Tax News Flash, August 9, 2011—California Schedule EO (565/568) - Pass-Through Entity Ownership
Beginning with the 2011 taxable year, partnerships and limited liability companies (LLC) will use the proposed California Schedule EO, Pass-Through Entity Ownership, for reporting pass-through entity ownership interests in entities that file federal Form 1065 or that are disregarded. In the past, we asked for that information in the form of a statement from the taxpayer. The proposed Schedule EO asks the taxpayer to identify by name, Secretary of State number, and Federal Employee Identification Number for all partnerships (including LLCs taxable as partnerships), in which the taxpayer holds a partial interest and for disregarded entities in which the taxpayer has full ownership. In addition, we ask the taxpayer to indicate which entities received California source income, and to provide the profit and loss sharing percentages used to compute the amount of income received by the owner. We will use that information to validate returns during processing, significantly reducing processing time and errors. The Schedule EO will benefit us and pass-through entities by providing a Schedule for partnerships and LLCs to report their pass-through entity interests.
Give your comments or suggestions about the form by August 31, 2011.