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California

Forms & Instructions This booklet contains:


FTB 3806, Los Angeles Revitalization Zone Deduction and Credit

3806 Summary

1998
Los Angeles Revitalization Zone
Business Booklet

Members of the Franchise Tax Board


Kathleen Connell, Chair
Johan Klehs, Member
B. Timothy Gage, Member

State of California
Franchise Tax Board
Instructions for Los Angeles Revitalization Zone Businesses
— Form FTB 3806
References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 1998, and to the California Revenue and Taxation Code (R&TC).

Contents • Enterprise zone tax incentives, get For more information, see the part in this booklet
FTB 3805Z, Enterprise Zone Business that explains the specific tax incentive.
General Information . . . . . . . . . . . . . 2 Booklet; Conformity. In general, California tax law con-
Hiring Credits . . . . . . . . . . . . . . . . . 3 • LAMBRA tax incentives, get FTB 3807, forms to the Internal Revenue Code (IRC) as of
Recapture of the Construction Hiring Local Agency Military Base Recovery Area January 1, 1998. However, there are continuing
Credit and General Hiring Business Booklet; differences between California and federal tax
Credit Worksheet . . . . . . . . . . . . . 4 • The MEA hiring credit, get form FTB 3808, law. California has not conformed to the changes
Sales or Use Tax Credit . . . . . . . . . . . 5 Manufacturing Enhancement Area Hiring made to the IRC by the federal Internal Revenue
Sales or Use Tax Credit Recapture Credit; or Service (IRS) Restructuring and Reform Act of
Worksheet . . . . . . . . . . . . . . . . 5 • TTA tax incentives, get FTB 3809, Targeted 1998 (Public Law 105-206) and the Tax and
Business Expense Deduction . . . . . . . . 6 Tax Area Business Booklet. Trade Relief Extension Act of 1998 (Public Law
Business Expense Deduction & Recapture For purposes of this booklet, the term ‘‘pass- 105-277).
Worksheet . . . . . . . . . . . . . . . . 7 through entity’’ refers to an S corporation, an
Net Interest Deduction for Lenders . . . . . 8 Principal Business Activity Code Chart. In
estate or trust, a partnership and a limited liability 1998, the FTB implemented the new principal
Net Interest Deduction for Lenders company (LLC) taxed as a partnership.
Worksheet . . . . . . . . . . . . . . . . 8 business activity (PBA) code chart that is based
on the North American Industry Classification
Doing Business Totally Within or A What’s New System (NAICS). The PBA code chart is pro-
Within and Outside the IMPORTANT!!!
Los Angeles Revitalization Zone . . . . 9 vided in this booklet (pages 17 through 19) and
Apportionment Worksheet . . . . . . . . . . 10 The LARZ (geographic area) expired on in your California and federal tax booklets. The
Net Operating Loss (NOL) . . . . . . . . . . 11 December 1, 1998. Generally, no further LARZ use of this system replaces the use of the Stan-
Income or Loss Worksheet . . . . . . . . . 12 tax incentives can be generated for taxable or dard Industrial Classification (SIC) for purposes
NOL Carryover Worksheet. . . . . . . . . . 14 income years ending on or after of business classification. However, the SIC con-
Computation of Credit Limitations . . . . . . 15 December 1, 1998. However, there are certain tinues to be used where specifically referenced in
Principal Business Activity Code Chart . . . 17 exceptions. These include: California tax law.
Form FTB 3806, Los Angeles • The net interest deduction for interest B Los Angeles Revitalization
Revitalization Zone Deduction received on or before November 30, 1998;
and Credit Summary . . . . . . . . . . . 21 and Zone
Computation of Credit Limitations • Certain tax incentives from 1997 fiscal year The LARZ was established to aid economic
Worksheet . . . . . . . . . . . . . . . . 22 pass-through entities. development in areas that suffered damage dur-
How to Get California Tax Information . . . 25 Any LARZ credit carryover or LARZ NOL carry- ing the civil unrest that occurred in the County of
F.A.S.T. Toll-Free Phone Service . . . . . . 26 over can be utilized to the extent of business Los Angeles during April and May 1992. The
income apportioned to the former LARZ. LARZ became operative on May 1, 1992, and
General Information Taxpayers who receive a LARZ construction hir-
applies to businesses with taxable or income
years beginning on or after January 1, 1992.
ing credit, general hiring credit or sales or use
California has established 5 types of economic The LARZ expired on December 1, 1998.
tax credit in their taxable or income year begin-
development areas that have related tax Businesses operating within the LARZ do not
ning on or after January 1, 1998, from a fiscal
incentives: need to receive prior approval to take advantage
year pass-through entity with a taxable or income
• Enterprise Zones; year beginning before January 1, 1998, (1997 of the special tax incentives.
• The Los Angeles Revitalization Zone (LARZ); fiscal year pass-through entity) may not claim
• Local Agency Military Base Recovery Areas these credits in their taxable or income year C Purpose
(LAMBRAs); beginning on or after January 1, 1998. These Use this booklet to determine the correct amount
• Manufacturing Enhancement Areas (MEAs); credits may only be claimed in taxable or income of deductions and credits that the business may
and years beginning before January 1, 1998. Note: If claim for operating or investing in a trade or busi-
• The Targeted Tax Area (TTA). you receive any LARZ credit from a 1997 fiscal ness within the LARZ. Complete the worksheets
A business may qualify for special deductions year pass-through entity, then see the specific in this booklet for each deduction or credit for
and credits if it operates or invests in a trade or credit instructions for certain income adjustments which the business is eligible. Then enter the
business located within the geographic bounda- that you should make. total deductions and credits on form FTB 3806.
ries of one of these economic development Taxpayers with 1998 taxable or income years
areas. ending before December 1, 1998, may claim the
D How to Claim Deductions and
California statutes require the Franchise Tax LARZ business expense deduction. Also, taxpay- Credits
Board (FTB) to provide information to the Califor- ers who receive a LARZ business expense To claim any LARZ deduction or credit, the busi-
nia Legislature and the Trade and Commerce deduction in their taxable or income year begin- ness must attach form FTB 3806 (included in
Agency (TCA) regarding the number of busi- ning on or after January 1, 1998, from a 1997 this booklet) to its California tax return.
nesses using the economic development area fiscal year pass-through entity may utilize the
Attach a separate form FTB 3806 for each
tax incentives, types of economic development deduction. Note: The LARZ business expense
business you operate or invest in that is
area tax incentives being used and the economic deduction election is made at the entity level.
located in the LARZ.
development areas in which the businesses are Taxpayers who receive a loss from a 1997 fiscal
claiming the tax incentives. Note: In order to help To assist with the processing of the tax return,
year pass-through entity operating in the LARZ
us meet this requirement, please be sure to indicate that the business operates or invests
may not elect a LARZ NOL for their taxable or
attach form FTB 3806, Los Angeles Revitalization within the LARZ by doing the following:
income year ending on or after
Zone Deduction and Credit Summary, to your December 1, 1998. Note: The LARZ NOL elec- Form 540 filers: Write ‘‘LARZ’’ in the top left
California tax return. tion is not made at the entity level but at the margin of Side 1 of
For information about: investor (shareholder, beneficiary, partner or Form 540.
member) level.

Page 2 FTB 3806 Booklet 1998


Form 540NR Write ‘‘LARZ’’ in the top left Schedule P – Alternative Minimum Tax and • In response to misconduct of the employee
filers: margin of Side 1 of Credit Limitations as determined by the applicable employment
Form 540NR. Schedule R – Apportionment and Allocation of compensation provisions;
Form 100 filers: Claim LARZ incentives on Income • Caused by the employee becoming disabled
Form 100, line 14, line 20 (unless the employee was able to return to
and line 24 through line 27, work and the employer did not offer to reem-
as applicable.
Part I Hiring Credits ploy the individual);
No new LARZ construction or general hiring
• Carried out so that other qualified individuals
Form 100S filers: Claim LARZ incentives on could be hired, creating a net increase in the
Form 100S, line 12, line 19 credits may be generated in taxable or income
number of qualified employees and their
and line 23 through line 26, years beginning on or after January 1, 1998.
hours worked;
However, LARZ construction and general hiring
as applicable.
credit carryovers may still be claimed for 15
• Due to a contractual agreement (applies only
Form 109 filers: Check the ‘‘yes’’ box for the to the LARZ construction hiring credit); or
years from the year the credit was generated.
enterprise zone, LARZ, • Caused by a substantial reduction in the
LAMBRA, MEA or TTA ques- Taxpayers who receive a LARZ construction hir- trade or business operations of the employer.
tion on the top of Side 1 of ing credit or general hiring credit in their taxable
Form 109. or income year beginning on or after
January 1, 1998, from a 1997 fiscal year pass- Instructions for Worksheet I —
Note: Be sure to keep all completed worksheets
and supporting documents for your records.
through entity may not claim these credits in Recapture of the Construction
their taxable or income year beginning on or after
Hiring Credit and General
E Geographic Boundaries January 1, 1998. These credits can only be
The geographic boundaries of the LARZ are
claimed for taxable or income years beginning Hiring Credit
before January 1, 1998.
used to determine whether tax incentives are Line 1, column (a) – Enter the name of the
available to a business in a particular location. For investors in 1997 fiscal year pass-through
terminated employee. Attach an additional
Information about the geographic boundaries of entities that have generated a LARZ hiring credit,
schedule(s) if necessary.
the LARZ is available from the individual commu- the pass-through entity’s wage deduction has
been reduced by the amount of the LARZ hiring Line 1, column (b) and column (c) – Enter the
nities listed below.
credit. In cases where the fiscal year pass- amount of credit recapture for each employee. If
For information about the geographic boundaries through entity generated a LARZ hiring credit, the construction hiring credit was claimed, enter
of the LARZ, call: the investors may decrease their distributive or the amount in column (b). If the general hiring
Compton . . . . . . . . . . . . (310) 605-5580 pro rata share of ordinary income from the pass- credit was claimed, enter the amount in
Hawthorne . . . . . . . . . . . (310) 970-7939 through entity by their distributive or pro rata column (c).
Huntington Park . . . (213) 582-6161, ext. 258 share of the LARZ hiring credit. Line 2 – Enter the total from line 2, column (b)
Inglewood . . . . . . . . . . . . (310) 412-5290 In addition, the investor should attach a state- on form FTB 3806, Side 1, line 6. Enter the total
Lawndale . . . . . . . . . . . . (310) 970-2130 ment to form FTB 3806 that includes the follow- from line 2, column (c) on form FTB 3806,
Long Beach . . . . . . . . . . . (562) 570-3871 ing information: Side 1, line 7.
Los Angeles . . . . . . . . . . (213) 485-2956
Lynwood . . . . . . . (310) 603-0220, ext. 253 • An explanation of the inconsistent treatment Also, include the amount of hiring credit recap-
of ordinary income and credit(s) from the ture on your California tax return or schedule as
Pomona . . . . . . . . . . . . . (909) 620-3760
pass-through entity; follows:
Signal Hill . . . . . . . . . . . . (562) 989-7342
Unincorporated LA County. . . (213) 890-7203 • The pass-through entity name and tax identifi- • Form 100, Schedule J, line 5;
cation number; and • Form 100S, Schedule J, line 5 and
If your business is located both within and out- • The distributive or pro rata share of the credit Schedule K-1 (100S), line 23;
side the LARZ, see Part V on page 9 for instruc-
tions on how to apportion business income.
amount(s). • Form 109, Schedule K, line 4;
Recapture of the Construction • Form 540, line 36;
F Forms Table • Form 540NR, line 45;
Hiring Credit and General • Form 541, line 21b and
The titles of forms referred to in this booklet are:
Form 100 – California Corporation Franchise
Hiring Credit Schedule K-1 (541), line 11e;
• Form 565, Schedule K, line 22 and
or Income Tax Return The employer must recapture the amount of Schedule K-1 (565), line 22; or
Form 100S – California S Corporation Fran-
credit attributable to an employee’s wages if the • Form 568, Schedule K, line 22 and
employer terminates the employee at any time Schedule K-1 (568), line 22.
chise or Income Tax Return during the longer of:
Indicate that you included the hiring credit recap-
Form 109 – California Exempt Organization • The first 270 days of employment (whether or ture on your tax return by writing ‘‘FTB 3806’’ in
Business Income Tax Return not consecutive); or the space provided on the schedule or form.
Form 540 – California Resident Income Tax • 90 days of employment plus 270 calendar
Return days. Partnerships and limited liability companies
(LLCs) taxed as partnerships must identify the
Form 540NR – California Nonresident or Part- A day of employment means any day for which recapture amounts for their partners and mem-
Year Resident Income Tax the employee receives wage compensation (in- bers on Schedule K-1 (565 or 568).
Return cluding a paid sick day, holiday or vacation day).
S corporation shareholders must recapture the
Form 541 – California Fiduciary Income Tax The employer must add to the current year’s tax portion of credit that they previously claimed,
Return the recaptured amount of credit claimed in the based on the terminated employee’s wages.
Form 565 – Partnership Return of Income year of termination and all prior years in which S corporations must also identify the recapture
the credit was claimed for the terminated amount for shareholders on Schedule K-1
Form 568 – Limited Liability Company
employee. (100S). This amount will differ from the amount
Return of Income
Note: The credit recapture does not apply if the recaptured by the S corporation on Form 100S,
Schedule CA – California Adjustments —
termination of employment was: Schedule J.
Residents
Schedule CA – California Adjustments —
• Voluntary on the part of the employee;
(540NR) Nonresidents or Part-Year
Residents

FTB 3806 Booklet 1998 Page 3


Worksheet I Recapture of the Construction Hiring Credit and General Hiring Credit
(a) (b) (c)
Terminated employee’s name Construction hiring credit recapture General hiring credit recapture

2 Total amount of credit recapture. Add the


amounts in column (b) and column (c).
See instructions. . . . . . . . . . . . . . . . 2

Page 4 FTB 3806 Booklet 1998


Part II Sales or Use Tax Credit • An explanation of the inconsistent treatment Also include the amount of sales or use tax
of ordinary income and credit(s) from the credit recapture on your California tax return or
No new LARZ sales or use tax credits may be pass-through entity; schedule as follows:
generated in taxable or income years beginning • The pass-through entity name and tax identifi- • Form 100, Schedule J, line 5;
on or after January 1, 1998. However, LARZ cation number; and • Form 100S, Schedule J, line 5 and
sales or use tax credit carryovers may still be • The distributive or pro rata share of the credit Schedule K-1 (100S), line 23;
claimed for 15 years from the year the LARZ amount(s). • Form 109, Schedule K, line 4;
credit was generated.
Sales or Use Tax Credit Recapture • Form 540, line 36;
Taxpayers who receive a LARZ sales or use tax • Form 540NR, line 45;
credit in their taxable or income year beginning The full amount of the credit must be recaptured • Form 541, line 21b and
on or after January 1, 1998, from a 1997 fiscal (added back to the tax liability) in the year of dis- Schedule K-1 (541), line 11e;
year pass-through entity may not claim these position or nonuse if the property is disposed of • Form 565, Schedule K, line 22 and
credits in their taxable or income year beginning or no longer in use in the LARZ before the close Schedule K-1 (565), line 22; or
on or after January 1, 1998. These credits can of the second taxable or income year after the • Form 568, Schedule K, line 22 and
only be claimed for taxable or income years property was placed in service. Schedule K-1 (568), line 22.
beginning before January 1, 1998. Indicate that you included the sales or use tax
Investors in 1997 fiscal year pass-through entities Instructions for Worksheet II — recapture on the tax return by writing ‘‘FTB 3806’’
that have generated a LARZ sales or use tax Sales or Use Tax Credit Recapture in the space provided on the schedule or form.
credit will need to adjust net income received S corporations and their shareholders must
from the pass-through entity over the life of the Line 1, column (a) – Enter a description of the recapture the portion of credit that was previously
asset(s) on which the credit was based. The property. Attach an additional schedule(s) if claimed. S corporations must also identify the
adjustment will decrease net income by their dis- necessary. recapture amount for shareholders on
tributive or pro rata share of the difference Line 1, column (b) – Enter the amount of the Schedule K-1 (100S). This amount will differ from
between the depreciation expense with the credit sales or use tax credit that must be recaptured. the amount recaptured by the S corporation on
basis reduction and the depreciation expense Form 100S, Schedule J. Partnerships and LLCs
without the credit basis reduction. This informa- Line 2 – Enter the amount from line 2, col-
umn (b) on form FTB 3806, Side 1, line 8. taxed as partnerships should also identify the
tion must be obtained from the pass-through recapture amount for partners and members on
entity. Schedule K-1 (565 and 568).
In addition, the investor should attach a state-
ment to form FTB 3806 that includes the follow-
ing information:

Worksheet II Sales or Use Tax Credit Recapture


(a) Property description (b) Recapture amount

2 Total amount of credit recapture. Add the amounts in column (b). See instructions . . . . . . . . . . . . . . . 2

FTB 3806 Booklet 1998 Page 5


Part III Business Expense Limitations: If you elect to expense qualified • Form 568, Schedule K, line 9 and
property, you may not claim the manufacturers’ Schedule K-1 (568), line 9.
Deduction investment credit for that property. Note: If filing Form 540 or Form 540NR, indicate
Taxpayers with 1998 taxable or income years Depreciation. The basis of the property (for that you are claiming the business expense
ending before December 1, 1998, may claim the depreciation purposes) must be reduced by the deduction by writing ‘‘FTB 3806’’ below the
LARZ business expense deduction. Also, taxpay- amount allowed as a LARZ business expense dotted line to the left of Form 540, line 14 or
ers who receive a LARZ business expense deduction. Form 540NR, line 14.
deduction in their taxable or income year begin- Election. The LARZ business expense deduction
ning on or after January 1, 1998, from a 1997 must be claimed by making an election on the
Section B — Deduction Recapture
fiscal year pass-through entity may utilize the original return filed, and thus cannot be claimed The deduction is subject to recapture (added
deduction. Note: The LARZ business expense on an amended return. Such an election cannot back to income) if, before the close of the sec-
deduction election is made at the entity level. be revoked without the written consent of ond taxable or income year after the property
LARZ businesses described above may elect to the FTB. was placed in service, the property is sold, dis-
treat the cost of qualified property as a LARZ posed or no longer used exclusively in the LARZ.
business expense deduction rather than a capital In that case, add to current year income the
expense. For the year the property is placed in
Instructions for Worksheet III — amount previously deducted for that property.
service, the business may deduct the cost in that Business Expense Deduction & Line 1, column (a) – Enter a description of the
year rather than depreciate it over several years. Recapture property. Attach an additional schedule(s) if
Note: Estates and trusts are not allowed to claim necessary.
the LARZ business expense deduction. Section A — Deduction Line 1, column (b) – Enter the amount of the
Qualified property is IRC Section 1245 property business expense deduction claimed for the
acquired by purchase, placed in service on or
Computation property that must be recaptured.
after September 1, 1992, and before Line 1, column (a) – Enter a description of the Line 2 – Enter the amount from line 2,
December 1, 1998, and used exclusively in a property and the location (street address and column (b) on form FTB 3806, Side 1, line 9, and
trade or business within the LARZ. Qualified city) of its use. Attach an additional schedule(s) on your California tax return or schedule as
property includes, but is not limited to, tangible if necessary. follows:
personal property (excluding buildings and inven- Line 1, column (b) – Enter the cost of the quali- • Form 100, line 14, as a negative amount;
tory). Most equipment and furnishings purchased fied property listed in column (a). • Form 100S, line 12, as a negative amount,
for exclusive use within the LARZ qualify for the Line 2 – Enter the amount from line 2, Form 100S, Schedule K, line 6 and
deduction. column (b) on form FTB 3806, Side 1, line 2, and Schedule K-1 (100S), line 6;
If the expense election is made, the business on your California tax return or schedule as • Form 109, Part I, line 12;
must treat the cost of qualified property as a follows: • Schedule CA (540), column C, on the appli-
business expense in the year the property is first • Form 100, line 14; cable line for your business activity;
placed in service. However, the LARZ business • Form 100S, line 12, Form 100S, Schedule K, • Schedule CA (540NR), column C, on the
expense deduction is not allowed if the property line 8 and Schedule K-1 (100S), line 8; applicable line for your business activity;
was: • Form 109, Part II, line 24; • Form 565, Schedule K, line 7 and
• Transferred between members of an affiliated • Schedule CA (540), column B, on the applica- Schedule K-1 (565), line 7; or
group; ble line for your business activity; • Form 568, Schedule K, line 7 and
• Acquired as a gift or inherited; • Schedule CA (540NR), column B, on the Schedule K-1 (568), line 7.
• Traded for other property; applicable line for your business activity; Note: If filing Form 540 or Form 540NR, indicate
• Received from a personal or business relation • Form 565, Schedule K, line 9 and that you are recapturing the business expense
as defined in IRC Sections 267 and 707(b); Schedule K-1 (565), line 9; or deduction by writing ‘‘FTB 3806’’ above the dot-
or ted line to the left of Form 540, line 16 or
• Described in IRC Section 168(f). Form 540NR, line 16.

Page 6 FTB 3806 Booklet 1998


Worksheet III Business Expense Deduction & Recapture — Los Angeles Revitalization Zone
Section A Deduction Computation
(a) Property description and location (b) Cost

2 Total. Add the amounts in column (b). This is the amount deductible as a business expense.
See instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section B Deduction Recapture


(a) Property description (b) Recapture amount

2 Total recapture amount. Add the amounts in column (b). See instructions . . . . . . . . . . . . . . . . . . . . . 2

FTB 3806 Booklet 1998 Page 7


Part IV Net Interest Deduction • The lender may not have equity or other Instructions for Worksheet IV —
ownership interest in the borrower’s trade or
for Lenders business; and Net Interest Deduction for Lenders
A deduction from income is allowed for the
• The loan must be made on or after Line 1, column (e) – Enter the direct expenses
May 1, 1992.
amount of net interest received from loans made incurred in making the loan. Attach an additional
to a trade or business located within the LARZ. Example: You lend $5,000 to a LARZ business schedule(s) if necessary. Examples of direct
that meets the requirements listed above. You expenses include:
Net interest is defined as the amount of interest
receive $550 in interest and incur $300 in
received before December 1, 1998, less any
expenses directly related to the loan. You may
• Commissions paid to a loan representative;
direct expenses incurred in making the loan.
deduct $250 ($550 – $300) of net interest from
• Costs incurred in funding the loan; and
Examples of direct expenses include, but are not
your taxable income.
• Other costs of the loan.
limited to: Line 2 – Enter the amount from line 2, column (f)
Record Keeping. You should maintain records
• Commissions paid to a loan representative; for each loan showing:
on form FTB 3806, Side 1, line 3, and on your
• Costs incurred in funding the loan; and California tax return or schedule as follows:
• Other costs of the loan. • The identity and location of the trade or busi- • Form 100, line 14;
ness to which you lent the money;
Types of loans that qualify for this deduction
• The amount of the loan, interest received and • Form 100S, line 12, Form 100S, Schedule K,
include business loans, mortgages and loans line 10 and Schedule K-1 (100S), line 10;
any direct expenses associated with the loan;
from noncommercial sources. The following
and
• Form 109, Part II, line 24;
requirements must be met to qualify for the
• The use of the loan. • Schedule CA (540), column B, on line 8 or
deduction: the applicable line for your business activity;
• The loan must be made to a trade or • Schedule CA (540NR), column B, on the
business located solely within the LARZ; applicable line for your business activity;
• The money lent must be used strictly for • Form 541, line 15a;
the borrower’s business activities within • Form 565, Schedule K, line 11 and
the LARZ; Schedule K-1 (565), line 11; or
• Form 568, Schedule K, line 11 and
Schedule K-1 (568), line 11.

Worksheet IV Net Interest Deduction for Lenders — Los Angeles Revitalization Zone
(a) Name and location of (b) Date (c) Amount (d) Interest (e) Direct (f) Net interest
business to which loan was made of loan of loan received expenses (col. (d) minus
incurred col. (e))

2 Total. Add the amounts in column (f). See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Page 8 FTB 3806 Booklet 1998


Part V Doing Business Totally must be combined. For more information, get Compensation Within the LARZ
Schedule R. See the instructions for ordering Compensation is considered to be within the
Within or Within and Outside the forms on page 25. LARZ if either of the following tests is met:
Los Angeles Revitalization Zone Pass-through entities must report to their share- • The employee’s services are performed within
holders, beneficiaries, partners and members: the geographical boundaries of the LARZ; or
The LARZ tax incentives are limited to the tax on
business income attributable to operations within 1. The distributive (or pro rata for S corpora- • The employee’s services are performed within
tions) share of the business income appor- and outside the LARZ, but the services per-
the zone. If the business is located totally within
tioned to the LARZ; and formed outside the LARZ are incidental to the
or within and outside of the LARZ, the portion of
2. The distributive (or pro rata for S corpora- employee’s service within the LARZ.
total business operations that are attributable to
the LARZ must be determined. tions) share of the business capital gains Note: Incidental means any temporary or transi-
apportioned to the LARZ included in item 1. tory service rendered in connection with an
Use Worksheet V, Apportionment, to determine
These items should be reported using the appro- isolated transaction.
the amount of business income apportioned to
the zone. The zone business income determines priate schedules listed below: Compensation Within and Outside the LARZ
the amount of the tax incentives that can be • Schedule K-1 (100S), line 23; If the employee’s services are performed both
used. • Schedule K-1 (541), line 11e; within and outside the LARZ, the employee’s
Only California source business income is appor- • Schedule K-1 (565), line 22; or compensation will be attributed to the LARZ if:
tioned to the LARZ. A taxpayer’s LARZ business • Schedule K-1 (568), line 22. • The employee’s base of operations is within
income is its California apportioned business Property Factor the LARZ; or
income multiplied by the specific LARZ apportion- Property is defined as the average value of all • There is no base of operations in any other
ment percentage. real and tangible personal property owned or part of the state in which some part of the
The LARZ property and payroll factors used in rented by the business and used during the taxa- service is performed, but the place from
the determination of apportionable business ble or income year to produce business income. which the service is directed or controlled is
income include only the taxpayer’s California Note: Property is included in the factor if it was within the LARZ.
amounts in the denominator. available for use during the taxable or income Base of operations is the permanent place from
Note: If the business operates only within the year. which employees start work and customarily
LARZ, you do not have to complete this work- Property owned by the business is valued at its return in order to receive instruction from the tax-
sheet. Enter 100% (1.00) on line 4. original cost. Generally, original cost is the payer or communications from their customers or
basis of the property for federal income tax pur- persons; to replenish stock or other material; to
Business Income vs. Nonbusiness Income repair equipment; or to perform any other func-
poses (prior to any federal adjustment) at the
Only business income is apportioned to the time of acquisition by the business, adjusted for tions necessary in the exercise of their trade or
LARZ to determine the incentive limitation. LARZ subsequent capital additions or improvements profession at some other point or points.
tax incentives are limited to tax on business and partial dispositions because of sale or The numerator of the payroll factor is the total
income attributable to the operations within the exchange. Allowance for depreciation is not compensation paid to employees for working
LARZ. considered. within the LARZ during the taxable or income
Business income is defined as income arising Rented property is valued at 8 times the net year (column (b)).
from transactions and activities in the regular annual rental rate. The net annual rental rate for The denominator of the payroll factor is the total
course of the trade or business. Business income any item of rented property is the total rent paid compensation paid to employees working in
includes income from tangible and intangible for the property, less aggregate annual subrental California (column (a)).
property if the acquisition, management and dis- rates paid by subtenants.
position of the property constitute integral parts
The numerator of the property factor is the aver- Example – Computation of LARZ income assigned to
of the regular trade or business operations. Non- each entity operating within the LARZ:
business income is all income other than busi- age value of the real and tangible personal prop-
erty owned or rented by the business and used Parent Corporation A has one subsidiary, B. Corporations A
ness income. Get Title 18 Cal. Code Regulation and B operate within the LARZ. The combined group oper-
Section 25120 for further references and exam- within the LARZ during the taxable or income ates both within and outside California and apportions its
ples of nonbusiness income. year to produce LARZ business income income to California using Schedule R. The combined group’s
(column (b)). business income apportioned to California was $1,000,000.
For an individual, business income includes but Business income apportioned to the LARZ is determined as
is not limited to California business income or The denominator of the property factor is the follows:
total average value of all real and tangible per- A B Combined
loss from Schedules C, D, D-1 (or Form 4797, Property Factor
Sales of Business Property, if you did not have sonal property owned or rented and used during
LARZ property $2,000,000 $1,000,000 $3,000,000
to file a Schedule D-1), E and F and wages. Be the taxable or income year within California California property $5,000,000
sure to include casualty losses, disaster losses (column (a)). Apportionment % 40% 20% 60%
and any business deductions reported on Payroll Factor Payroll Factor
Schedule A as itemized deductions. Note: If you Payroll is defined as the total amount paid to the LARZ payroll $2,000,000 $800,000 $2,800,000
elected to carry back part or all of your current business’s employees for compensation for the California payroll $4,000,000
year disaster loss under IRC Section 165(i)(1), production of business income during the taxable Apportionment % 50% 20% 70%
do not include the amount of the loss that was or income year. Average
carried back in your current year business Apportionment % 45% 20% 65%
Compensation means wages, salaries, commis- (Property + Payroll Factors)
income for the LARZ. 2
sions and any other form of remuneration paid
In general, all transactions and activities of the directly to employees for personal services. Apportioned
Business Income $1,000,000
business that are dependent upon or contribute
Payments made to independent contractors or LARZ INCOME $ 450,000 $ 200,000 $ 650,000
to the operations of the economic enterprise as a
any other person not properly classified as an
whole constitute trade or business.
employee are excluded.
When a corporation is part of a group of corpora-
tions engaged in a unitary business, the income
and apportionment factors of the unitary group

FTB 3806 Booklet 1998 Page 9


Worksheet V Apportionment — Los Angeles Revitalization Zone
Use Worksheet V if your business has net income from sources within (a) Total within California (b) Total within (c) Percentage within
and outside the LARZ. the LARZ the LARZ
(column (b) ÷ column (a))

PROPERTY FACTOR
1 Average yearly value of owned real and tangible personal
property used in the business (at original cost). See
instructions on page 9. Exclude property not connected
with the business and the value of construction in progress.
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Machinery and equipment . . . . . . . . . . . . . . . . . . .

Furniture and fixtures . . . . . . . . . . . . . . . . . . . . .

Delivery equipment . . . . . . . . . . . . . . . . . . . . . . .

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other tangible assets (attach schedule) . . . . . . . . . . .


Rented property used in the business.
See instructions on page 9 . . . . . . . . . . . . . . . . . .

Total property values. . . . . . . . . . . . . . . . . . . . .


PAYROLL FACTOR
2 Employees’ wages, salaries, commissions and other
compensation related to business income included in
return.
Total payroll.. . . . . . . . . . . . . . . . . . . . . . . . . .

3 Total percentage (add the percentages in column (c)) . . .


4 Average apportionment percentage (1/2 of line 3).
Enter here and on form FTB 3806, Side 1, line 5 . . . . .
The average apportionment percentage shown on line 4 represents the portion of the taxpayer’s total business that is attributable to activities conducted
within the LARZ.

Note: Those factors with zero balances in the totals of column (a) will not be included in the computation of the average apportionment percentage. For
example, if the taxpayer has no payroll within and outside the LARZ, then the average apportionment percentage would be computed by dividing line 3 by 1
(instead of by 2 as normally instructed.)

Page 10 FTB 3806 Booklet 1998


Part VI Net Operating Loss (NOL) Instructions for Income or Loss Line 6 – Line 9: If your business operation
reported on Schedule C, C-EZ, E or F, or
Generally, no new LARZ NOLs may be gener- Worksheet another schedule, is within and outside the LARZ
ated in taxable or income years beginning on or and California, get Schedule R and complete line
Use the Income or Loss Worksheet on the follow-
after January 1, 1998. However, LARZ NOL car- 1 through line 13b. Enter the figure on Schedule
ing page to determine the amount to enter on:
ryovers may still be claimed for 15 years from the R, line 13b in column (a) of this worksheet. To
year the LARZ NOL was generated. • Worksheet VI, line 1 and line 6 (Form 540 determine the percentage figure in column (b),
and Form 540NR filers); and complete Worksheet V. Enter the figure on Work-
Note: Financial institutions using bad debt
reserve methods may carry over the loss for a
• Worksheet VII, Part I, line 1 and line 3. sheet V, line 4 in column (b) of this worksheet.
maximum of 5 income years. Do not include disaster losses in any amounts Note: When computing Schedule R, disregard
used in the table. any reference to Form 100, Form 565 or
Taxpayers who receive a loss from a 1997 fiscal Form 568. Also disregard any reference to
year pass-through entity operating in the LARZ Only California source business income is appor-
Schedule R-3, Schedule R-4 or Schedule R-5,
may not elect a LARZ NOL for their taxable or tioned to the LARZ.
and skip line 11.
income year ending on or after The first step is to determine which portion of the
December 1, 1998. Note: The LARZ NOL elec- Nonresidents that have an apportioning business
taxpayer’s net income is ‘‘business income’’ and
tion is not made at the entity level but at the that operates within the LARZ should have
which portion is ‘‘nonbusiness income,’’ since
investor (shareholder, beneficiary, partner or already computed Schedule R and can use those
only business income may be apportioned to the
member) level. amounts when that schedule is referenced. Resi-
LARZ. See Part V (page 9) for a complete dis-
dents that have an apportioning business will not
Exception: Taxpayers with taxable or income cussion of business and nonbusiness income.
have completed a Schedule R for California
years ending before December 1, 1998, may Business income or loss reported on Schedules income tax purposes since they are taxed on
claim a 1998 LARZ NOL. These taxpayers C, C-EZ, E and F, and other schedules are income from all sources. However, in order for
should use the 1997 FTB 3806, Worksheet VI, reported on line 6 through line 9. Line 11 and residents to determine their California source
Section A or Section B, to compute their 1998 line 12 report business gains or losses reported business income for purposes of the LARZ calcu-
LARZ NOL. on Schedules D and D-1. All business income lation, they must complete a Schedule R also.
Limitation. A LARZ NOL deduction can offset and losses should be adjusted for any differ-
Line 11 - Line 12: If the gain or loss reported on
only business income attributable to operations ences between California and federal amounts
Schedule D or Schedule D-1 (as adjusted on
within the LARZ. as shown on the Schedule CA (540 or 540NR).
Schedule CA (540 or 540NR)) was attributed to
Alternative Minimum Tax. Taxpayers claiming a Income Computation an asset used in an activity conducted within and
LARZ NOL deduction must determine their NOL (Use to compute zone income for outside the LARZ and California, get Schedule R
for alternative minimum tax (AMT) purposes. Use and complete Schedule R-1. Multiply the gain or
Schedule P (100, 540, 540NR or 541) to com- Worksheet VI and Worksheet VII) loss reported by the percentage on
pute the LARZ NOL for AMT purposes. Line 6 – Line 9: If your business operation Schedule R-1, line 5 and enter the result in
S Corporations. LARZ NOLs incurred prior to reported on Schedule C, C-EZ, E or F, or column (a). To determine the percentage figure
becoming an S corporation may not be used another schedule, is entirely in the LARZ, enter in column (b), complete Worksheet V. Enter the
against S corporation income. See IRC the income or loss from this activity in column figure on Worksheet V, line 4 in column (b) of
Section 1371(b). (a), and enter 1.00 in column (b). this worksheet.
Line 11 – Line 12: If the gain or loss reported on
However, an S corporation is allowed to deduct a
Schedule D or Schedule D-1 (as adjusted on Part I — Individual Income and
LARZ NOL incurred after the ‘‘S’’ election is
made. An S corporation may use the NOL as a Schedule CA (540 or 540NR)) was attributed to Expense Items
deduction against income subject to the 1.5% an asset used in an activity conducted entirely in Wages. Taxpayers with wages from a company
entity-level tax (3.5% for financial institutions). the LARZ, enter the gain or loss reported in col- located within and outside the LARZ must deter-
The expenses (and income) giving rise to the umn (a) and enter 1.00 in column (b). mine the LARZ wage income by entering the per-
loss are also passed through to the shareholders Line 6 – Line 9: If your business operation centage of their time (during the period for which
in the year the loss is incurred. reported on Schedule C, C-EZ, E or F, or the wages entered on line 1 were earned) that
Taxpayers Operating Within and Outside the another schedule, is entirely in California, enter they worked within the LARZ. This percentage
LARZ. Unlike the NOL treatment on a federal the income or loss from this activity in column must be determined based on their record of
consolidated return, a loss carryover for one (a). To determine the percentage figure in col- time and events such as a travel log or entries in
member included in a combined report may not umn (b), complete Worksheet V. Enter the figure a daily planner.
be applied to the intrastate apportioned income on Worksheet V, line 4 in column (b) of this
of another member included in a combined worksheet. Part II — Pass-Through Income or
report. Line 11 – Line 12: If the gain or loss reported on Loss
For water’s-edge purposes, each corporation’s Schedule D or Schedule D-1 (as adjusted on Multiple Pass-Through Entities. If you are a
NOL carryover is limited to the amount deter- Schedule CA (540 or 540NR)) was attributed to shareholder, partner or member in multiple pass-
mined by recomputing the income and factors of an asset used in an activity conducted entirely in through entities with businesses located within
the original worldwide combined reporting group California, enter the gain or loss reported in col- and outside the LARZ from which you received
as if the water’s-edge election had been in force umn (a). To determine the percentage figure in LARZ incentives, see the example below for
for the year of the loss. The NOL carryover may column (b), complete Worksheet V. Enter the fig- computing business income in the LARZ.
not be increased as a result of the ure on Worksheet V, line 4 in column (b) of this
worksheet. Example:
recomputation. Trade or
Business
Income
from Entity’s
Schedule K-1 LARZ LARZ
(100S, 541, Apportionment Apportioned
Pass-through 565 or 568) Percentage Income
ABC, Inc. $40,000 80% $32,000
A, B & C 30,000 10% 3,000
ABC, LLC 10,000 50% 5,000
$40,000

FTB 3806 Booklet 1998 Page 11


Part III — Taxpayer’s Trade or Line 14 – If the result on the Income or Loss (skip line 2 through line 5). Also enter the
Worksheet, line 14, column (c) is a negative amount from the Income or Loss Worksheet,
Business amount, you do not have current year LARZ line 14, column (c) on Worksheet VII, Part I,
Business Income. Use business income or loss income and you cannot claim any LARZ tax line 1 and line 3 (skip line 2) if you have
from Form 1040 Schedules C, C-EZ, E and F, incentives this year. LARZ credit carryovers.
plus California adjustments from Schedule CA If the result on the Income or Loss Worksheet, • You do not have LARZ NOL carryovers but
(540 or 540NR) for each trade or business. Also line 14, column (c) is a positive amount and: you do have LARZ credit carryovers, enter
include business capital gains and losses from the amount on Worksheet VII, Part I, line 1
Schedule D and business gains and losses from
• You have LARZ NOL carryovers, enter the and line 3 (skip line 2).
amount on Worksheet VI, line 1 and line 6
Schedule D-1 (as adjusted on Schedule CA (540
or 540NR)).

Income or Loss Worksheet — Los Angeles Revitalization Zone


Part I Individual Income and Expense Items. See instructions.
(a) (b) (c)
Amount % of time providing services Apportioned amount
in the LARZ (a) x (b)

1 Wages . . . . . . . . . . . . . . . . . . .
2 Employee business expenses . . . . . .

3 Subtotal: Enter the total of line 1, column (c) and line 2, column (c) in column (c), this line. . . . . . . . . . . . . .
Part II Pass-through Income or Loss. See instructions.
(a) (b)
Name of entity Distributive or pro rata share of business income or loss apportioned to
the LARZ from Schedule(s) K-1 (100S, 541, 565 or 568) including
business capital gains and losses

5 Subtotal: Enter the total of line 4, column (b) in column (b), this line . . . . .
Part III Taxpayer’s Trade or Business. See instructions.
(a) (b) (c)
California business Apportionment % Apportioned income or loss
income or loss for the LARZ (a) x (b)

6 Schedule C or C-EZ. . . . . . . . . . . .
7 Schedule E (Rentals) . . . . . . . . . . .
8 Schedule F. . . . . . . . . . . . . . . . .

9 Other . . . . . . . . . . . . . . . . . . . .

10 Subtotal: Enter the total of line 6 through line 9, column (c) in column (c), this line . . . . . . . . . . . . . . . . . .
(a) (b) (c)
California business Apportionment % Apportioned gain or loss
gain or loss for the LARZ (a) x (b)

11 Schedule D. . . . . . . . . . . . . . . . .

12 Schedule D-1 . . . . . . . . . . . . . . .
13 Subtotal: Enter the total of line 11, column (c) and line 12, column (c) in column (c), this line . . . . . . . . . . . .

14 Total: Enter the total of line 3, line 10 and line 13, column (c) and line 5, column (b) in column (c), this line . . . .

Page 12 FTB 3806 Booklet 1998


Instructions for Worksheet VI — Line 3 – Corporations must reduce income by
Example:
the disaster loss deduction and the deduction for
Net Operating Loss (NOL) Carryover excess net passive income. (b) Carry- (c) Amount (d) Balance (e) LARZ NOL
over from deducted available to carryover
and Carryover Limitations Line 6 – This is your modified taxable income prior year this year offset losses
(MTI). Reduce this amount by your LARZ NOL
Use this worksheet to compute the LARZ NOL deduction. The LARZ NOL deduction may not be $5,000
deduction for corporations, individuals and larger than your MTI. If your MTI is a loss in the $ 500 $ 500 4,500 $ 0
exempt trusts. The LARZ NOL deduction is used current year or if it limits the amount of NOL you 6,000 4,500 0 1,500
to reduce current year income from the LARZ. may use this year, you must carry over the NOL
Note: Taxpayers with 1998 taxable or income to future years.
Line 14 – Enter the amount of your current year
years ending before December 1, 1998, should Line 7 – Enter the amount from line 6. If this LARZ NOL. Note: Only for taxpayers with taxa-
use the 1997 FTB 3806, Worksheet VI, amount is zero or negative, transfer the ble or income years ending before
Section A or Section B, to compute a current amount(s) from line 8 through line 13, column (b) December 1, 1998.
year LARZ loss. Skip line 1 through line 6. Enter to column (e). Go to line 14.
zero on line 7 and follow the instructions for Line 15 – Enter the totals from column (b),
line 8 through line 15. Line 8 through Line 13 – Enter the amounts as column (c) and column (e) on form FTB 3806,
positive numbers. Side 1, line 4a, line 4b and line 4c, respectively.
Line 1 – See Part V (page 9) for a discussion of
business and nonbusiness income. Note to In column (c), enter the smaller of the amount in Your LARZ NOL deduction for 1998 is the
Form 540 and Form 540NR filers: Be sure to column (b) or the amount in column (d) from the amount on line 15, column (c). Enter this amount
include casualty losses, disaster losses and any previous line. on your California tax return or schedule as
business deductions reported on Schedule A as In column (d), enter the result of subtracting col- follows:
itemized deductions. Exception: If you elected to umn (c) from the balance on the previous line in • Form 100, line 20;
carry back part or all of your current year disaster column (d). • Form 100S, line 19;
loss under IRC Section 165(i)(1), do not include In column (e), enter the result of subtracting the • Form 109, line 3 or line 11;
the amount of the loss that was carried back in amount in column (c) from the amount in • Schedule CA (540), line 21e,
your current year business income for the LARZ. column (b), as applicable. column B; or
Line 2 – In modifying your income, deduct your • Schedule CA (540NR), line 21e, column B.
capital losses only up to your capital gains. Enter
any net capital losses included in line 1 as a
positive number.

FTB 3806 Booklet 1998 Page 13


Worksheet VI Net Operating Loss (NOL) Carryover and Carrover Limitations — Los Angeles Revitalization Zone

1 Enter the amount from Form 100, line 17; Form 100S, combined amounts of line 15
and line 17; or Form 109, line 1 or line 10. Form 540 and Form 540NR filers, enter the
total from the Income or Loss Worksheet, line 14, column (c) (page 12) on line 1 and
line 6 (skip line 2 through line 5). See instructions. Note: Apportioning corporations, enter
the amount from Schedule R, line 13b for the corporation doing business in the zone . . . . 1
2 a Form 100, 100S and 109 filers: Enter any nonbusiness income included in
line 1 as a negative number. Form 540 and Form 540NR filers: Leave blank . . . . . 2a
b Form 100, 100S and 109 filers: Enter any nonbusiness losses included in
line 1 as a positive number. Form 540 and Form 540NR filers: Leave blank . . . . . 2b
c Combine line 2a through line 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
3 Form 100 filers: Enter the amount from Form 100, line 21. Form 100S filers: Enter
the total of the amounts on Form 100S, line 17 and line 20. Form 540, Form 540NR
and Form 109 filers: Enter -0-. Enter this amount as a negative number . . . . . . . . . 3
4 Combine line 1, line 2c and line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Enter the average apportionment percentage from Worksheet V, line 4 . . . . . . . . . . 5
6 Modified taxable income. Multiply line 4 by line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

(a) Description (b) Carryover (c) Amount (d) Balance (e) LARZ NOL
from prior deducted available to carryover
year this year offset losses

7 Modified taxable income from


line 6 . . . . . . . . . . . . . . . . . . . . . . .
8 LARZ NOL carryover
beginning in 1992 . . . . . . . . . . . . . . . .
9 LARZ NOL carryover
beginning in 1993 . . . . . . . . . . . . . . . .
10 LARZ NOL carryover
beginning in 1994 . . . . . . . . . . . . . . . .
11 LARZ NOL carryover
beginning in 1995 . . . . . . . . . . . . . . . .
12 LARZ NOL carryover
beginning in 1996 . . . . . . . . . . . . . . . .
13 LARZ NOL carryover
beginning in 1997 . . . . . . . . . . . . . . . .
14 LARZ NOL carryover
beginning in 1998 . . . . . . . . . . . . . . . .
15 Total the amounts in column (b), column (c)
and column (e). See instructions . . . . . . . .

Page 14 FTB 3806 Booklet 1998


Part VII Computation of Credit • Separately state the distributive share of any Interest on savings account 1,000
business capital gains and losses apportioned Dividends 3,000
Limitations to the zone included in the amount above. Schedule K-1 (100S) from ABC, Inc.:
S corporations: Complete Part I and Part III of Ordinary income 40,000
No new LARZ credits may be generated in taxa-
this worksheet if your entity-level tax before cred- LARZ business expense
ble or income years beginning on or after
its is more than the minimum franchise tax. deduction (5,000)*
January 1, 1998. However, LARZ credit carry-
overs may still be claimed for 15 years from the Corporations and S corporations subject to Gregory’s unreimbursed employee
year the credit was generated. the minimum tax only: Complete only Part IV of expenses from Schedule A (2,000)
Credit Limitations. The amount of credit carry- this worksheet. *The LARZ business expense deduction is a
over you can claim on your California tax return All others: Complete Part I and Part II of this separately stated item on Schedule K-1 (100S),
is limited by the amount of tax attributable to the worksheet. line 8.
LARZ business income. Use Worksheet VII on The Smiths’ LARZ income (total amount to be
Part I
form FTB 3806, Side 2 to compute this limitation. reported on line 3) is computed as follows:
Note: For filers with LARZ NOLs or LARZ NOL
Credit carryovers you are otherwise eligible to Gregory’s LARZ ($100,000 x 50%) $50,000
carryovers:
claim may be limited. Do not apply credit carry- Mary’s LARZ salary
overs against the minimum franchise tax (corpo- • Complete Worksheet VI first if you have a ($75,000 x 100%) 75,000
rations, limited partnerships, limited liability current year LARZ NOL or a LARZ NOL Pass-through ordinary income from
partnerships, LLCs and S corporations), the alter- carryover(s). ABC, Inc. ($40,000 x 80%) 32,000
native minimum tax (corporations, exempt organi- • Then complete Worksheet VII if you have any Gregory’s unreimbursed employee
zations, individuals and fiduciaries), the built-in LARZ credit carryovers. business expenses
gains tax (S corporations) or the net passive If you do not have a current LARZ NOL or any (2,000 x 50%) (1,000)
income tax (S corporations). Refer to the credit LARZ NOL carryovers: Total LARZ income (Worksheet VII,
instructions in your tax booklet for more
information.
• Individual filers: Go to the Income or Loss Part I, line 3) $151,000
Worksheet in Part VI. Follow the instructions Note: The standard deduction and personal or
Carryover. If the amount of credit carryover there. Enter the amount from the Income or dependency exemptions are not included in the
available this year exceeds your tax, you may Loss Worksheet, line 14, column (c) on computation of LARZ income since they are not
carry over any excess credit to future years. The Worksheet VII, Part I, line 1 and line 3 (skip related to trade or business activities.
maximum carryover period is 15 years. Apply the line 2). Gregory and Mary Smith must compute the tax
carryover to the earliest taxable or income • Corporations: Follow the instructions for line 1 (to be entered on Worksheet VII, Part I, line 6a)
year(s) possible. In no event can the credit carry- below. on the total LARZ income of $151,000 (as if it
over be carried back and applied against a prior represents all of their income). Using the tax rate
Line 1 – See page 9 for a definition of trade or
year’s tax. Even though the LARZ has expired, schedule in their tax booklet for filing status mar-
business income. Enter all trade or business
the tax must continue to be computed on income ried filing joint, the 1998 tax figured on $151,000
income.
as if the LARZ were still in existence. is $10,745.
Line 2 – If your business is located entirely
For S corporations, the amount of credit carry- Line 6b – Corporations and S corporations: If
within the zone, enter 1.
over that is in excess of the 1.5% entity-level tax the amount on line 6b is the minimum franchise
(3.5% for financial S corporations) in the current Specifically, this percentage is the apportionment
percentage computed by the entity using tax ($800), you cannot use your LARZ credit car-
year may be carried forward and used in future ryovers this year. You should complete Part IV of
years to offset the 1.5% entity-level tax (3.5% for FTB 3806, Worksheet V, and represents the per-
centage of the entity’s business attributable to the worksheet to figure the amount to carry over.
financial S corporations). See the instructions for
Worksheet VII, Part III for more information. the LARZ. Part II
Credit Code Number. To claim the LARZ hiring Line 6a – Compute the tax as if the LARZ taxa- Use Part II if you are a corporation, individual,
and sales or use tax credit carryovers on your ble income represented all of your taxable estate or trust. Corporations that are subject to
return, you must use credit code number 159. income. paying only the minimum franchise tax, go to
Using the incorrect code number may cause a Individuals: Use the tax table or tax rate sched- Part IV.
delay in allowing the credit. ule in your tax booklet for your filing status. Line 8A, column (e) – Enter the amount from
Exempt organizations: Use the applicable tax line 7. This is the amount of limitation based on
Instructions for Worksheet VII — rate in your tax booklet. Corporations and the tax on LARZ business income.
S corporations: Use the applicable tax rate. Line 8A, column (f) – Enter the amount of credit
Computation of Credit Limitations Example (Determination of LARZ Income for carryover that is used on Schedule P (100, 540,
Note: Worksheet VII is on Side 2 of form Shareholders, Partners or Members of Pass- 540NR or 541), column (b). The amount cannot
FTB 3806. Through Entities): be greater than the amount in column (e) or the
Gregory Smith is vice president of ABC, Inc., an amount computed on line 8B, column (d).
Partnerships and LLCs taxed as partnerships do
S corporation that has two locations: one in the Line 8B, column (c) – Enter the amount of the
not complete Worksheet VII. The partners and
LARZ and one outside the LARZ. Eighty percent total prior year carryover of the credit (this is the
members of these types of entities should com-
(80%) of the S corporation’s business is attribut- amount of credit that was previously figured on
plete Worksheet VII in order to determine the
able to the LARZ. (Note: This percentage was Worksheet I, Section A, in the prior year, minus
amount of LARZ credit carryovers that they may
determined by ABC, Inc. using FTB 3806, Work- the amount that was allowed to be taken on the
claim on their California tax return. S corpora-
sheet V — Apportionment Worksheet, when prior year return).
tions and their shareholders must each complete
ABC’s California S corporation return
Worksheet VII. Line 8B, column (d) – Enter the amount of
(Form 100S) was prepared.) Gregory divides his
Reporting Requirements of S Corporations, time equally (50%/50%) between the two offices line 8B, column (c) here.
Estates or Trusts, Partnerships and LLCs of ABC, Inc. Line 8B, column (e) – Compare the amount of
Taxed as Partnerships. line 8A, column (e) and line 8A, column (f). Enter
Mary Smith (Gregory’s spouse) works for ABC,
• Report to shareholders, beneficiaries, part- Inc. at its office located in the LARZ. the smaller amount.
ners and members, the distributive or pro rata Line 8B, column (g) – Subtract the amount of
Gregory and Mary Smith have the following 1998
share of business income, loss or deduction column (e) from the amount of column (d). Enter
items of California income and expense:
apportioned to the zone; and the result in column (g). This is the amount of
Gregory’s salary from ABC, Inc. $100,000 credit carryover that can be carried over to future
Mary’s salary from ABC, Inc. 75,000 years. Note: This carryover includes both the

FTB 3806 Booklet 1998 Page 15


Schedule P (100, 540, 540NR or 541) limitation Line 9B, column (g) – Subtract the amount of Line 10B, column (d) – Enter the amount of
and the limitation based on LARZ business column (e) from the amount of column (d). Enter line 10B, column (c) here.
income. the result in column (g). This is the amount of Line 10B, column (e) – Compare the amount of
Line 9A, column (e) – Subtract the amount of credit carryover that can be carried over to future line 10A, column (e) and line 10A, column (f).
line 8B, column (e) from the amount of line 8A, years. Note: This carryover includes both the Enter the smaller amount.
column (e). If the result is zero, your remaining Schedule P (100, 540, 540NR or 541) limitation
and the limitation based on LARZ income. Line 10B, column (g) – Subtract the amount of
credit carryovers are limited and must be carried column (e) from the amount of column (d). Enter
over to future years. In this case, enter the Line 10A, column (e) – Subtract the amount of the result in column (g). This is the amount of
amounts from line 9B, column (d) and line 10B, line 9B, column (e) from the amount of line 9A, credit carryover that can be carried over to future
column (d) on line 9B and 10B in column (g). column (e). If the result is zero, your remaining years. Note: This carryover includes both the
Line 9A, column (f) – Enter the amount of credit credit carryover is limited and must be carried Schedule P (100, 540, 540NR or 541) limitation
carryover that is used on Schedule P (100, 540, over to future years. In this case, enter the and the limitation based on LARZ income.
540NR or 541), column (b). The amount cannot amount from line 10B, column (d) in column (g).
Example: Part II
be greater than the amount in column (e) or the Line 10A, column (f) – Enter the amount of
amount computed on line 9B, column (d). credit carryover that is used on Schedule P (100, The ABC Business has $8,000 of tax. The busi-
540, 540NR or 541), column (b). The amount ness has a credit limitation of $7,000 computed
Line 9B, column (c) – Enter the amount of the on Worksheet VII, line 7. The business has the
total prior year carryover of the credit (this is the cannot be greater than the amount in column (e)
or the amount computed on line 10B, column (d). following credit carryovers:
amount of credit that was previously figured on
Worksheet I, Section B, in the prior year, minus Line 10B, column (c) – Enter the amount of Construction hiring credit
the amount that was allowed to be taken on the total prior year carryover of the credit (this is the carryover – $5,000
prior year return). amount of credit that was previously figured on General hiring credit
Worksheet II, in the prior year, minus the amount carryover – $800
Line 9B, column (d) – Enter the amount of Sales or use tax credit
line 9B, column (c) here. that was allowed to be taken on the prior year
return). carryover – $9,000
Line 9B, column (e) – Compare the amount of Worksheet VII, Part II would be computed as
line 9A, column (e) and line 9A, column (f). Enter follows:
the smaller amount.

Part II Limitation of Credits for Corporations, Individuals and Estates and Trusts
(a) (c) (d) (e) (f) (g)
Credit Total Total credit Limitation Used on Schedule P Carryover
name prior year carryover (enter based on (can never be greater (col. (d) minus
carryover amounts from col. (c)) LARZ business income than col. (d) or col. (e)) col. (e))

Construction A 7,000 5,000


8 hiring
B 5,000 5,000 5,000 -0-
General A 2,000 800
9 hiring
B 800 800 800 -0-
Sales or A 1,200 1,200
10 use tax
B 9,000 9,000 1,200 7,800

Part III line 13 in this column for line 11, line 12 and line Part IV
Use Part III only if you are an S corporation. 13, as applicable. Use Part IV if you are a corporation or
You may need to adjust your Schedule C to Line 11 through Line 13, column (f) – Enter the S corporation subject to paying only the minimum
reflect the LARZ tax limitation (Part I, line 7) on amount of credit carryover that was used by the franchise tax.
your credits after completing this worksheet. S corporation in the current year to offset its Line 14 through Line 16, column (c) – Enter
1.5% entity-level tax (3.5% for financial S corpo- the amount of the total prior year carryover of the
Line 11 through Line 13, column (d) – Enter rations) in column (f) for line 11, line 12 and line
the amount of the total prior year credit carryover credit in column (c) for line 14, line 15 and
13, as applicable. line 16, as applicable. (These are the amounts of
on line 11, column (d); line 12, column (d); and
line 13, column (d), as applicable. This is the Line 11 through Line 13, column (g) – Subtract credits that were previously figured on
amount of credit that was previously figured on the amounts in column (f) for each line from the Worksheet I and Worksheet II in the prior year,
the prior year’s Worksheet I or Worksheet II, amounts in column (e) for each line. These are minus the amount that was allowed to be taken
minus the amount that was allowed to be taken the amount of credit carryovers that can be car- on the prior year return.)
on the prior year return. ried over to future years and used by the Line 14 through Line 16, column (d) – Enter
S corporation. the amount in column (c) for line 14, line 15 and
Line 11 through Line 13, column (e) – Enter
the amount in column (d) for line 11, line 12 and line 16 in this column for line 14, line 15 and
line 16, as applicable.

Page 16 FTB 3806 Booklet 1998


FTB 3806 Code Code
315230 Women’s & Girls’ Cut & Sew 332900 Other Fabricated Metal
Codes for Principal Business Activity Apparel Mfg Product Mfg
315290 Other Cut & Sew Apparel Mfg Machinery Manufacturing
This list of principal business activities and their associ- 315990 Apparel Accessories & Other 333100 Agriculture, Construction, &
Apparel Mfg Mining Machinery Mfg
ated codes is designed to classify a business by the Leather and Allied Product 333200 Industrial Machinery Mfg
type of activity in which it is engaged to facilitate the Manufacturing 333310 Commercial & Service
316110 Leather & Hide Tanning & Industry Machinery Mfg
administration of the California Revenue and Taxation Finishing 333410 Ventilation, Heating,
Code. For taxable or income years beginning on or after 316210 Footwear Mfg (including Air-Conditioning, &
rubber & plastics) Commercial Refrigeration
January 1, 1998, these principal business activity codes 316990 Other Leather & Allied Equipment Mfg
are based on the North American Industry Classification Product Mfg 333510 Metalworking Machinery Mfg
Wood Product Manufacturing 333610 Engine, Turbine & Power
System. 321110 Sawmills & Wood Transmission Equipment Mfg
Preservation 333900 Other General Purpose
321210 Veneer, Plywood, & Machinery Mfg
Engineered Wood Product Computer and Electronic Product
Mfg Manufacturing
321900 Other Wood Product Mfg 334110 Computer & Peripheral
Paper Manufacturing Equipment Mfg
322100 Pulp, Paper, & Paperboard 334200 Communications Equipment
Mills Mfg
322200 Converted Paper Product Mfg 334310 Audio & Video Equipment Mfg
Agriculture, Forestry, Fishing Construction Printing and Related Support 334410 Semiconductor & Other
Electronic Component Mfg
and Hunting Code Activities
334500 Navigational, Measuring,
Code 323100 Printing & Related Support
Building, Developing, and General Activities Electromedical, & Control
Crop Production Contracting Instruments Mfg
233110 Land Subdivision & Land Petroleum and Coal Products 334610 Manufacturing & Reproducing
111100 Oilseed & Grain Farming Manufacturing
111210 Vegetable & Melon Farming Development Magnetic & Optical Media
233200 Residential Building 324110 Petroleum Refineries
(including potatoes & yams) (including integrated) Electrical Equipment, Appliance, and
111300 Fruit & Tree Nut Farming Construction Component Manufacturing
233300 Nonresidential Building 324120 Asphalt Paving, Roofing, &
111400 Greenhouse, Nursery, & Saturated Materials Mfg 335100 Electric Lighting Equipment
Floriculture Production Construction Mfg
324190 Other Petroleum & Coal
111900 Other Crop Farming (including Heavy Construction Products Mfg 335200 Household Appliance Mfg
tobacco, cotton, sugarcane, 234100 Highway, Street, Bridge, & 335310 Electrical Equipment Mfg
Tunnel Construction Chemical Manufacturing
hay, peanut, sugar beet & all 335900 Other Electrical Equipment &
other crop farming) 234900 Other Heavy Construction 325100 Basic Chemical Mfg
Component Mfg
325200 Resin, Synthetic Rubber, &
Animal Production Special Trade Contractors Artificial & Synthetic Fibers & Transportation Equipment
112111 Beef Cattle Ranching & 235110 Plumbing, Heating, & Filaments Mfg Manufacturing
Farming Air-Conditioning Contractors 325300 Pesticide, Fertilizer, & Other 336100 Motor Vehicle Mfg
112112 Cattle Feedlots 235210 Painting & Wall Covering Agricultural Chemical Mfg 336210 Motor Vehicle Body & Trailer
112120 Dairy Cattle & Milk Production Contractors 325410 Pharmaceutical & Medicine Mfg
112210 Hog & Pig Farming 235310 Electrical Contractors Mfg 336300 Motor Vehicle Parts Mfg
112300 Poultry & Egg Production 235400 Masonry, Drywall, Insulation, 325500 Paint, Coating, & Adhesive 336410 Aerospace Product & Parts
112400 Sheep & Goat Farming & Tile Contractors Mfg Mfg
112510 Animal Aquaculture (including 235500 Carpentry & Floor Contractors 325600 Soap, Cleaning Compound, & 336510 Railroad Rolling Stock Mfg
shellfish & finfish farms & 235610 Roofing, Siding, & Sheet Toilet Preparation Mfg 336610 Ship & Boat Building
hatcheries) Metal Contractors 325900 Other Chemical Product & 336990 Other Transportation
112900 Other Animal Production 235710 Concrete Contractors Preparation Mfg Equipment Mfg
Forestry and Logging 235810 Water Well Drilling Plastics and Rubber Products Furniture and Related Product
113110 Timber Tract Operations Contractors Manufacturing Manufacturing
113210 Forest Nurseries & Gathering 235900 Other Special Trade 326100 Plastics Product Mfg 337000 Furniture & Related Product
of Forest Products Contractors 326200 Rubber Product Mfg Manufacturing
113310 Logging Manufacturing Nonmetallic Mineral Product Miscellaneous Manufacturing
Fishing, Hunting and Trapping Manufacturing 339110 Medical Equipment &
Food Manufacturing 327100 Clay Product & Refractory Mfg Supplies Mfg
114110 Fishing 311110 Animal Food Mfg
114210 Hunting & Trapping 339900 Other Miscellaneous
311200 Grain & Oilseed Milling 327210 Glass & Glass Product Mfg Manufacturing
Support Activities for Agriculture 311300 Sugar & Confectionery
and Forestry 327300 Cement & Concrete Product
Product Mfg Mfg Wholesale Trade
115110 Support Activities for Crop 311400 Fruit & Vegetable Preserving
Production (including cotton 327400 Lime & Gypsum Product Mfg Wholesale Trade, Durable Goods
& Specialty Food Mfg 327900 Other Nonmetallic Mineral 421100 Motor Vehicle & Motor Vehicle
ginning, soil preparation, 311500 Dairy Product Mfg
planting, & cultivating) Product Mfg Parts & Supplies Wholesalers
311610 Animal Slaughtering and 421200 Furniture & Home Furnishing
115210 Support Activities for Animal Processing Primary Metal Manufacturing
Production 331110 Iron & Steel Mills & Ferroalloy Wholesalers
311710 Seafood Product Preparation 421300 Lumber & Other Construction
115310 Support Activities For Forestry & Packaging Mfg
331200 Steel Product Mfg from Materials Wholesalers
311800 Bakeries & Tortilla Mfg 421400 Professional & Commercial
Purchased Steel
Mining 311900 Other Food Mfg (including Equipment & Supplies
coffee, tea, flavorings & 331310 Alumina & Aluminum
211110 Oil & Gas Extraction Production & Processing Wholesalers
seasonings) 421500 Metal & Mineral (except
212110 Coal Mining 331400 Nonferrous Metal (except
Beverage and Tobacco Product Aluminum) Production & Petroleum) Wholesalers
212200 Metal Ore Mining Manufacturing Processing 421600 Electrical Goods Wholesalers
212310 Stone Mining & Quarrying 312110 Soft Drink & Ice Mfg 331500 Foundries 421700 Hardware, & Plumbing &
212320 Sand, Gravel, Clay, & 312120 Breweries Heating Equipment &
Ceramic & Refractory Fabricated Metal Product
312130 Wineries Manufacturing Supplies Wholesalers
Minerals Mining & Quarrying
312140 Distilleries 332110 Forging & Stamping 421800 Machinery, Equipment, &
212390 Other Nonmetallic Mineral Supplies Wholesalers
Mining & Quarrying 312200 Tobacco Manufacturing 332210 Cutlery & Handtool Mfg
421910 Sporting & Recreational
213110 Support Activities for Mining Textile Mills and Textile Product 332300 Architectural & Structural Goods & Supplies
Mills Metals Mfg Wholesalers
Utilities 313000 Textile Mills 332400 Boiler, Tank, & Shipping 421920 Toy & Hobby Goods &
221100 Electric Power Generation, 314000 Textile Product Mills Container Mfg Supplies Wholesalers
Transmission & Distribution Apparel Manufacturing 332510 Hardware Mfg 421930 Recyclable Material
221210 Natural Gas Distribution 315100 Apparel Knitting Mills 332610 Spring & Wire Product Mfg Wholesalers
221300 Water, Sewage & Other 315210 Cut & Sew Apparel 332700 Machine Shops; Turned 421940 Jewelry, Watch, Precious
Systems Contractors Product; & Screw, Nut, & Bolt Stone, & Precious Metal
315220 Men’s & Boys’ Cut & Sew Mfg Wholesalers
Apparel Mfg 332810 Coating, Engraving, Heat 421990 Other Miscellaneous Durable
Treating, & Allied Activities Goods Wholesalers

FTB 3806 Booklet 1998 Page 17


Code Code Code Code
Wholesale Trade, Nondurable Goods Clothing and Clothing Accessories Support Activities for Transportation 523210 Securities & Commodity
422100 Paper & Paper Product Stores 488100 Support Activities for Air Exchanges
Wholesalers 448110 Men’s Clothing Stores Transportation 523900 Other Financial Investment
422210 Drugs & Druggists’ Sundries 448120 Women’s Clothing Stores 488210 Support Activities for Rail Activities (including portfolio
Wholesalers 448130 Children’s & Infants’ Clothing Transportation management & investment
422300 Apparel, Piece Goods, & Stores 488300 Support Activities for Water advice)
Notions Wholesalers 448140 Family Clothing Stores Transportation Insurance Carriers and Related
422400 Grocery & Related Product 448150 Clothing Accessories Stores 488410 Motor Vehicle Towing Activities
Wholesalers 448190 Other Clothing Stores 488490 Other Support Activities for 524140 Direct Life, Health, & Medical
422500 Farm Product Raw Material 448210 Shoe Stores Road Transportation Insurance & Reinsurance
Wholesalers 488510 Freight Transportation Carriers
448310 Jewelry Stores
422600 Chemical & Allied Products Arrangement 524150 Direct Insurance &
448320 Luggage & Leather Goods Reinsurance (except Life,
Wholesalers Stores 488990 Other Support Activities for
422700 Petroleum & Petroleum Transportation Health & Medical) Carriers
Products Wholesalers Sporting Goods, Hobby, Book, and 524210 Insurance Agencies &
Music Stores Couriers and Messengers
422800 Beer, Wine, & Distilled Brokerages
451110 Sporting Goods Stores 492110 Couriers
Alcoholic Beverage 524290 Other Insurance Related
451120 Hobby, Toy, & Game Stores 492210 Local Messengers & Local Activities
Wholesalers Delivery
422910 Farm Supplies Wholesalers 451130 Sewing, Needlework, & Piece Funds, Trusts, and Other Financial
422920 Book, Periodical, & Goods Stores Warehousing and Storage Vehicles
Newspaper Wholesalers 451140 Musical Instrument & Supplies 493100 Warehousing & Storage 525100 Insurance & Employee Benefit
422930 Flower, Nursery Stock, & Stores (except lessors of Funds
Florists’ Supplies Wholesalers 451211 Book Stores miniwarehouses & self-
storage units) 525910 Open-End Investment Funds
422940 Tobacco & Tobacco Product 451212 News Dealers & Newsstands (Form 1120-RIC)
Wholesalers 451220 Prerecorded Tape, Compact Information 525920 Trusts, Estates, & Agency
422950 Paint, Varnish, & Supplies Disc, & Record Stores Accounts
Wholesalers Publishing Industries
General Merchandise Stores 525930 Real Estate Investment Trusts
422990 Other Miscellaneous 511110 Newspaper Publishers (Form 1120-REIT)
452110 Department stores
Nondurable Goods 511120 Periodical Publishers 525990 Other Financial Vehicles
452900 Other General Merchandise
Wholesalers Stores 511130 Book Publishers
Miscellaneous Store Retailers
511140 Database & Directory Real Estate and Rental and
Retail Trade Publishers Leasing
453110 Florists 511190 Other Publishers
Motor Vehicle and Parts Dealers Real Estate
453210 Office Supplies & Stationery 511210 Software Publishers
441110 New Car Dealers Stores 531110 Lessors of Residential
441120 Used Car Dealers 453220 Gift, Novelty, & Souvenir Motion Picture and Sound Recording Buildings & Dwellings
441210 Recreational Vehicle Dealers Stores Industries 531120 Lessors of Nonresidential
441221 Motorcycle Dealers 453310 Used Merchandise Stores 512100 Motion Picture & Video Buildings (except
441222 Boat Dealers Industries (except video Miniwarehouses)
453910 Pet & Pet Supplies Stores rental)
441229 All Other Motor Vehicle 453920 Art Dealers 531130 Lessors of Miniwarehouses &
Dealers 512200 Sound Recording Industries Self-Storage Units
453930 Manufactured (Mobile) Home
441300 Automotive Parts, Dealers Broadcasting and 531190 Lessors of Other Real Estate
Accessories, & Tire Stores Telecommunications Property
453990 All Other Miscellaneous Store
Furniture and Home Furnishings Retailers (including tobacco, 513100 Radio & Television 531210 Offices of Real Estate Agents
Stores candle, & trophy shops) Broadcasting & Brokers
442110 Furniture Stores 513200 Cable Networks & Program 531310 Real Estate Property
Nonstore Retailers Distribution Managers
442210 Floor Covering Stores 454110 Electronic Shopping &
442291 Window Treatment Stores 513300 Telecommunications 531320 Offices of Real Estate
Mail-Order Houses (including paging, cellular, Appraisers
442299 All Other Home Furnishings 454210 Vending Machine Operators satellite, & other
Stores 531390 Other Activities Related to
454311 Heating Oil Dealers telecommunications) Real Estate
Electronics and Appliance Stores 454312 Liquefied Petroleum Gas Information Services and Data Rental and Leasing Services
443111 Household Appliance Stores (Bottled Gas) Dealers Processing Services 532100 Automotive Equipment Rental
443112 Radio, Television, & Other 454319 Other Fuel Dealers 514100 Information Services & Leasing
Electronics Stores 454390 Other Direct Selling (including news syndicates, 532210 Consumer Electronics &
443120 Computer & Software Stores Establishments (including libraries, & on-line information Appliances Rental
443130 Camera & Photographic door-to-door retailing, frozen services)
food plan providers, party 532220 Formal Wear & Costume
Supplies Stores 514210 Data Processing Services Rental
plan merchandisers, &
Building Material and Garden coffee-break service 532230 Video Tape & Disc Rental
Equipment and Supplies Dealers Finance and Insurance 532290 Other Consumer Goods
providers)
444110 Home Centers Depository Credit Intermediation Rental
444120 Paint & Wallpaper Stores Transportation and 522110 Commercial Banking 532310 General Rental Centers
444130 Hardware Stores Warehousing 522120 Savings Institutions 532400 Commercial & Industrial
444190 Other Building Material Air, Rail, and Water Transportation 522130 Credit Unions Machinery & Equipment
Dealers 522190 Other Depository Credit Rental & Leasing
481000 Air Transportation
444200 Lawn & Garden Equipment & Intermediation Lessors of Nonfinancial Intangible
Supplies Stores 482110 Rail Transportation
483000 Water Transportation Nondepository Credit Intermediation Assets (except copyrighted works)
Food and Beverage Stores 522210 Credit Card Issuing 533110 Lessors of Nonfinancial
445110 Supermarkets and Other Truck Transportation Intangible Assets (except
522220 Sales Financing
Grocery (except 484110 General Freight Trucking, copyrighted works)
Local 522291 Consumer Lending
Convenience) Stores 522292 Real Estate Credit (including
445120 Convenience Stores 484120 General Freight Trucking, Professional, Scientific, and
Long-distance mortgage bankers &
445210 Meat Markets
484200 Specialized Freight Trucking
originators) Technical Services
445220 Fish & Seafood Markets 522293 International Trade Financing Legal Services
445230 Fruit & Vegetable Markets Transit and Ground Passenger 522294 Secondary Market Financing
Transportation 541110 Offices of Lawyers
445291 Baked Goods Stores 522298 All Other Nondepository Credit 541190 Other Legal Services
445292 Confectionery & Nut Stores 485110 Urban Transit Systems Intermediation
485210 Interurban & Rural Bus Accounting, Tax Preparation,
445299 All Other Specialty Food Activities Related to Credit Bookkeeping, and Payroll Services
Stores Transportation
Intermediation 541211 Offices of Certified Public
445310 Beer, Wine, & Liquor Stores 485310 Taxi Service
522300 Activities Related to Credit Accountants
485320 Limousine Service Intermediation (including loan
Health and Personal Care Stores 541213 Tax Preparation Services
485410 School & Employee Bus brokers)
446110 Pharmacies & Drug Stores Transportation 541214 Payroll Services
446120 Cosmetics, Beauty Supplies, Securities, Commodity Contracts, 541219 Other Accounting Services
485510 Charter Bus Industry and Other Financial Investments and
& Perfume Stores
485990 Other Transit & Ground Related Activities Architectural, Engineering, and
446130 Optical Goods Stores Passenger Transportation Related Services
446190 Other Health & Personal Care 523110 Investment Banking &
Pipeline Transportation Securities Dealing 541310 Architectural Services
Stores
486000 Pipeline Transportation 523120 Securities Brokerage 541320 Landscape Architecture
Gasoline Stations Services
447100 Gasoline Stations (including Scenic & Sightseeing Transportation 523130 Commodity Contracts Dealing
541330 Engineering Services
convenience stores with gas) 487000 Scenic & Sightseeing 523140 Commodity Contracts
Transportation Brokerage 541340 Drafting Services
541350 Building Inspection Services

Page 18 FTB 3806 Booklet 1998


Code Code Code Code
541360 Geophysical Surveying & 561500 Travel Arrangement & Other Ambulatory Health Care Food Services and Drinking Places
Mapping Services Reservation Services Services 722110 Full-Service Restaurants
541370 Surveying & Mapping (except 561600 Investigation & Security 621900 Other Ambulatory Health Care 722210 Limited-Service Eating Places
Geophysical) Services Services Services (including 722300 Special Food Services
541380 Testing Laboratories 561710 Exterminating & Pest Control ambulance services & blood (including food service
Specialized Design Services Services & organ banks) contractors & caterers)
541400 Specialized Design Services 561720 Janitorial Services Hospitals 722410 Drinking Places (Alcoholic
(including interior, industrial, 561730 Landscaping Services 622000 Hospitals Beverages)
graphic, & fashion design) 561740 Carpet & Upholstery Cleaning Nursing and Residential Care
Computer Systems Design and Services Facilities Other Services
Related Services 561790 Other Services to Buildings & 623000 Nursing & Residential Care Repair and Maintenance
541511 Custom Computer Dwellings Facilities 811110 Automotive Mechanical &
Programming Services 561900 Other Support Services Social Assistance Electrical Repair &
541512 Computer Systems Design (including packaging & Maintenance
labeling services, & 624100 Individual & Family Services
Services 811120 Automotive Body, Paint,
convention & trade show 624200 Community Food & Housing, Interior, & Glass Repair
541513 Computer Facilities organizers) & Emergency & Other Relief
Management Services Services 811190 Other Automotive Repair &
541519 Other Computer Related Waste Management and Remediation Maintenance (including oil
Services 624310 Vocational Rehabilitation change & lubrication shops &
Services Services
562000 Waste Management & car washes)
Other Professional, Scientific, and Remediation Services 624410 Child Day Care Services 811210 Electronic & Precision
Technical Services Equipment Repair &
541600 Management, Scientific, & Educational Services Arts, Entertainment, and Maintenance
Technical Consulting Services
611000 Educational Services
Recreation 811310 Commercial & Industrial
541700 Scientific Research & Performing Arts, Spectator Sports, Machinery & Equipment
Development Services (including schools, colleges, &
universities) and Related Industries (except Automotive &
541800 Advertising & Related 711100 Performing Arts Companies Electronic) Repair &
Services Health Care and Social 711210 Spectator Sports (including Maintenance
541910 Marketing Research & Public 811410 Home & Garden Equipment &
Opinion Polling Assistance sports clubs & racetracks)
711300 Promoters of Performing Arts, Appliance Repair &
541920 Photographic Services Offices of Physicians and Dentists Maintenance
Sports, & Similar Events
541930 Translation & Interpretation 621111 Offices of Physicians (except 811420 Reupholstery & Furniture
mental health specialists) 711410 Agents & Managers for
Services Artists, Athletes, Entertainers, Repair
541940 Veterinary Services 621112 Offices of Physicians, Mental & Other Public Figures 811430 Footwear & Leather Goods
541990 All Other Professional, Health Specialists Repair
711510 Independent Artists, Writers,
Scientific, & Technical 621210 Offices of Dentists & Performers 811490 Other Personal & Household
Services Offices of Other Health Practitioners Goods Repair & Maintenance
Museums, Historical Sites, and
621310 Offices of Chiropractors Similar Institutions Personal and Laundry Services
Management of Companies 621320 Offices of Optometrists 812111 Barber Shops
712100 Museums, Historical Sites, &
(Holding Companies) 621330 Offices of Mental Health Similar Institutions 812112 Beauty Salons
551111 Offices of Bank Holding Practitioners (except 812113 Nail Salons
Physicians) Amusement, Gambling, and
Companies Recreation Industries 812190 Other Personal Care Services
551112 Offices of Other Holding 621340 Offices of Physical, (including diet & weight
Occupational & Speech 713100 Amusement Parks & Arcades
Companies reducing centers)
Therapists, & Audiologists 713200 Gambling Industries
713900 Other Amusement & 812210 Funeral Homes & Funeral
Administrative and Support 621391 Offices of Podiatrists Services
Recreation Industries
and Waste Management and 621399 Offices of All Other
(including golf courses, skiing 812220 Cemeteries & Crematories
Remediation Services Miscellaneous Health 812310 Coin-Operated Laundries &
Practitioners facilities, marinas, fitness
Administrative and Support Services centers, & bowling centers) Drycleaners
Outpatient Care Centers 812320 Drycleaning & Laundry
561110 Office Administrative Services
561210 Facilities Support Services
621410 Family Planning Centers Accommodation and Food Services (except
561300 Employment Services
621420 Outpatient Mental Health & Services Coin-Operated)
Substance Abuse Centers 812330 Linen & Uniform Supply
561410 Document Preparation Accommodation
621491 HMO Medical Centers 812910 Pet Care (except Veterinary)
Services 721110 Hotels (except casino hotels)
621492 Kidney Dialysis Centers & Motels Services
561420 Telephone Call Centers
621493 Freestanding Ambulatory 721120 Casino Hotels 812920 Photofinishing
561430 Business Service Centers Surgical & Emergency
(including private mail centers 721191 Bed & Breakfast Inns 812930 Parking Lots & Garages
Centers 812990 All Other Personal Services
& copy shops) 721199 All Other Traveler
621498 All Other Outpatient Care Religious, Grantmaking, Civic,
561440 Collection Agencies Centers Accommodation
561450 Credit Bureaus 721210 RV (Recreational Vehicle) Professional, and Similar
Medical and Diagnostic Laboratories Parks & Recreational Camps Organizations
561490 Other Business Support
Services (including 621510 Medical & Diagnostic 721310 Rooming & Boarding Houses 813000 Religious, Grantmaking, Civic,
repossession services, court Laboratories Professional, & Similiar
reporting, & stenotype Home Health Care Services Organizations
services) 621610 Home Health Care Services

FTB 3806 Booklet 1998 Page 19


THIS PAGE LEFT BLANK FOR NOTES

Page 20 FTB 3806 Booklet 1998


YEAR
Los Angeles Revitalization Zone CALIFORNIA FORM

1998 Deduction and Credit Summary 3806


Attach to your California tax return. Social security or California corporation number

Name(s) as shown on return FEIN


A. Check the appropriate box for your entity type:


■ Individual ■ Estate ■ Trust ■ C corporation ■ S corporation ■ Partnership
■ Exempt organization ■ Limited liability company ■ Limited liability partnership
B. Enter the name of the Los Angeles Revitalization Zone (LARZ) business:
C. Enter the address (actual location) where the LARZ business is conducted.

D. Enter the name of the community in the LARZ in which the business and/or investment activity is located. See General Information E.

E. Principal Business Activity Code number of the LARZ business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Enter the 6-digit number from the Principal Business Activity Code Chart (pages 17 through 19).
F. Gross annual receipts of the business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Total asset value of the business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part I Credits Used
1 Hiring and sales or use tax credits claimed on the current year return:
a Construction hiring credit from Worksheet VII, line 8A, column (f) or line 11, column (f) . . . . . . . . . . . . . . . . . . . . .
b General hiring credit from Worksheet VII, line 9A, column (f) or line 12, column (f) . . . . . . . . . . . . . . . . . . . . . . . .
c Sales or use tax credit from Worksheet VII, line 10A, column (f) or line 13, column (f) . . . . . . . . . . . . . . . . . . . . . .
Add line 1a, line 1b and line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❚ 1
Note: To figure the amount of credits to carry over, complete Worksheet VII on Side 2.
Part II Business Expense Deduction for Equipment Purchases
2 Enter the cost of qualified property purchased for the LARZ that is being deducted as a current year
business expense from Worksheet III, Section A, line 2, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ELECTION: The act of deducting a portion of the cost of any property as a current year expense rather than adding it to the capital account
constitutes an election to treat that property in accordance with R&TC Sections 17266 or 24356.4. That election may not be revoked except with the
written consent of the Franchise Tax Board (FTB).
Part III Net Interest Deduction for Lenders
3 Enter the amount of net interest received on loans to businesses located in the LARZ from
Worksheet IV, line 2, column (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Part IV Net Operating Loss Carryover and Deduction
4a Enter the LARZ NOL carryover from prior years from Worksheet VI, line 15, column (b) . . . . . . . . . . . . . . . . . . . . . . 4a
4b Enter the total LARZ NOL deduction used in the current year from Worksheet VI, line 15, column (c).
Enter this amount on Schedule CA (540 or 540NR), line 21e, column B; Form 100, line 20; Form 100S, line 19;
or Form 109, line 3 or line 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4b
4c Enter the LARZ NOL to carry over to future years from Worksheet VI, line 15, column (e). . . . . . . . . . . . . . . . . . . . . 4c
ELECTION: For those taxpayers eligible for an NOL carryover under R&TC Section 17276.2, 17276.4, 17276.5, 17276.6, 24416.2, 24416.4, 24416.5 or
24416.6, the act of claiming an NOL carryover on this form constitutes the irrevocable election to apply the loss under R&TC Section 17276.4 or
24416.4, for taxpayers operating a trade or business within the LARZ. If you elect to carry over an NOL under the LARZ provisions, you cannot
carry over any other type and amount of NOL from this year.
Part V Portion of Business Attributable to the LARZ
5 Enter the average apportionment percentage of your business that is in the LARZ from Worksheet V, line 4.
If your operation is wholly within the LARZ, the average apportionment percentage is 100% (1.00) . . . . . . . . . . . . . . . 5
Part VI Recapture of Deduction and Credits
6 Recapture of construction hiring credit from Worksheet I, line 2, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Recapture of general hiring credit from Worksheet I, line 2, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Recapture of sales or use tax credit from Worksheet II, line 2, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Recapture of business expense deduction from Worksheet III, Section B, line 2, column (b) . . . . . . . . . . . . . . . . . . . 9

380698109 FTB 3806 1998 Side 1


Worksheet VII Computation of Credit Limitations — Los Angeles Revitalization Zone
Part I Computation of Limitations. See instructions.
1 Trade or business income. Individuals: Enter the amount from the Income or Loss Worksheet, line 14,
column (c) (page 12) on this line and on line 3 (skip line 2). See instructions on page 15. Note: Multistate apportioning
corporations, enter the amount from Schedule R, line 13b for the corporation doing business in the zone . . . . . . . . . . . . 1
2 Corporations: Enter the average apportionment percentage from Worksheet V, line 4. See instructions . . . . . . . . . . 2
3 Multiply line 1 by line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Enter the LARZ NOL deduction from Worksheet VI, line 15, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 LARZ taxable income. Subtract line 4 from line 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6a Compute the amount of tax due using the amount on line 5. See instructions. . . . . . . 6a
6b Enter the amount of tax from Form 540, line 24; Form 540NR, line 27; Form 541, line 21;
Form 100, line 23 or Form 100S, line 22 or Form 109, line 7 or line 15. Corporations
and S corporations, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b
7 Enter the smaller of line 6a or line 6b. This is the limitation based on LARZ income.
Go to Part II, Part III or Part IV. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Part II Limitation of Credits for Corporations, Individuals and Estates and Trusts. See instructions.

(a) (c) (d) (e) (f) (g)


Credit Total Total credit carry- Limitation Used on Schedule P Carryover
name prior year over (enter amounts based on (can never be greater (col. (d) minus
carryover from col. (c)) LARZ business income than col. (d) or col. (e)) col. (e))

Construction A
8 hiring
B
General A
9 hiring
B
Sales or A
10 use tax
B
Part III Limitation of Credits for S Corporations only. See instructions.

(a) (d) (e) (f) (g)


Credit Total Total credit carry- Credit carryover Carryover
name prior year over (enter amounts used this year (col. (e) minus
carryover from col. (d)) by S corporation col. (f))

Construction
11
hiring
General
12
hiring
Sales or
13
use tax
Part IV Limitation of Credits for Corporations and S Corporations Subject to Paying Only the Minimum Franchise Tax. See instructions.

(a) (c) (d)


Credit Total Total credit
name prior year carryover
carryover (enter amounts
from col. (c))
Construction
14
hiring
General
15
hiring
Sales or
16
use tax

Side 2 FTB 3806 1998 380698209


YEAR
Los Angeles Revitalization Zone CALIFORNIA FORM

1998 Deduction and Credit Summary 3806


Attach to your California tax return. Social security or California corporation number

Name(s) as shown on return FEIN


A. Check the appropriate box for your entity type:


■ Individual ■ Estate ■ Trust ■ C corporation ■ S corporation ■ Partnership
■ Exempt organization ■ Limited liability company ■ Limited liability partnership
B. Enter the name of the Los Angeles Revitalization Zone (LARZ) business:
C. Enter the address (actual location) where the LARZ business is conducted.

D. Enter the name of the community in the LARZ in which the business and/or investment activity is located. See General Information E.

E. Principal Business Activity Code number of the LARZ business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Enter the 6-digit number from the Principal Business Activity Code Chart (pages 17 through 19).
F. Gross annual receipts of the business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Total asset value of the business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part I Credits Used
1 Hiring and sales or use tax credits claimed on the current year return:
a Construction hiring credit from Worksheet VII, line 8A, column (f) or line 11, column (f) . . . . . . . . . . . . . . . . . . . . .
b General hiring credit from Worksheet VII, line 9A, column (f) or line 12, column (f) . . . . . . . . . . . . . . . . . . . . . . . .
c Sales or use tax credit from Worksheet VII, line 10A, column (f) or line 13, column (f) . . . . . . . . . . . . . . . . . . . . . .
Add line 1a, line 1b and line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❚ 1
Note: To figure the amount of credits to carry over, complete Worksheet VII on Side 2.
Part II Business Expense Deduction for Equipment Purchases
2 Enter the cost of qualified property purchased for the LARZ that is being deducted as a current year
business expense from Worksheet III, Section A, line 2, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ELECTION: The act of deducting a portion of the cost of any property as a current year expense rather than adding it to the capital account
constitutes an election to treat that property in accordance with R&TC Sections 17266 or 24356.4. That election may not be revoked except with the
written consent of the Franchise Tax Board (FTB).
Part III Net Interest Deduction for Lenders
3 Enter the amount of net interest received on loans to businesses located in the LARZ from
Worksheet IV, line 2, column (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Part IV Net Operating Loss Carryover and Deduction
4a Enter the LARZ NOL carryover from prior years from Worksheet VI, line 15, column (b) . . . . . . . . . . . . . . . . . . . . . . 4a
4b Enter the total LARZ NOL deduction used in the current year from Worksheet VI, line 15, column (c).
Enter this amount on Schedule CA (540 or 540NR), line 21e, column B; Form 100, line 20; Form 100S, line 19;
or Form 109, line 3 or line 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4b
4c Enter the LARZ NOL to carry over to future years from Worksheet VI, line 15, column (e). . . . . . . . . . . . . . . . . . . . . 4c
ELECTION: For those taxpayers eligible for an NOL carryover under R&TC Section 17276.2, 17276.4, 17276.5, 17276.6, 24416.2, 24416.4, 24416.5 or
24416.6, the act of claiming an NOL carryover on this form constitutes the irrevocable election to apply the loss under R&TC Section 17276.4 or
24416.4, for taxpayers operating a trade or business within the LARZ. If you elect to carry over an NOL under the LARZ provisions, you cannot
carry over any other type and amount of NOL from this year.
Part V Portion of Business Attributable to the LARZ
5 Enter the average apportionment percentage of your business that is in the LARZ from Worksheet V, line 4.
If your operation is wholly within the LARZ, the average apportionment percentage is 100% (1.00) . . . . . . . . . . . . . . . 5
Part VI Recapture of Deduction and Credits
6 Recapture of construction hiring credit from Worksheet I, line 2, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Recapture of general hiring credit from Worksheet I, line 2, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Recapture of sales or use tax credit from Worksheet II, line 2, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Recapture of business expense deduction from Worksheet III, Section B, line 2, column (b) . . . . . . . . . . . . . . . . . . . 9

380698109 FTB 3806 1998 Side 1


Worksheet VII Computation of Credit Limitations — Los Angeles Revitalization Zone
Part I Computation of Limitations. See instructions.
1 Trade or business income. Individuals: Enter the amount from the Income or Loss Worksheet, line 14,
column (c) (page 12) on this line and on line 3 (skip line 2). See instructions on page 15. Note: Multistate apportioning
corporations, enter the amount from Schedule R, line 13b for the corporation doing business in the zone . . . . . . . . . . . . 1
2 Corporations: Enter the average apportionment percentage from Worksheet V, line 4. See instructions . . . . . . . . . . 2
3 Multiply line 1 by line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Enter the LARZ NOL deduction from Worksheet VI, line 15, column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 LARZ taxable income. Subtract line 4 from line 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6a Compute the amount of tax due using the amount on line 5. See instructions. . . . . . . 6a
6b Enter the amount of tax from Form 540, line 24; Form 540NR, line 27; Form 541, line 21;
Form 100, line 23 or Form 100S, line 22 or Form 109, line 7 or line 15. Corporations
and S corporations, see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b
7 Enter the smaller of line 6a or line 6b. This is the limitation based on LARZ income.
Go to Part II, Part III or Part IV. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Part II Limitation of Credits for Corporations, Individuals and Estates and Trusts. See instructions.

(a) (c) (d) (e) (f) (g)


Credit Total Total credit carry- Limitation Used on Schedule P Carryover
name prior year over (enter amounts based on (can never be greater (col. (d) minus
carryover from col. (c)) LARZ business income than col. (d) or col. (e)) col. (e))

Construction A
8 hiring
B
General A
9 hiring
B
Sales or A
10 use tax
B
Part III Limitation of Credits for S Corporations only. See instructions.

(a) (d) (e) (f) (g)


Credit Total Total credit carry- Credit carryover Carryover
name prior year over (enter amounts used this year (col. (e) minus
carryover from col. (d)) by S corporation col. (f))

Construction
11
hiring
General
12
hiring
Sales or
13
use tax
Part IV Limitation of Credits for Corporations and S Corporations Subject to Paying Only the Minimum Franchise Tax. See instructions.

(a) (c) (d)


Credit Total Total credit
name prior year carryover
carryover (enter amounts
from col. (c))
Construction
14
hiring
General
15
hiring
Sales or
16
use tax

Side 2 FTB 3806 1998 380698209


How to Get California Tax Information (Keep This Page For Future Use)
Where to Get Income Tax Forms Your Rights as a Taxpayer Letters
By Internet – If you have Internet access, Our goal at the Franchise Tax Board is to If you find it necessary to write rather than
you may download, view and print 1994 make certain that your rights are protected so call, please address your letter to:
through 1998 California tax forms and publica- that you will have the highest confidence in RESOURCE DEVELOPMENT SECTION
tions. Our Internet address is: the integrity, efficiency and fairness of our FRANCHISE TAX BOARD
http://www.ftb.ca.gov state tax system. FTB Publication 4058, PO BOX 1468
By phone – Use F.A.S.T. to order 1996, 1997 California Taxpayers’ Bill of Rights, includes SACRAMENTO CA 95812-1468
and 1998 California personal income tax information on your rights as a California tax-
payer, the Taxpayers’ Rights Advocate Pro- Please allow 6 to 8 weeks for a reply. Include
forms, 1998 California corporate tax forms your California identification number and day-
and 1998 federal forms. To order a form: gram and how you can request written advice
from the FTB on whether a particular transac- time telephone number on all
• Refer to the list in your tax booklet and tion is taxable. See ‘‘Where to Get Income correspondence.
find the code number for the form you Tax Forms’’ on this page for how to get
want to order. Pub. 4058.
• Call (800) 338-0505 and follow the Field Offices
instructions.
You can get information, California tax forms
Please allow 2 weeks to receive your order. General Toll-Free Phone Service and resolve problems on your account if you
If you live outside California, please allow visit one of our field offices.
3 weeks to receive your order. Between January 4 – April 15, 1999, our
general toll-free phone service is available: Field Office Address
In person – Most libraries, post offices and
banks provide free California personal income • Monday – Friday, 6 a.m. until midnight; Bakersfield 1800 30th St, Ste 370
and Burbank 333 N Glenoaks Blvd,
tax booklets during the filing season. Many
libraries and some quick print businesses • Saturday, 8 a.m. until 5 p.m. Ste 200
Fresno 2550 Mariposa St,
have forms and schedules for you to photo- After April 15, 1999, our general toll-free Rm 3002
copy (you may have to pay a nominal fee). phone service is available: Long Beach 4300 Long Beach Blvd,
Note that employees at libraries, post offices, • Monday – Friday, 7 a.m. until 8 p.m. Ste 700B
banks and quick print businesses cannot pro- Los Angeles 300 S Spring St, Ste 5704
The best times to call are before 10 a.m. and
vide tax information or assistance. Oakland 1515 Clay St, #3N-305
after 6 p.m. Times of day are Pacific Standard
By mail – Write to: Time (PST). Sacramento 3321 Power Inn Road,
TAX FORMS REQUEST UNIT Ste 250
From within the San Bernardino 464 W 4th St, Ste 454B
FRANCHISE TAX BOARD United States, . . . . . . . (800) 852-5711
PO BOX 307 San Diego 5353 Mission Ctr Rd, Ste 314
From outside the San Francisco 455 Golden Gate Ave,
RANCHO CORDOVA CA 95741-0307 United States, . . . . . . . (916) 845-6500 Ste 7400
(not toll-free) San Jose 96 N Third St, 4th Fl
For hearing impaired
Economic Development Area with TDD . . . . . . . . . . (800) 822-6268
Santa Ana 600 W Santa Ana Blvd,
Ste 300
Information For federal tax questions, Santa Rosa 50 D St, Rm 130
call the IRS at . . . . . . . . (800) 829-1040 Stockton 31 East Channel St, Rm 219
Further information about LARZ tax incentives
is available from: Asistencia Bilingüe en Español Ventura 4820 McGrath St, Ste 270
Para obtener servicios en Español y West Covina 100 N Barranca St, Ste 600
FRANCHISE TAX BOARD
ECONOMIC DEVELOPMENT AREA asistencia para completar su declaración de Out of State Offices
INFORMATION impuestos/formularios, llame al número de Chicago 1 N Franklin, Ste 400
Telephone: (916) 845-3464 teléfono (anotado arriba) que le corresponde. Chicago IL 60606-3401
FAX: (916) 845-0415 Long Island 1325 Franklin Ave, Ste 560
Garden City NY 11530
Houston 1415 Louisiana, Ste 1515
Houston TX 77002-7351
Manhattan 1212 Ave of the Americas,
4th Fl
New York NY 10036-1601

FTB 3806 Booklet 1998 Page 25


& F.A.S.T. Toll-Free Phone Service (Keep This Page For Future Use)
Call Fast Answers about State Taxes, the F.A.S.T. 211 – How do I figure my IRA deduction? 718 – How do I get an extension of time to file?
toll-free phone service you can use to: 212 – How do I claim my disaster related loss? 722 – When do I have to file a short-period return?
• Find out about your current year tax refund; 215 – Who qualifies me to use the head of house- 734 – Is my corporation subject to the franchise tax
• Order most California and federal income tax hold filing status? or income tax?
forms; and 216 – I’m due a refund. Do I still need to file a S Corporations
• Hear recorded answers to many of your return? 704 – Is an S corporation subject to the minimum
questions about California taxes. 217 – I am currently/was in the military. Do I have franchise tax?
to file a California return? 705 – Are S corporations required to file estimate
F.A.S.T. is available in English and Spanish to 218 – I’m in the military. Do I have to use the same
callers with touch-tone telephones. payments?
filing status as federal? 706 – What forms do S corporations file?
How To Use F.A.S.T. 219 – I sold my personal residence. How do I 707 – The tax for my S corporation is less than the
Have paper and pencil ready to take notes. report the sale to California? minimum franchise tax. What figure do I put
Call from within the 220 – There is no difference in my state and on line 22 of Form 100S?
United States . . . . . . . . . (800) 338-0505 federal depreciation, business income and 708 – Where do S corporations make adjustments
Call from outside the capital gain income. What do I do? for state and federal law differences on
United States (not toll-free) . . (916) 845-6600 221 – What is community property? Schedule K-1 (100S) and where do nonresi-
To Find Out About Your Current Year Personal 222 – How much can I deduct for vehicle license dent shareholders find their California source
Income Tax Refund fees? income on their Schedule K-1 (100S)?
You should wait at least 8 weeks after you file your 227 – How do I get a refund of excess SDI?
239 – Where can I get help with filing my income Exempt Organizations
tax return before you call to find out about your 709 – How do I get tax-exempt status?
refund. You will need your social security number, tax return?
240 – Does a tax return have to be filed for a 710 – Does an exempt organization have to file
the numbers in your street address, box number or Form 199?
route number, and your ZIP Code to use this ser- deceased taxpayer?
735 – How can an exempt organization incorporate
vice. Refund status information is available from Refunds: without paying corporation fees and costs?
6 a.m. until midnight Monday through Friday except 300 – My spouse has passed away. You sent a 736 – I have exempt status. Do I need to file
state holidays and 6 a.m. until 10 p.m. Saturday and refund with both our names on it. What do I Form 100 or Form 109 in addition to
Sunday. Call the F.A.S.T. number, select refund do? Form 199?
information and follow the recorded instructions. 301 – I got a letter saying you sent my refund to
To Obtain Your Personal Income Tax Balance another agency. Why? Minimum Tax and Estimate Tax
Due and Payment Information 711 – Can I claim my prepayment tax as a credit or
Penalties: estimate payment on my return?
You should wait at least 45 days from the date you 400 – I have an extension of time to file my return.
mailed your payment before you call to verify receipt 712 – What is the minimum franchise tax?
Why did I get a penalty? 714 – My corporation is not doing business; does it
of your payment. You will need your social security 401 – I filed my return on time. Why did I get a
number, the numbers in your street address, box have to pay the minimum franchise tax?
penalty? 716 – When are my estimate payments due?
number or route number, and your ZIP Code to use 402 – How can I protest a penalty?
this service. Personal income tax balance due and 403 – What is the estimate penalty rate? Billings and Miscellaneous Notices
payment information is available from 6 a.m. until 723 – I received a bill for $250. What is this for?
midnight Monday through Friday except state holi- Notices and Bills: 728 – Why was my corporation suspended?
days and 6 a.m. until 10 p.m. Saturday and Sunday. 500 – I received a bill and I cannot pay it in full. 729 – Why is my subsidiary getting a request for a
What do I do? return when we file a combined report?
To Order Forms 501 – Why didn’t you give me credit for my
See ‘‘Where to Get Income Tax Forms’’ on page 25. withholding? Tax Clearance
For personal income tax forms, this service is avail- 502 – You didn’t give me credit for my child as a 724 – How do I dissolve my corporation?
able from 6 a.m. until midnight Monday through Fri- dependent. What do I do? 725 – What do I have to do to get a tax clearance?
day except state holidays and 6 a.m. until 10 p.m. 504 – I’m head of my house. Why was I denied 726 – How long will it take to get a tax clearance
Saturday and Sunday. Corporate tax forms are avail- head of household filing status? certificate?
able from 6 a.m. until 6 p.m. Monday through Friday. 505 – Why was my IRA deduction denied? 727 – My corporation was suspended/forfeited.
To Hear Answers To Your California Tax 506 – How can I get information about my Can I still get a tax clearance?
Questions Form 1099-G? Miscellaneous
Recorded answers to your tax questions are avail- 508 – I received a notice that didn’t show all pay- 617 – What are the current interest rates?
able 24 hours a day, 7 days a week. To receive ments made. How do I get credit for them? 700 – Who do I need to contact to start a
answers to any of the following questions, call the business?
F.A.S.T. number, select general tax information and Tax For Children Under 14:
601 – Can my child take a personal exemption 701 – I need a state ID number for my business.
enter the 3-digit code when instructed to do so. Who do I contact?
credit when I claim her or him as a
Times of day are Pacific Standard Time (PST). dependent on my return? 702 – Can you send me an employer’s tax guide?
602 – Federal law limits the standard deduction. Is 703 – How do I incorporate?
719 – How do I properly identify my corporation
Personal Income Tax Information the state law the same?
when dealing with the Franchise Tax Board?
Miscellaneous 720 – How do I obtain information about changing
Code – Question 610 – Can I pay my taxes with a credit card?
Filing Assistance: my corporation’s name?
611 – What address do I send my payment to? 721 – How do I change my accounting period?
100 – Do I need to file a return? 612 – I mailed my return and haven’t heard any-
111 – Which form should I use? 737 – Where do I send my payment?
thing. Should I send a copy of my return? 738 – What is electronic funds transfer?
112 – How do I file electronically and get a fast 613 – I forgot to attach my Form(s) W-2 when I
refund? 739 – How do I get a copy of my state corporate
mailed my return. What do I do? tax return?
200 – Where can I pick up a form today? 614 – I forgot to attach a copy of my federal return.
201 – How can I get an extension to file? 740 – What requirements do I have to report
What do I do? municipal bond interest paid by a state other
202 – There is no envelope in the booklet. Where 615 – How do I get a copy of my state tax return?
do I send my return? than California?
616 – What should I do if my federal tax return was 750 – How do I organize or register an LLC?
203 – What is and how do I qualify for the examined and changed by the IRS?
nonrefundable renter’s credit? 751 – How do I cancel my registration as an LLC?
617 – What are the current interest rates? 752 – What tax forms do I use to file as an LLC?
204 – I never received a Form W-2. What do I do? 619 – How do I report a change of address?
205 – I have no withholding taken out. What do I 758 – If a corporation converted to an LLC during
do? the current year, is the corporation liable for
206 – Do I have to attach a copy of my federal Corporation Franchise and Income tax as a corporation and an LLC tax/fee in
the same year?
return?
207 – Should I file my return even though I do not Tax Information
have the money to pay? Code – Question
208 – How do I figure my estimate tax payments? Filing Assistance
209 – I lived in California for part of the year. Do I 715 – If my actual tax is less than the minimum
have to file a return? franchise tax, what figure do I put on line 23
210 – I do not live in California. Why do I have to of Form 100?
file a return? 717 – What are the tax rates for corporations?

Page 26 FTB 3806 Booklet 1998