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Change simplifies tax law
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To the extent a provision refers to a tax measurement period beginning prior to the operative date of this bill, the term taxable year means income year under prior law whenever applicable.

The sole purpose of this change was to simplify the law. It will not cause any additional payments of tax or any acceleration of any tax payment from taxpayers. Also, there is no reason to believe this change in California law

will change the timing of the deduction of the franchise tax for federal purposes.

This legislation also amended the provision that exempts new corporations from payment of the minimum franchise tax at the time of incorporation and for its first year.

This change preserved the exemption from the minimum franchise tax for the first tax return.

Ask the Advocate
picture of Debbie Newcomb Taxpayer Advocate
Debbie Newcomb
Taxpayer Advocate


My limited liability company (LLC) wants to change its status, for tax purposes only, from a partnership to a corporation. For federal purposes it's quite easy, the LLC simply checks a box on federal Form 8832, Entity Classification Election, and elects to be treated like a corporation for tax purposes.

In addition, it must recognize and report the tax consequences resulting from that change in tax classification. (Note: Under proposed federal regulations, if a partnership elects to be taxed as an association that is taxable as a corporation, the partnership would be deemed to contribute all its assets and liabilities to the association in return for stock in the association. The partnership would then be deemed to liquidate by distributing the stock in the association to its partners.)

My question is: What do I need to do for the state?

The election the LLC made on its federal Form 8832, Entity Classification Election, automatically applies for state tax purposes. Under California law the tax classification of an entity for federal tax purposes applies for state income and franchise tax purposes. 

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Seasons change, so do forms
Amazingly, we are still receiving 1999 forms masquerading as tax year 2000 forms.

Remember, the 2000 version of all our forms are accessible on our website. To access them go to our home page at www.ftb.ca.gov and select Forms and Publications.

If you are using substitute or scannable 2000 California tax forms, please ensure that the tax forms meet our Substitute Forms Program requirements.

Delays may occur during processing if these requirements are not met. In some cases, we may not be able to process your clients' forms and will have to contact them directly. have questions about our forms contact Hector Lopez, Substitute Forms Program Co-Administrator at (916) 845-3553. His email address is Hector_Lopez@ftb.ca.gov.

Or contact Joyce Goin at (916) 845-3194. Her email address is Joyce_Goin@ftb.ca.gov.

Tax Practitioner Services

Need answers fast? Call any one of our Tax Practitioner Services Hotline telephone numbers.

Tax Practitioner Hotline
Telephone (916) 845-7057
Fax (916) 845-6377

Personal Income Tax Collection
Fax (916) 845-0494

Business Entities Collection
Fax (916) 845-0145

FTB e-file Help Desk
Telephone (916) 845-0353

FTB joins IRS at field offices during filing season

January 15 through April 16, 2001, we will offer customer services at selected Internal Revenue Service offices providing extended hours.

Since hours and locations are subject to change, check our website before you visit. Go to www.ftb.ca.gov and click on the Tax Assistance button. Look for FTB Field Offices, and IRS Field Offices with Extended Hours.

March/April 2001

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