Changes to 2012 Forms

Updates to the Form 592-F on 12/21/2012 –– Foreign Partner or Member Annual Return

We replaced text on the Form 592-F Instructions on:

1. Page 1, Column 1, General Information, Paragraph 3
2. Page 1, Column 1, What’s New
3. Page 2, Column 3, Amount of Tax Withheld

Previous Version

1. For taxable years beginning on or after January 1, 2011, the maximum personal income tax rate is 9.3%. In addition, non-California partnerships are subject to withholding requirements on a sale of California real property at a rate of 3 1/3% (.0333) of sales price or 9.3% of gain. The alternative withholding rate for the gain on sale of California real property by S corporations is 10.8% and 12.8% for financial S corporations.
2. Note: new text added.
3. Amount of Tax Withheld – Enter the amount of tax withheld. Determine the California source taxable income allocable for the partner or member, then multiply by the applicable tax rate:

   Income amount X Maximum tax rate for the partner or member.

   Tax Rates
   9.3% Non-corporate maximum tax rate
   8.84% Corporate maximum tax rate
   10.84% Bank and financial institution maximum tax rate

Revised Version

1. Text eliminated.
2. Increase in Rates – For taxable years beginning on or after January 1, 2012, the maximum personal income tax rate increased to 12.3%. In addition, non-California partnerships are subject to withholding requirements on a sale of California real property at a rate of 3 1/3% (.0333) of sales price or 12.3% of gain. The alternative withholding rate for the gain on sale of California real property by S corporations increased to 13.8% and 15.8% for financial S corporations.
3. Amount of Tax Withheld – Enter the amount of tax withheld. Determine the California source taxable income allocable for the partner or member, then multiply by the applicable tax rate:

   Income amount X Maximum tax rate for the partner or member.

   Tax Rates
   12.3% Non-corporate maximum tax rate
   8.84% Corporate maximum tax rate
   10.84% Bank and financial institution maximum tax rate

Reason for the changes

In November 2012 Proposition 30 was passed by California voters. This ballot measure increased the maximum personal income tax rate for taxable years beginning on or after January 1, 2012, from 9.3% to 12.3%. As a result of the personal income tax rate increase, the alternative withholding rate for the gain on sale of California real property by individuals and non-California partnerships increased from 9.3% to 12.3%. The gain on sale of California real property by S corporations increased from 10.8% to 13.8% and from 12.8% to 15.8% for financial S corporations. We are revising the form and instructions to reflect the increase in rates.

Impact

No tax impact.

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