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California

Forms & Instructions This booklet contains:

3809
Form FTB 3809, Targeted Tax Area Deduction and Credit
Summary

1998
Targeted Tax Area 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 Targeted Tax Area Businesses — Form FTB 3809
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 For information about: To assist with the processing of the tax return,
• Enterprise Zone incentives, get FTB indicate that the business operates or invests
General Information. . . . . . . . . . . . . 2 3805Z, Enterprise Zone Business Booklet; within the TTA by doing the following:
Hiring Credit . . . . . . . . . . . . . . . . . 3 • LARZ tax incentives, get FTB 3806, Form 540 and Write ‘‘TTA’’ in the top left
Hiring Credit & Recapture Worksheet . . 5 Los Angeles Revitalization Zone Business Form 540NR margin of Side 1 of Form
Sales or Use Tax Credit . . . . . . . . . . 6 Booklet; filers: 540 or Form 540NR.
Sales or Use Tax Credit Worksheet . . . 7 • LAMBRA tax incentives, get FTB 3807, Form 100 filers: Claim TTA incentives
Business Expense Deduction . . . . . . . 8 Local Agency Military Base Recovery Area on Form 100, line 14
Business Expense Deduction & Recapture Business Booklet; or and line 24 through line
Worksheet . . . . . . . . . . . . . . . . 9 • The MEA hiring credit, get form FTB 3808, 27, as applicable.
Doing Business Totally Within the Manufacturing Enhancement Business Form 100S filers: Claim TTA incentives
Targeted Tax Area or Within and Booklet. on Form 100S, line 12
Outside the Targeted Tax Area . . . . 10 and line 23 through line
Apportionment Worksheet . . . . . . . . . 11 What’s New 26, as applicable.
Net Operating Loss (NOL) Computations Form 109 filers: Check the ‘‘yes’’ box for
and Loss Limitations . . . . . . . . . . 12 California Tax Law Changes
the Enterprise Zone,
Income or Loss Worksheet . . . . . . . . 13 Conformity. In general, California tax law LARZ, LAMBRA, TTA
NOL Worksheet . . . . . . . . . . . . . . . 14 conforms to the Internal Revenue Code (IRC) or MEA question on the
Computation of Credit Limitations . . . . 16 as of January 1, 1998. However, there are top of Side 1 of Form 109.
S Corporations . . . . . . . . . . . . . 16 continuing differences between California and
Principal Business Activity Code Chart . 18 federal tax law. California has not conformed Note: Be sure to keep all completed work-
Form FTB 3809, Targeted Tax Area to the changes made to the IRC by the sheets and supporting documents for your
Deduction and Credit Summary. . . . 21 federal Internal Revenue Service Restructur- records.
Computation of Credit Limitations ing and Reform Act of 1998 (Public Law
Worksheet . . . . . . . . . . . . . . . . . . 22 105-206) and the Tax and Trade Relief Exten- C Targeted Tax Area Designation
How to Get California Tax Information . . 25 sion Act of 1998 (Public Law 105-277). The TTA was established in California to stim-
F.A.S.T. Toll-Free Phone Service. . . . . 26 Principal Business Activity Code Chart ulate development in a selected economically
In 1998, the FTB implemented the new princi- depressed area. Special tax incentives are
pal business activity (PBA) code chart that is available for entities and individuals who oper-
General Information based on the North American Industry Classi- ate or invest in a business located within the
fication System (NAICS). The PBA code chart designated TTA.
California has established 5 types of eco-
nomic development areas that have related is provided in this booklet (pages 18 through Businesses operating within the TTA do not
tax incentives: 20) and in your California and federal tax need to qualify or receive prior approval to
booklets. The NAICS replaces the Standard take advantage of these special tax incen-
• Enterprise Zones; Industrial Classification (SIC) for purposes of tives.
• The Los Angeles Revitalization Zone business classification. However, the Califor-
(LARZ); All of the incorporated cities in Tulare County
nia Revenue and Taxation Code (R&TC) still
• Local Agency Military Base Recovery refers to the SIC codes for purposes of eligi-
and portions of the unincorporated areas of
Areas (LAMBRAs); Tulare County have received final designation
bility for the TTA incentives.
• Manufacturing Enhancement Areas as the TTA effective November 1, 1998. The
(MEAs); and 8 incoporated cities in Tulare County are:
• The Targeted Tax Area (TTA).
A Purpose Dinuba
Use this booklet to determine the correct Exeter
A business may qualify for special deductions amount of deductions and credits that a busi-
and credits if it operates or invests in a trade Farmersville
ness may claim for operating or investing in a Lindsay
or business located within the geographic trade or business within the TTA. Complete
boundaries of one of these economic Porterville
the worksheets in this booklet for each deduc- Tulare
development areas. tion or credit for which the business is eligible. Visalia
California statutes require the Franchise Tax Then enter the total deductions and credits on Woodlake
Board (FTB) to provide information to the form FTB 3809.
California Legislature and the Trade and Com- Caution: The special tax incentives available
merce Agency (TCA) regarding the number of B How to Claim Deductions and to businesses operating within the TTA can
businesses using the economic development only be taken for costs paid or incurred on or
area tax incentives, types of economic devel-
Credits after November 1, 1998 (see Section D
opment area tax incentives being used and To claim any deduction or credit, the business below) and before the designation expires.
the economic development areas in which the must attach form FTB 3809 (included in this
businesses are claiming the tax incentives. booklet) to its California tax return. D Important Considerations
Note: In order to help us meet this require- Attach a separate form FTB 3809 for each TTA tax incentives apply only to:
ment, please be sure to attach form business you operate or invest in that is • Qualified assets purchased and placed in
FTB 3809, Targeted Tax Area Deduction and located within the TTA. service on or after November 1, 1998;
Credit Summary, to your California tax return. • Qualified employees hired after November
1, 1998; and/or
• NOLs for taxable or income years begin-
ning on or after November 1, 1998.

Page 2 FTB 3809 Booklet 1998


Eligibility. In order to qualify for any of the Schedule California Adjustments — ployment of an employee does not constitute
incentives described above, a taxpayer must CA (540NR) Nonresidents or commencement of employment for the quali-
meet both of the following requirements: Part-Year Residents fied wages test.
1. Be engaged in a trade or business within Schedule P Alternative Minimum Tax and The credit is based on the smaller of the
the TTA; and Credit Limitations following:
Schedule R Apportionment and Allocation
2. Be engaged in a line of business
of Income • The actual hourly rate paid or incurred by
described in SIC code 2000 to 2099, inclu- the employer for work performed by the
sive; 2200 to 3999, inclusive; 4200 to employee during the taxable or income
4299, inclusive; 4500 to 4599, inclusive; Part I Hiring Credit year; or
and 4700 to 5199, inclusive, of the Stan-
Eligible employers conducting a trade or busi- • 150% of the minimum hourly wage
dard Industrial Classification Manual pub- established by the Industrial Welfare
lished by the United States Office of ness inside the TTA may claim the hiring
credit for a new employee who: Commission.
Management and Budget, 1987 edition.
In the case of any pass-through entity, the • Was hired after November 1, 1998 (see Where the California minimum wage is higher
General Information C); than the federal minimum wage, the California
determination of whether a taxpayer is a qual-
ified taxpayer for the business expense • Spends at least 90% of their work time on minimum wage is used for purposes of com-
activities directly related to the conduct of puting the TTA hiring credit. The established
deduction, hiring credit and sales and use tax minimum wage after March 1, 1998, is $5.75
credit, is made at the entity level. Any busi- a trade or business located within the TTA;
ness expense deduction, hiring credit and • Performs at least 50% of the work within per hour. 150% of the minimum wage is
the boundaries of the TTA; and $8.62.
sales or use tax credit is allowed to the pass-
through entity and passed through to the part- • Was at the time of hire: Example:
ners or shareholders. For purpose of this 1. A person receiving or eligible to Ray Jones was hired November 1, 1998, at
paragraph, the term ‘‘pass-through entity’’ receive subsidized employment, train- $8.50 per hour.
means any partnership, S corporation, estate ing or services funded by the federal Ray’s hourly rate was $9.00 for the 2nd
or trust. Job Training Partnership Act (JTPA); month. However, the hourly rate that qualifies
2. A person eligible to be a voluntary or for the credit is limited to 150% of the mini-
E Geographic Boundaries mandatory registrant under the mum wage or currently $8.62 per hour.
The geographic boundaries of the TTA are Greater Avenues for Independence
Month(s) Hours x Hourly rate = Qualified wages
used to determine whether tax incentives are Act of 1985 (GAIN);
per month per month
available to a business in a specified location. 3. A member of a targeted group as
1 172 $8.50 $1,462.00
Further information about the geographic defined in the federal Work Opportu-
2 170 8.62 1,465.40
boundaries of the TTA is available from: nity Tax Credit (WOTC);
4. An economically disadvantaged indi- Credit Limitations
ENTERPRISE ZONE PROGRAMS
CA TRADE AND COMMERCE AGENCY
vidual 14 years of age or older; • The amount of hiring credit claimed may
5. A qualified dislocated worker; not exceed the amount of tax on the TTA
801 K STREET SUITE 1700 6. A disabled individual eligible for, business income in any year. Use Work-
SACRAMENTO CA 95814 enrolled in or who completed a state sheet VI on Side 2 of form FTB 3809 to
Telephone: (916) 324-8211 rehabilitation plan; compute the credit limitation.
FAX: (916) 322-7214 7. A service-connected disabled veteran; • In the case where the business is qualified
If your business is located within and outside 8. A veteran of the Vietnam era; to take the TTA hiring credit as well as
the TTA, see Part IV for instructions on how 9. A veteran who recently separated another hiring credit (e.g., enterprise zone,
to apportion income. from military service; MEA or LAMBRA) for the same wage
10. An ex-offender; expense, the business may only claim one
F Forms Table 11. A person eligible for or a recipient of: credit (See R&TC Sections 17053.34(c)
The titles of forms referred to in this booklet • Federal Supplemental Security and 23634(c)).
are: Income benefits (SSI); • The business may carry over any unused
• Aid to Families with Dependent hiring credit to future years until the credit
Form 100 California Corporation Children (AFDC); is used. In the case of an S corporation,
Franchise or Income • Food stamps; or 2/3 of the credit is lost and the remaining
Tax Return • State and local general 1/3 can be carried over if it cannot be
Form 100S California S Corporation assistance;
Franchise or Income used in the current year. For additional
12. A Native American; or information about the treatment of credits
Tax Return 13. A resident of the TTA.
Form 109 California Exempt for S corporations, see Part VI.
Organization Business The percentage of wages used to calculate Record Keeping. For each qualified
Income Tax Return the credit depends on the number of years employee, keep a schedule of the first 60
Form 540 California Resident Income the employee works for the employer in the months (5 years) of employment showing:
TTA. The applicable percentage begins at
Tax Return
50% and declines 10% for each year of
• Employee name;
Form 540NR California Nonresident or
employment. After the fifth year of employ-
• Date employee was hired;
Part-Year Resident Income Tax
ment, no credit is allowed.
• Number of hours employee worked for
Return each month of employment;
Form 541 California Fiduciary Income Wages that qualify for the hiring credit are • Smaller of the hourly rate of pay for each
Tax Return those wages paid to a qualified employee for month of employment or 150% of the
Form 565 Partnership Return of Income the consecutive 60-month period beginning on minimum wage;
Form 568 Limited Liability Company the first date the employee commenced • Location of employee’s job site and duties
Return of Income employment with the employer. For an performed;
Schedule California Adjustments — employer that operates a business that has • Total qualified wages per month for each
CA (540) Residents regularly occurring seasonal or intermittent month of employment; and
employment decreases and increases, reem-

FTB 3809 Booklet 1998 Page 3


• Also, retain a copy of the certification the employer terminates the employee at any Line 1, column (a) – Enter the name of the
issued by the appropriate government time during the longer of: terminated employee. Attach an additional
agency (if required) or other documenta- • The first 270 days of employment (whether schedule(s) if necessary.
tion to substantiate an individual’s eligibility or not consecutive); or Line 1, column (b) – Enter the amount of
as a ‘‘qualified employee’’. • 90 days of employment plus 270 calendar credit recapture for each employee listed in
days. column (a).
Instructions for Worksheet I — For seasonal employees, the employer must Line 2 – Enter the amount from line 2,
recapture the amount of credit attributable to column (b) on form FTB 3809, Side 1, Part V,
Hiring Credit & Recapture a seasonal employee’s wages if the employer line 5.
terminates employment before the completion Also, include the amount of hiring credit
Section A — Credit Computation of 270 days of employment during the recapture on your California tax return or
Line 1, column (a) – Enter the name of each 60-month period beginning the day the schedule as follows:
employee commences employment with the
qualified employee. Attach an additional
employer. • Form 100, Schedule J, line 5;
schedule(s) if necessary. • Form 100S, Schedule J, line 5 and
Line 1, column (b) – Enter the qualified A ‘‘day of employment’’ means any day for Schedule K-1 (100S), line 23;
wages paid or incurred during the taxable or which the employee receives wage compen- • Form 109, Schedule K, line 4;
income year to each employee listed in sation (including a paid sick day, holiday or • Form 540, line 36;
column (a). vacation day). • Form 540NR, line 45;
Line 2, column (b) – Total the amount in this The employer must add to the current year’s • Form 541, line 21b and
column. tax the amount of credit claimed in the year of Schedule K-1 (541), line 11e;
termination and all prior years in which the • Form 565, Schedule K, line 22 and
Line 3, column (b) – Multiply the total on line credit was claimed for the terminated Schedule K-1 (565), line 22; or
2 by the percentage in this column. employee. • Form 568, Schedule K, line 22 and
Line 4 – Enter the amount from line 4 on form Note: The credit recapture does not apply if Schedule K-1 (568), line 22.
FTB 3809, Side 2, Worksheet VI, as follows: the termination of employment was: Indicate that you included the hiring credit
• Part II, line 8B, column (b) for corpora- • Voluntary on the part of the employee; recapture on your tax return by writing ‘‘FTB
tions, individuals and estates and trusts; • In response to misconduct of the 3809’’ in the space provided on the schedule
• Part III, line 10, column (b) for S corpora- employee; or form.
tions; or • Caused by the employee becoming Partnerships and limited liability companies
• Part IV, line 12, column (b) for corpora- disabled (unless the employee was able to (LLCs) taxed as partnerships must identify the
tions and S corporations subject to paying return to work and the employer did not recapture amounts for their partners and
only the minimum franchise tax. offer to re-employ the individual); members on Schedule K-1 (565 or 568).
• Carried out so that other qualified individu- S corporation shareholders must recapture the
Section B — Credit Recapture als could be hired, creating a net increase portion of credit that was previously claimed,
Note: Generally, the recapture provision will in both the number of qualified employees based on the terminated employee’s wages.
not apply for taxable or income years begin- and the number of hours worked; or S corporations must also identify the recap-
ning in 1998, since the TTA credit provision • Due to a substantial reduction in the ture amount for shareholders on Schedule K-1
was not effective until November 1, 1998. The employer’s trade or business operations. (100S). This amount will differ from the
following information is being provided for amount recaptured by the S corporation on
future reference. Form 100S, Schedule J.
The employer must recapture the amount of
credit attributable to an employee’s wages if

Page 4 FTB 3809 Booklet 1998


Worksheet I Hiring Credit & Recapture — Targeted Tax Area
Section A Credit Computation
Qualified wages paid or incurred for year of employment
(a) Employee’s name (b) First year (c) Second year (d) Third year (e) Fourth year (f) Fifth year
1

2 Total. See instructions . . . . . . . . . . . . . . .


.50 .40 .30 .20 .10
3 Multiply line 2 by the percentage for each
column. See instructions . . . . . . . . . . . . . .

4 Enter the amount on line 3. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4


Section B Credit Recapture
(a) Terminated employee’s name (b) Recapture amount
1

2 Total amount of credit recapture. Add the amounts in


column (b). See instructions for where to report on your
California tax return . . . . . . . . . . . . . . . . . . . . . . . . 2

FTB 3809 Booklet 1998 Page 5


Part II Sales or Use Tax Credit on the TTA business income in any year. • The amount of sales or use tax paid on its
After completing Worksheet II, use Work- purchase;
Individuals, estates or trusts, partnerships sheet VI on Side 2 of form FTB 3809 to • The location where it is used; and
and LLCs taxed as partnerships may claim compute the credit limitation. • If purchased from a manufacturer located
a credit equal to the sales or use tax paid or • Any unused credit may be carried over outside California, records to substantiate
incurred to purchase up to $1 million of quali- and applied against the tax on TTA that machinery of comparable quality and
fied machinery. income in future years. price was not available for purchase in
Corporations may claim a credit equal to the • In the case where the business is qualified California.
sales or use tax paid or incurred to purchase to take the TTA sales or use tax credit as Example:
up to $20 million of qualified machinery. Indi- well as another credit (e.g. enterprise zone
sales or use tax credit, manufacturers’ XYZ Inc., an S corporation, purchases quali-
viduals who are S corporation shareholders fied property for $20 million ($20 m.). The
may claim their pro rata share of pass-through investment credit or LAMBRA sales or use
tax credit) for the same piece of property, sales tax rate is 6% (.06) and the entity-level
credit to the extent the S corporation paid or tax rate is 1.5% (.015).
incurred sales or use tax to purchase up to $1 then the business may only claim one
million of qualified machinery. See the exam- credit. The credit allowed XYZ Inc. and the deprecia-
ple in the third column of this page. ble basis of the qualified property for XYZ Inc.
Depreciation
are figured as follows:
Qualified machinery is the machinery or Any taxpayer that claims this credit cannot
machinery parts used to: increase the basis of the qualified property Depreciable
basis
• Manufacture, process, fabricate or other- with respect to the sales or use tax paid or
Qualified property $20 m. $20 m.
wise assemble a product; incurred in connection with the purchase of Sales tax paid
• Produce renewable energy resources; or qualified property. ($20 m. x .06) 1.2 m. +1.2 m.
• Control air or water pollution. To compute the difference between California Sales or use tax credit
and federal depreciation, use the following allowed XYZ Inc. 1.2 m. (1.2m.)
In addition, qualified property is:
forms or schedules:
• Data processing and communications Depreciable basis of qualified
equipment including, but not limited to, • Form 100 filers – FTB 3885, Corporation property for XYZ Inc. $20 m.
computers, computer-automated drafting Depreciation and Amortization; Credit allowed to offset the
systems, copy machines, telephone sys- • Form 100S filers – Schedule B (100S), entity-level tax ($1.2 m. x 1/3) $0.4 m.
tems and faxes; and S Corporation Depreciation and
• Motion picture manufacturing equipment Amortization; XYZ Inc. has two 50% shareholders. The
central to production and postproduction • Form 109 filers – Form 109, Schedule J, credit allowed the shareholders and the
including, but not limited to, cameras, Depreciation. Note: Exempt trusts use depreciable basis of the qualified property for
audio recorders, digital image and sound FTB 3885F, Depreciation the shareholders are figured as follows:
processing equipment. and Amortization; Depreciable
• Form 540 and Form 540NR filers – basis
The business must use the machinery exclu- FTB 3885A, Depreciation and Amortization Qualified property (pur-
sively within the boundaries of the TTA. Adjustments; chased by XYZ Inc.) $20 m. $20 m.
Use tax paid on purchases of machinery out- • Form 541 filers – FTB 3885F, Depreciation Sales tax
side California qualifies for the credit only if and Amortization; (paid by XYZ Inc.) 1.2 m. +1.2 m.
machinery of a comparable quality and price • Form 565 filers – FTB 3885P, Depreciation Maximum qualified costs
was not available in California at the time it and Amortization; or for sales or use
was purchased. • Form 568 filers – FTB 3885L, Depreciation tax credit
Sales or use tax credit
1 m.

Leased Property and Amortization. allowed the share-


The sales tax paid on qualified property being Record Keeping holders ($1 m. x .06) .06 m. (.06 m.)
purchased using a financial (conditional sales) In order to support the sales or use tax credit Depreciable basis of
contract qualifies for the sales or use tax claimed, keep all records that document the qualified property
credit. purchase of the machinery, such as the sales for the shareholders $21.14 m.
To determine whether the lease qualifies as a receipt and proof of payment. Additionally,
Total amount of credit allowed
purchase rather than a true lease, see Reve- keep all records that identify or describe: the shareholders $.06 m.
nue Ruling 55-540, 1955-2 C.B. 39 and FTB • The machinery purchased (such as serial Note: Each shareholder is allowed
Legal Ruling 94-2, March 23, 1994. numbers, etc.); a $30,000 (.06 m. ÷ 2 = .03 m.)
Credit Limitations sales or use tax credit.
• The amount of sales or use tax credit
claimed may not exceed the amount of tax

Page 6 FTB 3809 Booklet 1998


Instructions for Worksheet II — Line 1, column (c) – Enter the amount of Line 2, column (c) – Add the amounts in
sales or use tax paid or incurred on the line 1, column (c). Enter the total here and on
Sales or Use Tax Credit machinery or machinery parts listed in form FTB 3809, Side 2, Worksheet VI, as
Line 1, column (a) – List the items of quali- column (a). follows:
fied machinery and machinery parts pur- Line 2, column (b) – Add the amounts in line • Part II, line 9B, column (b) for corpora-
chased during the year. For each item, 1, column (b). tions, individuals and estates and trusts;
provide the location (street address and city) Caution: This amount cannot exceed • Part III, line 11, column (b) for S corpora-
of its use. Attach an additional schedule(s) if $1 million for individuals, estates or trusts, tions; or
necessary. partnerships or LLCs taxed as partnerships or • Part IV, line 13, column (b) for corpora-
Line 1, column (b) – Enter the cost of the $20 million for corporations. tions and S corporations subject to paying
machinery or machinery parts listed in only the minimum franchise tax.
column (a). Caution: Only the sales or use tax paid on
the cost of machinery up to the limitations in
column (b) stated above may be claimed as a
credit.

Worksheet II Sales or Use Tax Credit — Targeted Tax Area

(a) Machinery/parts description and location (b) Cost (c) Sales or use tax

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

FTB 3809 Booklet 1998 Page 7


Part III Business Expense limitation applies to the partnership and to • Form 100S, line 12, Form 100S, Schedule
each partner. K, line 8 and Schedule K-1 (100S), line 8;
Deduction Depreciation. If the business elects to deduct • Form 109, Part II, line 24;
Certain businesses conducting a qualified the amount computed in Worksheet III, • Schedule CA (540), column B, on the
trade or business within the TTA may elect to Section A, as a business expense, the depre- applicable line for your business activity;
treat 40% of the eligible cost of qualified prop- ciable basis of the property must be reduced • Schedule CA (540NR), column B, on the
erty as a business expense rather than a cap- by the deduction. applicable line for your business activity;
ital expense (R&TC Sections 17267.6 and • Form 565, Schedule K, line 9 and
Subtract the amount claimed as a business Schedule K-1 (565), line 9; or
24356.6). For the year the property is placed
in service, the business may deduct the cost
expense from the basis or cost of the property • Form 568, Schedule K, line 9 and
and depreciate the remaining basis or cost. Schedule K-1 (568), line 9.
in the current year rather than depreciate it
Normal depreciation is allowed on the cost of Note: If filing Form 540 or Form 540NR, indi-
over several years.
the property in excess of the expensed cate that you are claiming the business
Note: The TTA business expense deduction amount, starting with the taxable or income
is not allowed for estates or trusts. expense deduction by writing ‘‘FTB 3809’’
year following the taxable or income year the above the dotted line to the left of the amount
Qualified property is any recovery property property was placed in service. entered on Form 540, line 14 or Form 540NR,
that is IRC Section 1245 property which Corporations may not claim the additional line 14.
includes, but is not limited to, tangible per- first-year depreciation allowed under R&TC
sonal property (excluding buildings) and most Section 24356 on any item of property if any Section B — Deduction Recapture
equipment and furnishings acquired by pur- portion of it was deducted as a business
chase for exclusive use within the TTA. Office Note: Generally, the recapture provisions will
expense. All other taxpayers cannot claim the not apply for income or taxable years begin-
supplies and other small nondepreciable items deduction allowed under IRC Section 179 on
are not included. ning in 1998, since the business expense
any item of property if any portion of it was deduction provisions were not effective until
The maximum aggregate cost applicable to deducted as a business expense. November 1, 1998. This information is being
the 40% deduction the business may claim in To compute the difference between California provided for future reference.
any taxable or income year is determined by and federal depreciation, use the following
the number of years that have elapsed since The deduction is subject to recapture (added
forms: back to income) if, before the close of the
the TTA received its final designation. See
General Information C for the designation
• Form 100 filers – FTB 3885, Corporation second taxable or income year after the prop-
Depreciation and Amortization; erty was placed in service, the property is
date.
• Form 100S filers – Schedule B (100S), sold, disposed of or no longer used exclu-
The applicable cost is: S Corporation Depreciation and sively in the TTA trade or business. In that
Income year of designation . . . . $100,000 Amortization; case, add to current year income the amount
First income year • Form 109 filers – Form 109, Schedule J, previously deducted for that property.
after designation. . . . . . . . . . $100,000 Depreciation; Line 1, column (a) – Enter a description of
Second income year • Form 540 and Form 540NR filers – the property. Attach an additional schedule(s)
after designation. . . . . . . . . . . $75,000 FTB 3885A, Depreciation and Amortiza- if necessary.
Third income year tion;
after designation. . . . . . . . . . . $75,000 • Form 565 filers – FTB 3885P, Depreciation Line 1, column (b) – Enter the amount of the
Remaining years of designation . . $50,000 and Amortization; or business expense deduction claimed for the
Election. The business must elect to treat the • Form 568 filers – FTB 3885L, Depreciation property listed in column (a).
cost of qualified property as a business and Amortization. Line 2 – Enter the amount from line 2,
expense in the year the property is first column (b) on form FTB 3809, Side 1, Part V,
placed in service. However, the TTA business line 6, and on your California tax return or
expense deduction is not allowed if the prop-
Instructions for Worksheet III — schedule as follows:
erty was: Business Expense Deduction & • Form 100, line 14, as a negative amount;
• Transferred between members of an affili- Recapture • Form 100S, line 12, as a negative
ated group; amount, Form 100S, Schedule K, line 6
• Acquired as a gift or inherited; Section A — Deduction
and Schedule K-1 (100S), line 6;
• Traded for other property; • Form 109, Part I, line 12;
• Received from a personal or business rela- Computation • Schedule CA (540), column C, on the
tion as defined in IRC Section 267 or Line 2, column (a) – Enter a description of applicable line for your business activity;
707(b); or the property and the location (street address • Schedule CA (540NR), column C, on the
• Described in IRC Section 168(f). and city) of its use. Attach an additional applicable line for your business activity;
schedule(s) if necessary. • Form 565, Schedule K, line 7 and
The TTA business expense deduction must Schedule K-1 (565), line 7; or
be claimed by making an election on the origi- Line 2, column (b) – Enter the cost of the • Form 568, Schedule K, line 7 and
nal return filed, and thus cannot be claimed property listed in column (a). Schedule K-1 (568), line 7.
on an amended return. Such an election can- Line 5 – Enter the amount from line 5,
not be revoked without the written consent of Note: If filing Form 540 or Form 540NR, indi-
column (b) on form FTB 3809, Side 1, Part II, cate that you are recapturing the business
the FTB. line 2, and on your California tax return or expense deduction by writing ‘‘FTB 3809’’
A husband and wife filing separate returns schedule as follows: above the dotted line to the left of Form 540,
may each claim 50% of the allowable deduc- • Form 100, line 14; line 16 or Form 540NR, line 16.
tion. In the case of a partnership, the dollar

Page 8 FTB 3809 Booklet 1998


Worksheet III Business Expense Deduction & Recapture — Targeted Tax Area

Section A Deduction Computation

1 Enter $40,000 for the taxable or income year of designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1


Note: This amount will decrease in later years based on the number of taxable or income years that
have expired since the designation date.
(a) Property description and location (b) Cost

3 Total. Add the amounts in column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4 Multiply line 3 by 40% (.40) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5 Enter the smaller of line 1 or line 4. This is the maximum amount deductible as a business expense for the
targeted tax area. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Section B Deduction Recapture

(a) Property description (b) Recapture amount

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

FTB 3809 Booklet 1998 Page 9


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

Page 10 FTB 3809 Booklet 1998


Worksheet IV Apportionment — Targeted Tax Area (TTA)
Section A Income Apportionment
Use Worksheet IV, Section A, if your business has net income from (a) Total within (b) Total within (c) Percentage within
sources within and outside the TTA. California the TTA the TTA
(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 10. 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 10 . . . . . . . . . . . . . . .
Total property values. . . . . . . . . . . . . . . . . . . . .
PAYROLL FACTOR
2 Employees’ wages, salaries, commissions and other
compensation related to business income included in
the return.
Total payroll.. . . . . . . . . . . . . . . . . . . . . . . . . .
3 Total percentage (sum of the percentages in column (c)) .
4 Average apportionment percentage (1/2 of line 3).
Enter here and on form FTB 3809, Side 1, line 4 . . . . .
Section B Loss Apportionment (For the computation of current year net operating loss only)
Use Worksheet IV, Section B, if your business has net losses from (a) Total within and (b) Total within (c) Percentage within
sources within and outside the TTA. outside the the TTA the TTA
TTA (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 10. 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 10 . . . . . . . . . . . . . . .
Total property values. . . . . . . . . . . . . . . . . . . . .
PAYROLL FACTOR
2 Employees’ wages, salaries, commissions and other
compensation related to business income included in
the return.
Total payroll.. . . . . . . . . . . . . . . . . . . . . . . . . .
3 Total percentage (sum of the percentages in column (c)) .
4 Average apportionment percentage (1/2 of line 3).
Enter here and on Worksheet V, Section B, line 4 . . . . .
Notes for Sections A and B: 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 TTA. Also, 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 does not have any payroll within or outside the TTA, then the average apportionment percentage would be computed by dividing line 4 by 1 (instead of
by 2 as normally instructed).

FTB 3809 Booklet 1998 Page 11


Part V Net Operating Loss (NOL) provisions of R&TC Chapter 17 (commencing
with Section 25101), with certain modifications to
Line 11 – Line 12: If the gain or loss reported on
Schedule D or Schedule D-1 (as adjusted on
Computation and Loss Limitations the apportioning factors. The apportionment fac- Schedule CA (540 or 540 NR)) was attributed to
A TTA NOL generated by a business that oper- tors include the property and payroll factors, and an asset used in an activity conducted within and
ates or invests within the TTA can be carried compare TTA property and payroll to total prop- outside the TTA, enter the gain or loss reported
forward for 15 years but may not be carried back. erty and payroll. This apportionment factor calcu- in column (a). To determine the percentage fig-
Financial institutions using bad debt reserve lation is done on Worksheet IV, Section B. The ure in column (b), complete Worksheet IV,
methods may carryover the loss for a maximum loss carryover is deducted from income appor- Section B. Enter the figure on Worksheet IV,
of 5 income years. In addition, up to 100% of the tioned by each business to the TTA in subse- Section B, line 4, in column (b) of this worksheet.
NOL generated in the TTA can be carried quent years. This calculation is done on Income Computation (Use to compute TTA
forward. Worksheet V, Section C. income for Worksheet V, Section C and
The business cannot generate NOLs from Corporations that are members of a unitary group Worksheet VI)
activities within the TTA until the first taxable or filing a combined report must separately compute Line 6 – Line 9: If your business operation
income year beginning on or after the date the loss carryover for each corporation in the group reported on Schedules C, C-EZ, E, F or other
TTA is officially designated. Only taxable or (R&TC Section 25108) using their individual schedules is entirely in the TTA, enter the
income years beginning on or after November 1, apportionment factors. income or loss from this activity in column (a),
1998, will qualify for the NOL this year. See Unlike the NOL treatment on a federal consoli- and enter 1.00 in column (b).
General Information C for designation date. dated return, a loss carryover for one member Line 11 – Line 12: If the gain or loss reported on
Limitation. A TTA NOL deduction can offset only included in a combined report may not be Schedule D or Schedule D-1 (as adjusted on
business income attributable to operations within applied to the intrastate apportioned income of Schedule CA (540 or 540NR)) was attributed to
the TTA. another member included in a combined report. an asset used in an activity conducted entirely
For water’s-edge purposes, each corporation’s within the TTA, enter the gain or loss reported in
Election. Taxpayers must elect and designate column (a) and enter 1.00 in column (b).
the carryover category (general or specific enter- NOL carryover is limited to the amount deter-
prise zone, LAMBRA or TTA NOL) on the original mined by recomputing the income and factors of Line 6 – Line 9: If your business operation
return for the year of a loss and file form the original worldwide combined reporting group reported on Schedules C, C-EZ, E, F or other
FTB 3809 for each year in which an NOL deduc- as if the water’s-edge election had been in force schedules is entirely in California, enter the
tion is being taken. The election is irrevocable. for the year of the loss. The TTA NOL carryover income or loss from this activity in column (a). To
may not be increased as a result of the determine the percentage figure in column (b),
Note: If you elect the TTA NOL deduction, you recomputation. complete Worksheet IV, Section A. Enter the fig-
are prohibited by law from carrying over any ure on Worksheet IV, Section A, line 4, in
other type of NOL from this year. column (b) of this worksheet.
To determine which type of NOL will provide the Instructions for Income or Loss
Line 11 – Line 12: If the gain or loss reported on
greatest benefit, businesses that have general or Worksheet Schedule D or Schedule D-1 (as adjusted on
specific, Enterprise Zone, LAMBRA or TTA NOLs Schedule CA (540 or 540NR)) was attributed to
or that may qualify for the special NOL treatment Use the Income or Loss Worksheet on the follow-
ing page to determine the amount to enter on: an asset used in an activity conducted entirely
should estimate future income and complete
Worksheet V and forms: • Worksheet V, Section A, line 1 and within California, enter the gain or loss reported
• FTB 3805Q, Net Operating Loss (NOL) • Worksheet VI, Part I, line 1 and line 3. in column (a). To determine the percentage fig-
ure in column (b), complete Worksheet IV, Sec-
Computation and NOL and Disaster Loss Do not include disaster losses in any amounts tion A. Enter the figure on Worksheet IV,
Limitations — Corporations; used in the table. Section A, line 4 in column (b) of this worksheet.
• FTB 3805V, Net Operating Loss (NOL) Com- Only California source business income is appor-
putation and NOL and Disaster Loss Limita- Line 6 – Line 9: If your business operation
tioned to the TTA. reported on Schedules C, C-EZ, E, F or other
tions — Individuals, Estates and Trusts;
• FTB 3805Z, Enterprise Zone Business The first step is to determine which portion of the
taxpayer’s net income is ‘‘business income’’ and
schedules is within and outside the TTA and
Booklet, Worksheet VI; or California, get Schedule R and complete line 1
• FTB 3807, Local Agency Military Base which portion is ‘‘nonbusiness income,’’ since
only business income may be apportioned to the
through line 13b. Enter the figure on Schedule R,
Recovery Area Business Booklet, line 13b in column (a) of this worksheet. To
Worksheet V. TTA. See Part IV, Doing Business Totally Within determine the percentage figure in column (b),
the Targeted Tax Area or Within and Outside the complete Worksheet IV, Section A. Enter the fig-
Alternative Minimum Tax. Taxpayers claiming a Targeted Tax Area, on page 10. ure on Worksheet IV, Section A, line 4 in
TTA NOL deduction must determine their NOL column (b) of this worksheet.
for alternative minimum tax purposes. Use Business income or loss reported on Schedules
Schedule P (100, 540, 540NR or 541) to com- C, C-EZ, E, F and other schedules are reported Note: When computing Schedule R, disregard
pute the NOL for alternative minimum tax on line 6 through line 9. Line 11 and line 12 any reference to Form 100, Form 565 or Form
purposes. report business gains or losses reported on 568. Also, disregard any reference to Schedule
Schedules D and D-1. All business income and R-3, Schedule R-4 or Schedule R-5, and skip
S Corporations. TTA NOLs incurred prior to losses should be adjusted for any differences line 11.
becoming an S corporation cannot be used between California and federal amounts as
against S corporation income. See IRC Nonresidents that have an apportioning business
shown on the Schedule CA (540 or 540NR). that operates within the TTA should have already
Section 1371(b).
Loss Computation (Use to compute TTA NOL computed Schedule R, and can use those
However, an S corporation is allowed to deduct a for Worksheet V, Section A) amounts when that schedule is referenced. Resi-
TTA NOL incurred after the ‘‘S’’ election is made. Line 6 – Line 9: If your business operation dents that have an apportioning business will not
An S corporation may use the NOL as a deduc- reported on Schedules C, C-EZ, E, F or other have completed a Schedule R for California
tion against income subject to the 1.5% entity- schedules is entirely in the TTA, enter the income tax purposes since they are taxed on
level tax (3.5% for financial S corporations). The income or loss from this activity in column (a), income from all sources. However, in order for
NOL is also passed through to the shareholders and enter 1.00 in column (b). residents to determine their California source
in the year the loss is incurred. business income for purposes of the TTA calcu-
Line 11 – Line 12: If the gain or loss reported on
NOL Carryover Amount – Nonapportioning Schedule D or Schedule D-1 (as adjusted on lation, they must complete a Schedule R also.
Corporations Operating Totally Within the Schedule CA (540 or 540NR)) was attributed to Line 11 – Line 12: If the gain or loss reported on
Zone an asset used in an activity conducted entirely in Schedule D or Schedule D-1 (as adjusted on
For taxpayers with all payroll and property inside the TTA, enter the gain or loss reported in Schedule CA (540 or 540NR)) was attributed to
the TTA, the NOL carryover is determined by column (a) and enter 1.00 in column (b). an asset used in an activity conducted within and
computing the business loss that results from outside the TTA and California, get Schedule R
business activities in the TTA. Line 6 – Line 9: If your business operation
reported on Schedules C, C-EZ, E, F, or other and complete Schedule R-1. Multiply the gain or
NOL Carryover Amount – Corporations schedules is within and outside the TTA, enter loss reported by the percentage on Schedule
Operating Within and Outside the Area the income or loss from this activity in column R-1, line 5 and enter the result in column (a). To
If the business is located within and outside the (a). To determine the percentage figure in col- determine the percentage figure in column (b),
TTA, the loss amount available for carryover is umn (b), complete Worksheet IV, Section B. complete Worksheet IV, Section A. Enter the fig-
determined by apportioning the total business Enter the figure on Worksheet IV, Section B, ure on Worksheet IV, Section A, line 4 in
loss of the corporation to the TTA pursuant to the line 4, in column (b) of this worksheet. column (b) of this worksheet.

Page 12 FTB 3809 Booklet 1998


Part I Individual Income and from which you received TTA incentives, see the
example below for computing business income in
adjustments from Schedule CA (540 or 540NR)
for each trade or business. Also, include busi-
Expense Items the TTA. ness capital gains and losses from Schedule D
Wages Trade or
and business gains and losses from
Taxpayers with wages from a company located business Schedule D-1.
within and outside the TTA must determine the income Line 14 – Generally, TTA NOLs are not available
TTA wage income by entering the percentage of from
Schedule K-1 Entity’s TTA TTA
for the 1998 taxable or income year. However
their time in column (b)(during the period for Pass-through (100S, 541, apportionment apportioned certain fiscal year filers with taxable or income
which the wages entered on line 1 were earned) entity 565 or 568) percentage income years beginning on or after November 1, 1998,
that they worked within the TTA. This percentage may be eligible for a TTA NOL.
ABC, Inc. $40,000 80% $32,000
must be determined based on their record of A, B & C 30,000 10% 3,000 If, in computing your income or loss, the result
time and events such as a travel log or entries in ABC, LLC 10,000 50% 5,000 on line 14, column (c) is a negative amount, you
a daily planner. $40,000
do not have any business income attributable to
Part II Pass-through Income or the TTA. Enter the amount on Worksheet V,
Section A, line 1 to calculate your TTA NOL
Loss Part III Taxpayer’s Trade or carryover.
Multiple Pass-through Entities Business If the amount on line 14, column (c), is a posi-
If you are a shareholder, beneficiary, partner or Business Income or Loss tive amount, you do not have a TTA NOL. Enter
member in multiple pass-through entities with Use business income or loss from Form 1040 the amount on Worksheet VI, Part I, line 1 and 3
businesses located within and outside the TTA Schedules C, C-EZ, E and F, plus California (skip line 2).

Income or Loss Worksheet — Targeted Tax Area (TTA)


Part I Individual Income and Expense Items. See instructions.
(a) (b) (c)
Amount % of time providing services in Apportioned amount
the TTA (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
targeted tax area from Schedule K-1 (100S, 541, 565 or 568) including 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)
Business income or loss Apportionment % Apportioned income or loss
for the TTA (a) x (b)

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

8 Schedule F. . . . . . . . . . . . . . . . .
9 Other business income or loss . . . . . .
10 Subtotal: Enter the total of line 6 through line 9, column (c) in column (c), this line . . . . . . . . . . . . . . . . . .
(a) (b) (c)
Business gain Apportionment % Apportioned gain or loss
or loss for the TTA (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 column (c) for line 3, line 10 and line 13, and line 5, column (b) in column (c), this line . .

FTB 3809 Booklet 1998 Page 13


Instructions for Worksheet V — Net Section B Computation of Current disaster losses and any business deductions
reported on Schedule A as an itemized deduc-
Operating Loss Computation and Year NOL — Corporations tion.
Loss Limitations Use this section to compute the TTA NOL to be Exception: If you elected to carry back part or all
carried over to future years for corporations. of your current year disaster loss under IRC Sec-
If your taxable or income year begins on or after Complete Section B only if the corporation has tion 165(i)(1), do not include the amount of the
November 1, 1998, individuals and exempt trusts a current year loss. loss that was carried back in your current year
with a current year loss should complete Section You must complete form FTB 3805Q, Net business income for the TTA.
A. Corporations with a current year loss should Operating Loss (NOL) Computation and NOL
complete Section B. Line 2 – In modifying your income, deduct your
and Disaster Loss Limitations — Corporations, capital losses only up to your capital gains. Enter
Section A Computation of Current before you can compute the allowable TTA loss. as a positive number any net capital losses
included in line 1.
Year NOL — Individuals and Section C Computation of NOL
Line 3 – Corporations must reduce income by
Exempt Trusts Carryover and Carryover Limita- the disaster loss deduction and the deduction for
Use this section to compute the TTA NOL to be tions excess net passive income.
carried over to future years by individuals and Note: Generally, the TTA NOL carryover provi- Line 6 – This is your modified taxable income
exempt trusts. Complete Section A only if you sion will not be available for taxable or income (MTI). You may reduce this amount by your TTA
have a current year loss. years beginning in 1998, since the TTA was not NOL deduction. Your TTA NOL deduction may
You must complete form FTB 3805V, Net designated until November 1, 1998. not be larger than your MTI. If your MTI is a loss
Operating Loss (NOL) Computation and NOL and in the current year or if it limits the amount of
Use this section to compute the TTA NOL
Disaster Loss Limitations — Individuals, Estates NOL you may use this year, you must carry over
deduction for individuals, exempt trusts and
and Trusts, before you can compute the allow- the NOL to future years.
corporations. The TTA NOL deduction is used to
able TTA loss. reduce current year income from the TTA. Line 8 – If the amount shown in line 6 is a nega-
To compute the TTA NOL, separate business tive number, transfer the amount to column (e)
Line 1 – See Part IV for a discussion of business
income and deductions from nonbusiness income as a positive number.
and nonbusiness income. Note to 540 and
and deductions. See Part IV, Doing Business 540NR filers: Be sure to include casualty losses,
Totally Within the TTA or Within and Outside the
TTA, for a complete discussion of business and
nonbusiness income.

Worksheet V Net Operating Loss (NOL) — Targeted Tax Area (TTA)


Section A Computation of Current Year Net Operating Loss — Individuals and Exempt Trusts
1 Net trade or business loss from all sources. Individuals: Enter the total from the Income or Loss Worksheet, line 14,
column (c) (page 13) as a positive number. For purposes of this worksheet section, do not include any 1998 losses
or disaster loss carryovers in line 1. See instructions for definition of business income (page 10). Exempt Trusts:
Enter the amount from Form 109, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Total business capital losses included in line 1. Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Total business capital gains included in line 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 If line 2 is greater than line 3, enter the difference as a positive number; otherwise enter -0- . . . . . . . . . . . . . . . . 4
5 Subtract line 4 from line 1. If the result is zero or less, do not complete the rest of this section. You do not have a
current year NOL from the TTA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Enter the amount from form FTB 3805V, Part I, Section A, line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Enter the smaller of line 5 or line 6 here and in Section C, line 8, column (e). . . . . . . . . . . . . . . . . . . . . . . . . 7
This is the TTA NOL carryover from 1998 to 1999.
Section B Computation of Current Year Net Operating Loss — Corporations
Note: If you have a TTA NOL and a prior year general NOL, see instructions.
During the year the corporation incurred the NOL, the corporation was a: ■ C corporation ■ S corporation ■ Exempt corporation
1 Net loss for state purposes from Form 100, line 17; Form 100S, combined amounts of line 15 and line 17; or
Form 109, line 1. Enter as a positive number. Note: Apportioning corporations, enter the amount from
Schedule R, line 12 for the corporations doing business in the area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 a 1998 disaster relief loss included in line 1. Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a
b Nonbusiness income included in line 1. Enter as a negative number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
c Nonbusiness losses included in line 1. Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
d Combine line 2a through line 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2d
3 Subtract line 2d from line 1. If zero or less, do not complete the rest of this section; the corporation does not have
a current year NOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Enter the average apportionment percentage from Worksheet IV, Section B, line 4 . . . . . . . . . . . . . . . . . . . . . . 4
5 Multiply line 3 by line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Enter the amount from form FTB 3805Q, Part I, line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Enter the smaller of line 5 or line 6 here and in Section C, line 8, column (e) . . . . . . . . . . . . . . . . . . . . . . . . . 7
This is the TTA NOL carryover from 1998 to 1999.

Page 14 FTB 3809 Booklet 1998


Worksheet V (continued)
Section C Computation of NOL Carryover and Carryover Limitations — Individuals, Exempt Trusts and Corporations. See instructions.
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 13) on line 1 and
line 6 (skip line 2 through line 5). See instructions. Apportioning corporations, enter the
amount from Schedule R, line 13b for corporations doing business in the TTA . . . . . . 1
2 a Form 100, Form 100S and Form 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, Form 100S and Form 109 filers: Enter any nonbusiness loss included in
line 1 as a positive number. Form 540 and Form 540NR filers leave blank . . . . . . 2b
c Combine line 2a and line 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
3 Form 100 filers: Enter the amount from Form 100, line 21. Form 100S filers: Enter the
total of the amounts from 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. If zero or less, enter -0- on line 6 . . . . . . . . . . . 4
5 Enter the average apportionment percentage from Worksheet IV, Section A, line 4 . . . 5
6 Modified taxable income. Multiply line 4 by line 5. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

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

7 Modified taxable income from line 6. . . . . . .


8 TTA NOL carryover for taxable or income years
beginning on or after November 1, 1998 . . . .

FTB 3809 Booklet 1998 Page 15


Part VI Computation of Credit Instructions for Worksheet VI — Example (Determination of TTA Income for
Shareholders, Partners or Members of Pass-
Limitations Computation of Credit Limitations through Entities):
The amount of credit you can claim on your Note: Worksheet VI is on Side 2 of form Ray Smith is vice president of ABC, Inc., an
California tax return is limited by the amount of FTB 3809. S corporation that has two locations: one within
tax attributable to TTA income. Use Worksheet the TTA and one outside the TTA. Eighty percent
Partnerships and LLCs taxed as partnerships do (80%) of the S corporation’s business is attribut-
VI on form FTB 3809, Side 2 to compute this not complete Worksheet VI. The partners and
limitation. able to the TTA. (Note: This percentage was
members of these types of entities should com- determined by ABC, Inc. using Worksheet IV
Credits you are otherwise eligible to claim may plete Worksheet VI in order to determine the when ABC’s S corporation return (Form 100S)
be limited. Do not apply credits against the mini- amount of TTA credits that they may claim on was prepared.) Ray divides his time equally
mum franchise tax (corporations, limited partner- their California tax return. S corporations and (50%/50%) between the two offices of ABC, Inc.
ships, limited liability partnerships, LLCs and their shareholders must complete Worksheet VI.
S corporations), the alternative minimum tax (cor- Mary Smith (Ray’s spouse) works for ABC, Inc.
Reporting Requirements of S Corporations, at its office located in the TTA.
porations, exempt organizations, individuals and Estates or Trusts, Partnerships and LLCs
fiduciaries), the built-in gains tax (S corporations) Taxed as Partnerships Ray and Mary Smith have the following 1998
or the net passive income tax (S corporations). items of California income and expense:
• Report to shareholders, beneficiaries,
Refer to the credit instructions in your tax booklet partners and member, the distributive or pro Ray’s salary from ABC, Inc. $100,000
for more information. rata share of business income, losses or Mary’s salary from ABC, Inc. 75,000
S Corporations and the Application of deductions apportioned to the area; and Interest on savings account 1,000
Targeted Tax Area Credits • Separately state any distributive share or pro- Dividends 3,000
rata of business capital gains and losses Schedule K-1(100S) from ABC, Inc.:
An S corporation may use its TTA credit to Ordinary income 40,000
reduce TTA tax at both the corporate and share- apportioned to the area included in the
amount above. TTA business expense deduction (5,000)*
holders level.
S corporations: Complete only Part I or Part III Ray’s unreimbursed employee
An S corporation may use 1/3 of the TTA credit expenses from Schedule A (2,000)
to reduce the tax on the S corporation’s TTA of this worksheet if your entity-level tax before
income. In addition, S corporation shareholders credits is more than the minimum franchise tax. *The TTA business expense deduction is a sepa-
may claim their pro rata share of the entire Corporations and S corporations subject to rately stated item on Schedule K-1 (100S), line 8.
amount of the TTA credits calculated under the the minimum franchise tax only: Complete The Smith’s TTA income (total amount to be
Personal Income Tax Law. only Part IV of this worksheet. reported on line 3) is computed as follows:
Example: In 1998, an S corporation qualified for All others: Complete Part I and Part II of this Ray’s TTA salary
a $3,000 TTA hiring credit. The S corporation will worksheet. ($100,000 x 50%) $50,000
be able to use 1/3 of the credit ($3,000 × 1/3 = Mary’s TTA salary
$1,000) to offset the tax on the corporation’s TTA Part I ($75,000 x 100%) 75,000
income. Note: For filers with an NOL. Pass-through ordinary income from
ABC, Inc. ($40,000 x 80%) 32,000
The S corporation will also pass-through a • Complete Worksheet V first if you have a cur- TTA business expense deduction
$3,000 credit to its shareholders to offset their rent year NOL.
from ABC, Inc. (5,000)
individual tax (computed under the Personal • Then complete Worksheet VI if you have any Ray’s unreimbursed employee business
Income Tax Law) on TTA income. TTA credits.
expenses ($2,000 x 50%) (1,000)
S corporations should attach form FTB 3809 to If you do not have a current year NOL: Total TTA income
Form 100S, California S Corporation Franchise • Individuals: Go to the Income or Loss Work- (Worksheet VI, Part I, line 3) $151,000
or Income Tax Return, to claim the tax credits. If sheet in Part V. Follow the instructions there.
form FTB 3809 is not attached to the return, the Note: The standard deduction and personal or
Enter the amount from the Income or Loss dependency exemptions are not included in the
credits may be disallowed. Worksheet, line 14, column (c) on Worksheet computation of TTA income since they are not
Shareholders should attach Schedule(s) K-1 VI, Part I, line 1 and line 3 (skip line 2). related to trade or business activities.
(100s), Shareholder’s Share of Income, Deduc- • Corporations: Follow the instructions for line Ray and Mary must compute the tax (to be
tions, Credits, etc., to their individual tax returns. 1 below.
entered on Worksheet VI, Part I, line 6a) on the
Carryover. If the amount of available credit this Line 1 – Enter all trade or business income. See total TTA income of $151,000 (as if it represents
year exceeds your tax, you may carry over any Part IV on page 10 for the definition of business all of their income). Using the tax rate schedule
excess credit to future years until exhausted. income. in their tax booklet for filing status married filing
Apply the carryover to the earliest taxable or Line 2 – If your business is located entirely joint, the 1998 tax figured on $151,000 is
income year(s) possible. In no event can the within the TTA, enter 1. $10,745.
credit be carried back and applied against a prior
year’s tax. Specifically, this percentage is the apportionment Line 6b – Corporations and S corporations: If
percentage computed by the entity using Work- the amount on line 6b is the minimum franchise
For S corporations, the amount of the 1/3 credit sheet IV, Apportionment, and represents the per- tax ($800), you cannot use your TTA credits this
that is in excess of the 1.5% entity-level tax centage of the entity’s business attributable to year. You should complete Part IV of the work-
(3.5% for financial S corporations) in the current the TTA. sheet to figure the amount of credit carryover.
year may also be carried forward and used in
future years to offset the S corporation entity- Line 6a – Compute the tax as if the TTA taxable Part II
level tax. See the instructions for Worksheet VI, income represented all of your taxable income.
Individuals: Use the tax table or tax rate Use Part II if you are a corporation, individual,
Part III for more information. estate or trust. Corporations and S corporations
schedule for your filing status in your tax booklet.
Credit Code Number. To claim the TTA hiring that are subject to paying only the minimum
Exempt organizations: Use the applicable tax
and sales or use tax credits on your return you franchise tax, go to Part IV.
rate in your tax booklet.
must use credit code number 210. Using the Line 8A, column (e) – Enter the amount from
Corporations and S corporations: Use the
incorrect code number may cause a delay. line 7. This is the amount of limitation based on
applicable tax rate.
the tax on TTA business income.
Line 8A, column (f) – Enter the amount of credit
that is used on Schedule P (100, 540, 540NR or

Page 16 FTB 3809 Booklet 1998


541), column (b). The amount cannot be greater be carried over to future years. Note: This Line 9B, column (b) – Enter the amount of the
than the amount on line 8A, column (e) or the carryover includes both the Schedule P (100, current year credit that was computed on
amount computed on line 8B, column (d). Enter 540, 540NR or 541) limitation and the limitation Worksheet II.
this amount on form FTB 3809, Side 1, line 1a. based on TTA business income. Line 9B, column (d) – Enter the amount of the
Line 8B, column (b) – Enter the amount of the Line 9A, column (e) – Subtract the amount on current year credit on line 9B, column (b).
current year credit that was computed on line 8B, column (e) from the amount on line 8A, Line 9B, column (e) – Compare the amounts on
Worksheet I. column (e). If the result is zero, your remaining line 9A, column (e) and line 9A, column (f). Enter
Line 8B, column (d) – Enter the amount of the credits are limited and must be carried over to the smaller amount.
current year credit from line 8B, column (b). future years. In this case, enter the amount from
line 9B, column (d) on line 9B, column (g). Line 9B, column (g) – Subtract the amount on
Line 8B, column (e) – Compare the amounts on line 9B, column (e) from the amount on line 9B,
line 8A, column (e) and line 8A, column (f). Enter Line 9A, column (f) – Enter the amount of credit column (d). Enter the result on line 9B,
the smaller amount. that is used on Schedule P (100, 540, 540NR or column (g). This is the amount of credit that can
541), column (b). The amount cannot be greater be carried over to future years. Note: This carry-
Line 8B, column (g) – Subtract the amount on than the amount on line 9A, column (e) or the
line 8B, column (e) from the amount on line 8B, over includes both the Schedule P (100, 540,
amount computed on line 9B, column (d). Enter 540NR or 541) limitation and the limitation based
column (d). Enter the result on line 8B, this amount on form FTB 3809, Side 1, line 1b.
column (g). This is the amount of credit that can on TTA business income.

Example: Part II
Note: This example is provided for information purposes only. Generally, the carryover amount in column (c) is not available for the 1998
taxable or income year.

The ABC Business has $8,000 of tax. The business computed a credit limitation based on the TTA income of $7,000 on Worksheet VI, line 7.
The business has the following credits:
Hiring credit — $500 and a $300 carryover from a prior year
Sales or use tax credit — $9,000
Worksheet VI, Part II would be computed as follows:
Part II Limitation of Credits for Corporations, Individuals and Estates and Trusts. See instructions.
(a) (b) (c) (d) (e) (f) (g)
Credit Credit Total Total credit Limitation Used on Schedule P Carryover
name amount prior year (add col. (b) based on (can never be greater (col. (d) minus
carryover and col. (c)) TTA business income than col. (d) or col. (e)) col. (e))

Hiring A 7,000 800


8 credit
B 500 300 800 800 -0-

Sales or use A 6,200 6,200


9 tax credit
B 9,000 -0- 9,000 6,200 2,800

Part III in column (c) are the maximum amounts of the that can be carried over to future years and used
current year credits that may be used by the by the S corporation.
Use Part III only if you are an S corporation. S corporation to offset its 1.5% entity-level tax
Line 10 and Line 11, column (b) – Enter the (3.5% for financial S corporations). Part IV
credit computed this year from Worksheet I and Line 10 and Line 11, column (e) – Enter the Use Part IV if you are a corporation or S corpo-
Worksheet II. Also enter this amount on amounts of the current year credits in column (c). ration subject to paying only the minimum
Form 100S: franchise tax.
Line 10 and Line 11, column (f) – Enter the
• Schedule C, line 4; and amount of credit that was used by the S corpora- Line 12 and Line 13, column (b) – Enter the
• Schedule K, line 13. tion in the current year to offset its 1.5% entity- amount of current year credits that were
You may need to adjust your Schedule C (100S) level tax (3.5% for financial S corporations). computed on Worksheet I and Worksheet II.
to reflect the TTA tax limitation (Part I, line 7) to Enter this amount on form FTB 3809, side 1, line S corporations may only enter 1/3 of the
your credits after completing this worksheet. 1a and line 1b, respectively. amounts from Worksheet I and II.
Line 10 and Line 11, column (c) – Multiply the Line 10 and Line 11, column (g) – Subtract the Line 12 and Line 13, column (d) – Enter the
amount on line 10 and line 11, column (b) by 1/3. amounts in column (f) from the amounts in amounts from column (b). These are the amount
Enter these amounts in column (c). The amounts column (e). These are the amounts of credits of credits that can be carried over to future
years.

FTB 3809 Booklet 1998 Page 17


FTB 3809 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

Page 18 FTB 3809 Booklet 1998


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

FTB 3809 Booklet 1998 Page 19


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

Page 20 FTB 3809 Booklet 1998


YEAR
Targeted Tax Area CALIFORNIA FORM

1998 Deduction and Credit Summary 3809


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 targeted tax area (TTA) business:
C. Enter the address (actual location) where the TTA business is conducted:

D. Enter the name of the specific area of the TTA in which the business and/or investment activity is located. See General Information C.

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


Enter the 6-digit number from the Principal Business Activity Code Chart on pages 18 through 20.
F. Total number of employees in the TTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Number of employees included in the computation of the hiring credit, if claimed . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H. Number of new employees included in the computation of the hiring credit, if claimed . . . . . . . . . . . . . . . . . . . . . . . . . .
I. Gross annual receipts of the business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J. 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 Hiring credit from Worksheet VI, line 8A, column (f) or line 10, column (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b Sales or use tax credit from Worksheet VI, line 9A, column (f) or line 11, column (f) . . . . . . . . . . . . . . . . . . . . . . .
Add line 1a and line 1b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❚ 1
Note: To figure the amount of credits to carryover, complete Worksheet VI on Side 2.
Part II Business Expense Deduction for Equipment Purchases
2 Enter the cost of qualified property purchased for the TTA that is being deducted as a current year
business expense from Worksheet III, Section A, line 5, 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 17267.6 or 24356.6. That election may not be revoked except with
the written consent of the Franchise Tax Board.
Part III Net Operating Loss (NOL) Carryover and Deduction
3 Enter the TTA NOL carryover to future years from Worksheet V, Section C, line 8, column (e) . . . . . . . . . . . . . . . . . . 3
ELECTION: For those taxpayers eligible for an NOL carryover under R&TC Sections 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 Sections 17276.6 or 24416.6, for taxpayers operating a trade or business within the TTA. If you elect to carry over an NOL
under the TTA provisions, you cannot carry over any other type and amount of NOL from this year.
Part IV Portion of Business Attributable to the Targeted Tax Area
4 Enter the average apportionment percentage of your business that is in the TTA from Worksheet IV,
Section A, line 4. If your operation is wholly within the TTA, the average apportionment percentage
is 100% (1.00) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Part V Recapture of Deduction and Credits
5 TTA recapture of hiring credit from Worksheet I, Section B, line 2, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Recapture of business expense deduction from Worksheet III, Section B, line 2, column (b) . . . . . . . . . . . . . . . . . . . . 6

380998109 FTB 3809 1998 Side 1


Worksheet VI Computation of Credit Limitations — Targeted Tax Area (TTA)
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 13) on this line and on line 3 (skip line 2). See instructions on page 17. Multistate apportioning corporations
enter the amount from Schedule R, line 13b for corporations doing business in the TTA . . . . . . . . . . . . . . . . . . . 1
2 Corporations: Enter the average apportionment percentage from Worksheet IV, Section A, line 4. See instructions . . . 2
3 Multiply line 1 by line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 TTA NOL deductions from prior year carryovers. Generally not applicable for taxable or income years beginning
on or after January 1, 1998, and before January 1, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 TTA taxable income. Enter amount 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; 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 the TTA 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) (b) (c) (d) (e) (f) (g)


Credit Credit Total Total credit Limitation Used on Schedule P Carryover
name amount prior year (enter amount based on (can never be greater (col. (d) minus
carryover from col. (b)) TTA business income than col. (d) or col. (e)) col. (e))

Hiring A
8 credit
B
Sales or A
9 use tax
credit B
Part III Limitation of Credits for S Corporations Only. See instructions.

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


Credit Credit S corporation Total Total credit Credit used Carryover
name amount credit (multiply prior year (enter amount this year by (col. (e) minus
col. (b) by 1/3) carryover from col. (c)) S corporation col. (f))

Hiring
10
credit
Sales or use
11
tax credit
Part IV Limitation of Credits for Corporations and S Corporations Subject to Paying Only the Minimum Franchise Tax. See instructions.

(a) (b) (c) (d)


Credit Credit Total Total credit
name amount prior year carryover. (enter
carryover amount from col. (b))

Hiring
12
credit
Sales or use
13
tax credit

Side 2 FTB 3809 1998 380998209


YEAR
Targeted Tax Area CALIFORNIA FORM

1998 Deduction and Credit Summary 3809


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 targeted tax area (TTA) business:
C. Enter the address (actual location) where the TTA business is conducted:

D. Enter the name of the specific area of the TTA in which the business and/or investment activity is located. See General Information C.

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


Enter the 6-digit number from the Principal Business Activity Code Chart on pages 18 through 20.
F. Total number of employees in the TTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Number of employees included in the computation of the hiring credit, if claimed . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H. Number of new employees included in the computation of the hiring credit, if claimed . . . . . . . . . . . . . . . . . . . . . . . . . .
I. Gross annual receipts of the business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J. 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 Hiring credit from Worksheet VI, line 8A, column (f) or line 10, column (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b Sales or use tax credit from Worksheet VI, line 9A, column (f) or line 11, column (f) . . . . . . . . . . . . . . . . . . . . . . .
Add line 1a and line 1b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ❚ 1
Note: To figure the amount of credits to carryover, complete Worksheet VI on Side 2.
Part II Business Expense Deduction for Equipment Purchases
2 Enter the cost of qualified property purchased for the TTA that is being deducted as a current year
business expense from Worksheet III, Section A, line 5, 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 17267.6 or 24356.6. That election may not be revoked except with
the written consent of the Franchise Tax Board.
Part III Net Operating Loss (NOL) Carryover and Deduction
3 Enter the TTA NOL carryover to future years from Worksheet V, Section C, line 8, column (e) . . . . . . . . . . . . . . . . . . 3
ELECTION: For those taxpayers eligible for an NOL carryover under R&TC Sections 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 Sections 17276.6 or 24416.6, for taxpayers operating a trade or business within the TTA. If you elect to carry over an NOL
under the TTA provisions, you cannot carry over any other type and amount of NOL from this year.
Part IV Portion of Business Attributable to the Targeted Tax Area
4 Enter the average apportionment percentage of your business that is in the TTA from Worksheet IV,
Section A, line 4. If your operation is wholly within the TTA, the average apportionment percentage
is 100% (1.00) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Part V Recapture of Deduction and Credits
5 TTA recapture of hiring credit from Worksheet I, Section B, line 2, column (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Recapture of business expense deduction from Worksheet III, Section B, line 2, column (b) . . . . . . . . . . . . . . . . . . . . 6

380998109 FTB 3809 1998 Side 1


Worksheet VI Computation of Credit Limitations — Targeted Tax Area (TTA)
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 13) on this line and on line 3 (skip line 2). See instructions on page 17. Multistate apportioning corporations
enter the amount from Schedule R, line 13b for corporations doing business in the TTA . . . . . . . . . . . . . . . . . . . 1
2 Corporations: Enter the average apportionment percentage from Worksheet IV, Section A, line 4. See instructions . . . 2
3 Multiply line 1 by line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 TTA NOL deductions from prior year carryovers. Generally not applicable for taxable or income years beginning
on or after January 1, 1998, and before January 1, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 TTA taxable income. Enter amount 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; 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 the TTA 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) (b) (c) (d) (e) (f) (g)


Credit Credit Total Total credit Limitation Used on Schedule P Carryover
name amount prior year (enter amount based on (can never be greater (col. (d) minus
carryover from col. (b)) TTA business income than col. (d) or col. (e)) col. (e))

Hiring A
8 credit
B
Sales or A
9 use tax
credit B
Part III Limitation of Credits for S Corporations Only. See instructions.

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


Credit Credit S corporation Total Total credit Credit used Carryover
name amount credit (multiply prior year (enter amount this year by (col. (e) minus
col. (b) by 1/3) carryover from col. (c)) S corporation col. (f))

Hiring
10
credit
Sales or use
11
tax credit
Part IV Limitation of Credits for Corporations and S Corporations Subject to Paying Only the Minimum Franchise Tax. See instructions.

(a) (b) (c) (d)


Credit Credit Total Total credit
name amount prior year carryover. (enter
carryover amount from col. (b))

Hiring
12
credit
Sales or use
13
tax credit

Side 2 FTB 3809 1998 380998209


How to Get California Tax Information (Keep This Page For Future Use)
General Toll-Free Phone Service Economic Development Area Your Rights as a Taxpayer
Between January 4 – April 15, 1999, our Information Our goal at the Franchise Tax Board (FTB) is
general toll-free phone service is available: Further information about the TTA tax to make certain that your rights are protected
• Monday – Friday, 6 a.m. until midnight; incentives is available from: so that you will have the highest confidence in
and the integrity, efficiency and fairness of our
FRANCHISE TAX BOARD
• Saturday, 8 a.m. until 5 p.m. ECONOMIC DEVELOPMENT AREA
state tax system. FTB Publication 4058,
California Taxpayers’ Bill of Rights, includes
After April 15, 1999, our general toll-free INFORMATION information on your rights as a California tax-
phone service is available: Telephone: (916) 845-3464 payer, the Taxpayers’ Rights Advocate Pro-
• Monday – Friday, 7 a.m. until 8 p.m. FAX: (916) 845-0415 gram and how you can request written advice
The best times to call are before 10 a.m. and from the FTB on whether a particular transac-
after 6 p.m. Times of day are Pacific Standard tion is taxable. See ‘‘Where to Get Income
Where to Get Income Tax Forms Tax Forms’’ on this page for how to get this
Time (PST).
By Internet – If you have Internet access, publication.
From within the
United States, . . . . . . . (800) 852-5711 you may download, view and print 1994
From outside the through 1998 California tax forms and publica-
tions. Our Internet address is: Field Offices
United States, . . . . . . . (916) 845-6500
(not toll-free) http://www.ftb.ca.gov You can get information, California tax forms
For hearing impaired By phone – Use F.A.S.T. to order 1996, 1997 and resolve problems on your account if you
with TDD . . . . . . . . . . (800) 822-6268 and 1998 California personal income tax visit one of our field offices.
For federal tax questions, forms, 1998 California corporate tax forms Field Offices Address
call the IRS at . . . . . . . . (800) 829-1040 and 1998 federal forms. To order a form:
Bakersfield 1800 30th St, Ste 370
Asistencia Bilingüe en Español • Refer to the list in your tax booklet and Burbank 333 N Glenoaks Blvd,
Para obtener servicios en Español y find the code number for the form you Ste 200
asistencia para completar su declaración de want to order. Fresno 2550 Mariposa St,
impuestos/formularios, llame al número de • Call (800) 338-0505 and follow the Rm 3002
teléfono (anotado arriba) que le corresponde. instructions. Long Beach 4300 Long Beach Blvd,
Please allow 2 weeks to receive your order. Ste 700B
If you live outside Californa, please allow Los Angeles 300 S Spring St, Ste 5704
Letters 3 weeks to receive your order. Oakland 1515 Clay St, #3N-305
In person – Most libraries, post offices and Sacramento 3321 Power Inn Road
We can serve you by phone if you call us for
banks provide free California personal income Ste 250
information to complete your California tax
tax booklets during the filing season. Many San Bernardino 464 W 4th St, Ste 454B
return and its related forms. However, you
libraries and some quick print businesses San Diego 5353 Mission Ctr Rd, Ste 314
may want to write to us if you are replying to
have forms and schedules for you to photo- San Francisco 455 Golden Gate Ave,
a notice we sent you or to get a written reply.
copy (you may have to pay a nominal fee). Ste 7400
If you write, be sure your letter includes your San Jose 96 N Third St, 4th Fl
Note that employees at libraries, post offices,
FEIN or social security number, your daytime Santa Ana 600 W Santa Ana Blvd,
banks and quick print businesses cannot pro-
and evening telephone numbers and a copy Ste 300
vide tax information or assistance. The LARZ,
of the notice. Send your letter to: Santa Rosa 50 D St, Rm 130
LAMBRA, MEA and TTA Business Booklets
RESOURCE DEVELOPMENT SECTION are only available at our field offices. For the Stockton 31 East Channel St, Rm 219
FRANCHISE TAX BOARD location of these offices, see the ‘‘Field Ventura 4820 McGrath St, Ste 270
PO BOX 1468 Office’’ section on this page. West Covina 100 N Barranca St, Ste 600
SACRAMENTO CA 95812-1468 Out of State Field Offices
By mail – Write to:
We will respond to your letter within 6 to 8 Chicago 1 N. Franklin, Ste 400
TAX FORMS REQUEST UNIT
weeks. In some cases, we may need to call Chicago, IL 60606-3401
FRANCHISE TAX BOARD
you for additional information. Long Island 1325 Franklin Ave, Ste 560
PO BOX 307
RANCHO CORDOVA CA 95741-0307 Garden City, NY 11530-1631
Houston 1415 Louisiana, Ste 1515
Geographic Boundaries Houston, TX 77002-7351
Further information about geographic bounda- Manhattan 1212 Ave of the Americas,
ries of the TTA is available from: 4th Fl
New York, NY 10036-1601
ENTERPRISE ZONE PROGRAMS
CA TRADE AND COMMERCE AGENCY
801 K STREET SUITE 1700
SACRAMENTO CA 95814
Telephone: (916) 324-8211
FAX: (916) 322-7214

FTB 3809 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 numbers, 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 the instructions for ordering 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 dependent. 724 – How do I dissolve my corporation?
able from 6 a.m. until midnight Monday through Fri- 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/
To Hear Answers To Your California Tax 506 – How do I get information about my Form forfeited. Can I still get a tax clearance?
Questions 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 you 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 the 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 3809 Booklet 1998