6. Line 13l – Tax shelter farm activities
  7. Line 13m – Related adjustments
  8. Line 13a through line 13l
  9. Figure the difference between AMT and regular tax amount for each item. Combine the amounts for all your related adjustments and enter the total on line 13m.
  10. Line 29 – Adjustments and preferences
    Follow instructions for Part I, line 7 through line 13m. Enter on line 29a through 29s

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.

Back to Tax Form Changes for 2012

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