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California

Forms & Instructions


This Booklet Contains:

100S Form 100S, California S Corporation Franchise or Income Tax


Return
Schedule B (100S), S Corporation Depreciation and Amortization
Schedule C (100S), S Corporation Tax Credits
Schedule D (100S), S Corporation Capital Gains and Losses and
Built-in Gains
Schedule QS, Qualified Subchapter S Subsidiary (QSub)
Information Worksheet
Schedule H (100S), S Corporation Dividend Income Deduction

1999 FTB 2426, Water's-Edge Cover Sheet


Schedule K-1 (100S), Shareholder's Share of Income, Deductions,
S Corporation Tax Booklet
Credits, etc.
FTB 3539, Payment Voucher for Automatic Extension for Corpora-
tions and Exempt Organizations
FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and
Disaster Loss Limitations — Corporations
FTB 3830, S Corporation's List of Shareholders and Consents

Do you need help? (800) 338-0505


Members of the Franchise Tax Board Most of your questions can be answered by reading the instructions in this booklet. If
you need additional help, use our automated toll-free phone service available 24
Kathleen Connell, Chair hours a day. Or, if you have internet access go to our website at: www.ftb.ca.gov.
Johan Klehs, Member If you cannot get the answer you need, call our general toll-free phone service listed
B. Timothy Gage, Member on page 56.

STATE OF CALIFORNIA
FRANCHISE TAX BOARD
Table of Contents

Form 100S, California S Corporation Franchise or Income Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25


Instructions for Form 100S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule B (100S), S Corporation Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Instructions for Schedule B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Schedule C (100S), S Corporation Tax Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Instructions for Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Schedule D (100S), S Corporation Capital Gains and Losses and Built-in Gains . . . . . . . . . . . . . . . . . . . . . . 42
Instructions for Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Schedule QS, Qualified Subchapter S Subsidiary (QSub) Information Worksheet . . . . . . . . . . . . . . . . . . . . . 33
Instructions for Schedule QS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Schedule H (100S), S Corporation Dividend Income Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Instructions for Schedule H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
FTB 2426, Water’s-Edge Cover Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Instructions for form FTB 2426 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Schedule K-1 (100S), Shareholder’s Share of Income, Deductions, Credits, etc. . . . . . . . . . . . . . . . . . . . . . . 47
Instructions for Schedule K and K-1 (S Corp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Instructions for Schedule K-1 (Shareholder) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
FTB 3539, Payment Voucher for Automatic Extension for Corporations and Exempt Organizations . . . . . . . . 53
Instructions for form FTB 3539 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and Disaster
Loss Limitations — Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Instructions for form FTB 3805Q . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
FTB 3830, S Corporation’s List of Shareholders and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Instructions for form FTB 3830 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Page 2 Form 100S Booklet 1999


Instructions for Form 100S
California S Corporation Franchise or Income Tax Return
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).

What’s New and exempt organizations is not a estimates of inventory shrinkage and the
prerequisite for receiving an extension of taxpayer now wishes to use that method.
Preparer Tax Identification Number (PTIN) time to file a return. • Temporary suspension of income
This filing season tax professionals will have • The sunset date of January 1, 2000 was limitations on percentage depletion for
the option of providing their individual Social eliminated and instead provides that the production from marginal wells. The
Security Number (SSN) or Preparer Tax chapter authorizing the Tax Credit percentage depletion deduction, which
Identification Number (PTIN) on returns they Allocation Committee to allocate the credit may not exceed 65% of the taxpayer’s
prepare. The alternative number can be used for the costs of constructing or rehabilitat- taxable income, is no longer restricted to
in lieu of an SSN beginning January 1, 2000. ing low-income housing shall be in effect 100% of the net income derived from the
Preparers who want a PTIN must complete so long as the federal low-income housing oil or gas well property.
and submit federal Form W-7P, Application for credit is in effect. • Required recognition of gain on certain
Preparer Tax Identification Number, to the • The state credit for “qualified research appreciated financial positions in personal
IRS. expenses” was increased from 11% to property.
12%. • Election of mark-to-market for securities
Tax Law Changes • State-chartered credit unions now qualify and commodities traders. Allows securities
In general, California tax law conforms to the for exemption from franchise or income traders and commodities traders and
Internal Revenue Code (IRC) as of January 1, tax under Bank and Corporation Tax Law dealers to elect to use mark-to-market
1998. However, there are continuing differ- and also credit unions are exempt from accounting similar to what is currently
ences between California and federal tax law. other state, county, and municipal taxes required for securities dealers. Commodi-
California has not conformed to most of the and license fees, except certain specified ties would include only commodities of a
changes made to the IRC by the federal taxes. kind that are dealt with in the organized
Internal Revenue Service Restructuring and • The four year statute of limitations commodities exchange. An election to use
Reform Act of 1998 (Public Law 105-206) applicable to credits and claims for refund the mark-to-market method for federal
and has not conformed to any of the changes was modified to begin on the date the purposes is considered an election for
made by the Tax and Trade Relief Extension return was actually filed, if the return was state purposes and a separate election is
Act of 1998 (Public Law 105-277). timely filed by the extended due date. not allowed.
California law changes effective for income California law conforms to federal law for • Limitation on exception for investment
years beginning on or after January 1, 1999. the following provisions for income years companies under IRC Section 351.
beginning on or after January 1, 1998: • Contributions of property. For certain
• The sunset date of January 1, 1999 on the contributions of ordinary income and
issuance of qualified small business stock • Tax-exempt organizations may be capital gain property, the IRC Section
was removed, thereby making the shareholders in an S corporation. 170(e)(1) limitation is modified so that, in
exclusion permanent. • Deferral of income recognition of suspense the case of charitable contribution of stock
• For corporations that incorporate or accounts. Family farm corporations with in an S corporation, rules similar to IRC
qualify to do business in California on or income over $25 million may defer tax on Section 751 (relating to unrealized
after January 1, 2000, the prepayment of income that was a result of changes in receivables and inventory items) apply in
the minimum franchise tax to the Secre- accounting methods required of these determining whether gain on the stock was
tary of State (SOS) is no longer required. corporations. For calendar year taxpayers, long-term, if stock was sold by the
For the first income year (second taxable the suspense account for these deferrals S corporation.
year) the corporation will compute its tax must be recaptured starting with income • S corporations with Employee Stock
liability by multiplying its state net income years beginning on or after January 1, 1998. Ownership Plan (ESOP) shareholders. If
by the appropriate tax rate and will not be For fiscal year taxpayers, the suspense an ESOP is an S corporation shareholder,
subject to the minimum franchise tax. The account must be recaptured starting in items of income or loss of the S corpora-
corporation will become subject to income years beginning after June 8, 1997, if tion that flow through to the ESOP are not
minimum franchise tax beginning in its the fiscal year taxpayer’s income year ends treated as unrelated business taxable
second income year (third taxable year). on or after December 31, 1997. income (UBTI). Previously, such items
This does not apply to qualified Subchap- • Expensing of Environmental Remediation were treated as UBTI.
ter S subsidiaries or corporations that Costs. Certain environmental remediation • ESOPs and employees of S corporations.
reorganize solely to avoid payment of its expenditures that would otherwise be S corporations which establish and
minimum franchise tax. chargeable to capital accounts may be maintain ESOPs are not required to give
• For the purposes of determining the expensed and taken as a deduction in the participants the right to demand distribu-
correct amount of tax for water’s-edge year the expense was paid or incurred. An tions in the form of employer securities, if
electors, the presumption of correctness election to expense environmental the participants have the right to receive
attaches to all federal audit determinations, remediation costs for federal purposes is such distributions in cash.
including determinations made at the considered to be an election for state • IRC 338 elections. An IRC Section 338
audit, appeals, and/or competent authority purposes and a separate election is not election, relating to stock purchases
levels. allowed. treated as asset acquisitions, is treated as
• The law was amended to eliminate • Shrinkage Estimates for Inventory an election for state purposes. A separate
ambiguity with respect to the due date for Accounting. For purposes of inventory election for state purposes is not allowed.
filing a tax return by requiring corporate accounting, an adjustment for shrinkage, • Expansion of deduction for certain interest
taxpayers to file their income tax return “on based on an estimate, may be made. and premiums paid for company-owned
or before the 15th day of the third month Taxpayers can voluntarily change their life insurance.
following the close of its income year.” method of accounting if the method • Modification of holding period applicable
• The law was amended to clarify that currently being used does not utilize to dividends received deduction.
payment of estimated tax by corporations

Form 100S Booklet 1999 Page 3


• Repeal of special installment sales rule for Important Information In addition, if an S corporation has one or
manufacturers of tangible personal more shareholders who are nonresidents of
property. California Tax Forms on the Internet! California or trusts with nonresident fiducia-
• Required registration for abusive tax Do you need a California franchise or income ries, the S corporation must file form
shelters. tax form or publication? Do you have Internet FTB 3830, S Corporation’s List of Sharehold-
• Perfection of untimely S corporation access? If so, you may download, view, and ers and Consents (included in this booklet).
election. If for any income year beginning print 1994 through 1999 California tax forms, This list must include the names and social
on or after January 1, 1987, a corporation schedules, instructions, and publications. security numbers or federal employer
failed to qualify as an S corporation solely Legal Notices and Rulings numbered 96-1 identification numbers (FEIN) of all sharehold-
because it did not file a timely federal and subsequent are also available. Go to our ers and each nonresident shareholder’s or
Form 2553, Election by a Small Business website at: www.ftb.ca.gov fiduciary’s signed consent to be subject to
Corporation, the S corporation shall be Records Maintenance Requirements California’s jurisdiction to tax the
treated as an S corporation for California Any taxpayer filing on a water’s-edge or shareholder’s pro-rata share of income
purposes for the income year in which the worldwide basis is required to keep and attributable to California sources.
federal election was originally made and maintain records and make available upon R&TC Section 23801(b)(3) authorizes the FTB
for each subsequent income year if both request the following: to retroactively revoke the S corporation status
the following conditions are met: if the S corporation fails to file form FTB 3830
• Any records needed to determine the
1. The corporation and all of its share- correct treatment of items reported on the and meet the requirements outlined above.
holders reported their income for worldwide or water’s-edge combined The taxable income of the S corporation is
California tax purposes on original report for purposes of determining the calculated two different ways for two different
returns consistent with S corporation income attributable to California; purposes. First, it is calculated in the same
status for the year the S corporation • Any records needed to determine the manner as for C corporations, with certain
election should have been made, and treatment of items as nonbusiness or modifications, for purposes of computing the
for each subsequent income year (if business income; 1.5% income or franchise tax. Second, it is
any) until terminated; and • Any records needed to determine the calculated using federal rules for the pass-
2. The corporation and its shareholders apportionment factor; and through of income and deductions, etc. for
filed a federal Form 2553 with the IRS • Documents and information needed to purposes of pass-through to the shareholders.
requesting automatic relief with respect determine the attribution of income to the
to the late S corporation election in full U.S. or foreign jurisdictions under IRC A Franchise or Income Tax
compliance with federal Rev. Proc. Subpart F, IRC Section 882, or other Corporation franchise tax
1997-48 I.R.B. 1997-43 and the similar provisions of the IRC. Entities subject to the corporation franchise
S corporation received notification of See R&TC Section 19141.6 and the regula- tax include all S corporations that are:
acceptance of the untimely filed tions thereunder for more information. A
S corporation election from the IRS. • Incorporated in California; or
corporation may be required to authorize an • Qualified to do business in California; or
The S corporation shall provide a copy agent to act on its behalf in response to
of the notification to the FTB upon • Doing business in California, whether or
requests for information or records pursuant not incorporated or qualified under
request. to R&TC Section 19504. The penalty for California law.
California law does not conform to federal failure to maintain the above required records
law for the following: is $10,000 for each income year for which the The tax must be prepaid for the privilege of
failure applies. In addition, if the failure doing business. It is measured by the income
• Decreased capital gains tax rate.
continues for more than 90 days after the FTB of the preceding income year for the privilege
• Special tax rules for ESOPs. Certain special
notifies the S corporation of the failure, a of doing business in the following taxable
tax rules relating to employee stock
penalty of $10,000 may be assessed for each year. For purposes of these instructions, the
ownership plans (ESOPs) will not apply
additional 30-day period of continued failure. term “income year” means taxable year for
with respect to S corporation stock held by
For income years beginning on or after S corporations that are taxed under Chapter 3
the ESOP. These include rules relating to
January 1, 1996, there is no maximum (i.e., corporations that are not doing business
certain contributions to ESOPs, the
amount of penalty that may be assessed. See within California but derive income from
deduction for dividends paid on employer
General Information M, Penalties, for more sources within California) of the Bank and
securities, and the rollover of gain on the
information. Corporation Tax Law.
sale of stock to an ESOP. See IRC
Sections 404(a)(9) and 404(k) for more Note: A corporation that makes a valid The term “doing business” means actively
information. election to be treated as an S corporation for engaging in any transaction for the purpose of
• Accelerated depreciation for property on California purposes is not allowed to be financial gain or profit.
Indian reservations. included in a combined report of a unitary Corporation income tax
• The elimination of the deduction for club group, except as provided by R&TC The corporation income tax is imposed on all
membership fees. Also, California law Section 23801(d)(1). S corporations that derive income from
does not conform to the disallowance of sources within California but are not doing
the deduction for employee remuneration General Information business in California.
in excess of $1 million.
• The federal provisions disallowing the Form 100S is used if a corporation has For purposes of the corporation income tax,
deduction for lobbying expenses. The elected to be a California small business the term “corporation” is not limited to
expense is still deductible for California corporation (S corporation). incorporated entities, but also includes:
purposes. All federal S corporations subject to California • Associations;
• The treatment of Subpart F and laws that did not make a California • Massachusetts or business trusts;
Section 936 income. C corporation election must file Form 100S • Real estate investment trusts; and
and pay the greater of the minimum franchise • Other business entities classified as
tax or the 1.5% income or franchise tax. The associations under Title 18 Cal. Code Regs
tax rate for financial S corporations is 3.5%. Sections 23038(b)-1 through 23038(b)-3.

Page 4 Form 100S Booklet 1999


B Tax Rate and Minimum business in California may make this election. S corporation status can be maintained or
Such an election is treated as a revocation of elected if the corporation changes its
Franchise Tax the California election and will be disregarded accounting method from the bad debt reserve
Tax rate if not filed when due. Get form FTB 3560 for method to the specific write-off method. Get
The tax rate for S corporations that are information on filing deadlines. FTB Notice 98-3 for more information.
subject to either the franchise or the income A federal S corporation that previously elected Note: California is not following the automatic
tax is 1.5%. The tax rate for certain capital to be a California C corporation may elect to consent procedure for a change of accounting
gains, built-in gains, and excess net passive become a California S corporation unless the method involving previously unclaimed
income is 8.84%. California S corporation status was terminated allowable depreciation or amortization of
Financial S corporations are required to use a within the past 5 years. Use form FTB 3560 to Federal Revenue Procedure 96-31. Get FTB
rate of 2% above the S corporation rate make this election. Notice 96-3 for more information.
(currently 1.5% or 8.84% for certain capital Terminations
gains, built-in gains, and excess net passive A corporation may terminate its S corporation
E When to File
income). See R&TC Section 23186(f). status by: File Form 100S by the 15th day of the 3rd
Minimum franchise tax month after the close of the income year
• Revoking the election (federal or state); or
unless the return is for a short period as
All S corporations subject to the corporation • Ceasing to qualify as an S corporation; or
required under R&TC Section 24634. See
franchise tax and any S corporation “quali- • Violating the passive investment income
R&TC Section 18601(c) for the due date of
fied” to do business in California must file restrictions on corporations with earnings
the short period return. Generally, the due
Form 100S and pay at least the minimum and profits.
date of a short period return is the same as
franchise tax as required by law. The An S corporation may terminate its S election the due date of the federal short period return.
minimum franchise tax is $800 and must be for California, by revocation, without Farmer’s cooperative associations must file
paid whether the S corporation is active, terminating its federal S election. However, Form 100S by the 15th day of the 9th month
inactive, operates at a loss, or files a return terminating the taxpayer’s federal S election after the close of the income year.
for a short period of less than 12 months. simultaneously terminates its California
See General Information O, Dissolution/
There is no minimum franchise tax for: S election.
Withdrawal, and General Information P,
• Corporations that derive income from If the taxpayer terminates its S corporation Ceasing Business, for information on final
sources within California but are subject status, short period returns are required for returns.
only to income tax because they are not the S corporation short year and the
“doing business” in California, and are not C corporation short year, if applicable. F Extension of Time to File
incorporated or qualified under the laws of During the five years after the termination of If an S corporation cannot file its California
California (get FTB Pub. 1050, FTB Pub. the S corporation status, the taxpayer may not return by the 15th day of the 3rd month after
1060, or FTB Pub. 1063 for more make another California S election unless the the close of the income year, it may file on or
information regarding “doing business”); FTB consents. before the 15th day of the 10th month,
• Credit unions;
For more information about elections and without filing a written request for an
• Exempt homeowners’ associations;
terminations, get form FTB 3560. extension. If the S corporation is suspended
• Exempt political organizations;
on the original due date, the automatic
• Qualified non-profit farm cooperative
associations; D Accounting Period and extension will not apply. An automatic
extension does not extend the time for
• Exempt organizations; and Method payment. The full amount of tax must be paid
• Corporations that are not incorporated The income year of the S corporation must by the original due date of Form 100S. If there
under the laws of California; whose sole not be different from the taxable year used for is an unpaid tax liability on the original due
activities in California are engaging in federal purposes, unless initiated or approved date, get form FTB 3539, Payment Voucher
convention and trade show activities for by the FTB (R&TC Section 24632). for Automatic Extension for Corporations and
seven or fewer days during the income
A change in accounting method requires Exempt Organizations (included in this
year; and do not derive more than $10,000
consent from the FTB. However, an booklet) and send it with the payment by the
of gross income reportable to California
S corporation that obtains federal approval to original due date of the Form 100S.
during the income year. These S corpora-
tions are not “doing business” in change its accounting method, or that is Note: If the corporation must pay its tax
California. Get FTB Pub. 1060 for more permitted or required by federal law to make a liability using Electronic Funds Transfer (EFT),
information. change in its accounting method without prior all taxes due must be remitted by EFT to avoid
approval, and does so, is deemed to have the penalties. Do not send form FTB 3539.
S corporations are not subject to the FTB’s approval if: (1) the S corporation files a
alternative minimum tax. timely Form 100S consistent with the change G Electronic Funds Transfer
for the 1st year the change is effective, and
C Elections and Terminations (2) the change is consistent with California (EFT)
Elections law. A copy of federal Form 3115, Application Corporations that meet certain requirements
Corporations that elect federal S corporation for Change in Accounting Method, and a copy must remit all of their payments through EFT
status and have a California filing require- of the federal consent to the change must be rather than by paper checks to avoid penal-
ment, are deemed to have made a California S attached to Form 100S for the 1st year the ties. Once a corporation remits an estimated
election on the same date as the federal change becomes effective. The FTB may tax payment or extension payment in excess
election. These corporations must report the modify requested changes if the adjustments of $20,000 or has a total tax liability in excess
federal S election to the FTB using form would distort income for California purposes. of $80,000, the FTB will notify the corporation
FTB 3560, S Corporation Election or Termina- If the corporation is a bank, savings and loan that all future payments must be made by EFT.
tion/Revocation. association, or financial corporation, it can no Those that wish to participate on a voluntary
longer use the bad debt reserve method of basis may do so. For more information, call
If a federal S corporation wants to be a the FTB EFT Section at (916) 845-4025, or get
California C corporation, it must elect such accounting and elect to be, or continue to be,
an S corporation for income years beginning FTB Pub. 3817, Electronic Funds Transfer
treatment using form FTB 3560. Only Program Information Guide.
corporations incorporated or qualified to do on or after January 1, 1997. However, the

Form 100S Booklet 1999 Page 5


H Where to File See the specific line instructions for more in the case of new corporations in existence for
information. less than four years. However, see the
If tax is due, and the corporation is not instructions for federal Form 1120S,
required to use EFT, make the check or money 2. Schedule F – California computation
method Schedule D, for rules applicable to certain
order payable to the Franchise Tax Board. carryover basis assets.
Write the California corporation number and If the S corporation has no federal filing
“1999 Form 100S” on the check or money requirement, or if the S corporation Built-in gains under current IRC
order. Mail the return and payment to: maintains separate records for state Section 1374
purposes, complete Form 100S, For those S corporations that made the initial
FRANCHISE TAX BOARD Schedule F, Computation of Trade or federal S election after December 31, 1986,
PO BOX 942857 Business Income, to determine state certain income items reported by the
SACRAMENTO CA 94257-0501 ordinary income. If ordinary income is S corporation are taxed at 8.84% (or the
Mail all other returns, including those with computed under California laws, generally financial C corporation tax rate). This
payment by EFT to: no state adjustments are necessary. provision applies for a period of 10 years
FRANCHISE TAX BOARD Transfer the amount from Schedule F, following the C corporation’s election to
PO BOX 942857 line 22, to Side 1, line 1. Complete become an S corporation. The amount of
SACRAMENTO CA 94257-0500 Form 100S, Side 1, line 1 through line 14, built-in gain that is taxed at 8.84% (or the
only if applicable. financial C corporation tax rate) is the excess
Private Delivery Services
Note: Regardless of the net income computa- of recognized built-in gains over recognized
California law conforms to federal law built-in losses, limited by taxable income as
tion method used, the corporation must
regarding the use of certain designated determined under IRC Section 1374(d)(2)(A).
attach any form, schedule, or supporting
private delivery services to meet the “timely The following items are treated as built-in
document referred to on the return and
mailing as timely filing/paying” rule for tax gains subject to this tax:
schedules or forms filed with FTB.
returns and payments. See federal
Form 1120S, U.S. Income Tax Return for an Substitution of federal schedules • Accounts receivable of cash basis
S Corporation, for a list of designated delivery S corporations may not substitute federal taxpayers from C corporation years;
services. If a private delivery service is used, schedules for California schedules. • Long-term contract deferred income from
address the return to: C corporation years;
FRANCHISE TAX BOARD J Certain Capital Gains/Built- • Deferred income from installment sales
made in C corporation years;
SACRAMENTO CA 95827 in Gains • Recapture of depreciation from
Caution: Private delivery services cannot For California purposes, when a C corporation C corporation years;
deliver items to PO boxes. If using one of elects to be an S corporation, certain items of • Income from unreplaced LIFO inventory
these services to mail any item to the FTB, DO gain or loss recognized in S corporation years from C corporation years; and
NOT use an FTB PO box. are subject to the C corporation 8.84% tax • Any other income item that is attributable
Private Mailbox (PMB) Number rate instead of the S corporation 1.5% tax rate to C corporation years.
If you lease a mailbox from a private business (financial S corporations add 2%). (These are just a few of the examples. This list
rather than from the United States Postal Former IRC Section 1374 allowed a threshold is not intended to be all inclusive.)
Service, enter the box number in the special amount in determining if the S corporation Note: For purposes of current IRC
field on the tax return labeled “PMB no.” was subject to the 8.84% tax. However, former Section 1374, the effective date of any
IRC Section 1374 was replaced by current IRC California S election made in 1987 and 1988
I Net Income Computation Section 1374, which does not allow the reverts back to the date of the federal
The computation of net income from trade threshold amount and is applicable to other S election if the corporation was previously a
and business activities generally follows the items of income in addition to capital gains. federal S corporation.
determination of taxable income as provided Capital gains under former IRC Section 1374 Transitional rules under IRC Section 1374
in the IRC. However, there are differences that Generally, S corporations that made the The Tax Reform Act of 1986, Act Section
must be taken into account when completing federal S election before January 1, 1987, or 633(d)(8), to which California conforms,
Form 100S. There are two ways to complete during 1987 or 1988, and are under the provides special transitional relief from the
Form 100S, the federal reconciliation method transitional relief rules applicable to built-in built-in gains tax for qualified S corporations.
or the California computation method. gains may be subject to a tax on capital gains A “qualified S corporation” is any
1. Federal reconciliation method (under former IRC Section 1374) for S corporation that has an applicable value of
a. Attach a copy of federal Form 1120S, California purposes for certain sales or $10 million or less on August 1, 1986, all
Page 1, U.S. Income Tax Return for an dispositions. times thereafter and before the corporation is
S Corporation, and all pertinent Based on former IRC Section 1374, a tax is completely liquidated, and is more than 50%
supporting schedules, or transfer the imposed at 8.84% (or the financial owned by 10 or fewer qualified persons. A
information from federal Form 1120S, C corporation tax rate) if: “qualified person” is an individual, an estate,
Page 1, to Schedule F and attach all • The S corporation is not subject to tax on or a trust that is described in IRC
pertinent supporting schedules; the gain under the new built-in gains rules Section 1361(c)(2)(A)(ii) or (iii).
b. Enter the amount of federal ordinary (see below); This transitional relief applies to qualified
income (loss) from trade or business • The excess of the net long-term capital corporations that elected S corporation status
activities before any net operating loss gain over the net short-term capital loss is after December 31, 1986, and before
(NOL) on Form 100S, Side 1, line 1; and more than $25,000; January 1, 1989. The relief is not available to
c. Enter the state adjustments (including • The excess is more than 50% of the an otherwise qualified S corporation in the
any adjustments necessary to report corporation’s taxable income; and case of the sale or distribution of capital
items not included in ordinary trade or • The taxable income is more than $25,000. assets held 6 months or less or in the case of
business income or loss) on line 2 the sale or distribution of assets which results
through line 14, to arrive at net income The capital gains tax under former IRC
Section 1374 does not apply if the corporation in ordinary income (loss).
after state adjustments, Side 1, line 15.
was an S corporation during each of the
preceding three years or for the entire period

Page 6 Form 100S Booklet 1999


K Estimated Tax and the late filing penalty will be assessed from required form for each year the failure occurs.
the original due date of the return. See R&TC Section 19141.5.
Every S corporation, must pay estimated tax
using Form 100-ES, Corporation Estimated Tax. Failure to pay total tax by the due date If the S corporation does not file its
Any S corporation that fails to pay the total Form 100S by the due date or extended due
Estimated tax is generally due and payable in date, whichever is later, copies of federal
tax shown on Form 100S by the original due
four installments: Form(s) 5472 must still be filed on time or the
date is assessed a penalty. The penalty is 5%
• The 1st payment is due on the 15th day of of the unpaid tax, plus 0.5% for each month, penalty will be imposed. Attach a cover letter
the 4th month of the income year (note or part of the month (not to exceed 40 to the copies indicating the taxpayer’s name,
that this payment may not be less than the months) the tax remains unpaid. This penalty California corporation number, and income
minimum franchise tax, plus QSub annual may not exceed 25% of the unpaid tax. year. Mail to the same address used for
tax, if applicable); and returns without payments. See General
Note: If an S corporation is subject to both
• The 2nd, 3rd, and 4th installments are due Information H, Where to File. When the
the penalty for failure to file a timely return
and payable on the 15th day of the 6th, S corporation files Form 100S, also attach
and the penalty for failure to pay the total tax
9th, and 12th months, respectively, of the copies of the federal Form(s) 5472.
by the due date, a combination of the two
income year. Record maintenance penalties
penalties may be imposed, but the total will
Note for first-time filers: The prepayment of not exceed 25% of the unpaid tax. The penalty for failure to maintain certain
tax made to the California Secretary of State records is $10,000 for each income year for
(SOS) at the time of incorporation or Underpayment of estimated tax
which the failure applies. In addition, if the
qualification is for the privilege of “doing Any S corporation that fails to pay, pays late,
failure continues for more than 90 days after
business” during the S corporation’s 1st or underpays an installment of estimated tax
the FTB notifies the S corporation of the
taxable year. Do not claim this payment as an is assessed a penalty. The penalty is a
failure, in general, a penalty of $10,000 may
estimated tax payment or credit against the percentage of the underpayment for the
be assessed for each additional 30-day period
tax liability shown on the return for the underpayment period.
of continued failure. For income years
S corporation’s 1st year. Get form FTB 5806, Underpayment of beginning on or after January 1, 1996, there
The 1st tax return the corporation files reports Estimated Tax by Corporations, to determine is no maximum amount of penalty that may
the income of its 1st income year. The tax both the amount of underpayment and the be charged.
shown on that return is the tax for the amount of penalty.
See the Important Information section for a
privilege of doing business in the Note: If the S corporation uses Exception B or discussion of the records required to be
corporation’s 2nd taxable year. Exception C to compute or eliminate any of maintained. See R&TC Section 19141.6 and
California law has conformed to the federal the four installments, form FTB 5806 must be the regulations thereunder for more
expanded annualization periods for the attached to the front of Form 100S. information.
computation of estimate payments. For EFT Penalty Accuracy and fraud related penalties
income years beginning on or after January 1, If the S corporation must pay its tax liability California conforms to IRC Sections 6662
1998, the applicable percentage for estimate using EFT, all payments must be remitted by through 6665 that authorize the imposition of
basis is 100%. EFT to avoid penalties. The EFT penalty is an accuracy-related penalty equal to 20% of
Get the instructions for Form 100-ES for more 10% of the amount not paid by EFT. See the related underpayment and the imposition
information. R&TC Section 19011 and General Information of a fraud penalty equal to 75% of the related
Note: If the corporation must pay its tax G, Electronic Funds Transfer (EFT), for more underpayment. See R&TC Section 19164, for
liability using EFT, all estimate payments due information. more information.
must be remitted by EFT to avoid penalties. Information reporting penalties Secretary of State penalty
For income years beginning on or after The California Corporations Code requires the
L Commencing S Corporations January 1, 1997, U.S. taxpayers who have an FTB to assess a penalty for failure to file an
The tax measured by the income in the 1st ownership interest in (directly or indirectly) a annual statement of corporate officers with
year of business (1st income year) is for the foreign corporation and were required to file the California SOS. See R&TC Section 19141.
privilege of “doing business” during the 2nd federal Form(s) 5471, Information Return of
For more information, contact the:
year. U.S. Persons With Respect to Certain Foreign
Corporations, with the federal return, must CALIFORNIA SECRETARY OF STATE
Even if the 1st income year is for a period of PO BOX 944230
attach a copy(s) to the California return. A
less than 12 months or if the S corporation is SACRAMENTO CA 94244-2300
penalty for failure to include a copy of federal
inactive during the 1st income year, the Telephone: (916) 657-3537
Form(s) 5471, as required, is $1,000 per
S corporation must pay at least the minimum
required form for each year the failure occurs. Other penalties
franchise tax by the 1st estimate installment
The penalty applies for income years Other penalties may be imposed for a check
due date, and file Form 100S by the due date.
beginning on or after January 1, 1998. The or EFT returned for insufficient funds, non-
Get FTB Pub. 1060, Guide for Corporations penalty will not be assessed if the taxpayer U.S. foreign corporations operating while
Starting Business in California, for more provides a copy of the form(s) within 90 days forfeited or without qualifying to do business
information. of request from the FTB and the taxpayer in California, and domestic corporations
agrees to attach a copy(s) of Form 5471 to all operating while suspended in California. See
M Penalties returns filed for subsequent years. R&TC Sections 19134 and 19135, for more
Failure to file a timely return Certain domestic corporations that are 25% information.
Any S corporation that fails to file a or more foreign-owned and foreign corpora-
Form 100S on or before the due date is tions engaged in a U.S. trade or business N Interest
assessed a penalty. The penalty is 5% of the must attach federal Form(s) 5472, Informa- Interest is due and payable on any tax due if
tax due, after any timely payments or credits, tion Return of a 25% Foreign-Owned U.S. not paid by the original due date of
for each month of delinquency, not to exceed Corporation or a Foreign Corporation Engaged Form 100S. Interest is also due on some
25% of the unpaid tax. If the S corporation in a U.S. Trade or Business, to Form 100S. penalties. The automatic extension of time to
does not file its return by the extended due The penalty for failing to include file Form 100S does not stop interest from
date, the automatic extension will not apply Form(s) 5472, as required, is $10,000 per accruing. California follows federal rules for

Form 100S Booklet 1999 Page 7


the calculation of interest. Get FTB Pub. 1138, suspended (in the case of a domestic foreign corporations are excluded from the
Refund/Billing Information, for more S corporation) or forfeited (in the case of a combined report.
information. foreign S corporation). To make the water’s-edge election, an
S corporations that operate while suspended S corporation should enter into a contract
O Dissolution/Withdrawal or forfeited are subject to a $2,000 penalty with the FTB by filing Form 100-WE, Water’s-
The franchise tax for the period in which the per income year, which is in addition to any Edge Contract. For the election to be valid for
S corporation formally dissolves or withdraws tax, penalties, and interest already accrued. any income year, Form 100-WE should be
is measured by the income of the year in Also, any contracts entered into during signed and attached to the original
which it ceased doing business in California, suspension or forfeiture are voidable at the Form 100S. A copy should be attached to all
unless such income has already been taxed at request of any party to the contract other than subsequent returns filed during the contract
the rate prescribed for the taxable year of the suspended or forfeited corporation. period.
dissolution or withdrawal. Such contracts will remain voidable and In consideration for being allowed to file on a
An S corporation that is a successor to a unenforceable unless the S corporation water’s-edge basis, the S corporation must,
corporation that commenced doing business in applies for relief from contract voidability and among other things:
California before January 1, 1972, is allowed a the FTB grants relief. • File returns on a water’s-edge basis for a
credit that may be refunded in the year of See R&TC Sections 19135, 19719, 23301, period of 84 months;
dissolution or withdrawal. The amount of the 23305.1, and 23305.2 for more information. • Agree to business income treatment of
refundable credit is the difference between the dividends received from certain corpora-
minimum franchise tax for the corporation’s R Apportionment of Income tions; and
first full 12 months of doing business and the • Consent to the taking of certain deposi-
total tax paid for the same period. S corporations with business income
attributable to sources both within and tions and the acceptance of subpoenas
To claim this credit, enter the amount on outside of California are required to apportion duces tecum requiring the reasonable
Form 100S, Side 1, line 36. To the left of such income. To calculate the apportionment production of documents.
line 36, write “Dissolving/ Withdrawing.” percentage, use Schedule R, Apportionment Water’s-edge returns must have form
The return for the final taxable period is due and Allocation of Income. Be sure to answer FTB 2426, Water’s-Edge Cover Sheet
on or before the 15th day of the 3rd full Question P on Form 100S, Side 2. (included in this booklet), attached to the
month after the month during which the Note: A corporation that has made a valid front of Form 100S.
S corporation formally dissolved or withdrew. election to be treated as an S corporation is Get Form 100-WE, Water’s-Edge Booklet, for
Get FTB Pub. 1149, Terminating a Corportion, generally not included in a combined report. more information.
for more information. However, in some cases, the FTB may use
Samples and/or forms for a dissolution, combined reporting methods to clearly reflect U Amended Return
surrender, or merger agreement filing may be income of an S corporation (R&TC To correct or change Form 100S, file the most
obtained by addressing your request to: Section 23801(d)(1)). current Form 100X, Amended Corporation
ATTN: LEGAL REVIEWCALIFORNIA Franchise or Income Tax Return. Using the
SECRETARY OF STATE
S Excess Net Passive incorrect form may delay processing of the
1500 11TH ST 3RD FLOOR Investment Income amended return. If the IRS examined and
SACRAMENTO CA 95814-5701 California conforms to IRC Section 1375 for changed the S corporation’s federal return or
income years beginning on or after January 1, if the S corporation filed an amended federal
P Ceasing Business 1987. If an S corporation does not have return, file Form 100X within six months of
excess net passive investment income for the final federal determination.
Because the corporation franchise tax is a
prepaid tax, a special tax computation is federal purposes, then the S corporation will
necessary when an S corporation ceases to not have excess net passive investment V Information Returns
do business in California. The tax for the final income for California purposes. Every S corporation engaged in a trade or
year in which the S corporation does business If at the close of the income year, an business and making or receiving certain
in California is: S corporation has undistributed earnings and payments in the course of the trade or
profits (defined in IRC Section 1362(d)(3)) business is required to file information
• The tax measured by the income of the returns which report the amount of these
preceding year; PLUS from previous years as a C corporation and
has passive investment income that repre- payments.
• The tax measured by the income of the
year in which the corporation ceases to do sents more than 25% of total gross receipts, Payments that must be reported include, but
business; PLUS then the S corporation may be subject to a tax are not limited to, compensation for services
• The tax due on unreported income on the excess net passive investment income not subject to withholding, commissions,
attributable to installment obligations. (R&TC Section 23811). fees, prizes and awards, payments to
If an S corporation has an 80% or greater independent contractors, rents, royalties and
The tax due must be at least the minimum pensions exceeding $600 annually, interest
franchise tax. Generally, the S corporation will ownership stake in a C corporation, dividends
received from that C corporation are not and dividends exceeding $10 annually, and
remain subject to the minimum franchise tax cash payments over $10,000 received in a
for each year it is in existence until it files a treated as passive investment income, for
purposes of IRC Sections 1362 and 1375, if trade or business. Payments of any amount
certificate of dissolution or withdrawal with by a broker or barter exchange must also be
the California SOS. See General the dividends are attributable to the earnings
and profits of the C corporation derived from reported.
Information O, Dissolution/Withdrawal, and
R&TC Sections 23331 through 23335 for the active conduct of a trade or business. S corporations must report payments made to
more information. California residents by providing copies of
T Water’s-Edge Reporting federal Form 1099. Reports must be made for
Q Suspension/Forfeiture For income years beginning on or after the calendar year and are due to the IRS no
January 1, 1988, taxpayers may elect to later than February 28th of the year following
If an S corporation fails to file Form 100S payment. S corporations must also submit
and/or fails to pay any tax, penalty, or interest compute income attributable to California on
the basis of a water’s-edge election, affiliated federal Form 8300, Report of Cash Payments
due, its powers, rights, and privileges may be

Page 8 Form 100S Booklet 1999


Over $10,000 Received in a Trade or Busi- group, as defined in R&TC Section 25105, of For more information, see form FTB 3805Q,
ness, within 15 days after the date of the which the bank or corporation is a member. Net Operating Loss (NOL) Computation and
transaction. If during the 1st income year, the NOL and Disaster Loss Limitations —
S corporations must report interest paid on corporation’s gross receipts exceed $1 million Corporations (included in this booklet), or get
municipal bonds held by California taxpayers or tax liability exceeds $800, the corporation form FTB 3805Z, Enterprise Zone Business
and issued by a state other than California, or must pay an additional amount of $500, if the Booklet; form FTB 3806, Los Angeles
a municipality other than a California corporation prepaid the $300 minimum tax to Revitalization Zone Booklet; form FTB 3807,
municipality. Entities paying interest to the SOS. Local Agency Military Base Recovery Area
California residents on these types of bonds Booklet; or form FTB 3809, Targeted Tax Area
The corporation must pay the additional tax on Business Booklet.
are required to report interest payments or before the original due date of its 1st
aggregating $10 or more and paid after required return without regard to extension.
January 1, 1999. Information returns are due See R&TC Section 23221 for more
Y At-Risk Rules
June 1, 2000. Get form FTB 4800, Federally information. California S corporations are subject to IRC
Tax Exempt Non-California Bond Interest and Section 465 relating to the at-risk rules. For
Interest-Dividend Payment Information, for Minimum franchise tax more information, see federal Form 6198,
more information. For income years beginning on or after At-Risk Limitations. Losses from passive
January 1, 1999 and before January 1, 2000, activities are first subject to the at-risk rules
California conforms to the information
the minimum franchise tax for a QNC for the and then to the passive activity rules.
reporting requirements of IRC Section 6045(f)
1st return required to be filed is $500. The
for certain payments made to attorneys. If the
S corporation has complied with the require-
minimum franchise tax for the 1st return is Z Passive Activity Loss
due as an estimate payment on the 15th day
ments for federal purposes, the S corporation
of the 4th month of the QNC’s 1st income Limitation
will be treated as having complied with the California S corporations generally follow IRC
year. For purposes of the QNC minimum
requirements for California purposes and no Section 469 and the regulations thereunder
franchise tax, the corporation must meet the
penalty will be imposed. that allow losses from passive activities to be
following criteria:
California conforms to the information applied only against income from passive
• Incorporate on or after January 1, 1999;
reporting requirements imposed under IRC activities.
• Begin business operations at or after the
Sections 6038, 6038A, and 6038B. Any California differs from federal law in that
time of incorporation;
information returns required to be filed for rental real estate activities of taxpayers
• Reasonably estimate that it will have gross
federal purposes under these IRC Sections are engaged in a real property business are still
receipts, less returns and allowances,
also required to be filed for California treated as a passive activity.
reportable to California of $1 million or
purposes. Required federal information
less; California law also differs from federal law in
returns should be attached to the Form 100S
• Reasonably estimate it will not have a tax that the passive activity loss rules are applied
when filed. If these information returns are
liability that exceeds the minimum at both the S corporation level and at the
not provided, penalties may be imposed under
franchise tax of $800; and shareholder level. The passive activity loss
R&TC Sections 19141.2 and 19141.5.
• Did not begin business as a single rules must be applied in determining the net
Mail all information returns required to be proprietorship, partnership, or other form income of the S corporation that will be taxed
filed separate from the tax return to: of business entity prior to its incorporation. using the 1.5% tax rate. Subsequent to the
FRANCHISE TAX BOARD Gross receipts includes the gross receipts of income and deductions flowing through to the
PO BOX 942857 each member of the commonly controlled shareholders, the rules are again applied in
SACRAMENTO CA 94257-0500 group, as defined in R&TC Section 25105, of determining the net income of the share-
which the bank or corporation is a member. holder. Treatment at the shareholder level is
W Qualified New Corporations If during the income year, the corporation’s the same as the federal treatment prior to
(QNCs) gross receipts exceed $1 million or the tax January 1, 1994.
SOS prepayment tax liability exceeds the minimum franchise tax of The passive activity loss rules apply to the
$800, the corporation must pay an additional S corporation as if it were an individual (i.e.,
Effective for income years beginning on or
amount of $300. The corporation must pay losses from passive activities may not be used
after January 1, 1998, and before January 1,
the additional amount on or before the to offset other income, except for $25,000 in
2000, the minimum tax prepaid to the
original due date of its 1st required return losses from rental real estate). However, when
California SOS for the 1st income year is
without regard to extension. See R&TC determining whether the S corporation
$300 for a QNC. For purposes of the $300
Section 23153 for more information. materially participates in the activity, the
prepaid minimum tax, a QNC is a corporation
material participation rules that apply to a
that reasonably estimates it will:
X Net Operating Loss (NOL) “closely held C corporation” should be
• Have gross receipts, less returns and applied to the S corporation. For more
allowances, reportable to California of Carryover periods varying from 5 to 15 years
and carryover deductions varying from 50% information, see IRC Section 469(h)(4).
$1 million or less;
to 100% are allowed for NOLs sustained by S corporations must use form FTB 3801,
• Have tax liability that does not exceed $800;
qualified corporations. Passive Activity Loss Limitations, to figure the
• Not have 50% or more of its stock owned,
R&TC Sections 24416 through 24416.6 and allowable net loss from passive activities.
upon initial issuance, by another corporation;
• Begin operations at or after the time of its 25108 provide for NOL carryovers incurred in
incorporation; and the conduct of a trade or business. AA Passive Activity Credits
• Not have begun business prior to its R&TC Section 24347.5 provides special S corporation credits subject to the passive
incorporation as a single proprietorship, treatment for the carryover of disaster losses activity credit limitation rules include:
partnership, or other form of business incurred in an area designated by the • Research credit;
entity. President of the United States or the Governor • Orphan drug credit carryover; and
Gross receipts includes the gross receipts of of California as a disaster area. • Low-income housing credit.
each member of the commonly controlled Get form FTB 3801-CR, Passive Activity Credit
Limitations, for more information.

Form 100S Booklet 1999 Page 9


BB Tax Credits IRC Section 1361(b)(2)). In addition, 100% of File the 1999 Form 100S for calendar year
the stock of the subsidiary must be held by 1999 and fiscal years that begin in 1999.
If a C corporation had unused credit carry- the S corporation parent and the parent must
overs when it elected S corporation status, Enter income year beginning and ending dates
elect to treat the subsidiary as a QSub. A only if the return is for a short year or a fiscal
the carryovers were reduced to 1/3 and QSub is not treated as a separate entity and all
transferred to the S corporation. The year. If the S corporation reports its income
assets, liabilities, and items of income, using a calendar year, leave blank. If the
remaining 2/3 were disregarded. The deduction, and credit of the QSub are treated
allowable carryovers may be used to offset return is filed for a short period (less than 12
as belonging to the parent S corporation. The months), write “short year” in red in the top
the 1.5% tax on net income in accordance activities of the QSub are treated as activities
with the respective carryover rules. These margin on Form 100S, Side 1.
of the parent S corporation. An election made
C corporation carryovers may not be passed by the parent S corporation under IRC Note: The 1999 Form 100S may also be used
through to shareholders. Refer to Section 1361(b)(3) to treat the corporation as if:
Schedule C (100S), S Corporation Tax Credits, a QSub for federal purposes is treated as a • The corporation has an income year of
included in this booklet. binding election for California purposes. A less than 12 months that begins and ends
S corporations may generate credits from separate election is not filed for California. in 2000; and
both the Bank and Corporation Tax Law and The federal election is made on federal • The 2000 Form 100S is not available at the
the Personal Income Tax Law. Follow the Form 966, Corporate Dissolution or Liquida- time the corporation is required to file its
guidelines below: tion. For information on making the election, return. The S corporation must show its
• If a credit listed on page 18 is allowed only get IRS Notice 97-4, 1997-1 C.B. 351. 2000 income year on the 1999 Form 100S
under the Bank and Corporation Tax Law, California requires that an S corporation and incorporate any tax law changes that
1/3 of the credit may be used to offset the parent attach a copy of the Form 966 for each are effective for income years beginning
S corporation tax or may be carried over, if QSub doing business or qualified to do after December 31, 1999.
allowed. The remaining 2/3 must be business in California to the return for the Convert all foreign monetary amounts to U. S.
disregarded and may not be carried over. income year during which the QSub election dollars.
No part of the credit may be passed was made. California follows the federal Caution: California law is different from
through to the shareholders. transitional relief procedures for perfecting a federal law. California taxes S corporations
• If the credit is allowed only under Personal QSub election. under Chapter 2 (commencing with Section
Income Tax Law, the full credit may be A QSub is subject to an $800 annual tax 23101) or Chapter 3 (commencing with
passed through to the shareholders. No which is paid by the S corporation parent. The Section 23501) of the Bank and Corporation
part of the credit may be used by the QSub annual tax is due and payable when the Tax Law.
S corporation to offset the S corporation S corporation’s first estimated tax payment is
tax or to be carried over. due. If the QSub is acquired, or a QSub Questions A through R
• If a credit is allowed under both the Bank election is made during the income year, the Answer all applicable questions. Be sure to
and Corporation Tax Law and Personal QSub annual tax is due with the answer Questions E through R on Side 2.
Income Tax Law, the S corporation may use S corporation’s next estimated tax payment Note the following instructions when
1/3 of the credit to offset the S corporation after the date of the QSub election or answering:
tax or it may be carried over, if allowed. The acquisition. The QSub annual tax is subject to
remaining 2/3 must be disregarded and the estimated tax rules and penalties. Question A – Final Return
may not be carried over. The full amount of Get FTB Pub 1149, Terminating a Corporation
the credit, as calculated under the Personal An S corporation that owns a QSub does not for more information.
Income Tax Law, may also be passed file a combined return. Instead, the QSub is
disregarded, and the activities, assets, Question B – Transfer or acquisition of
through to the shareholders. voting stock
liabilities, income, deductions, and credits of
Credits and credit carryovers may not reduce the QSub are considered to be the assets, All S corporations must answer Question B. If
the minimum franchise tax, the QSub annual liabilities, income, and credits of the the answer is “yes,” a “Statement of Change
tax(es), built-in gains tax, excess net passive S corporation. If the QSub is not unitary with in Control and Ownership of Legal Entities”
income tax, credit recaptures, the increase in the S corporation, then it is treated as a (BOE-100-B) must be filed with the State
tax imposed for the deferral of installment separate division and separate computations Board of Equalization, or substantial penalties
sale income, or an installment of LIFO must be made to compute business income may result. Forms and information may be
recapture tax. and apportionment factors for the QSub and obtained from the Board of Equalization at
the S corporation, and to apportion to (800) 400-7115.
CC Group Nonresident California the business income of each. Answer “yes” to Question B on Side 1 if:
Shareholder Return An S corporation parent must complete the • The percentage of outstanding voting
Nonresident shareholders of an S corporation Schedule QS, Qualified Subchapter shares of this S corporation or its
doing business in California may elect to file a S Subsidiary Information Worksheet on subsidiary(ies) owned by one person or
group nonresident return on Form 540NR, page 33 and attach it to the Form 100S for one entity cumulatively surpassed 50%
California Nonresident or Part-Year Resident each income year in which a QSub is acquired during this year; or
Income Tax Return. Get FTB Pub. 1067, or a QSub election is made. • The total percentage of voting shares
Guidelines for Filing a Group Form 540NR for transferred to one irrevocable trust
more information. Specific Line Instructions cumulatively surpassed 50% this year; or
• One or more irrevocable proxies trans-
DD Qualified Subchapter S Filing Form 100S without errors will expedite ferred voting rights to more than 50% of
processing. Before mailing Form 100S, make
Subsidiary (QSub) sure entries have been made for:
the outstanding shares to one person or
one entity during this year; or
California has conformed to the sections of • California corporation number (7 digits); • This S corporation’s cumulative ownership
the IRC that allow S corporations to own a • Federal employer identification number or control of the stock or other ownership
QSub. A QSub is a domestic corporation that (FEIN) (9 digits); and interest in any legal entity surpassed 50%
is not an ineligible corporation (i.e., it must be • Corporation name and address. during this year; or
eligible to be an S corporation as defined by

Page 10 Form 100S Booklet 1999


• Cumulatively more than 50% of the total Line 2 through Line 14 – State adjustments Enter any passive activity income on line 7.
outstanding shares of this S corporation To figure net income for California purposes, California ordinary net gain or loss
have been transferred or changed corporations using the federal reconciliation Before entering the amount from
ownership or control this year. method (see General Information I, Net Schedule D-1, line 18, determine whether the
R&TC Section 64(e) requires this information Income Computation) must enter California gain is subject to built-in gains tax. If the gain
for use by the California State Board of adjustments to the federal net income on is subject to built-in gains tax, enter the
Equalization. line 2 through line 14. If a specific line for the amount on Schedule D (100S), Part IV so the
adjustment is not on Form 100S, enter the built-in gains tax can be computed, and enter
Question C – Principal business activity adjustment on line 7, Other additions, or
code the difference between the amount on
line 13, Other deductions, and attach a Schedule D-1, line 18 and the amount subject
All S corporations must answer Question C. schedule. to built-in gains tax on 100S, Side 1, line 7.
Include the 6 digit PBA code from the chart Line 2 – Taxes not deductible See General Information O, Dissolution/
found on page 21 through page 23 of this Withdrawal.
California law does not permit a deduction for
booklet.
California corporation franchise or income taxes Note: Business expense deductions are not
The code should be the number for the or any other taxes on, according to, or measured allowed with respect to payments to a club
specific industry group from which the by income or profits. Add these taxes to income that restricts membership or the use of its
greatest percentage of California “total on line 2. Examples of these taxes are services or facilities on the basis of age, sex,
receipts” is derived. “Total receipts” means California’s minimum franchise tax, the 1.5% race, religion, color, ancestry, or national
gross receipts plus all other income. The income or franchise tax, and the environmental origin. “Club” means a club as defined in the
California code number may be different from taxes imposed by IRC Section 59A. Business and Professions Code, Div. 9, Ch. 3,
the federal code number. Art. 4, beginning with Section 23425. Add
Line 3 – Interest on government obligations
If, as its principal business activity, the S corporations subject to the California back such deductions on this line.
corporation: (1) purchases raw material; franchise tax must report interest received on Line 9 and Line 10 – Dividends
(2) subcontracts out for labor to make a government obligations even though it may
finished product from the raw materials; and See Schedule H (100S), Dividend Income
be exempt from state or federal individual Deduction, instructions.
(3) retains title to the goods, the corporation is income tax. This interest must be added to
considered to be a manufacturer and must income on line 3. See line 13 instructions for Line 11 – Contributions
enter one of the codes under “Manufacturing.” S corporations subject to the California For income years beginning on or after
Also, write in the business activity and corporation income tax. January 1, 1996, the contribution deduction
principal product or service on the lines is 10% of California net income, without
provided. Line 4 – Net capital gain regard to charitable contributions and special
Enter on this line any net capital gain subject deductions (e.g., the deduction for dividends
Question E – Does this return include
to the 1.5% tax rate (3.5% for financial received). The definition of California net
Qualified Subchapter S Subsidiaries
S corporations) shown on Schedule D (100S), income differs from federal taxable income for
(QSubs)?
Section B, and any gains subject to the 8.84% computing the contribution deduction.
Answer “yes” if the S corporation owns a tax rate (10.84% for financial S corporations)
QSub. Refer to the instructions for line 22 and Five-year carryover provisions per IRC
shown on Schedule D (100S), Section A,
line 35 to report the QSub annual tax. Be sure Section 170(d)(2) shall apply for excess
line 3a and line 6a.
to complete the worksheet on page 33 of this contributions made during income years
booklet and attach the worksheet to Line 5 – Depreciation and amortization beginning on or after January 1, 1996.
Form 100S when filed. Depreciation for S corporations follows the On a separate worksheet, using the
depreciation rules provided under California Form 100S format, complete Form 100S,
Question R – 2000 tax forms
Personal Income Tax Law. Unlike other Side 1, through line 15 (without regard to
If the S corporation’s return is prepared by corporations, an S corporation is allowed to
someone else, or if the S corporation does line 11). Then complete the worksheet below
compute depreciation using the Modified to determine the contribution deduction to
not need Form 100S mailed to it next year, Accelerated Cost Recovery System (MACRS).
check the box at Question R. enter on this line.
Complete Schedule B (100S) for assets
Line 1 – Ordinary income (loss) from trade subject to depreciation and for assets subject 1. Net income after state adjustments
or business to amortization. Enter the total of Schedule B, from Side 1, line 15 . . . . . . . . . . . _____
S corporations using federal reconciliation to Part III, on Form 100S Side 1, line 5. 2. Deduction for dividends received . _____
figure net income (see General Information I, Line 6 – Portfolio income 3. Net income for contribution
Net Income Computation) must: Enter on this line net portfolio income not calculation purposes. Add
• Transfer the amount from federal included in line 1 but that must be included in line 1 and line 2 . . . . . . . . . . . . . . _____
Form 1120S, line 21 to line 1 and attach a the S corporation’s net income for computing 4. Allowable contributions. Multiply
copy of the federal return and all pertinent the 1.5% tax. Include interest, dividends, and line 3 by 10% (.10) . . . . . . . . . . . _____
supporting schedules; or copy the royalties. Do not include any passive activity 5. Enter the amount actually
information from federal Form 1120S, amounts on this line. Instead, include passive contributed . . . . . . . . . . . . . . . . . . _____
Page 1, onto Side 2, Schedule F and activity amounts on line 7 or line 13.
transfer the amount from Schedule F, 6. Enter the smaller of line 4 or
Line 7 – Other additions line 5 here and on Side 1, line 11 _____
line 22, to line 1.
• Then, complete Form 100S, Side 1, line 2 Include on this line other items not added on If any federal contribution deduction was
through line 14, State Adjustments. any other line to arrive at California net taken in arriving at the amount entered on
income. Attach a schedule that clearly shows Side 1, line 1, enter that amount as an
S corporations using the California computa- how each item was computed and explain the
tion to figure ordinary income (see General addition on line 7.
basis for the adjustment.
Information I, Net Income Computation) must Get Schedule R, Apportionment and Alloca-
transfer the amount from Side 2, Schedule F, If a federal contribution deduction was taken tion of Income, to figure the contribution
line 22, to line 1. Complete Form 100S, in arriving at the amount entered on line 1, computation for apportioning corporations.
Side 1, line 2 through line 14, only if include that amount in the computation of
applicable. line 7. See line 11, Contributions.

Form 100S Booklet 1999 Page 11


Line 12 – Enterprise Zone (EZ), Local 1.5% rate. See the “Excess Net Passive Line 20 – Disaster loss carryover deduction
Agency Military Base Recovery Area Income and Income Tax Worksheet,” included If the S corporation has a disaster loss
(LAMBRA), or Targeted Tax Area (TTA) on page 15 to determine if the S corporation carryover deduction, enter the total amount
business expense and/or net interest is subject to the tax on excess net passive from Part III, line 2 of the 1998 FTB 3805Q
deduction investment income. If a tax is shown on this only if the corporation has income in the
Businesses conducting a trade or business worksheet, enter the amount of excess net current year.
within an EZ, LAMBRA, or TTA may elect to passive income from line 8 of the worksheet
Line 22 – Tax
treat a portion of the cost of qualified property on Form 100S, Side 1, line 17.
S corporations must use a tax rate of 1.5%.
as a business expense rather than a capital For purposes of the built-in gains tax, enter Financial S corporations must use the
expense. For the year the property is placed in the smaller amount of line 11 or line 13 from financial tax rate of 3.5%. The tax on this line
service, the business may deduct a percent- Schedule D (100S), Section A, Part III or may not be less than the sum of the minimum
age of the cost in that year rather than line 20 from Schedule D (100S), Section A, franchise tax and QSub annual tax(es), if
depreciate it over the life of the asset. For Part IV. applicable. See General Information B, Tax
more information, get form FTB 3805Z, form
Line 18 – Net operating loss (NOL) Rate and Minimum Franchise Tax.
FTB 3807, or form FTB 3809.
carryover deduction If the S corporation is the parent of a QSub
Also, a deduction may be claimed on this line The NOL deduction is the amount of the NOL and paid the $800 annual tax on behalf of
for the amount of net interest on loans made carryover from prior years that may be each QSub, add the total amount of QSub
to an individual or company doing business deducted from income in this income year. annual tax(es) to the tax on net income or the
inside an EZ. For more information, get form However, the loss may not reduce the minimum franchise tax, whichever is
FTB 3805Z. S corporation’s current year income below applicable, and enter the result on line 22.
Be sure to attach form FTB 3805Z, form zero. Any excess loss must be carried Use the QSub information worksheet on
FTB 3807, or form FTB 3809 if any of these forward. page 33 of this booklet.
benefits are claimed. If the proper form is not If line 16 less line 17 is a positive amount, Example 1: Corporation A, an S corporation,
attached, these tax benefits may be enter the NOL carryover (but not more than is the parent of three QSubs, B, C & D. QSub
disallowed. line 16 less line 17) from the S corporation’s B & C are either incorporated or qualified to
Line 13 – Other deductions 1999 form FTB 3805Q, Part III, line 3 on do business in California. QSub D is not
Include on this line deductions not claimed on Form 100S, Side 1, line 18. Attach a copy of incorporated, doing business, or qualified to
any other line. Attach a schedule that clearly the 1999 form FTB 3805Q to Form 100S. If do business in California. Corporation A is
shows how each deduction was computed the full amount of the NOL carryover is not subject to $1,600 of QSub annual tax.
and explain the basis for the deduction. deducted this year, complete and attach a Example 2: Beta Corporation, an S corpora-
Include in the computation for line 13 any 1999 form FTB 3805Q showing the computa- tion, is the parent of three QSubs. Only one of
passive activity loss. Also enter any IRC tion of the NOL carryover to future years. the QSubs is qualified and doing business in
Section 179 expense from Schedule B (100S), If line 16 less line 17 is a negative amount, California. Beta Corporation reports net
line 5. enter -0- on this line and see form FTB 3805Q income for California tax purposes on line 21
For S corporations subject to income (and not instructions for the computation of the NOL of $100,000. Tax on net income is $1,500. On
franchise) tax, interest received on obligations carryover to future years. line 22, Beta Corporation will report tax of
of the federal government and on obligations No NOL carryover arising from a year in $2,300. The $2,300 includes tax on net
of the State of California and its political which an S corporation was a C corporation income of $1,500 plus $800 of QSub annual
subdivisions is exempt from income tax. If may be applied against the 1.5% tax. See IRC tax payments for one QSub. The two QSubs
such interest is reported on line 3, deduct it Section 1371(b)(1) and R&TC not doing business in California do not have
on this line. Section 23802(d). However, if the corporation to pay the QSub tax.
terminates its S election, thus becoming a Line 23 through Line 26 – Tax credits
Federal ordinary net gain or loss
C corporation, then the prior year NOL Credits may be used to reduce the California tax
Enter any federal ordinary net gain or loss carryover may be used to the extent it has not
from federal Form 4797, Sales of Business liability, however, may not be used to reduce the
expired. tax on line 22 to an amount less than the sum of
Property, line 18, if the amount is included in
income on line 1. Note: NOL carryovers arising from a year in the minimum franchise tax plus the QSub
which the S corporation was a C corporation annual tax(es), if applicable. Also, the
Line 16 – Net income (loss) for state may be used in computing the tax on built-in S corporation is allowed to claim only 1/3 of the
purposes gains. total credit generated against the 1.5% franchise
If all the S corporation income is derived from tax. See General Information AA, Passive Activity
California sources, transfer the amount from Line 19 – EZ, LARZ, or LAMBRA NOL
carryover deduction Credits, and BB, Tax Credits.
line 15 to this line.
An NOL generated by a business that operates Complete and submit the applicable credit
If only a portion of income is derived from (operated) or invests (invested) within an EZ, form for each credit claimed. For any
California sources, complete Schedule R, the LARZ, or a LAMBRA may receive special carryover only credits, complete form
before entering any amount on this line. tax treatment. 100% of the NOL generated can FTB 3540, Credit Carryover Summary. See
Transfer the amount from Schedule R, line 24, be carried forward for up to 15 years. Get page 14 for a list of available credits.
to this line. Be sure to answer “yes” to form FTB 3805Z, form FTB 3806, or form Transfer the credit(s) from the respective
Question P on Form 100S, Side 2. FTB 3807, for more information. credit forms to Schedule C (100S) to compute
If this line is a net loss, complete and attach Enter the EZ, LARZ, or LAMBRA NOL the amount of credit to claim on Form 100S.
the 1999 form FTB 3805Q to Form 100S. carryover deduction from the S corporation’s Then transfer the credit(s) from Schedule C
Line 17 – R&TC Section 23802(e) deduction form FTB 3805Z, form FTB 3806, or form (100S) to Form 100S. Each credit is identified
If the S corporation has a tax imposed on FTB 3807, on Form 100S, line 19. Attach a by a code number. To claim one, two, or three
excess net passive investment income, certain copy of the form FTB 3805Z, form FTB 3806, credits, enter the credit name, code number,
capital gains, and built-in gains, a deduction or form FTB 3807 to the Form 100S. and the amount of the credit on line 23,
is allowed against the net income taxed at the line 24, and line 25. Enter the total of any

Page 12 Form 100S Booklet 1999


remaining credits from Schedule C (100S) on R&TC Section 23811(e) provides a deduction Line 35 – 1999 estimated tax payments and
line 26. Do not make an entry on line 26 for C corporation earnings and profits excess SOS prepayment tax
unless line 23 through line 25 are complete. attributable to California sources for any
Enter the total amount of estimated tax
Attach all credit forms, schedules, and income year by the amount of a consent
payments made during the 1999 income year
Schedule C (100S) to Form 100S. dividend paid after the close of the income
on this line. If the S corporation is the parent
year. The amount of the consent dividend is
Line 29 – Tax from Schedule D (100S) of a QSub and made payments for the QSub
limited to the difference between the
S corporations must enter the tax from annual tax, include the total amount of QSub
C corporation earnings and profits attributable
Schedule D (100S) (included in this booklet). annual tax payment made during 1999 on this
to California sources and the C corporation
See General Information J, Certain Capital line along with the total estimated tax
earnings and profits for federal purposes.
Gains/Built-in Gains, for more information. payments. See General Information DD,
Line 32 – Additional SOS prepayment tax Qualified Subchapter S Subsidiary (QSub), for
Line 30 – Excess net passive income tax For income years beginning on or after more information. Be sure to complete the
If the corporation has always been an January 1, 1999, and before January 1, 2000, Schedule QS on page 33 of this booklet and
S corporation for California purposes or has the corporation must pay an additional $500 attach it to the return.
no federal excess net passive investment on the original due date of the 1st required For income years beginning prior to
income, the excess net passive investment return if it: January 1, 2000, if the S corporation prepaid
income tax does not apply. See General
• Incorporated as a qualified new corpora- an $800 minimum tax to the SOS, but met the
Information S, Excess Net Passive Investment
tion with the California SOS; QNC criteria during its 1st income year, the
Income, for more information.
• Paid the $300 prepaid minimum tax to the S corporation is entitled to a refund of the
To determine if the S corporation owes this California SOS; and excess prepaid tax. Include an additional $500
tax, complete line 1 through line 3 and line 9 • Had gross receipts, less returns and on this line. See General Information W,
of the “Excess Net Passive Income and allowances, exceeding $1 million or tax on Qualified New Corporations (QNCs), for more
Income Tax Worksheet” on page 15. If line 2 net income exceeding $800 during the 1st information.
is greater than line 3 and the S corporation income year.
has taxable income, it must pay the tax. Line 38 and Line 39 – Tax due or
If the corporation is required to pay the overpayment
Complete a separate schedule using the
additional SOS prepayment tax, enter $500 on In addition to any amount entered on line 38
format of line 1 through line 11 of the
this line. If the SOS prepayment tax is not or line 39, tax due or overpayment, also
worksheet to figure the tax. Enter the tax from
required, enter -0-. See General Information include any amounts required to be included
line 11 of the worksheet on Form 100S,
W, Qualified New Corporations (QNCs), for from Schedule J, Add-On Taxes or Recapture
Side 1, line 30. Attach the schedule showing
more information. of Tax Credits included in this booklet. See
the computation. Reduce each item of passive
income passed through to shareholders by its Line 33 – Adjusted total tax Schedule J instructions for more information.
portion of the tax on line 30. See IRC Add line 31 and line 32. Enter the result on Line 42 – Penalties and interest
Section 1366(f)(3) and R&TC this line. Complete and attach form FTB 5806,
Section 23803(b)(2). Underpayment of Estimated Tax by Corpora-
tions, to the front of Form 100S only if
Exception B or Exception C is used to
compute or eliminate the penalty.

Form 100S Booklet 1999 Page 13


CREDIT NAME CODE DESCRIPTION
Community Development Financial Institution 209 20% of a qualified deposit made into a community development financial institution
Deposits – Obtain certification from:
CALIFORNIA ORGANIZED INVESTMENT
NETWORK (COIN)
DEPARTMENT OF INSURANCE
300 CAPITOL MALL, STE 1460
SACRAMENTO CA 95814
Disabled Access for Eligible Small Businesses – 205 Similar to the federal credit, but limited to $125 per eligible small busines s, and based
FTB 3548 on 50% of qualified expenditures that do not exceed $250
Donated Agricultural Products Transportation – 204 50% of the costs paid or incurred for the transportation of agricultural produ cts
FTB 3547 donated to nonprofit charitable organizations
Employer Child Care Contribution – FTB 3501 190 Employer: 30% of contributions to a qualified plan
Employer Child Care Program – FTB 3501 189 Employer: 30% of the cost of establishing a child care program or constructing a child
care facility
Enhanced Oil Recovery – FTB 3546 203 1/3 of the similar federal credit but limited to qualified enhanced oil recovery projects
located within California
Enterprise Zone Hiring & Sales or Use Tax – 176 Business incentives for enterprise zone businesses
FTB 3805Z
Farmworker Housing – Construction 207 50% of qualified costs paid or incurred to construct or rehabilitate qualified farmworkers
Farmworker Housing – Loan housing
Obtain certification from: 208 Banks and financial corporations: 50% of foregone interest income on qualified
FARMWORKER HOUSING ASSISTANCE farmworker housing loans
PROGRAM, CALIFORNIA TAX CREDIT
ALLOCATION COMMITTEE
916 CAPITOL MALL, ROOM 485
SACRAMENTO CA 95814
Local Agency Military Base Recovery Area 198 Business incentives for LAMBRAs
(LAMBRA) Hiring & Sales or Use Tax – FTB 3807
Low-Income Housing – FTB 3521 172 Similar to the federal credit but limited to low-income housing in California
Manufacturing Enhancement Area – FTB 3808 211 Hiring Credit for Manufacturing Enhancement Area
Manufacturers’ Investment – FTB 3535 199 6% of the cost of qualified property
Prior Year Alternative Minimum Tax – FTB 3510 188 Must have paid alternative minimum tax in a prior year and have no alternative minimum
tax liability in the current year
Prison Inmate Labor – FTB 3507 162 10% of wages paid to prison inmates
Research – FTB 3523 183 Similar to the federal credit but limited to costs for research activities in California
Rice Straw 206 $15 per ton of rice straw grown in California
Obtain certification from:
DEPARTMENT OF FOOD AND AGRICULTURE
1220 N STREET, ROOM 409
SACRAMENTO CA 95814
Salmon & Steelhead Trout Habitat Restoration – 200 The lesser of 10% of qualified costs or other amount determined by the Departm ent of
Obtain certification from: Fish and Game
DEPARTMENT OF FISH AND GAME
C/O FISH TIMBER TAX CREDITS PROGRAM
PO BOX 944209
SACRAMENTO CA 95244-2090
Targeted Tax Area (TTA) Hiring & Sales or Use 210 Business incentives for TTA businesses
Tax – FTB 3809
Agricultural Products 175
Commercial Solar Electric System 196
Commercial Solar Energy 181 The expiration dates for these credits have passed. However, these credits had carryover
Contribution of Computer Software 202 features. You may claim these credits if there is a carryover available from prior years. If
Employer Ridesharing – Large employer 191 you are not required to complete Schedule P (100), get form FTB 3540, Credit
Employer Ridesharing – Small employer 192 Carryover Summary, to figure your credit carryover to future years.
Employer Rideshare – Transit 193
Energy Conservation 182
Los Angeles Revitalization Zone (LARZ) Hiring
& Sales or Use Tax 159
Low Emission Vehicles 160
Orphan Drug 185
Recycling Equipment 174
Ridesharing 171
Solar Energy 180
Solar Pump 179
Technology Property Contributions 201

Page 14 Form 100S Booklet 1999


Excess Net Passive Income and Income Tax Worksheet
1 Enter gross receipts for the income year (see IRC Section 1362(d)(3)(B) for gross receipts from the sale of capital assets)* 1
2 Enter passive investment income as defined in IRC Section 1362(d)(3)(C)* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Enter 25% (.25) of line 1. If line 2 is less than line 3, the corporation is not liable for this tax . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Excess passive investment income. Subtract line 3 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Enter expenses directly connected with the production of income on line 2 (see IRC Section 1375(b)(2))* . . . . . . . . . . . . . 5
6 Net passive income. Subtract line 5 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Divide the amount on line 4 by the amount on line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Excess of net passive income. Multiply line 6 by line 7 (see instructions on line 11 below) . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Enter taxable income** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Enter the smaller of line 8 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Excess net passive income tax. Enter 8.84% (financial S corporations must use 10.84%) of line 10 here and on Form 100S,
Side 1, line 30. (If an amount is entered here, go to line 8 above and carry the line 8 amount to Form 100S, line 17.) . . . . . 11
* Income and expenses on line 1, line 2, and line 5 are from total operations for the income year. This includes applicable income and expenses from
Form 100S, Side 1. See IRC Sections 1362(d)(3)(C) and 1375(b)(4) for exceptions regarding line 2 and line 5.
** Taxable income is defined in federal Treas. Regulations Section 1.1374-1A(d). Figure taxable income by completing line 1 through line 17 of Form 100,
California Corporation Franchise or Income Tax Return. Clearly mark ‘’ENPI Taxable Income’’ on the Form 100 computation and attach it to Form 100S.

Schedules Schedule C (100S) instructions for federal Schedule D


(Form 1120S) and General Information J,
Schedule B (100S) Use Schedule C (100S) to determine the Certain Capital Gains/Built-in Gains, for more
allowable amount of credits to claim on the information.
Effective January 1, 1998, California law 1999 Form 100S and the credit carryover to
conforms to federal law regarding the income future years. For more information, see Line 9
forecast method and the exemption of limits General Information Z, Passive Activity Loss If the S corporation is liable for the tax on
on depreciation for incremental costs of clean Limitation, AA, Passive Activity Credits, and excess net passive income (Form 100S,
fuel vehicles. BB, Tax Credits. Side 1, line 30) or the built-in gains tax (see
California generally conforms to the provi- Part IV below), and capital gain or loss was
Column (a) The amount entered in column (a)
sions of IRC Section 197 for amortization of included in the computation of either tax,
must be limited to 1/3 the amount of the total
intangibles for income years beginning on or figure the amount to enter on line 9 as
credit.
after January 1, 1994. However, there may be follows:
differences in the federal and California Schedule D (100S) Step 1: Refigure line 1, line 2, and line 4
amounts for intangible assets acquired in through line 6c in column (f) and line 7 of
income years beginning prior to January 1, Schedule D (100S) is divided into Section A
Schedule D (100S) by:
1994. See R&TC Section 24355.5 for more and Section B. Use Section A to report all
built-in gains and certain capital gains subject • Excluding the portion of any recognized
information. built-in capital gain or loss that does not
to the 8.84% tax rate (10.84% for financial
California did not allow depreciation under the S corporations). Use Section B to report all qualify for transitional relief; and
federal accelerated cost recovery system other capital gains subject to the 1.5% tax • Reducing any capital gain taken into
(ACRS) for years prior to 1987. California also rate (3.5% for financial S corporations). See account in determining passive investment
does not allow depreciation under MACRS for General Information J, Certain Capital Gains/ income (line 2 of the Excess Net Passive
assets placed in service while the corporation Built-in Gains, for more information. Income and Income Tax Worksheet above)
was taxable as a C corporation. by the portion of excess net passive
Note: Use California amounts when comput-
S corporations must continue calculating the income attributable to such gain. The
ing gain from like-kind exchanges on federal
California depreciation deduction for assets attributable portion is figured by multiply-
Form 8824.
placed in service before January 1, 1987, in ing excess net passive income by a
the same manner as in prior years. Get form Section A fraction, the numerator of which is the
FTB 3885, Corporation Depreciation and capital gain (less any expenses attributable
Part I and Part II to such gain), and the denominator of
Amortization, to determine how to continue S corporations use Part I to report and
depreciating these assets. The following were which is net passive income.
summarize gains and losses attributable to:
the most common methods used to calculate Step 2: Refigure line 3a, line 6a, line 8, and
(1) sale or exchange of capital assets; and
depreciation for years prior to 1987: (2) gains on distributions to shareholders of line 9 of Schedule D (100S) using the
• Straight-line; appreciated assets that are capital assets. Be amounts determined in Step 1. See General
• Declining balance; and sure to use the California basis for all assets Information J, Certain Capital Gains/Built-in
• Sum-of-the-years digits. when computing the gain or loss. See the Gains, for more information.
For assets placed in service in 1987 and after, instructions for federal Schedule D Part IV
S corporations may use the same method for (Form 1120S) for more information.
Line 16
California as was used for federal purposes. Line 2 and Line 5
S corporations conducting a trade or business To determine if the S corporation is subject to
Use California numbers when figuring the tax on built-in gains, see the instructions for
inside an EZ, a LAMBRA, or a TTA may elect amount to enter for short- or long-term federal Schedule D (Form 1120S) and General
to treat a portion of the cost of qualified capital gains or losses from like-kind
property as a business expense in the first Information J, Certain Capital Gains/Built-in
exchanges from federal Form 8824. Gains, for more information.
year it is placed in service. This expense
deduction is in lieu of the IRC Section 179 Part III Apportioning corporations only:
expense deduction. For more information, get To determine if the S corporation is subject to All recognized built-in gains and all recog-
form FTB 3805Z, form FTB 3807, or form the tax on certain capital gains, see the nized built-in losses apportioned and
FTB 3809.

Form 100S Booklet 1999 Page 15


allocated to California must be included on Schedule J IRC Section 197(f)(9)(B)(ii) election
line 16. Complete Schedule J, line 4 if the corporation
Complete Schedule J if the S corporation has elected to pay tax on the gain from the sale of
Line 18 credit amounts to recapture or is required to
If the S corporation: an intangible under the related person
include installment payments of “add-on” exception to the anti-churning rules.
• Filed its election to be an S corporation taxes for:
after 1986; Credit recaptures
• LIFO recapture resulting from an
• Was a C corporation before it elected to be S corporation election; Complete Schedule J, line 5, if the S corpora-
an S corporation, or acquired an asset • Interest computed under the look-back tion completed the credit recapture portion of:
with a basis determined by reference to its method for completed long-term contracts; • FTB 3501, Employer Child Care Program/
basis (or the basis of any other property) • Interest on tax attributable to installment Contribution Credit;
in the hands of a C corporation; and sales of certain property or use of the • FTB 3805Z, Enterprise Zone Deduction and
• Has a California net unrealized built-in gain installment method for non-dealer Credit Summary, Part VI;
as defined in IRC Section 1374(d)(1), that installment obligations; or • FTB 3806, Los Angeles Revitalization Zone
is in excess of the California net recog- • IRC Section 197(f)(9)(B)(ii) election to Deduction and Credit Summary, Part IV;
nized built-in gain from prior years; recognize gain on the disposition of an • FTB 3807 Local Agency Military Base
Then compute the California net unrealized IRC Section 197 intangible. Recovery Area Deduction and Credit
built-in gain reduced by the California net Revise the tax due or overpayment on Summary, Part VI;
recognized built-in gain from prior years. Form 100S, line 38 or line 39, as appropriate, • FTB 3808, Manufacturing Enhancement
by the amount from Schedule J, line 6. Area Credit Summary, Part III;
On line 18, enter the smaller of line 16,
• FTB 3809, Targeted Tax Area Deduction
line 17, or the amount computed above. LIFO recapture tax and Credit Summary, Part V; or
Line 19 If the S corporation computed the LIFO • FTB 3535 Manufacturers’ Investment
Enter on this line the amount from form recapture tax in the final year as a C corpora- Credit, Part III.
FTB 3805Q that reflects NOLs from the years tion, include on Schedule J, line 1, any LIFO
the corporation was a C corporation. Reduce installment due this income year. Schedule K and Schedule K-1
future NOL carryovers from C corporation Long-term contracts Shareholders’ share of income, deductions,
years by the amount applied on this line. If the S corporation must compute interest credits, etc.
Section B under the look-back method for completed
Purpose of schedules
S corporations use Part I and Part II to report long-term contracts, complete form
FTB 3834, Interest Computation Under the Schedule K (100S) is a summary schedule of
the sale or disposition of all capital assets all the shareholders’ shares of the
acquired as an S corporation or which are not Look-Back Method for Completed Long-Term
Contracts, and include the amount of interest S corporation’s income, deductions, credits,
reported in Section A. For more information, etc. Schedule K-1 (100S) shows each
see the instructions for federal Schedule D the S corporation owes or the amount of
interest to be credited or refunded to the shareholder’s separate share of pass-through
(Form 1120S). items and adjusted basis. Use federal
S corporation on Schedule J, line 2. Attach
Schedule K and Schedule K-1 (Form 1120S)
Schedule F form FTB 3834 to Form 100S. If interest is to
as a basis for preparing California Schedule K
be credited or refunded, enter as a negative
See General Information I, Net Income and Schedule K-1 (Form 100S).
amount.
Computation, for information on net income Note: Amounts on Schedule K-1 (100S) may
computation methods. Interest on tax attributable to payments
not add up to amounts reflected on
received on installment sales of certain
Line 7 – Compensation of Officers Form 100S, Side 1 amounts because Side 1
timeshares and residential lots
If the S corporation’s total receipts are calculates tax at the S corporation level while
If the S corporation elected to pay interest on Schedule K-1 (100S) amounts are calculated
$150,000 or more, complete and attach a
the amount of tax attributable to payments using different rules.
schedule showing the compensation of
received on installment obligations arising
officers. On the schedule list: Attach one copy of each Schedule K-1 (100S)
from the disposition of certain timeshares and
• Name of officer; residential lots under IRC Section 453(l)(3) to the Form 100S filed with the FTB. Keep one
• Social security number of officer; (R&TC Section 24667), it must include the copy of each Schedule K-1 (100S) for the
• Percentage of time devoted to the business; interest due on Schedule J, line 3a. For the S corporation’s records, and give each
• Percentage of stock owned; and applicable interest rates, get FTB Pub. 1138, shareholder a copy of Schedule K-1 (100S)
• Amount of compensation. Refund/Billing Information. Attach a schedule on or before the due date of Form 100S.
Also show the calculation of compensation of showing the computation. Note: Be sure to give each shareholder a copy
officers deducted: Interest on tax deferred under the of either the Shareholder’s Instructions for
• Total compensation of officers, minus installment method for certain nondealer Schedule K-1 (100S) (included in this
• Compensation of officers claimed in the installment obligations booklet) or specific instructions for each item
cost of goods sold schedule and elsewhere reported on the shareholder’s Schedule K-1
If an obligation arising from the disposition of
on the return. (100S).
property to which IRC Section 453A (R&TC
Line 8 – Salaries and wages Section 24667) applies is outstanding at the Substitute forms
Gain from the exercise of California Qualified close of the income year, the corporation You need approval from the FTB to use a
Stock Options (CQSOs) issued and exercised must include the interest due under IRC substitute Schedule K-1 (100S). The substi-
after 1996 and before 2002, can be excluded Section 453A(c) on Schedule J, line 3b. tute schedule must include the Shareholder’s
from gross income if the individual’s earned Attach a schedule showing the computation. Instructions for Schedule K-1 (100S) or other
income is $40,000 or less. The exclusion For the applicable interest rates, get FTB prepared specific instructions. For more
from gross income is subject to the alterna- Pub. 1138, Refund/Billing Information. information, get FTB Pub. 1098, Guidelines
tive minimum tax and the S corporation is not for the Development and Use of Substitute,
allowed a deduction for the compensation Scannable, and Reproduced Tax Forms.
excluded from the employee’s gross income.

Page 16 Form 100S Booklet 1999


General Instructions course of business. Portfolio income must be income year on Schedule K (100S) and each
separately accounted for as such. Portfolio shareholder’s distributive share on Schedule
Special reporting requirements for passive income also includes gains or losses from the K-1 (100S). On an attachment to each
activities sale or other disposition of property (other schedule, separately show the dollar amount
If items of income (loss), deduction, or credit than an interest in a passive activity) produc- of contributions subject to each of the 50%,
from more than one activity are reported on ing portfolio income or held for investment. 30%, and 20% of adjusted gross income
Schedule K-1 (100S), the S corporation must Line 4a, Line 4b, and Line 4c – Interest, limits.
attach a statement to Schedule K-1 (100S) for dividend, and royalty income A resident shareholder is allowed a deduction
each activity that is a passive activity to the Enter only taxable interest, dividend, and for contributions to a qualified organization as
shareholder. Rental activities are passive royalty income that is portfolio income. provided in IRC Section 170.
activities to all shareholders. Trade or Line 8 – Expense deduction for recovery
Line 4d and Line 4e – Net capital gain (loss)
business activities are passive activities to property
shareholders who do not materially participate Enter on line 4d and line 4e the amount of
capital gains and losses that is portfolio The amount of expense deduction for
in the activity. recovery property that can be claimed from all
income (loss). If any of the income (loss) is
The attachment must include all the informa- not portfolio income (loss), include it on line 6. sources will vary depending on the type of
tion explained in the instructions for federal property and the year of designation. For
Schedule K-1 (Form 1120S). Line 4f – Other portfolio income (loss) more information, see IRC Section 179 and
Enter any other portfolio income (loss) not R&TC Sections 17201, 17267.2, 17267.6, and
Specific Line Instructions entered on line 4a through line 4e. 17268.
Line 5 – Net gain (loss) under IRC Line 9 – Deductions related to portfolio
Item A through Item E (Schedule K-1 (100S) Section 1231
only) income (loss)
The amount for line 5 comes from Enter on this line the deductions allocable to
To insure correct processing of Schedule K-1 Schedule D-1, Sales of Business Property. Do
(100S), answer all items that are appropriate. portfolio income (loss) other than interest
not include specially allocated ordinary gains expenses. Generally, these deductions are IRC
Item A and Item B (Schedule K-1 (100S) and losses or net gains or losses from Section 212 expenses and are subject to IRC
only) involuntary conversions due to casualties or Section 212 limitations at the shareholder
See the instructions for Item A and Item C of thefts on this line. Instead, report these gains level. However, interest expense related to
federal Schedule K-1 (Form 1120S). or losses on line 6. portfolio income (loss) is generally investment
If the S corporation has more than one interest expense and is reported on line 11a.
Income activity and the amount on line 5 is a passive
Line 1 – Ordinary income (loss) from trade activity amount to the shareholder, attach a Investment Interest
or business activities statement to Schedule K-1 (100S) (or use Line 11a through Line 11b(2)
Enter in column (c) any California adjust- Schedule K-1 (100S), line 23) to identify to
These lines must be completed whether or not
ments to ordinary income that do not need to which activity the IRC Section 1231 gain
a shareholder is subject to the investment
be separately stated. Include in this column (loss) relates.
interest rules.
the adjustment to add back the minimum Line 6 – Other income (loss)
Enter any other item of income or loss not Line 11a – Interest expense on investment
franchise tax or the 1.5% tax deducted for
included on line 1 through line 5, such as: debts
federal purposes.
Include on this line interest paid or accrued to
Line 2 – Net income (loss) from rental real a. Wagering gains and losses. See IRC purchase or carry property held for invest-
estate activities Section 165(d). ment. Property held for investment includes
Enter the net of income and expenses of any b. Recovery of tax benefit items. See IRC property that produces portfolio income
rental real estate activity of the S corporation. Section 111. (interest, dividends, annuities, royalties, etc.).
If the S corporation has more than one rental c. Any gain or loss where the S corporation Therefore, interest expense allocable to
real estate activity reported on these lines, was a trader or dealer in IRC Section 1256 portfolio income should be reported on
attach a separate schedule or use contracts or property related to such Schedules K and K-1 (100S), line 11a rather
Schedule K-1 (100S), line 23 to list the contracts. See IRC Section 1256(f). than Schedules K and K-1 (100S), line 9.
income or loss from each activity, plus any d. Net gain (loss) from involuntary conver- Investment interest does not include interest
other information required under the rules for sions due to casualty or theft. expense allocable to a passive activity. A
passive activities. Attach form FTB 3801, e. Loss(es) from qualified low-income passive activity is a rental activity or a trade or
Passive Activity Loss Limitations, to Form housing projects for shareholders that are business activity in which the shareholder
100S. qualified investors. does not materially participate.
f. Eligible gain from the sale or exchange of
Line 3a, Line 3b, and Line 3c – Net income qualified small business stock (defined in Property held for investment includes a
(loss) from other rental activities R&TC Section 18152.5). Also report on an shareholder’s interest in a trade or business
(Schedule K (100S) only) attachment to Schedule K (100S) and activity that is not a passive activity to the
Enter the net of income and expenses of other Schedule K-1 (100S) the name of the shareholder and in which the shareholder
rental activities not listed on line 2 above. If corporation that issued the stock and the does not materially participate. An example
the S corporation has more than one rental adjusted basis of that stock. would be a shareholder’s working interest in
activity reported on these lines, attach a oil and gas property (i.e., the shareholder’s
Note: The exclusion allowed under R&TC interest is not limited) if the shareholder does
separate schedule listing the income or loss
Section 18152.5 for small business stock is not materially participate in the oil and gas
from each activity, plus any other information
not allowed for an S corporation but is activity.
required under the rules for passive activities.
allowed for the shareholder.
Line 4a through Line 4f – Portfolio income The amount on line 11a will be reflected (after
(loss) Deductions applying the investment interest expense
Portfolio income (loss) is any gross income limitations) by individual shareholders on
Line 7 – Charitable contributions their Schedule CA (540 or 540NR), California
from interest, dividends, annuities, or
Enter the total amount of charitable contribu- Adjustments.
royalties that is not derived in the ordinary
tions made by the S corporation during its

Form 100S Booklet 1999 Page 17


For more information, get form FTB 3526, amount to be reported and the form on which Line 20 (Schedule K only)
Investment Interest Expense Deduction. the amount should be reported. Enter total distributions made to shareholders
Line 11b(1) and Line 11b(2) – Investment Line 13 – Other credits other than dividends reported on Schedule K,
income and expenses Enter on an attached schedule each line 22. Noncash distributions of appreciated
Enter on line 11b(1) only the investment shareholder’s allocable share of any credit or property are valued at fair market value. Refer
income included on Schedules K and K-1 credit information reported on Schedule C to the instructions for federal Form 1120S for
(100S), line 4a, line 4b, line 4c, and line 4f. (100S) that is related to a trade or business the ordering rules on distributions.
Enter on line 11b(2) only the investment activity. Line 21 (Schedule K only)
expense included on Schedules K and K-1 The following are examples of credits that The S corporation may need to report
(100S), line 9. may apply to each shareholder: supplemental information separately to each
If there are items of investment income or shareholder that is not specifically requested
• Employer child care program/contribution
expense included in the amounts that are on the Schedule K-1 (100S).
credit (get form FTB 3501);
required to be passed through separately to • Enterprise zone hiring & sales or use tax Attach a schedule to the Schedule K showing
the shareholder on Schedule K-1 (100S), credit (get form FTB 3805Z); the computation of those items that must be
such as net short-term capital gain or loss, • Local Agency Military Base Recovery Area reported separately to shareholders including
net long-term gain or loss and other portfolio (LAMBRA) hiring & sales or use tax credit any credit recapture reported by shareholders
gains or losses, give each shareholder a (get form FTB 3807); on Schedule K-1, line 23.
schedule identifying these amounts. See the • Manufacturing enhancement area (MEA) Shareholders may need to obtain the amount
instructions for Form 1120S, for more hiring credit (get form FTB 3808); of their proportionate interest of aggregate
information on portfolio income. • Targeted tax area (TTA) hiring and sales or gross receipts, less returns and allowances,
Investment income includes gross income use tax credit (get form FTB 3809); from the S corporation. As a result of
from property held for investment, gain • Research credit (get form FTB 3523); or legislation enacted in 1996, alternative
attributable to the disposition of property held • Manufacturers’ investment credit (get form minimum taxable income shall not include
for investment, and other amounts that are FTB 3535). income, adjustments, and items of tax
gross portfolio income. Investment income preference related to any trade or business of
and investment expenses do not include any Adjustments and Tax a qualified taxpayer who has gross receipts,
income or expenses from a passive activity. Preference Items less returns and allowances, during the
Property subject to a net lease is not treated taxable year of less than $1,000,000 from all
Line 14a through Line 14e trades or businesses. The S corporation can
as investment property because it is subject
to the passive loss rules. Do not reduce Enter the items of income and deductions that provide the shareholder’s proportionate
investment income by losses from passive enter into each shareholder’s computation of interest of aggregate gross receipts on
activities. adjustments and tax preference items. A Schedule K-1 (100S), line 23. For purposes of
shareholder with alternative minimum tax R&TC Section 17062(b)(4), “gross receipts”
Investment expenses are deductible expenses items may be required to file Schedule P means the sum of gross receipts from the
(other than interest) directly connected with (540, 540NR, or 541), Alternative Minimum production of business income (within the
the production of investment income. Tax and Credit Limitations. meaning of subdivisions (a) and (c) of R&TC
Get form FTB 3526 for more information. Get the instructions for federal Schedules K Section 25120) and the gross receipts from
and K-1 (Form 1120S), Adjustments and Tax the production of nonbusiness income (within
Tax Credits Preference Items, line 14a through line 14e, the meaning of subdivision (d) of R&TC
Line 12a – Low-income housing credit for more information. Section 25120). “Proportionate interest”
R&TC Section 23610.5 provides a credit that includes an interest in a pass-through entity.
may be claimed by owners of residential Other State Taxes See R&TC Section 17062, Instructions for
rental projects providing low-income housing. federal Schedule K (1020S), line 21, and
Line 15a through Line 15e
The credit is generally effective for buildings Schedule K-1 (100S) instructions for more
Subject to certain conditions, shareholders information.
placed in service after 1986. If the sharehold- may claim a credit against their individual tax
ers are eligible to claim the low-income for net income taxes paid by the S corporation Line 22 (Schedule K only)
housing credit, attach a copy of form to another state that either taxes the corpora- Report the distribution amount made out of
FTB 3521, Low-Income Housing Credit, to tion as an S corporation or does not recog- prior C corporation years accumulated
Form 100S and to each shareholder’s nize S corporation status. For purposes of earnings and profits (E&P). The corporation
Schedule K-1 (100S). this credit, net income taxes include the should issue a federal Form 1099-DIV to each
Line 12b – Credits related to rental real shareholder’s share of taxes on, according to, of the shareholders reporting their propor-
estate activities or measured by income. Enter the name of the tionate distribution amounts.
Report any information that the shareholder other state(s), the income reported to the Line 20 (Schedule K-1 only)
needs to figure credits related to a rental real other state(s), and the amount of tax paid. Report the distribution amount for each
estate activity other than the low-income Attach a copy of the return filed with the other shareholder that was paid out of prior
housing credit. Attach to each shareholder’s state. C corporation years accumulated earnings
Schedule K-1 (100S) a schedule showing the Residents are taxable on all their pro rata and profits (E&P). Each shareholder should
amount to be reported and the form on which share of income and generally receive a credit receive a federal Form 1099-DIV reporting the
the amount should be reported. for taxes paid to other states. Nonresidents proportionate distribution amount shown on
Line 12c – Credits related to other rental must use the amounts shown in column (e). Schedule K-1 (100S), line 20.
activities See R&TC Sections 18001, 18002, and 18006
Line 21 (Schedule K-1 only)
Use this line to report information that the for more information.
Report the distribution amount for each
shareholder needs to figure credits related to shareholder for distributions other than
a rental activity other than a rental real estate Other Items dividends reported on Schedule K-1 (100S),
activity. Attach to each shareholder’s Line 16a through Line 19 line 20. Noncash distributions of appreciated
Schedule K-1 (100S) a schedule showing the Refer to the instructions for federal property are valued at fair market value. Refer
Schedules K and K-1 (Form 1120S).

Page 18 Form 100S Booklet 1999


to the instructions for federal Form 1120S for Business income is defined by Title 18 Cal. tion with accumulated E&P, the S corporation
the ordering rules on distributions. Code Reg. Section 25120(a) as income must be able to calculate its AAA at the time
Line 22 (Schedule K-1 only) arising in the regular course of the taxpayer’s of the merger for purposes of determining the
trade or business. Business income includes tax effect of post-merger distributions.
Report the amount of loan repayments the
income from tangible and intangible property Therefore, it is recommended that all
S corporation has made to each shareholder
if the acquisition, management, and disposi- S corporations maintain the AAA.
who has loaned the S corporation money.
tion of the property constitutes integral parts At the end of the income year, the AAA is
of the taxpayer’s regular trade or business.
Supplemental Information determined by taking into account all items of
In Part B, enter the shareholder’s pro rata income, loss, and deductions for the income
Line 23 (Schedule K-1 only) share of nonbusiness income from real and year (including nondeductible losses and
The S corporation will provide supplemental tangible property that is located in California. expenses that are not capitalized but exclud-
information required to be reported to each Because this income has a California source, ing certain exempt income and state taxes
shareholder on this line. this income should also be included on the attributable to C corporation years). After the
The S corporation should provide an amount appropriate line in column (e). year-end income and expense adjustments are
showing each shareholder’s proportionate In Part C, enter the shareholder’s pro rata made, the account is reduced by distributions
interest in the S corporation’s aggregate gross share of the S corporation’s payroll, property, made during the income year. The AAA should
receipts, less returns and allowances, on and sales factors. be reduced by the California built-in gains tax
Schedule K-1 (100S), line 23. See the amount and the minimum franchise tax.
instructions for Schedule K (100S), line 21. Schedule L Note: The amount on Form 100S, Side 1,
Report the credit recapture amount on line 23 Line 23 line 2, should be included as an other addition
if the S corporation completed the credit on Schedule M-2, line 3, and as an other
Retained earnings include balances in the
recapture portion of: reduction on Schedule M-2, line 5. Also
accumulated adjustments account (AAA), the
• FTB 3501, Employer Child Care Program/ include any other adjustments to arrive at
other adjustments account, and other retained
Contribution Credit; or California income.
earnings.
• FTB 3805Z, Part VI, Hiring Credit Enter- Note: The AAA may have a negative balance at
prise Zone; or Schedule M-1 year end as a result of losses or deductions
• FTB 3806, Los Angeles Revitalization Zone from the S corporation.
Schedule M-1 is used to reconcile the
(LARZ) Hiring Credit & Sales or Use Tax Column (b) – The other adjustments account
difference between book and tax accounting
Credit; or is adjusted for tax-exempt income (and
for an income or expense item. The
• FTB 3807, Local Agency Military Base related expenses) of the S corporation. After
S corporation must complete Schedule M-1 if
Recovery Area (LAMBRA) Hiring Credit & adjusting for tax-exempt income, the account
total assets of the entity are at least $25,000.
Sales or Use Tax Credit; or is reduced for any distributions made during
The federal and state Schedule M-1 may be
• FTB 3535, Manufacturers’ Investment the year.
the same when you use the federal reconcilia-
Credit; or
tion method for net income computation. See Note: Cancellation of debt income excluded
• FTB 3809, Targeted Tax Area (TTA) Hiring
General Information I, Net Income Computa- from gross income is not considered tax
Credit & Sales or Use Tax Credit; or
tion, for more information. The Schedule M-1 exempt income for purposes of determining
• FTB 3808, Manufacturing Enhancement
will be different if using the California AAA or OAA.
Area (MEA) Hiring Credit.
computation method for net income. The Column (c) – Other retained earnings include
Also show on line 23 a statement showing California computation method is generally
each of the following: appropriated and unappropriated retained
used when the S corporation has no federal earnings accumulated in prior years when the
1. Each shareholder’s share of business filing requirement, or if the S corporation S corporation was a C corporation. Line 1,
income apportioned to an enterprise zone, maintains separate records for state pur- column (c) for the first S corporation return
LAMBRA, MEA, or TTA; and poses. will be the sum of the ending balances of
2. Each shareholder’s pro-rata share of appropriated and unappropriated retained
business capital gain or loss included in 1 Schedule M-2 earnings for the previous year.
above. The computation of the California AAA and
Distributions
Table 1 and Table 2 other adjustments account (OAA) is similar to
the federal computation applying California Generally, property distributions (including
Table 1 – Enter the shareholder’s pro-rata cash) are applied in the following order to
share of nonbusiness income from intan- amounts. Get the instructions for federal
Form 1120S and IRC Section 1368 for reduce accounts of the S corporation that are
gibles. Because the source of this income used to compute the tax effect of distributions
must be determined at the shareholder level, additional information.
made by the S corporation to its shareholders:
do not enter income in this category in Column (a) – The AAA is an account of the
column (e). If the income (loss) for an income S corporation that generally reflects the 1. Reduce the AAA determined without
item is a mixture of income (loss) in different accumulated undistributed net income of the regard to any net negative adjustment for
subclasses (for example, short and long term corporation for the corporation’s post-1986 the income year (but not below zero). If
capital gain), attach a supplemental schedule years. S corporations with accumulated E&P distributions during the income year
providing a breakdown of income in each from C corporation years must maintain the exceed the AAA at the close of the income
subclass. AAA to determine the tax effect of distribu- year determined without regard to any net
tions during S corporation years and the post- negative adjustment for the income year,
Nonbusiness income is all income other than the AAA is allocated pro rata to each
business income. See definition of business termination transition period. An
S corporation without accumulated E&P does distribution made during the income year.
income below. See IRC Section 1368(c). The term “net
not need to maintain the AAA in order to
Table 2 – In Part A, enter the shareholder’s determine the tax effect of distributions. negative adjustment” means the excess, if
pro rata share of the S corporation’s business However, if an S corporation without any, of the reductions in the AAA for the
income. The shareholder will then add that accumulated E&P engages in certain income year (other than distributions) over
income to its own business income and transactions to which IRC Section 381(a) the increases in the AAA for the income
apportion the combined business income. applies, such as a merger into an S corpora- year.

Form 100S Booklet 1999 Page 19


2. Reduce accumulated E&P. Generally, the elect to do so with the consent of all its shareholder consents to the election. A
S corporation has accumulated E&P only if affected shareholders (IRC corporate officer must sign the statement
it has not distributed E&P accumulated in Section 1368(e)(3)(B)). This election is under penalties of perjury on behalf of the
prior years when the S corporation was a irrevocable and applies only for the tax corporation. The statement of election to
C corporation (IRC Section 1361(a)(2)), or year for which it is made. For more make a deemed dividend must include the
when the S corporation merged with information regarding this election, see amount of the deemed dividend distributed to
another corporation that has C corporation Statement Regarding Elections. each shareholder.
accumulated E&P. The only adjustments • Election to make a deemed dividend. If the When making either of the above elections,
that can be made to the accumulated E&P corporation wants to distribute all or part the corporation must prepare copies of
of an S corporation are: of its C corporation accumulated E&P federal Form 1099-DIV for shareholders to
through a deemed dividend, it may elect to report this dividend as taxable income.
a. Reductions for dividend distributions;
do so with the consent of all its affected
and Note: The corporation may file the election for
shareholders (IRC Section 1368(e)(3)(B)).
b. Adjustments for redemptions, California purposes only. It is not necessary
Under this section, the corporation will be
liquidations, reorganizations, etc. for the corporation to have the same election
treated as also having made the election to
3. Reduce the other adjustment account. distribute E&P first. The amount of the for federal purposes in order to make a
4. Reduce any remaining shareholders’ deemed dividend cannot exceed the California election. However, regardless of
equity account. accumulated E&P at the end of the income whether or not the corporation makes the
year reduced by any actual distributions of same election on the federal return, the
Note: Shareholders’ previously taxed income
accumulated E&P made during the income corporation must attach a separate election
(PTI) (Column (c), federal Form 1120S,
year. A deemed dividend is treated as if it statement to the California return.
Schedule M-2, 1120S) — California
S corporations will never have undistributed were a pro rata distribution of money to C corporation E&P
PTI. The federal code section that created PTI the shareholders, received by the share- Check the box below Schedule M-2, line 9, if
was removed from the IRC before California holders, and immediately contributed back the S corporation was a C corporation in a
incorporated the federal S corporation to the corporation all on the last day of the prior year(s) and has C corporation E&P at
provisions into the R&TC. tax year. This election is irrevocable and the end of the income year. For this purpose,
applies only for the tax year for which it is C corporation E&P means the remaining
Elections relating to the order of
made. balance of E&P of any S corporation for any
distributions
Statement regarding elections income year when it was not an S corpora-
The corporation may modify the ordering
To make any of the above elections, the tion. If the S corporation has C corporation
rules by making one or more of the following
corporation must attach a statement to a E&P, it may be liable for excess net passive
elections:
timely filed original Form 100S or amended income tax and the distributions to sharehold-
• Election to distribute accumulated E&P ers may have different tax consequences for
first. If the corporation has accumulated Form 100S for the year in which the election
is made. The corporation must identify the federal and California purposes. See instruc-
E&P and wants to distribute E&P before tions for Form 100S, Side 1, line 29 and
making distributions from the AAA, it may election it is making and state that each
line 30, for details on these taxes.

Page 20 Form 100S Booklet 1999


Code Code
Form 100S 315230 Women’s & Girls’ Cut & Sew 332900 Other Fabricated Metal
Codes for Principal Business Activity Apparel Mfg Product Mfg
This list of principal business activities and their associated codes is designed to 315290 Other Cut & Sew Apparel Mfg Machinery Manufacturing
315990 Apparel Accessories & Other 333100 Agriculture, Construction, &
classify a business by the type of activity in which it is engaged to facilitate the Apparel Mfg
administration of the California Revenue and Taxation Code. For income years Mining Machinery Mfg
beginning after 1997, these principal business activity codes are based on the North Leather and Allied Product 333200 Industrial Machinery Mfg
Manufacturing 333310 Commercial & Service
American Industry Classification System (NAICS).
316110 Leather & Hide Tanning & Industry Machinery Mfg
Using the list of activities and codes below, determine from which activity the Finishing 333410 Ventilation, Heating, Air-
company derives the largest percentage of its ‘’total receipts.’’ Total receipts is 316210 Footwear Mfg (including rubber Conditioning, & Commercial
defined as the sum of gross receipts or sales (Side 2, Schedule F, line 1a) plus all & plastics) Refrigeration Equipment Mfg
other income (Side 2, Schedule F, line 4 and line 5). If the company purchases raw 316990 Other Leather & Allied Product 333510 Metalworking Machinery Mfg
materials and supplies them to a subcontractor to produce the finished product, but Mfg 333610 Engine, Turbine & Power
retains title to the product, the company is considered a manufacturer and must use Wood Product Manufacturing Transmission Equipment Mfg
one of the manufacturing coes (311110-339900). 321110 Sawmills & Wood Preservation 333900 Other General Purpose
321210 Veneer, Plywood, & Engi- Machinery Mfg
Once the principal business activity is determined, entries must be made on
neered Wood Product Mfg Computer and Electronic Product
Form 100S, Question C. For the business activity code number, enter the six digit Manufacturing
code selected from the list below. On the next line enter a brief description of the 321900 Other Wood Product Mfg
Paper Manufacturing 334110 Computer & Peripheral
company’s business activity. Finally, enter a description of the principal product or Equipment Mfg
service of the company on the next line. 322100 Pulp, Paper, & Paperboard
Mills 334200 Communications Equipment
Mfg
322200 Converted Paper Product Mfg
334310 Audio & Video Equipment Mfg
Printing and Related Support 334410 Semiconductor & Other
Agriculture, Forestry, Construction Activities Electronic Component Mfg
Fishing, and Hunting Code 323100 Printing & Related Support 334500 Navigational, Measuring,
Code Building, Developing, and General Activities Electromedical, & Control
Crop Production Contracting Petroleum and Coal Products Instruments Mfg
111100 Oilseed & Grain Farming 233110 Land Subdivision & Land Manufacturing 334610 Manufacturing & Reproducing
111210 Vegetable & Melon Farming Development 324110 Petroleum Refineries Magnetic & Optical Media
(including potatoes & yams) 233200 Residential Building (including integrated) Electrical Equipment, Appliance, and
111300 Fruit & Tree Nut Farming Construction 324120 Asphalt Paving, Roofing, & Component Manufacturing
111400 Greenhouse, Nursery, & 233300 Nonresidential Building Saturated Materials Mfg 335100 Electric Lighting Equipment
Floriculture Production Construction 324190 Other Petroleum & Coal Mfg
111900 Other Crop Farming (including Heavy Construction Products Mfg 335200 Household Appliance Mfg
tobacco, cotton, sugarcane, 234100 Highway, Street, Bridge, & Chemical Manufacturing 335310 Electrical Equipment Mfg
hay, peanut, sugar beet, & all Tunnel Construction 325100 Basic Chemical Mfg 335900 Other Electrical Equipment &
other crop farming) 234900 Other Heavy Construction 325200 Resin, Synthetic Rubber, & Component Mfg
Animal Production Special Trade Contractors Artificial & Synthetic Fibers & Transportation Equipment
112111 Beef Cattle Ranching & 235110 Plumbing, Heating, & Air- Filaments Mfg Manufacturing
Farming 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 Mfg 336410 Aerospace Product & Parts
112400 Sheep & Goat Farming Tile Contractors 325600 Soap, Cleaning Compound, & Mfg
235500 Carpentry & Floor Contractors Toilet Preparation Mfg 336510 Railroad Rolling Stock Mfg
112510 Animal Aquaculture (including
shellfish & finfish farms & 235610 Roofing, Siding, & Sheet Metal 325900 Other Chemical Product & 336610 Ship & Boat Building
hatcheries) Contractors Preparation Mfg
336990 Other Transportation
112900 Other Animal Production 235710 Concrete Contractors Plastics and Rubber Products Equipment Mfg
235810 Water Well Drilling Contractors Manufacturing
Forestry and Logging Furniture and Related Product
235900 Other Special Trade Contrac- 326100 Plastics Product Mfg Manufacturing
113110 Timber Tract Operations
tors 326200 Rubber Product Mfg 337000 Furniture & Related Product
113210 Forest Nurseries & Gathering
of Forest Products Nonmetallic Mineral Product Manufacturing
113310 Logging Manufacturing Manufacturing Miscellaneous Manufacturing
Food Manufacturing 327100 Clay Product & Refractory Mfg 339110 Medical Equipment & Supplies
Fishing, Hunting and Trapping
311110 Animal Food Mfg 327210 Glass & Glass Product Mfg Mfg
114110 Fishing
311200 Grain & Oilseed Milling 327300 Cement & Concrete Product 339900 Other Miscellaneous
114210 Hunting & Trapping Mfg
311300 Sugar & Confectionery Product Manufacturing
Support Activities for Agriculture and Mfg 327400 Lime & Gypsum Product Mfg
Forestry 311400 Fruit & Vegetable Preserving & 327900 Other Nonmetallic Mineral Wholesale Trade
115110 Support Activities for Crop Specialty Food Mfg Product Mfg
Production (including cotton Wholesale Trade, Durable Goods
311500 Dairy Product Mfg Primary Metal Manufacturing 421100 Motor Vehicle & Motor Vehicle
ginning, soil preparation,
planting, & cultivating) 311610 Animal Slaughtering and 331110 Iron & Steel Mills & Ferroalloy Parts & Supplies Wholesalers
Processing Mfg 421200 Furniture & Home Furnishing
115210 Support Activities for Animal
Production 311710 Seafood Product Preparation & 331200 Steel Product Mfg from Wholesalers
Packaging Purchased Steel 421300 Lumber & Other Construction
115310 Support Activities for Forestry
311800 Bakeries & Tortilla Mfg 331310 Alumina & Aluminum Materials Wholesalers
Mining 311900 Other Food Mfg (including Production & Processing 421400 Professional & Commercial
coffee, tea, flavorings, & 331400 Nonferrous Metal (except Equipment & Supplies
211110 Oil & Gas Extraction seasonings) Aluminum) Production & Wholesalers
212110 Coal Mining Processing
212200 Metal Ore Mining Beverage and Tobacco Product 421500 Metal & Mineral (except
Manufacturing 331500 Foundries Petroleum) Wholesalers
212310 Stone Mining & Quarrying
312110 Soft Drink & Ice Mfg Fabricated Metal Product 421600 Electrical Goods Wholesalers
212320 Sand, Gravel, Clay, & Ceramic
& Refractory 312120 Breweries Manufacturing 421700 Hardware & Plumbing &
312130 Wineries 332110 Forging & Stamping Heating Equipment & Supplies
Minerals Mining & Quarrying 312140 Distilleries 332210 Cutlery & Handtool Mfg Wholesalers
212390 Other Nonmetallic Mineral 312200 Tobacco Manufacturing 332300 Architectural & Structural 421800 Machinery, Equipment, &
Mining & Quarrying Metals Mfg Supplies Wholesalers
213110 Support Activities for Mining Textile Mills and Textile Product Mills 421910 Sporting & Recreational
313000 Textile Mills 332400 Boiler, Tank, & Shipping
Container Mfg Goods & Supplies Wholesalers
Utilities 314000 Textile Product Mills
332510 Hardware Mfg 421920 Toy & Hobby Goods &
221100 Electric Power Generation, Apparel Manufacturing 332610 Spring & Wire Product Mfg Supplies Wholesalers
Transmission, & Distribution 315100 Apparel Knitting Mills 421930 Recyclable Material Wholesal-
332700 Machine Shops, Turned
221210 Natural Gas Distribution 315210 Cut & Sew Apparel Contrac- Product, & Screw, Nut, & Bolt ers
221300 Water, Sewage, & Other tors Mfg 421940 Jewelry, Watch, Precious
Systems 315220 Men’s & Boys’ Cut & Sew 332810 Coating, Engraving, Heat Stone, & Precious Metal
Apparel Mfg Treating, & Allied Activities Wholesalers
421990 Other Miscellaneous Durable
Goods Wholesalers

Form 100S Booklet 1999 Page 21


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 448310 Jewelry Stores 488510 Freight Transportation Carriers
422600 Chemical & Allied Products 448320 Luggage & Leather Goods Arrangement 524150 Direct Insurance & Reinsur-
Wholesalers Stores 488990 Other Support Activities for ance (except Life, Health, &
422700 Petroleum & Petroleum Transportation 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 Wholesal- 524290 Other Insurance Related
ers 451120 Hobby, Toy, & Game Stores 492210 Local Messengers & Local Activities
451130 Sewing, Needlework, & Piece Delivery
422910 Farm Supplies Wholesalers Funds, Trusts, and Other Financial
422920 Book, Periodical, & Newspaper Goods Stores Warehousing and Storage Vehicles
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 525920 Trusts, Estates, & Agency
422950 Paint, Varnish, & Supplies Disc, & Record Stores Information Accounts
Wholesalers General Merchandise Stores Publishing Industries 525930 Real Estate Investment Trusts
422990 Other Miscellaneous 452110 Department stores 511110 Newspaper Publishers (Form 1120-REIT)
Nondurable Goods Wholesal- 452900 Other General Merchandise 511120 Periodical Publishers 525990 Other Financial Vehicles
ers Stores 511130 Book Publishers
Miscellaneous Store Retailers 511140 Database & Directory Real Estate and Rental and
Retail Trade Publishers Leasing
453110 Florists
Motor Vehicle and Parts Dealers 511190 Other Publishers
453210 Office Supplies & Stationery Real Estate
441110 New Car Dealers Stores 511210 Software Publishers
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 453910 Pet & Pet Supplies Stores Industries (except video rental) Miniwarehouses)
441229 All Other Motor Vehicle 453920 Art Dealers 512200 Sound Recording Industries 531130 Lessors of Miniwarehouses &
Dealers 453930 Manufactured (Mobile) Home Broadcasting and Self-Storage Units
441300 Automotive Parts, Accessories, Dealers Telecommunications 531190 Lessors of Other Real Estate
& Tire Stores 453990 All Other Miscellaneous Store 513100 Radio & Television Broadcast- Property
Furniture and Home Furnishings Retailers (including tobacco, ing 531210 Offices of Real Estate Agents
Stores candle, & trophy shops) 513200 Cable Networks & Program & Brokers
442110 Furniture Stores Nonstore Retailers Distribution 531310 Real Estate Property
442210 Floor Covering Stores 513300 Telecommunications (including Managers
454110 Electronic Shopping & Mail-
442291 Window Treatment Stores Order Houses paging, cellular, satellite, & 531320 Offices of Real Estate
442299 All Other Home Furnishings other telecommunications) Appraisers
454210 Vending Machine Operators
Stores Information Services and Data 531390 Other Activities Related to
454311 Heating Oil Dealers Real Estate
Electronics and Appliance Stores 454312 Liquefied Petroleum Gas Processing Services
443111 Household Appliance Stores (Bottled Gas) Dealers 514100 Information Services (including Rental and Leasing Services
443112 Radio, Television, & Other 454319 Other Fuel Dealers news syndicates, libraries, & 532100 Automotive Equipment Rental
Electronics Stores 454390 Other Direct Selling Establish- on-line information services) & Leasing
443120 Computer & Software Stores ments (including door-to-door 514210 Data Processing Services 532210 Consumer Electronics &
retailing, frozen food plan Appliances Rental
443130 Camera & Photographic
Supplies Stores providers, party plan Finance and Insurance 532220 Formal Wear & Costume
merchandisers, & coffee-break Depository Credit Intermediation Rental
Building Material and Garden service providers) 532230 Video Tape & Disc Rental
Equipment and Supplies Dealers 522110 Commercial Banking
522120 Savings Institutions 532290 Other Consumer Goods Rental
444110 Home Centers Transportation and 532310 General Rental Centers
444120 Paint & Wallpaper Stores 522130 Credit Unions
Warehousing 522190 Other Depository Credit 532400 Commercial & Industrial
444130 Hardware Stores Machinery & Equipment
444190 Other Building Material Air, Rail, and Water Transportation Intermediation
Rental & Leasing
Dealers 481000 Air Transportation Nondepository Credit Intermediation
482110 Rail Transportation Lessors of Nonfinancial Intangible
444200 Lawn & Garden Equipment & 522210 Credit Card Issuing Assets (except copyrighted works)
Supplies Stores 483000 Water Transportation 522220 Sales Financing 533110 Lessors of Nonfinancial
Food and Beverage Stores Truck Transportation 522291 Consumer Lending Intangible Assets (except
445110 Supermarkets and Other 484110 General Freight Trucking, Local 522292 Real Estate Credit (including copyrighted works)
Grocery (except Convenience) 484120 General Freight Trucking, mortgage bankers &
Stores Long-distance originators) Professional, Scientific, and
445120 Convenience Stores 484200 Specialized Freight Trucking 522293 International Trade Financing Technical Services
445210 Meat Markets Transit and Ground Passenger 522294 Secondary Market Financing
522298 All Other Nondepository Credit Legal Services
445220 Fish & Seafood Markets Transportation
Intermediation 541110 Offices of Lawyers
445230 Fruit & Vegetable Markets 485110 Urban Transit Systems 541190 Other Legal Services
445291 Baked Goods Stores 485210 Interurban & Rural Bus Activities Related to Credit
445292 Confectionery & Nut Stores Transportation Intermediation Accounting, Tax Preparation,
445299 All Other Specialty Food 485310 Taxi Service 522300 Activities Related to Credit Bookkeeping, and Payroll Services
Stores 485320 Limousine Service Intermediation (including loan 541211 Offices of Certified Public
445310 Beer, Wine, & Liquor Stores brokers) Accountants
485410 School & Employee Bus
Transportation Securities, Commodity Contracts, and 541213 Tax Preparation Services
Health and Personal Care Stores 541214 Payroll Services
446110 Pharmacies & Drug Stores 485510 Charter Bus Industry Other Financial Investments and
485990 Other Transit & Ground Related Activities 541219 Other Accounting Services
446120 Cosmetics, Beauty Supplies, &
Perfume Stores Passenger Transportation 523110 Investment Banking & Architectural, Engineering, and
Securities Dealing Related Services
446130 Optical Goods Stores Pipeline Transportation
523120 Securities Brokerage 541310 Architectural Services
446190 Other Health & Personal Care 486000 Pipeline Transportation
Stores 523130 Commodity Contracts Dealing 541320 Landscape Architecture
Scenic & Sightseeing Transportation 523140 Commodity Contracts Services
Gasoline Stations 487000 Scenic & Sightseeing Brokerage 541330 Engineering Services
447100 Gasoline Stations (including Transportation 541340 Drafting Services
convenience stores with gas)
541350 Building Inspection Services

Page 22 Form 100S Booklet 1999


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

Form 100S Booklet 1999 Page 23


THIS PAGE INTENTIONALLY LEFT BLANK

visit our website:

www.ftb.ca.gov

Page 24 Form 100S Booklet 1999


INCOME YEAR
California S Corporation FORM

1999 Franchise or Income Tax Return 100S


For calendar year 1999 or fiscal year beginning month _______ day _______ year 1999, and ending month _______ day _______ year _______ .
California corporation number Federal employer identification number A Final return? ! Dissolved ! Surrendered (withdrawn) ! Merged/Reorganized
! IRC Section 338 sale If a box is checked, enter date  ______________
B Did this S corporation have a change in control or ownership, or
Corporation name
acquire ownership or control of any other legal entity this year?  ! Yes ! No
C Principal business activity code. (Do not leave blank): 
Address PMB no.
Business activity _________________________________________________________
Product or service _______________________________________________________
City State ZIP Code
D Is this corporation filing on a water’s-edge basis pursuant to
R&TC Sections 25110 and 25111 for the current income year? . . .  ! Yes ! No
1 Ordinary income (loss) from trade or business activities from Schedule F (Form 100S, Side 2) or federal Form 1120S, line 21.
If Schedule F (Form 100S, Side 2) was not completed, attach federal Form 1120S, page 1, and supporting schedules . . . . . . .  1
2 Foreign or domestic tax based on income or profits and California franchise or income tax deducted . . . . . . .  2
3 Interest on government obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
4 Net capital gain from Schedule D (100S), Section A & Section B. Attach Schedule D (100S), see instructions  4
5 Depreciation and amortization adjustments. Attach Schedule B (100S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
State 6 Portfolio income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
Adjust-
ments
7 Other additions. Attach schedule(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
8 Total. Add line 1 through line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678901234
 8
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9 Deductible dividends. Attach Schedule H (100S) . . . . . . . . . . . . . . . . . .  9 123456789012345678901234
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10 Water’s-edge dividend deduction. Attach Schedule H (100S) . . . . . . . . .  10 123456789012345678901234
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11 Contributions. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
123456789012345678901234
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12 EZ, LAMBRA, or TTA business expense and net interest deduction . . . .  12 123456789012345678901234
13 Other deductions. Attach schedule(s) . . . . . . . . . . . . . . . . . . . . . . . . . . .  13 123456789012345678901234
14 Total. Add line 9 through line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
15 Net income (loss) after state adjustments. Subtract line 14 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
16 Net income (loss) for state purposes. Use Schedule R if apportioning income . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678901234
 16
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17 R&TC Section 23802(e) deduction. See instructions . . . . . . . . . . . . . . .  17 123456789012345678901234
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Calif. 18 Net operating loss carryover deduction. See instructions . . . . . . . . . . . .  18
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Net 123456789012345678901234
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Income 19 EZ, LARZ, TTA, or LAMBRA NOL carryover deduction. See instructions .  19 123456789012345678901234
20 Disaster loss carryover deduction. See instructions . . . . . . . . . . . . . . . .  20 123456789012345678901234
21 Net income for tax purposes. Combine line 17 through line 20 and subtract from line 16 . . . . . . . . . . . . . . . .  21
22 Tax. ______% x line 21 (at least minimum franchise tax plus QSub annual tax(es), if applicable). See instructions 123456789012345678901234
 22
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23 Enter credit name __________________code no. __ __ __ and amount 23 123456789012345678901234
123456789012345678901234
24 Enter credit name __________________code no. __ __ __ and amount 24 123456789012345678901234
123456789012345678901234
25 Enter credit name __________________code no. __ __ __ and amount 25
123456789012345678901234
123456789012345678901234
123456789012345678901234
123456789012345678901234
26 To claim more than three credits, see instructions . . . . . . . . . . . . . . . . .  26
Taxes 27 Add line 23 through line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
28 Balance. Subtract line 27 from line 22 (at least minimum franchise tax plus QSub annual tax(es), if applicable) . . . . . . 123456789012345678901234
 28
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29 Tax from Schedule D (100S). Attach Schedule D (100S). See instructions  29
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30 Excess net passive income tax. See instructions . . . . . . . . . . . . . . . . . .  30 123456789012345678901234
31 Total tax. Add line 28 through line 30 . . . . . . . . . . . . . . . . . . . . . . . . . . .  31 123456789012345678901234
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32 Additional SOS prepayment tax. See instructions . . . . . . . . . . . . . . . . . .  32 123456789012345678901234
123456789012345678901234
33 Adjusted total tax. Add line 31 and line 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678901234
 33
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34 Overpayment from prior year allowed as a credit . . . . . . . . . . . . . . . . . .  34 123456789012345678901234
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35 1999 estimated tax payments/excess SOS prepayment tax/QSub payments. See instr.  35 123456789012345678901234
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Pay-
ments 36 Amount paid with extension of time to file return . . . . . . . . . . . . . . . . . .  36
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37 Total payments. Add line 34 through line 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
38 Tax due. If line 33 is more than line 37, subtract line 37 from line 33. Go to line 42 . . . . . . . . . . . . . . . . . . . .  38
39 Overpayment. If line 37 is more than line 33, subtract line 33 from line 37 . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
40 Amount of line 39 to be credited to 2000 estimated tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
Amount
Due or
Refund 41 Amount of line 39 to be refunded. Line 39 less line 40 . . . . . . . . . . . . . . . . . . .  41
42 Penalties and interest. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
  Check if estimate penalty computed using Exception B or C. Attach form FTB 5806.
43 Total amount due. Add line 38 and line 42. Pay with return . . . . . . . . . . . . . . . . . 43

100S99109 Form 100S C1 1999 Side 1


Schedule F Computation of Trade or Business Income. See instructions.
1 a) Gross receipts or sales _______________ b) Less returns and allowances ________________ Balance . 1c
2 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Income
4 Net gain (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
6 Total income (loss). Combine line 3 through line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Compensation of officers. Attach schedule. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
9 Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Deduc-
tions 12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 a) Depreciation ____________ b) Less depreciation reported elsewhere on return ____________ Balance  14
15 Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 Pension, profit-sharing, etc. plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19 a) Total travel and entertainment _______________________________ b) Deductible amount . . . . . . . . . . . 19b
20 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
21 Total deductions. Add line 7 through line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
22 Ordinary income (loss) from trade or business. Subtract line 21 from line 6. Enter here and on Side 1, line 1  22
Schedule V Cost of Goods Sold
1 Inventory at beginning of year . . . . . . . . . . . . . 5 Other costs. Attach schedule . . . . . . . . . . . . . .
2 Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . .  6 Total. Add line 1 through line 5 . . . . . . . . . . . . .
3 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . .  7 Inventory at end of year . . . . . . . . . . . . . . . . . .
4 Other IRC Sec. 263A costs. Attach schedule .  8 Cost of goods sold. Subtract line 7 from line 6 
Was there any substantial change in the manner of determining quantities, costs, or valuations between opening and closing inventory? . . . . . .  Yes  No
If “yes,’’ attach an explanation. Enter California seller’s permit number, if any _____________________ Method of inventory valuation _________________
Check if the LIFO inventory method was adopted this income year for any goods. If checked, attach federal Form 970 . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
If the LIFO inventory method was used for this income year, enter the amount of closing inventory computed under LIFO . . . . . . . ____________________
Schedule J Add-On Taxes or Recapture of Tax Credits. See instructions.
1 LIFO recapture due to S corporation election (IRC Sec. 1363(d) deferral: $__________________) . . . . . . . . . . . . . . . . .  1
2 Interest computed under the look-back method for completed long-term contracts (attach form FTB 3834) . . . . . . . . . .  2
3 Interest on tax attributable to installment: a) Sales of certain timeshares and residential lots . . . . . . . . . . . . . . . . . . . .  3a
b) Method for nondealer installment obligations . . . . . . . . . . . . . . . . . . . . . .  3b
4 IRC Section 197(f)(9)(B)(ii) election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
5 Credit recapture name:________________________________________________________________ . . . . . . . . . . .  5
6 Combine line 1 through line 5. Revise the amount on Side 1, line 38 or line 39, whichever applies, by this amount.
Write “Schedule J’’ to the left of line 38 or line 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
E Does this return include Qualified Subchapter S Subsidiaries? . . . . .   Yes  No K Effective Date of California S election:  ____________________________
F Date incorporated:__________________  Where: State Country____________ L Accounting method:  (1)  Cash (2)  Accrual (3)  Other
G Maximum number of shareholders in the corporation at any time during M Location of principal accounting records: ________________________________________
the year: ______________________ N “Doing business as’’ name:  __________________________________
H Date business began in California or date income was first derived from O Have all required information returns (e.g., federal Form 1099,
California sources: _______________________________________________ 8300, etc.) been filed with the Franchise Tax Board? . . . . . . . . . . . .  N/A  Yes  No
P Is this corporation apportioning income to California using
I Is the corporation under audit by the IRS or has it been audited Schedule R? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   Yes  No
in a prior year? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   Yes  No Q During the income year, were gross receipts (less returns and
J Effective date of federal S election: _______________________________________ allowances) of this corporation more than $1 million? . . . . . . . . . . . . . . .   Yes  No

R Check here if the corporation does not need tax forms mailed next year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is
Please true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Sign Signature of officer Title Date Telephone
Here  ( )
Preparer’s signature Date Check if self- Paid preparer’s SSN/FEIN/PTIN

 employed 
Paid
Telephone FEIN
Preparer’s Firm’s name
Use Only (or yours, if
self-employed) 
( ) -
and address

Side 2 Form 100S C1 1999 100S99209 For Privacy Act Notice, get form FTB 1131.
Schedule K S Corporation Shareholders’ Shares of Income, Deductions, Credits, etc.
(b) Amount from federal (c) California (d) Total amount
(a) Pro-rata share items Schedule K (1120S) adjustment using California law.
Combine (b) and (c)
where applicable
1 Ordinary income (loss) from trade or business activities . . . . . . . . . . . . . . . . . . 
2 Net income (loss) from rental real estate activities . . . . . . . . . . . . . . . . . . . . . . . 
3 a Gross income from other rental activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b Expenses from other rental activities. Attach schedule . . . . . . . . . . . . . . . . . .
c Net income (loss) from other rental activities. Subtract line 3b from line 3a . 
Income
(Loss) 4 Portfolio income (loss):
a Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
b Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
c Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
d Net short-term capital gain (loss). Attach schedule D (100S) . . . . . . . . . . . . 
e Net long-term capital gain (loss). Attach Schedule D (100S) . . . . . . . . . . . . . 
f Other portfolio income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . 
5 Net gain (loss) under IRC Section 1231 (other than due to casualty or theft) . . 
6 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
7 Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
8 Expense deduction for recovery property (R&TC Section 17267.2,
Deduc- Section 17267.6, Section 17268 and IRC Section 179).
tions
Attach Schedule B (100S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 Deductions related to portfolio income (loss). Attach schedule . . . . . . . . . . . . . 
10 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Invest- 11 a Interest expense on investment debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
ment b (1) Investment income included on line 4a, line 4b, line 4c, and line 4f . . . .
Interest
(2) Investment expenses included on line 9 above . . . . . . . . . . . . . . . . . . . . .12345678901234567890123456789
12345678901234567890123456789
12 a Low-income housing credit. See instructions. Attach schedule . . . . . . . . . . .12345678901234567890123456789
12345678901234567890123456789
12345678901234567890123456789
Tax
b Credits related to rental real estate activities other than on line 12(a). 12345678901234567890123456789
12345678901234567890123456789
Credits Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12345678901234567890123456789
.
12345678901234567890123456789
c Credits related to other rental activities. See instructions. Attach schedule . .12345678901234567890123456789
12345678901234567890123456789
13 Other credits. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12345678901234567890123456789
12345678901234567890123456789
14 a Depreciation adjustment on property placed in service after 12/31/86 . . . . .12345678901234567890123456789 12345678901234567890123456789
Adjust- b Adjusted gain or loss. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12345678901234567890123456789
12345678901234567890123456789
ments 12345678901234567890123456789
c Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12345678901234567890123456789
and Tax 12345678901234567890123456789
Preference d (1) Gross income from oil, gas, and geothermal properties . . . . . . . . . . . . .12345678901234567890123456789 12345678901234567890123456789
Items (2) Deductions allocable to oil, gas, and geothermal properties . . . . . . . . . .12345678901234567890123456789 12345678901234567890123456789
e Other adjustments and tax preference items. Attach schedule . . . . . . . . . . . .12345678901234567890123456789 12345678901234567890123456789
12345678901234567890123456789
15 a Type of income ________________________________________________12345678901234567890123456789
12345678901234567890123456789
Other b Name of state _________________________________________________12345678901234567890123456789 12345678901234567890123456789
State
c Total gross income from sources outside California. Attach schedule . . . . . .12345678901234567890123456789 12345678901234567890123456789
Taxes
d Total applicable deductions and losses. Attach schedule . . . . . . . . . . . . . . . .12345678901234567890123456789
12345678901234567890123456789
12345678901234567890123456789
e Total other state taxes. Check one:  Paid  Accrued . . . . . . . . . . . . . . . .12345678901234567890123456789
16 a Total expenditures to which an IRC Section 59(e) election may apply . . . . . .1234567890123456789012345678901212345678901
1234567890123456789012345678901212345678901
b Type of expenditures ___________________________________________1234567890123456789012345678901212345678901 1234567890123456789012345678901212345678901
17 Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 Other tax-exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other
Items 19 Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 Total property distributions (including cash) other than dividend
distributions reported on line 22 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12345678901234567890123456789
12345678901234567890123456789
12345678901234567890123456789
21 Other items and amounts not included in line 1 through line 20 above that 12345678901234567890123456789
are required to be reported separately to shareholders. Attach schedule . . . . .12345678901234567890123456789 12345678901234567890123456789
22 Total dividend distributions paid from accumulated earnings and profits . . . . . 
23 Income (loss) (required only if Schedule M-1 must be completed). Combine
line 1, line 2, and line 3c through line 6. From the result, subtract the sum
of line 7 through line 11a and line 16a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100S99309 Form 100S C1 1999 Side 3


Schedule L Balance Sheets Beginning of income year End of income year
Assets 123456789012345678
(a) (b)
12345678901234567812345678901234567 123456789012345678
(c) (d)
12345678901234567812345678901234567
1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678 12345678901234567123456789012345678 12345678901234567
2 a Trade notes and accounts receivable . . . . . . . . . 12345678901234567
12345678901234567 12345678901234567
12345678901234567
b Less allowance for bad debts . . . . . . . . . . . . . . . 123456789012345678
( ) 123456789012345678
( )
123456789012345678
123456789012345678 123456789012345678
123456789012345678
3 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678 123456789012345678 
4 Federal and state government obligations . . . . . . . 123456789012345678 123456789012345678 123456789012345678
123456789012345678
5 Other current assets. Attach schedule(s) . . . . . . . . 123456789012345678
123456789012345678 123456789012345678
123456789012345678
123456789012345678 123456789012345678
6 Loans to shareholders. Attach schedule(s) . . . . . . . 123456789012345678 123456789012345678 
123456789012345678
123456789012345678 123456789012345678
123456789012345678
7 Mortgage and real estate loans . . . . . . . . . . . . . . . . 123456789012345678 123456789012345678
8 Other investments. Attach schedule(s) . . . . . . . . . . 123456789012345678 12345678901234567812345678901234567 123456789012345678
123456789012345678 
123456789012345678
9 a Buildings and other fixed depreciable assets . . .
12345678901234567
12345678901234567 123456789012345678
123456789012345678
b Less accumulated depreciation . . . . . . . . . . . . . . ( ) 12345678901234567 ( )123456789012345678

12345678901234567
12345678901234567 123456789012345678
123456789012345678
10 a Depletable assets . . . . . . . . . . . . . . . . . . . . . . . .
b Less accumulated depletion . . . . . . . . . . . . . . . . 123456789012345678( ) 12345678901234567
( )
12345678901234567812345678901234567
123456789012345678 12345678901234567123456789012345678
12345678901234567
11 Land (net of any amortization) . . . . . . . . . . . . . . . . 
12345678901234567
12345678901234567 123456789012345678
123456789012345678
12 a Intangible assets (amortizable only) . . . . . . . . . .
b Less accumulated amortization . . . . . . . . . . . . . 123456789012345678 123456789012345678
( ) 123456789012345678
123456789012345678
( )
123456789012345678
13 Other assets. Attach schedule(s) . . . . . . . . . . . . . . 123456789012345678
123456789012345678
123456789012345678
12345678901234567812345678901234567 123456789012345678
14 Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678  123456789012345678 123456789012345678

123456789012345678
123456789012345678 12345678901234567
12345678901234567123456789012345678
123456789012345678 123456789012345678
123456789012345678
Liabilities and shareholders’ equity 123456789012345678 123456789012345678
15 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678 123456789012345678
123456789012345678
16 Mortgages, notes, bonds payable in less than 1 year123456789012345678
123456789012345678 123456789012345678
123456789012345678
123456789012345678 123456789012345678
17 Other current liabilities. Attach schedule(s) . . . . . . 123456789012345678 123456789012345678 123456789012345678
123456789012345678
18 Loans from shareholders. Attach schedule(s) . . . . 123456789012345678 123456789012345678 123456789012345678
123456789012345678 
19 Mortgages, notes, bonds payable in 1 year or more 123456789012345678 123456789012345678 123456789012345678
123456789012345678 
123456789012345678
123456789012345678 123456789012345678
123456789012345678
20 Other liabilities. Attach schedule(s) . . . . . . . . . . . .
123456789012345678 123456789012345678
21 Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678  123456789012345678
123456789012345678 
123456789012345678
22 Paid-in or capital surplus . . . . . . . . . . . . . . . . . . . . 123456789012345678 123456789012345678
123456789012345678 
123456789012345678
23 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678
123456789012345678 
123456789012345678
123456789012345678 123456789012345678
123456789012345678
24 Adjustments to shareholders’ equity. Attach schedule(s)
123456789012345678 123456789012345678
25 Less cost of treasury stock . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678 ( )123456789012345678
123456789012345678 ( )
26 Total liabilities and shareholders’ equity . . . . . . . 123456789012345678 123456789012345678
123456789012345678
Schedule M-1 Reconciliation of income (loss) per books with income (loss) per return.
Do not complete this schedule if the amount on Schedule L, line 14, column (d), is less than $25,000.
1 Net income per books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Income recorded on books this year not included on
2 Income included on Schedule K, line 1 through line 6, Schedule K, line 1 through line 6 (itemize)
not recorded on books this year (itemize)_________________ a Tax-exempt interest $ ________________________
________________________________________________ 123456789012345678  12345678901234567
123456789012345678
123456789012345678
_______________________________________
12345678901234567
12345678901234567
3 Expenses recorded on books this year not included on 123456789012345678
123456789012345678
6 Deductions included on Schedule K, lines 1 through 11 and 12345678901234567
12345678901234567
Schedule K, line 1 through line 11a and line 16a (itemize) 123456789012345678
123456789012345678
line 16a, not charged against book income this year (itemize) 12345678901234567
12345678901234567
a Depreciation . . . . . . . . . $ ________________________ 123456789012345678
123456789012345678 a Depreciation . . . . . . . $ ______________________ 12345678901234567
12345678901234567
b State taxes . . . . . . . . . . . $ ________________________ 123456789012345678
123456789012345678 b State tax refunds . . . . $ ______________________ 12345678901234567
c Travel and entertainment $ ________________________ 123456789012345678
123456789012345678 __________________________________________ 
________________________________________________ 7 Total. Add line 5 and line 6 . . . . . . . . . . . . . . . . . . . . . . . . .
4 Total. Add line 1 through line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Income (loss) (Schedule K, line 23, col. d). Line 4 less line 7
Schedule M-2 CA accumulated adjustments account, other adjustments account, and other retained earnings. See instructions.
Important: Use California figures and federal procedures. (a) Accumulated (b) Other adjustments (c) Other retained earnings
adjustments account account (see instructions)
1 Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1234567890123456789012345678901212
1234567890123456789012345678901212
2 Ordinary income from Form 100S, Side 1, line 1 . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678901212
3 Other additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678901212
1234567890123456789012345678901212
4 Loss from Form 100S, Side 1, line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( ) 1234567890123456789012345678901212
1234567890123456789012345678901212
5 Other reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( ) ( )
6 Combine line 1 through line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12345678901234567
12345678901234567
7 Distributions other than dividend distributions . . . . . . . . . . . . . . . . . . . . . .  12345678901234567
12345678901234567
8 Balance at end of year. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . 
9 Retained earnings at end of year. Add line 8, column (a) through column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
  If the corp. has C corp. E&P at the end of the income year, check the box and enter the amount. See instructions . . . . . . . . 
Side 4 Form 100S C1 1999 100S99409
INCOME YEAR
California S Corporation FORM

1999 Franchise or Income Tax Return 100S


For calendar year 1999 or fiscal year beginning month _______ day _______ year 1999, and ending month _______ day _______ year _______ .
California corporation number Federal employer identification number A Final return? ! Dissolved ! Surrendered (withdrawn) ! Merged/Reorganized
! IRC Section 338 sale If a box is checked, enter date  ______________
B Did this S corporation have a change in control or ownership, or
Corporation name
acquire ownership or control of any other legal entity this year?  ! Yes ! No
C Principal business activity code. (Do not leave blank): 
Address PMB no.
Business activity _________________________________________________________
Product or service _______________________________________________________
City State ZIP Code
D Is this corporation filing on a water’s-edge basis pursuant to
R&TC Sections 25110 and 25111 for the current income year? . . .  ! Yes ! No
1 Ordinary income (loss) from trade or business activities from Schedule F (Form 100S, Side 2) or federal Form 1120S, line 21.
If Schedule F (Form 100S, Side 2) was not completed, attach federal Form 1120S, page 1, and supporting schedules . . . . . . .  1
2 Foreign or domestic tax based on income or profits and California franchise or income tax deducted . . . . . . .  2
3 Interest on government obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
4 Net capital gain from Schedule D (100S), Section A & Section B. Attach Schedule D (100S), see instructions  4
5 Depreciation and amortization adjustments. Attach Schedule B (100S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
State 6 Portfolio income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
Adjust-
ments
7 Other additions. Attach schedule(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
8 Total. Add line 1 through line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678901234
 8
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9 Deductible dividends. Attach Schedule H (100S) . . . . . . . . . . . . . . . . . .  9 123456789012345678901234
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10 Water’s-edge dividend deduction. Attach Schedule H (100S) . . . . . . . . .  10 123456789012345678901234
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11 Contributions. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
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12 EZ, LAMBRA, or TTA business expense and net interest deduction . . . .  12 123456789012345678901234
13 Other deductions. Attach schedule(s) . . . . . . . . . . . . . . . . . . . . . . . . . . .  13 123456789012345678901234
14 Total. Add line 9 through line 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
15 Net income (loss) after state adjustments. Subtract line 14 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
16 Net income (loss) for state purposes. Use Schedule R if apportioning income . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678901234
 16
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17 R&TC Section 23802(e) deduction. See instructions . . . . . . . . . . . . . . .  17 123456789012345678901234
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Calif. 18 Net operating loss carryover deduction. See instructions . . . . . . . . . . . .  18
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Net 123456789012345678901234
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Income 19 EZ, LARZ, TTA, or LAMBRA NOL carryover deduction. See instructions .  19 123456789012345678901234
20 Disaster loss carryover deduction. See instructions . . . . . . . . . . . . . . . .  20 123456789012345678901234
21 Net income for tax purposes. Combine line 17 through line 20 and subtract from line 16 . . . . . . . . . . . . . . . .  21
22 Tax. ______% x line 21 (at least minimum franchise tax plus QSub annual tax(es), if applicable). See instructions 123456789012345678901234
 22
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23 Enter credit name __________________code no. __ __ __ and amount 23 123456789012345678901234
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24 Enter credit name __________________code no. __ __ __ and amount 24 123456789012345678901234
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25 Enter credit name __________________code no. __ __ __ and amount 25
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26 To claim more than three credits, see instructions . . . . . . . . . . . . . . . . .  26
Taxes 27 Add line 23 through line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
28 Balance. Subtract line 27 from line 22 (at least minimum franchise tax plus QSub annual tax(es), if applicable) . . . . . . 123456789012345678901234
 28
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29 Tax from Schedule D (100S). Attach Schedule D (100S). See instructions  29
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30 Excess net passive income tax. See instructions . . . . . . . . . . . . . . . . . .  30 123456789012345678901234
31 Total tax. Add line 28 through line 30 . . . . . . . . . . . . . . . . . . . . . . . . . . .  31 123456789012345678901234
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32 Additional SOS prepayment tax. See instructions . . . . . . . . . . . . . . . . . .  32 123456789012345678901234
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33 Adjusted total tax. Add line 31 and line 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678901234
 33
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34 Overpayment from prior year allowed as a credit . . . . . . . . . . . . . . . . . .  34 123456789012345678901234
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35 1999 estimated tax payments/excess SOS prepayment tax/QSub payments. See instr.  35 123456789012345678901234
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Pay-
ments 36 Amount paid with extension of time to file return . . . . . . . . . . . . . . . . . .  36
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37 Total payments. Add line 34 through line 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
38 Tax due. If line 33 is more than line 37, subtract line 37 from line 33. Go to line 42 . . . . . . . . . . . . . . . . . . . .  38
39 Overpayment. If line 37 is more than line 33, subtract line 33 from line 37 . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
40 Amount of line 39 to be credited to 2000 estimated tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
Amount
Due or
Refund 41 Amount of line 39 to be refunded. Line 39 less line 40 . . . . . . . . . . . . . . . . . . .  41
42 Penalties and interest. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
  Check if estimate penalty computed using Exception B or C. Attach form FTB 5806.
43 Total amount due. Add line 38 and line 42. Pay with return . . . . . . . . . . . . . . . . . 43

100S99109 Form 100S C1 1999 Side 1


Schedule F Computation of Trade or Business Income. See instructions.
1 a) Gross receipts or sales _______________ b) Less returns and allowances ________________ Balance . 1c
2 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Income
4 Net gain (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
6 Total income (loss). Combine line 3 through line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Compensation of officers. Attach schedule. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
9 Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11
Deduc-
tions 12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 a) Depreciation ____________ b) Less depreciation reported elsewhere on return ____________ Balance  14
15 Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 Pension, profit-sharing, etc. plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19 a) Total travel and entertainment _______________________________ b) Deductible amount . . . . . . . . . . . 19b
20 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
21 Total deductions. Add line 7 through line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
22 Ordinary income (loss) from trade or business. Subtract line 21 from line 6. Enter here and on Side 1, line 1  22
Schedule V Cost of Goods Sold
1 Inventory at beginning of year . . . . . . . . . . . . . 5 Other costs. Attach schedule . . . . . . . . . . . . . .
2 Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . .  6 Total. Add line 1 through line 5 . . . . . . . . . . . . .
3 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . .  7 Inventory at end of year . . . . . . . . . . . . . . . . . .
4 Other IRC Sec. 263A costs. Attach schedule .  8 Cost of goods sold. Subtract line 7 from line 6 
Was there any substantial change in the manner of determining quantities, costs, or valuations between opening and closing inventory? . . . . . .  Yes  No
If “yes,’’ attach an explanation. Enter California seller’s permit number, if any _____________________ Method of inventory valuation _________________
Check if the LIFO inventory method was adopted this income year for any goods. If checked, attach federal Form 970 . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
If the LIFO inventory method was used for this income year, enter the amount of closing inventory computed under LIFO . . . . . . . ____________________
Schedule J Add-On Taxes or Recapture of Tax Credits. See instructions.
1 LIFO recapture due to S corporation election (IRC Sec. 1363(d) deferral: $__________________) . . . . . . . . . . . . . . . . .  1
2 Interest computed under the look-back method for completed long-term contracts (attach form FTB 3834) . . . . . . . . . .  2
3 Interest on tax attributable to installment: a) Sales of certain timeshares and residential lots . . . . . . . . . . . . . . . . . . . .  3a
b) Method for nondealer installment obligations . . . . . . . . . . . . . . . . . . . . . .  3b
4 IRC Section 197(f)(9)(B)(ii) election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
5 Credit recapture name:________________________________________________________________ . . . . . . . . . . .  5
6 Combine line 1 through line 5. Revise the amount on Side 1, line 38 or line 39, whichever applies, by this amount.
Write “Schedule J’’ to the left of line 38 or line 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
E Does this return include Qualified Subchapter S Subsidiaries? . . . . .   Yes  No K Effective Date of California S election:  ____________________________
F Date incorporated:__________________  Where: State Country____________ L Accounting method:  (1)  Cash (2)  Accrual (3)  Other
G Maximum number of shareholders in the corporation at any time during M Location of principal accounting records: ________________________________________
the year: ______________________ N “Doing business as’’ name:  __________________________________
H Date business began in California or date income was first derived from O Have all required information returns (e.g., federal Form 1099,
California sources: _______________________________________________ 8300, etc.) been filed with the Franchise Tax Board? . . . . . . . . . . . .  N/A  Yes  No
P Is this corporation apportioning income to California using
I Is the corporation under audit by the IRS or has it been audited Schedule R? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   Yes  No
in a prior year? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   Yes  No Q During the income year, were gross receipts (less returns and
J Effective date of federal S election: _______________________________________ allowances) of this corporation more than $1 million? . . . . . . . . . . . . . . .   Yes  No

R Check here if the corporation does not need tax forms mailed next year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is
Please true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Sign Signature of officer Title Date Telephone
Here  ( )
Preparer’s signature Date Check if self- Paid preparer’s SSN/FEIN/PTIN

 employed 
Paid
Telephone FEIN
Preparer’s Firm’s name
Use Only (or yours, if
self-employed) 
( ) -
and address

Side 2 Form 100S C1 1999 100S99209 For Privacy Act Notice, get form FTB 1131.
Schedule K S Corporation Shareholders’ Shares of Income, Deductions, Credits, etc.
(b) Amount from federal (c) California (d) Total amount
(a) Pro-rata share items Schedule K (1120S) adjustment using California law.
Combine (b) and (c)
where applicable
1 Ordinary income (loss) from trade or business activities . . . . . . . . . . . . . . . . . 
2 Net income (loss) from rental real estate activities . . . . . . . . . . . . . . . . . . . . . . 
3 a Gross income from other rental activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
b Expenses from other rental activities. Attach schedule . . . . . . . . . . . . . . . . .
c Net income (loss) from other rental activities. Subtract line 3b from line 3a 
Income
(Loss) 4 Portfolio income (loss):
a Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
b Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
c Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
d Net short-term capital gain (loss). Attach schedule D (100S) . . . . . . . . . . . . 
e Net long-term capital gain (loss). Attach Schedule D (100S) . . . . . . . . . . . . 
f Other portfolio income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . 
5 Net gain (loss) under IRC Section 1231 (other than due to casualty or theft) . 
6 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
7 Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
8 Expense deduction for recovery property (R&TC Section 17267.2,
Deduc- Section 17267.6, Section 17268 and IRC Section 179).
tions
Attach Schedule B (100S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 Deductions related to portfolio income (loss). Attach schedule . . . . . . . . . . . . 
10 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Invest- 11 a Interest expense on investment debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
ment b (1) Investment income included on line 4a, line 4b, line 4c, and line 4f . . . .
Interest
(2) Investment expenses included on line 9 above . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678
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12 a Low-income housing credit. See instructions. Attach schedule . . . . . . . . . . 1234567890123456789012345678
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b Credits related to rental real estate activities other than on line 12(a). 1234567890123456789012345678
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Tax
Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678
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Credits
c Credits related to other rental activities. See instructions. Attach schedule . 1234567890123456789012345678
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13 Other credits. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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14 a Depreciation adjustment on property placed in service after 12/31/86 . . . . . 1234567890123456789012345678
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Adjust- b Adjusted gain or loss. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678
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ments
c Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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and Tax 1234567890123456789012345678
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d (1) Gross income from oil, gas, and geothermal properties . . . . . . . . . . . . .
Preference
Items
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(2) Deductions allocable to oil, gas, and geothermal properties . . . . . . . . . . 1234567890123456789012345678
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e Other adjustments and tax preference items. Attach schedule . . . . . . . . . . . 1234567890123456789012345678
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15 a Type of income ________________________________________________ 1234567890123456789012345678
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Other b Name of state _________________________________________________ 1234567890123456789012345678
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State
c Total gross income from sources outside California. Attach schedule . . . . . 1234567890123456789012345678
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Taxes
d Total applicable deductions and losses. Attach schedule . . . . . . . . . . . . . . .
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e Total other state taxes. Check one:  Paid  Accrued . . . . . . . . . . . . . . . 
16 a Total expenditures to which an IRC Section 59(e) election may apply . . . . . 123456789012345678901234567890121234567890
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b Type of expenditures ___________________________________________ 123456789012345678901234567890121234567890
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17 Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 Other tax-exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other
Items 19 Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 Total property distributions (including cash) other than dividend
distributions reported on line 22 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678
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21 Other items and amounts not included in line 1 through line 20 above that 1234567890123456789012345678
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are required to be reported separately to shareholders. Attach schedule . . . . . 1234567890123456789012345678
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22 Total dividend distributions paid from accumulated earnings and profits . . . . . 
23 Income (loss) (required only if Schedule M-1 must be completed). Combine
line 1, line 2, and line 3c through line 6. From the result, subtract the sum
of line 7 through line 11a and line 16a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100S99309 Form 100S C1 1999 Side 3


Schedule L Balance Sheets Beginning of income year End of income year
Assets 123456789012345678
(a) (b)
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(c) (d)
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1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678 12345678901234567123456789012345678 12345678901234567
2 a Trade notes and accounts receivable . . . . . . . . . 12345678901234567
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b Less allowance for bad debts . . . . . . . . . . . . . . . 123456789012345678
( ) 123456789012345678
( )
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3 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678 123456789012345678 
4 Federal and state government obligations . . . . . . . 123456789012345678 123456789012345678 123456789012345678
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5 Other current assets. Attach schedule(s) . . . . . . . . 123456789012345678
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6 Loans to shareholders. Attach schedule(s) . . . . . . . 123456789012345678 123456789012345678 
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7 Mortgage and real estate loans . . . . . . . . . . . . . . . . 123456789012345678 123456789012345678
8 Other investments. Attach schedule(s) . . . . . . . . . . 123456789012345678 12345678901234567812345678901234567 123456789012345678
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9 a Buildings and other fixed depreciable assets . . .
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123456789012345678
b Less accumulated depreciation . . . . . . . . . . . . . . ( ) 12345678901234567 ( )123456789012345678

12345678901234567
12345678901234567 123456789012345678
123456789012345678
10 a Depletable assets . . . . . . . . . . . . . . . . . . . . . . . .
b Less accumulated depletion . . . . . . . . . . . . . . . . 123456789012345678( ) 12345678901234567
( )
12345678901234567812345678901234567
123456789012345678 12345678901234567123456789012345678
12345678901234567
11 Land (net of any amortization) . . . . . . . . . . . . . . . . 
12345678901234567
12345678901234567 123456789012345678
123456789012345678
12 a Intangible assets (amortizable only) . . . . . . . . . .
b Less accumulated amortization . . . . . . . . . . . . . 123456789012345678 123456789012345678
( ) 123456789012345678
123456789012345678
( )
123456789012345678
13 Other assets. Attach schedule(s) . . . . . . . . . . . . . . 123456789012345678
123456789012345678
123456789012345678
12345678901234567812345678901234567 123456789012345678
14 Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678  123456789012345678 123456789012345678

123456789012345678
123456789012345678 12345678901234567
12345678901234567123456789012345678
123456789012345678 123456789012345678
123456789012345678
Liabilities and shareholders’ equity 123456789012345678 123456789012345678
15 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678 123456789012345678
123456789012345678
16 Mortgages, notes, bonds payable in less than 1 year123456789012345678
123456789012345678 123456789012345678
123456789012345678
123456789012345678 123456789012345678
17 Other current liabilities. Attach schedule(s) . . . . . . 123456789012345678 123456789012345678 123456789012345678
123456789012345678
18 Loans from shareholders. Attach schedule(s) . . . . 123456789012345678 123456789012345678 123456789012345678
123456789012345678 
19 Mortgages, notes, bonds payable in 1 year or more 123456789012345678 123456789012345678 123456789012345678
123456789012345678 
123456789012345678
123456789012345678 123456789012345678
123456789012345678
20 Other liabilities. Attach schedule(s) . . . . . . . . . . . .
123456789012345678 123456789012345678
21 Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678  123456789012345678
123456789012345678 
123456789012345678
22 Paid-in or capital surplus . . . . . . . . . . . . . . . . . . . . 123456789012345678 123456789012345678
123456789012345678 
123456789012345678
23 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678
123456789012345678 
123456789012345678
123456789012345678 123456789012345678
123456789012345678
24 Adjustments to shareholders’ equity. Attach schedule(s)
123456789012345678 123456789012345678
25 Less cost of treasury stock . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678 ( )123456789012345678
123456789012345678 ( )
26 Total liabilities and shareholders’ equity . . . . . . . 123456789012345678 123456789012345678
123456789012345678
Schedule M-1 Reconciliation of income (loss) per books with income (loss) per return.
Do not complete this schedule if the amount on Schedule L, line 14, column (d), is less than $25,000.
1 Net income per books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Income recorded on books this year not included on
2 Income included on Schedule K, line 1 through line 6, Schedule K, line 1 through line 6 (itemize)
not recorded on books this year (itemize)_________________ a Tax-exempt interest $ ________________________
________________________________________________ 123456789012345678  12345678901234567
123456789012345678
123456789012345678
_______________________________________
12345678901234567
12345678901234567
3 Expenses recorded on books this year not included on 123456789012345678
123456789012345678
6 Deductions included on Schedule K, lines 1 through 11 and 12345678901234567
12345678901234567
Schedule K, line 1 through line 11a and line 16a (itemize) 123456789012345678
123456789012345678
line 16a, not charged against book income this year (itemize) 12345678901234567
12345678901234567
a Depreciation . . . . . . . . . $ ________________________ 123456789012345678
123456789012345678 a Depreciation . . . . . . . $ ______________________ 12345678901234567
12345678901234567
b State taxes . . . . . . . . . . . $ ________________________ 123456789012345678
123456789012345678 b State tax refunds . . . . $ ______________________ 12345678901234567
c Travel and entertainment $ ________________________ 123456789012345678
123456789012345678 __________________________________________ 
________________________________________________ 7 Total. Add line 5 and line 6 . . . . . . . . . . . . . . . . . . . . . . . . .
4 Total. Add line 1 through line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Income (loss) (Schedule K, line 23, col. d). Line 4 less line 7
Schedule M-2 CA accumulated adjustments account, other adjustments account, and other retained earnings. See instructions.
Important: Use California figures and federal procedures. (a) Accumulated (b) Other adjustments (c) Other retained earnings
adjustments account account (see instructions)
1 Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1234567890123456789012345678901212
1234567890123456789012345678901212
2 Ordinary income from Form 100S, Side 1, line 1 . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678901212
3 Other additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678901212
1234567890123456789012345678901212
4 Loss from Form 100S, Side 1, line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( ) 1234567890123456789012345678901212
1234567890123456789012345678901212
5 Other reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( ) ( )
6 Combine line 1 through line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12345678901234567
12345678901234567
7 Distributions other than dividend distributions . . . . . . . . . . . . . . . . . . . . . .  12345678901234567
12345678901234567
8 Balance at end of year. Subtract line 7 from line 6 . . . . . . . . . . . . . . . . . . . 
9 Retained earnings at end of year. Add line 8, column (a) through column (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
  If the corp. has C corp. E&P at the end of the income year, check the box and enter the amount. See instructions . . . . . . . . 
Side 4 Form 100S C1 1999 100S99409
INCOME YEAR
Qualified Subchapter S Subsidiary (QSub) CALIFORNIA SCHEDULE

1999 Information Worksheet QS


Part I
Name of parent corporation California corporation number Federal employer identification number (FEIN)

Part II
(a) (b) (c) (d) (e) (f)
Name of QSub California Federal employer Effective date of Date of QSub Amount of
corporation identification federal QSub annual tax QSub annual
number number election payment tax paid
(MM/DD/YY) (MM/DD/YY)

General Information Specific Instructions Enter the effective date of the federal QSub
election made for the subsidiary in column
For income years beginning on or after (d). An election made by the parent S
January 1, 1997, California law has con- Part I corporation under IRC Section 1361(b)(3) to
formed to the federal treatment of Qualified Enter in Part I the name of the parent treat a corporation as a qualified subchapter
Subchapter S Subsidiaries (QSub), with S corporation, the S corporation’s California S subsidiary for federal purposes is treated as
certain exceptions. The QSub is subject to an corporation number (7 digits), and the Federal a binding election for California purposes. A
annual tax of $800 which is paid by the S Employer Identification Number (FEIN) separate election cannot be filed for
corporation’s parent. See General Information (9 digits). California. If the effective date falls on a date
DD, Qualified Subchaper S Subsidiary (QSub), other than the first day of the subsidiary’s
for more information. Part II income year, the subsidiary must file a short
An S corporation parent must complete the Enter in Part II the information for each QSub period return if it was subject to tax in
Schedule QS and attach it to the Form 100S. required to be included in the California California prior to the effective date.
S Corporation Franchise or Income Tax The S corporation parent is required to pay
Purpose Return. In column (a), enter the name of each $800 annual tax for each QSub it owns that is
The Qualified Subchapter S Subsidiary QSub included in this return. If the QSub has incorporated, qualified, or doing business in
Information Worksheet is used by the or had a California corporation number, enter California. The QSub annual tax is due and
S corporation parent of a QSub to inform the the number in column (b). If the QSub has or payable when the S corporation’s first
Franchise Tax Board (FTB) of the QSub(s) it had a FEIN, enter the number in column (c). If estimated tax payment is due. If the QSub is
owns. This will notify the FTB that the QSub the corporation does not have a California acquired during the income year, the QSub
items of income, deductions, and credits will corporation number and/or a FEIN, enter annual tax is due with the S corporation’s next
be included in the parent’s return and the “none.” estimated tax installment. Enter the date of
QSub will not be filing a separate California payment in column (e) and amount of QSub
franchise or income tax return. annual tax paid in column (f).

QS99109 Schedule QS 1999


THIS PAGE INTENTIONALLY LEFT BLANK

visit our website:

www.ftb.ca.gov

Page 34 Form 100S Booklet 1999


INCOME YEAR
Net Operating Loss (NOL) Computation and NOL CALIFORNIA FORM

1999 and Disaster Loss Limitations — Corporations 3805Q


Attach to your California tax return (Form 100, Form 100S, or Form 109).
Corporation name California corporation number

During the year the corporation incurred the NOL, the corporation was a(n): m C Corporation m S Corporation FEIN

m Exempt Organization m Limited Liability Company (classified as corporations)


If the corporation previously filed California returns under another corporate name, enter the corporation name and California corporation number:
_________________________________________________________________________________________________________________________________

Note: If the corporation is included in a combined report of a unitary group, see instructions, General Information C.

PART I Computation of current year NOL. If you do not have a current year NOL, go to Part II.
1 Net loss from Form 100, line 18; Form 109, line 2; or Form 100S, line 16.
Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 _________________
2 1999 disaster loss from line 1. Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 _________________
3 Subtract line 2 from line 1. If zero or less, enter -0- and see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 _________________
4 a Enter the amount of the loss incurred by a new business included in line 3 . . . . . . . . . . . . . . . . . . 4a_________________
b Enter the amount of the loss incurred by an eligible small business included in line 3 . . . . . . . . . . . 4b_________________
c Add line 4a and line 4b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4c_________________
5 Subtract line 4c from line 3. If zero, skip to line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 _________________
6 General NOL. Multiply line 5 by 50% (.50) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 _________________
7 1999 NOL carryover. Add line 2, line 4c, and line 6. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 _________________

PART II NOL carryover and disaster loss carryover limitations. See Instructions.
(g)
1 Net income (loss) – Enter the amount from Form 100, line 18; Form 109, line 2; Available balance

or Form 100S, line 16 less line 17 (but not less than -0-) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior Year NOLs
(a) (b) (c) (d) (e) (f) (h)
Year of Code (See instructions for Type of NOL Initial loss Carryover Amount used Carryover to 2000
loss Part II, column (b)) (See below) from 1998 in 1999 (col. (e) - col. (f))

Current Year NOLs


(col. (d) - col. (f))

3 1999 19 or 20 DIS

4 1999

1999

1999

1999

Type of NOL: General (GEN), New Business (NB), Eligible Small Business (ESB), Title 11 (T11), or Disaster (DIS).

PART III 1999 NOL deduction


1 Total the amounts in column (f) from Part II, line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 __________________
2 Enter the total amount from column (f) that represents disaster loss carryover deduction here and on Form 100,
line 21; or Form 100S, line 20. Form 109 filers enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 __________________
3 Subtract line 2 from line 1. Enter this amount on Form 100, line 19; Form 109, line 4; or form 100S, line 18 . . . . . . . . . . . . . . 3 __________________

3805Q99109 FTB 3805Q 1999


1999 Instructions for Form FTB 3805Q
Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations – Corporations
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).

General Information Only a portion of the NOL may be eligible for carryover to D Water’s-Edge
future years because California has established different
In general, California tax law conforms to the Internal Each taxpayer’s NOL carryover is limited to the amount
categories of NOL. See General Information F for more
Revenue Code (IRC) as of January 1, 1998. However, there determined by recomputing the income and factors of the
information.
are continuing differences between California and federal original worldwide combined reporting group as if the
tax law. California has not conformed to most of the Note: If the corporation has a current year NOL under water’s-edge election had been in force for the year of the
changes made to the IRC by the federal Internal Revenue R&TC Section 24416.2, 24416.5, and 24416.6 (relating to loss. The NOL carryover may not be increased as a result
Service (IRS) Restructuring and Reform Act of 1998 EZ, LAMBRA, or TTA NOLs), it must elect on its return for of the recomputation.
(Public Law 105-206) and has not conformed to any of the the income year in which the loss is incurred to carry over
changes made by the Tax and Trade Relief Extension Act of the loss either under that section or the loss under R&TC E S Corporations
1998 (Public Law 105-277). Section 24416 (relating to general NOLs). If the former An S corporation is allowed to carry over a loss that is
election is made, you must use the applicable economic incurred during a year in which it has in effect a valid
In 1998, the Franchise Tax Board (FTB) implemented the development area (EDA) form to calculate the NOL. The election to be treated as an S corporation. The loss is also
new principal business activity (PBA) code chart that is election is irrevocable. Get form FTB 3805Z, form passed through to the shareholders in the year incurred
based on the North American Industry Classification FTB 3807, or form FTB 3809 for more information. and is taken into account in determining each
System (NAICS) in the corporate tax booklets. However,
shareholder’s NOL carryover, if any.
the California R&TC still uses the Standard Industrial B Apportioning Corporations
Codes (SIC) for purposes of the new business and eligible If a corporation changes from a C corporation to an
The loss carryover for a corporation that apportions
small business NOL. S corporation, the loss incurred while the corporation was
income is the amount of the corporation’s loss, if any, after
a C corporation may not be applied to offset income
The Los Angeles Revitalization Zone (LARZ) expired on adding income or loss apportioned to California with
subject to the 1.5% tax imposed on an S corporation.
December 1, 1998. No new LARZ NOLs may be generated. income or loss allocable to California under Chapter 17 of
However, losses incurred while the corporation was a
However, LARZ NOL carryovers can be utilized to the the Bank and Corporation Tax Law. The loss carryover may
C corporation may be applied against the built-in gains
extent of business income apportioned to the former be deducted from income of that corporation apportioned
which is subject to tax. If the corporation incurred losses
LARZ. Get FTB 3806, Los Angeles Revitalization Zone and allocable to California in subsequent years.
while it was a C corporation and an S corporation, and the
Business Booklet, for more information.
C Combined Reporting S corporation is using C corporation losses to offset its
A Purpose Corporations that are members of a unitary group filing a
built-in gains, the corporation must complete two forms
FTB 3805Q and attach them to Form 100S, California
Use form FTB 3805Q to figure the current year NOL and to single return must use intrastate apportionment, separately
S Corporation Franchise or Income Tax Return. The
limit NOL and disaster loss carryover deductions. computing the loss carryover for each corporation in the
unused losses incurred while the corporation was a
Note: Exempt trusts should use form FTB 3805V, Net group using its individual apportionment factors (R&TC
C corporation are “unavailable” except as provided for
Operating Loss (NOL) Computation and NOL and Disaster Section 25108). Complete a separate form FTB 3805Q for
above unless and until the S corporation reverts back to a
Loss Limitations – Individuals, Estates, and Trusts. EACH taxpayer included in the combined report. Attach the
C corporation or the carryover period expires.
form FTB 3805Q for EACH taxpayer member included in
The California NOL is figured the same way as the federal
NOL, except that for California:
the combined report BEHIND the combined form F Types of NOLs
FTB 3805Q for all members.
• An NOL may be carried over only to future years (no The following table shows the types of NOL available, a
carrybacks are allowed); and Unlike the loss treatment for a federal consolidated return, a description, and the percentages and carryover periods for
• The carryover period and the amount to be carried over California loss carryover for one member in a combined each type of loss.
differ from federal allowances. report may not be applied to the income of another member
included in the combined report. Get FTB Pub. 1061,
Guidelines for Corporations Filing a Combined Report, for
more information.

Year NOL NOL Carryover


Type of NOL and Description incurred carried over period
General NOL (GEN) 1993-1999 50% 5 Years
Available as a result of a loss incurred in years after 1986 and allowed under R&TC Section 24416. 1987-1992 None Expired
Does not include losses incurred from activities that qualify as a new business or an eligible small business, and EZ,
LARZ, LAMBRA, TTA, or disaster loss.
New Business NOL (NB)
Get FTB Legal Ruling 96-5 for more information.
Incurred by a trade or business that first commenced in California on or after January 1, 1994. Year of
During the first three years of business, 100% of an NOL may be carried over for an extended period, but only to the extent of the net operation
loss from the new business. The term ‘’new business’’ also includes any taxpayer engaged in biopharmaceutical activities or other
biotechnology activities described in Codes 2833 to 2836 of the SIC Manual. It also includes any taxpayer that has not received Year 1 100% 8 Years
regulatory approval for any product from the United States Food and Drug Administration. See R&TC Section 24416(g)(7)(A) for Year 2 100% 7 Years
more information. Year 3 100% 6 Years
If a taxpayer’s NOL exceeds the net loss from the new business, the excess may be carried over as a general NOL.
If a taxpayer acquires assets of an existing trade or business which is doing business in California, the trade or business thereafter
conducted by the taxpayer or related person is not a new business if the fair market value (FMV) of the acquired assets exceeds 20%
of the FMV of the total assets of the trade or business conducted by the taxpayer or any related person. To determine whether the
acquired assets exceed 20% of the total assets, include only the assets that continue to be used in the same trade or business activity
as were used immediately prior to the acquisition. For this purpose, the same trade or business activity means the same division
classification listed in the SIC Manual.
If a taxpayer or related person has been engaged in a trade or business in California within the preceding 36 months and thereafter
commences an additional trade or business in California, the additional trade or business qualifies as a new business only if the
activity is classified under a different division classification of the SIC Manual.
Business activities conducted by the taxpayer or related persons wholly outside California are disregarded in determining whether the
trade or business conducted within California is a new business. Related persons are defined in IRC Sections 257 or 318.
(continued on next page)

Page 36 FTB 3805Q 1999


Year NOL NOL Carryover
Type of NOL and Description (continued) incurred carried over period
Eligible Small Business (ESB) Income
Get Legal Ruling 96-5 for more information. years
Incurred in a trade or business activity that has gross receipts, less returns and allowances, of less than $1 million during the beginning 100% 5 Years
income year. on or after
100% of an NOL may be carried over, but only to the extent of the net loss from the eligible small business. If a taxpayer’s NOL 1/1/94
exceeds the net loss from an eligible small business, the excess may be carried over at 50% as a general NOL.
The corporation should use the same SIC Code division classifications described in the new business NOL section to determine what
constitutes a trade or business activity.
Title 11 Bankruptcy (T11)
1987-1993 50% 10 Years
If the corporation is claiming an NOL carryover deduction under the provisions of R&TC Section 24416(e)(4)(A), enter the carryover
amount on Side 1, Part II, line 2.
Disaster Losses (DIS)
See list 100% 5 Years
Casualty losses in areas of California declared by the President of the United States or the Governor of California to be in a state of
in the 50% 10 Years
disaster.
Instructions
An election may be made under IRC 165(I) permitting the disaster loss to be taken against the previous year’s income. If you made for Part II
this election, see current year NOLs, Part II, line 3. If special legislation is enacted under R&TC Section 24347.5 and the specified
disaster loss exceeds income in the year it is claimed, 100% of the excess may be carried over for up to 5 income years. If any excess
loss remains after the 5-year period, 50% of that remaining loss may be carried over for up to 10 additional incomes years.

Specific Line Instructions Prior Year NOLs Column (c) – Enter the type of NOL from the table in
Column (a) – Enter the year the loss was incurred. General Information F, Types of NOLs. If using an EDA
NOL, get the applicable form for the NOL type.
Part I Column (b) – If the loss is due to a disaster, enter the
disaster code from the list below. If the loss is from a new Column (d) – Enter the amount of the initial loss for the
Use Part I of this form to figure the current year NOL
business or eligible small business, enter the SIC Code for year given in column (a).
eligible for carryover.
the new business or eligible small business from the Column (e) – Enter the carryover amount from the 1998
Line 2 – If the corporation incurred a disaster loss during Standard Industrial Classification Manual. DO NOT enter form FTB 3805Q, Part II, column (h).
1999, enter the amount of the loss on this line. Enter as a the code from the PBA chart available in the 1999
positive number. Column (f) – Enter the smaller of the amount in
Form 100 or Form 100S booklets. If the loss was from an column (e) or the amount in column (g) of the previous
Line 3 – If the amount is zero or less, the corporation S Corporation, enter the entity’s federal employer line.
does not have a current year general NOL. Go to Part II for identification number from Schedule K-1 (100S).
computation of general NOL carryovers, the current year Column (g) – Enter the result of subtracting column (f)
Following is a list of events that have been declared from the balance in column (g) of the previous line.
disaster loss, and carryover from disaster losses. disasters:
Line 7 – Go to Part II, Current Year NOLs, to record your Column (h) – Subtract the amount in column (f) from the
1999 NOL carryover to 2000. Complete columns (b), (c), Year Code Event amount in column (e) and enter the result.
(d), and (h) only, for each type of loss that you incurred. 1999 20 Wildfires and other related casualties* Current Year NOLs
1999 19 Winter Freeze 98/99
If you have a eligible qualified new business or a small 1998 Line 3, Column (d) – Enter your 1999 disaster loss from
business and your NOL is greater than the amount of net 1998 18 El Niño 98 Part I, line 2. If you did not elect to deduct your disaster
loss from such a business, use the general NOL first. If 1997 17 Disaster floods 96/97 loss in the prior year:
you operate one or more new businesses and one or more 1996
• In column (f), enter the disaster loss used in 1999.
eligible small businesses, determine the amount of the 1996 16 Firestorms 96*
• In column (h), enter column (d) less column (f).
loss attributable to the new business(es), the small 1995 15 Storms, flooding, and other related casualties
business(es), and the general NOL in the following 1994 14 San Luis Obispo fire and other related casualties If you elected to deduct your 1999 disaster loss on your
manner. The NOL is first treated as a new business NOL to 1994 13 Los Angeles, Orange, and Ventura County earthquake 1998 return, and you have an excess amount to be carried
the extent of the loss from the new business. Any and other related casualties over to 1999, enter the carryover amount from your 1998
remaining NOL is then treated as an eligible small 1993 12 Storms, floods, and other related casualties form FTB 3805Q, Part II, line 3, column (h), in Part II,
business NOL to the extent of the loss from the eligible 1992 11 Wildfires and other related casualties in Calaveras and line 2, column (e). Use the Prior Year NOL instructions for
Shasta Counties column (a) through column (h) except:
small business. Any further remaining NOL is treated as an
1992 10 San Bernardino County earthquake and other related
NOL under the general rules. casualties • In column (a), enter 1999;
• In column (b), enter 19 or 20; and
Part II 1992 9 Riots, arson, and related casualties in California during
April and May • In column (d), enter the total disaster loss incurred in
Use Part II to limit current year disaster loss and loss 1992 8 Humboldt County earthquake and related casualties 1999.
carryover deductions to current year income and to record 1992 7 Storms, floods, and other related casualties
all of the corporation’s loss carryover information. 1991 6 Oakland/Berkeley fire and other related casualties
If the corporation has losses from more than one source 1990 5 Santa Barbara fires and other related casualties
and/or more than one category, the corporation must 1989 4 Bay Area earthquake and other related casualties
compute the allowable NOL carryover for each loss 1987 3 Forest fires, October earthquake, and other related
casualties
separately.
1986 2 Storms, floods, and other related casualties
When to use an NOL carryover 1985 1 Forest fires and related casualties occurring in
California
Use your NOLs in the order the losses were incurred.
*Carryover period limited to 5 years at 50%. No special legislation
There is no requirement to deduct NOL carryovers before was enacted.
disaster loss carryovers.

FTB 3805Q 1999 Page 37


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visit our website:

www.ftb.ca.gov

Page 38 Form 100S Booklet 1999


YEAR
CALIFORNIA FORM

1999 Water’s-Edge Cover Sheet 2426


For calendar year 1999 or fiscal year beginning month ________ day ________ year 1999, and ending month ________ day ________ year ________

Attach this form to the front of Form 100 or Form 100S.

Corporation and Contract Information


Corporation name California corporation number

MONTH DAY YEAR MONTH DAY YEAR

THE WATER’S-EDGE CONTRACT PERIOD BEGINS ___________________________ AND ENDS __________________________

Indicate which of the following forms are included with this return by checking all applicable boxes:

FTB 2416 FTB 2424 Form 100-WE Copy of Form


100-WE
from prior year
election

THIS FORM MUST BE ATTACHED TO THE FRONT OF FORM 100 OR FORM 100S
Signature of officer Date

Please
Print or type name of signing officer Telephone
Sign
Here ( )
Print or type title

General Information General Instructions Attach a copy of the applicable contract to


the front of all subsequent returns filed
Form FTB 2426 should be attached to the during the contract period.
Purpose front of Form 100 or Form 100S. California Corporation Number for Unitary
Use form FTB 2426 as a cover sheet Do not attach form FTB 1116, Notice of Group Single Return
whenever a corporation files a return Nonrenewal of Water’s-Edge Contract, or Enter the California corporation number of
determining its California income on a form FTB 1117, Request to Terminate the key corporation designated in the
water’s-edge basis. Water’s-Edge Election, to this form. Mail election to file a Unitary Group Single Return.
each of these forms separately from any
other form.
For a proper election, Form 100-WE,
Water’s-Edge Contract, should be attached
to the original return. Any taxpayer electing
water’s-edge must be in good standing with
both the Franchise Tax Board and the
California Secretary of State.

242699109 FTB 2426 C2 1999


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visit our website:

www.ftb.ca.gov

Page 40 Form 100S Booklet 1999


INCOME YEAR
CALIFORNIA SCHEDULE

1999 S Corporation Depreciation and Amortization B (100S)


For use by S corporations only. Attach to Form 100S.
Corporation name as shown on Form 100S California corporation number

Part I Depreciation. Use additional sheet(s) if necessary.


1 Enter federal depreciation from federal Form 4562, line 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 California depreciation:
(a) Description of property (b) Date (c) Cost or (d) Depreciation (e) Method (f) Life (g) Depreciation
acquired other basis allowed or allowable of figur- or rate for this year
in earlier years ing dep.

3 Add the amounts on line 2, column (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


4 Subtract line 3 from line 1. Enter here and on the applicable line of Schedule K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Enter the IRC 179 expense. Enter here and on Form 100S, Side 1, line 13. Do not enter more than $19,000 . . . . . . . . . . . . 5
Part II Amortization. Use additional sheet(s) if necessary.
1 Enter federal amortization from federal Form 4562, line 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 California amortization:
(a) Description of property (b) Date (c) Cost or (d) Amortization (e) R&TC (f) Period or (g) Amortization
acquired other basis allowed or allowable section percentage for this year
in earlier years

3 Add the amounts on line 2, column (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


4 California amortization adjustment. Subtract line 3 from line 1. Enter here and on the applicable line of Schedule K . . . . . . 4
Part III Depreciation and Amortization Adjustment.
Combine amounts on Part I, line 4 and Part II, line 4. Enter here and on Form 100S, Side 1, line 5 . . . . . . . . . . . . . . . . . . . . .

INCOME YEAR CALIFORNIA SCHEDULE

1999 S Corporation Tax Credits C (100S)


(a) Credit amount (b) Carryover from (c) Credit used this (d) Tax balance
(e) Credit carryover
See instructions for Form 100S, General Information Z, AA, and BB. limited to 1/3 prior year
to 2000 year (not more
Be sure to complete and attach all supporting credit forms. 1234567890123456789012345678901212
of total
1234567890123456789012345678901212 123456789012345
123456789012345
than (a) + (b))
1 Regular tax from Form 100S, Side 1, line 22 . . . . . . . . . . . . . . . . 1234567890123456789012345678901212 123456789012345
1234567890123456789012345678901212 123456789012345
2 Minimum franchise tax plus QSub annual tax(es) if applicable . . 1234567890123456789012345678901212
1234567890123456789012345678901212 123456789012345
123456789012345
3 Subtract line 2 from line 1. If zero or less, enter -0- . . . . . . . . . . . 1234567890123456789012345678901212 123456789012345
4 Code: ____ ____ ____ Credit Name:_______________________
5 Code: ____ ____ ____ Credit Name:_______________________
6 Code: ____ ____ ____ Credit Name:_______________________
7 Code: ____ ____ ____ Credit Name:_______________________
8 Code: ____ ____ ____ Credit Name:_______________________
9 Code: ____ ____ ____ Credit Name:_______________________
10 Code: ____ ____ ____ Credit Name:_______________________12345678901234567890123456789012123456789012345678901234567
12345678901234567890123456789012123456789012345678901234567
11 Enter the credit amounts on Form 100S, Side 1, line 23, 12345678901234567890123456789012123456789012345678901234567
12345678901234567890123456789012123456789012345678901234567
line 24, and line 25. If more than three credits, enter the total
12345678901234567890123456789012123456789012345678901234567
12345678901234567890123456789012123456789012345678901234567
12345678901234567890123456789012123456789012345678901234567
remaining credits on Form 100S, Side 1, line 26 . . . . . . . . . . . . . 12345678901234567890123456789012123456789012345678901234567

B100S99109 Schedules B/C/D/H (100S) 1999 Side 1


INCOME YEAR
S Corporation CALIFORNIA SCHEDULE

1999 Capital Gains and Losses and Built-In Gains D (100S)


Corporation name as shown on Form 100S California corporation number

SECTION A – 8.84% Tax on Certain Capital Gains and Built-In Gains


Part I Short-Term Capital Gains and Losses – Assets Held One Year or Less. Use additional sheet(s) if necessary.
1 (a) Description of property (b) Date acquired (c) Date sold (d) Gross sales price (e) Cost or other basis (f) Gain (loss)
(Example: 100 shares 7% preferred of “Z” Co.) (mo., day, yr.) (mo., day, yr.) plus expense of sale ((d) less (e))

2 Short-term capital gain from form FTB 3805E, line 26 or line 37 and federal Form 8824. See instructions . . . . . . . . . . . . . 2
3 a Net short-term capital gain (loss). Combine line 1 and line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3a
b Tax on short-term capital gain(s) included on line 21 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3b
c Subtract line 3b from line 3a. Enter this amount on Form 100S, Schedule K, column (d), line 4d or line 6 . . . . . . . . . . . 3c
Part II Long-Term Capital Gains and Losses – Assets Held More Than One Year. Use additional sheet(s) if necessary.
4
5 Long-term capital gain from form FTB 3805E, line 26 or line 37 and federal form 8824. See instructions . . . . . . . . . . . . . . 5
6 a Net long-term capital gain (loss). Combine line 4 and line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6a
b Tax on long-term capital gain(s) included on line 15 and line 21 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b
c Subtract line 6b from line 6a. Enter this amount on Form 100S, Schedule K, column (d), line 4e or line 6 . . . . . . . . . . . 6c
Part III Tax on Certain Capital Gains. See instructions before completing this part.
7 Enter IRC Section 1231 gain from Schedule D-1, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Net long-term capital gain (loss). Combine line 6a and line 7 and enter here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Note: If the corporation is liable for the excess net passive income tax (Form 100S, Side 1, line 30) or the built-in
gains tax (Part IV below), see instructions for line 9.
9 Net capital gain. Enter excess net long-term capital gain (line 8) over net short-term capital loss (line 3c) . . . . . . . . . . . . . 9
10 Statutory minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 $25,000
11 Subtract line 10 from line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Multiply line 11 by 8.84% (calendar year financial S corporations must use 10.84%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Taxable income. See instructions for federal Schedule D (Form 1120S). Use California amounts . . . . . . . . . . . . . . . . . . . . 13
14 Multiply line 13 by 8.84% (calendar year financial S corporations must use 10.84%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 Tax on certain capital gains. Enter smaller of line 12 or line 14 here and on Form 100S, Side 1, line 29 . . . . . . . . . . . . . . . 15
Part IV Tax on Built-In Gains. See instructions before completing this part.
16 Excess of recognized built-in gains over recognized built-in losses attributable to California. Attach computation schedule 16
17 Taxable income. See the instructions for federal Schedule D (Form 1120S). Use California amounts . . . . . . . . . . . . . . . . . 17
18 Enter the smaller of line 16 or line 17 or computed amount. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19 Net operating loss (NOL) carryover deduction from years the corporation was a C corporation (IRC Section 1374(b)(2))
(limited to the amount allowable for state purposes.) Attach the NOL form from the appropriate year. See instructions . . . 19
20 Subtract line 19 from line 18. If zero or less, enter -0- here and on line 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21 Tax on built-in gains. Multiply line 20 by 8.84% (financial S corps. must use 10.84%). Enter here and on Form 100S, Side 1, line 29 21
Part V Net Capital Gains (Losses)
Combine amounts on Part I, line 3a and Part II, line 6a. Enter here and on Form 100S, Side 1, line 4 . . . . . . . . . . . . . . . . . . . . .
SECTION B – 1.5% Tax on Capital Gains
Part I Short Term Capital Gains and Losses – Assets Held One Year or Less. Use additional sheet(s) if necessary.
1
2 a Short-term capital gain from form FTB 3805E, line 26 or line 37 and federal Form 8824. See instructions . . . . . . . . . . . . . 2a
b Unused capital loss carryover from 1998 attributable to the S corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2b
3 Net short-term capital gain (loss). Combine line 1 through line 2b. Enter here and on Form 100S, Schedule K, column (d), line 4d or line 6 . 3
Part II Long-Term Capital Gains and Losses – Assets Held More Than One Year. Use additional sheet(s) if necessary.
4
5 Enter gain from Schedule D-1, line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Long-term capital gain from form FTB 3805E, line 26 or line 37 and federal Form 8824. See instructions . . . . . . . . . . . . . 6
7 Net long-term capital gain (loss). Combine line 4 through line 6. Enter here and on Form 100S, Schedule K,
column (d), line 4e or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Enter excess of net short-term capital gain (line 3) over net long-term capital loss (line 7) . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Net capital gain. Enter excess of net long-term capital gain (line 7) over net short-term capital loss (line 3) . . . . . . . . . . . . 9
10 Total line 8 and line 9. Enter here and on Form 100S, Side 1, line 4. Note: If losses exceed gains, carry forward
losses to 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Side 2 Schedules B/C/D/H (100S) 1999 D100S99209


INCOME YEAR
CALIFORNIA SCHEDULE

1999 S Corporation Dividend Income Deduction H (100S)


See instructions for Schedule H (100S). Use and attach additional sheets if necessary.
Part I Elimination of Intercompany Dividends (R&TC Section 25106)
(a) Dividend payer (b) Dividend (c) Total amount (d) Amount that (e) Amount from (f) Amount from (g) Balance
payee of dividends qualifies column (d) paid column (d) paid column (c)
received for 100% out of current out of prior minus
elimination year E&P year E&P column (d)

1
2
3
4
5
6
7 Total amounts in each column. Enter amount from Part I,
column (d) on Form 100S, Side 1, line 9 . . . . . . . . . . . . .
Part II Deduction for Dividends Paid by a Corporation Taxed by California (R&TC Section 24402)
(a) Dividend payer (b) Dividends (c) FEIN or (d) Percentage of (e) Limitation (f) Percentage (g) Deductible
paid by California ownership of percentage of dividends dividends
CA taxpayer corporation no. dividend payer (See instructions) deductible columns
(See instructions) of dividend payer (b)X(e)X(f)

1
2
3
4
5
6 12345678901234567890123456789012123456789012345678
12345678901234567890123456789012123456789012345678
12345678901234567890123456789012123456789012345678
12345678901234567890123456789012123456789012345678
7 Total amounts in columns (b) and (g)
12345678901234567890123456789012123456789012345678
12345678901234567890123456789012123456789012345678
Part III Deduction for Dividends Paid to a California Corporation by an Insurance Company (R&TC Section 24410)
(a) Dividend payer (b) Dividend (c) California (d) Percentage of (e) Amount of (f) Apportionment (g) Deductible
payee corporation no. ownership of qualified factors of dividends
of dividend dividend payer insurance insurance column (e) X
payee dividends company column (f)
(See
instructions)
1
2
3
4
5
6 1234567890123
1234567890123
1234567890123
1234567890123
7 Total amounts in columns (e) and (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1234567890123
8 Add amounts from Part II, column (g) and Part III, column (g), enter the result here and add to
amount in Part I, column (d), line 7. Enter the result on Form 100S, Side 1, line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part IV Deduction for Dividends Paid to a Fully Included Member of a Water’s-Edge Combined Report (R&TC Section 24411)
(Foreign dividends paid by partially included members of a water’s-edge combined report cannot be computed on this schedule.)
(a) Dividend payer (b) Percentage of (c) Member of (d) Amount of (e) Amount from (f) Amount from (g) Deductible
ownership of water’s-edge qualified col. (d) paid out col. (d) paid out dividends
dividend payer combined dividends of current year of prior year column (d) X .75
reporting group received by E&P E&P
dividend was payee
paid to (payee) (See instructions)
1
2
3
4
5
6
7 Total amount in column (g). Enter total from Part IV, column (g) on
Form 100S, Side 1, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

H100S99309 Schedules B/C/D/H (100S) 1999 Side 3


Instructions for Schedule H (100S)
S Corporation Dividend Income Deduction
S corporations may claim a deduction for 4. Multiply the dividend received (column (b)) Current year qualifying dividends are
dividends paid by a corporation taxed by by the limitation percentage (column (e)). dividends received by any current member of
California on earnings from which the 5. Multiply the result of line 4 by the the water’s-edge group from a corporation
dividends are paid. deductible percentage (column (f)). (regardless of the place of incorporation) if:
6. Enter the result of line 5 in column (g). • The average of the payer’s property,
Part I
To complete Part III: payroll, and sales factors within the U.S. is
Intercompany Dividends less than 20%; and
Dividends paid to an electing S corporation 1. Follow steps 1 and 2 above.
• More than 50% of the total combined
from earnings and profits accumulated during For Part III, column (e), if any portion of a voting power of all classes of voting stock
any income year in which the dividend payer dividend also qualifies for the intercom- is owned directly or indirectly by a
was included in the combined report, which pany elimination in Part I, enter the member of the water’s-edge group at the
included the dividend payee, qualify for the balance from Part I, column (g) in Part III, time the dividend is received.
100% intercompany dividend elimination. column (e).
2. Enter in column (e) the amount of Interest Expense Deduction
Complete Schedule H (100S), Part I. Enter the For income years beginning on or after
total of Part I, column (d) on Form 100S, qualified insurance dividends received
from Schedule H (100S), Part I, January 1, 1997, the amount of interest
Side 1, line 9. expense incurred for purposes of foreign
column (g) for which a deduction under
Part II and Part III Part I and Part II has not been claimed. investments that must be offset against
3. Enter the apportionment factors for the deductible foreign dividends must be
Other Dividends
insurance corporation in column (f). computed by multiplying the amount of
To determine the deductible percentage of a
interest expense by the same percentage used
dividend (Schedule H (100S), Part II, Note: The apportionment factors used in to compute the deductible portion of the
column (f)) send a written request showing this computation are different from the qualifying foreign dividends.
the complete name of the dividend paying apportionment factors used for Schedule
corporation to: R apportionment. See R&TC Section The payer need not be in a unitary relation-
24410 for more information. ship with the recipient or any other member
DEDUCTIBLE DIVIDENDS
4. Multiply the amount in column (e) by the of the water’s-edge group.
FRANCHISE TAX BOARD
PO BOX 1468 amount in column (f) and enter the result Intercompany dividends received within the
SACRAMENTO CA 95812-1468 in column (g). current year’s water’s-edge group should be
Total the amounts on Schedule H (100S), eliminated pursuant to R&TC Section 25106
Or call the FTB at the phone numbers listed
Part II, column (g), line 7 and Part III, before computing the dividend deduction.
on page 55 of this booklet. Allow six to eight
weeks for a written reply. column (g), line 7. Enter the result on Part III, A deduction of 100% is provided for divi-
column (g), line 8 and on Form 100S, Side 1, dends derived from certain foreign construc-
Enter this percentage amount on Schedule H
line 9. tion projects. A construction project is defined
(100S), Part II, column (f).
Dividends received from a corporation, in as an activity attributable to an alteration of
To figure the amount of dividends to enter on land or any improvement thereto. The
which the S corporation owns less than 80%
Form 100S, line 9, compare Schedule H construction project, the location of which is
of the stock are considered passive invest-
(100S) Part II and Part III. not subject to the taxpayers’ control, must be
ment income.
To complete Part II: undertaken for an entity, including a govern-
Part IV mental entity, that is not affiliated with the
1. Fill in columns (a) through (c).
Water’s-Edge Dividends water’s-edge group. For more information,
For Part II, column (b), if any portion of a see R&TC Section 24411 and Form 100-WE,
California R&TC Section 24411 allows for a
dividend also qualifies for the intercom- Water’s-Edge Booklet and instructions.
75% deduction of a portion of the dividends
pany elimination in Part I, enter the
received and included in the water’s-edge Complete Form 100S, Schedule H (100S),
balance from Part I, column (g) in Part II,
return. For income years beginning on or after Part IV and enter the total of column (g) on
column (b).
January 1, 1998, dividends received from Form 100S, Side 1, line 10. For Part IV,
2. Enter the corporation’s percentage of
banks qualify for the water’s-edge dividend column (d), if any portion of a dividend also
ownership of the dividend paying
deduction. Both business and nonbusiness qualifies for the intercompany elimination in
corporation on Schedule H (100S),
dividends qualify for the dividend deduction. Part I, enter the balance from Part I,
column (d).
The allowable business dividend deduction is column (g) in Part IV, column (d).
3. Determine the limitation percentage and
determined by multiplying the total dividend
enter it on Schedule H (100S), Part II,
deduction (business and nonbusiness) by the
column (e). Refer to the ownership
ratio of business dividends to total dividends.
percentages in column (d) and the
The remaining dividend deduction is the
limitation percentages below to determine
nonbusiness dividend deduction.
the applicable limitation percentage.
In no event will a R&TC Section 24411
If the dividend Then the limitation
deduction be allowed with respect to a
paying corporation is: percentage is:
dividend for which a deduction was allowed
Less than 20% owned . . . . . . . . . . . . . . 70% under R&TC Sections 24402 or 24410 or
At least 20% but not more which was eliminated under R&TC
than 50% owned . . . . . . . . . . . . . . . . . . . 80% Section 25106.
More than 50% owned . . . . . . . . . . . . . 100%

Page 44 Form 100S Booklet 1999


INCOME YEAR
CALIFORNIA FORM

1999 S Corporation’s List of Shareholders and Consents 3830


For use by S corporations with one or more nonresident shareholders or trusts with nonresident fiduciaries. Attach to Form 100S and give a copy to
each nonresident shareholder or fiduciary. Use additional sheet(s) if necessary.
Corporation name California corporation number

Federal employer identification number (FEIN)

-
Note: Completion of this form does not satisfy the requirements for filing an income tax return for California.
List below the names and identification numbers of shareholders of record at the end of the corporation’s income year.
Only nonresident shareholders and nonresident fiduciaries must sign:
Number Shareholder’s name I consent to the jurisdiction of the State of California to tax my pro-rata Shareholder’s
share of the S corporation income attributable to California sources. Social security no./Federal
employer identification no.
Signature Date

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
List below the names and identification numbers of shareholders who sold or transferred their ownership interests before the end of the corporation’s income year.
Only nonresident shareholders and nonresident fiduciaries must sign:
Number Shareholder’s name I consent to the jurisdiction of the State of California to tax my pro-rata Shareholder’s
share of the S corporation income attributable to California sources. Social security no./Federal
employer identification no.
Signature Date

1
2
3
4
5

General Information Caution: Failure to attach this form (with required • You were married in 1999, and you and your
signatures) to Form 100S is grounds for the spouse had a combined gross income from all
Franchise Tax Board to retroactively revoke the sources of more than $21,798; or adjusted
A Purpose S corporation election. Revenue and Taxation Code gross income from all sources of more than
When an S corporation has one or more share- (R&TC) Section 23801(b). $17,438; or
holders who are nonresidents of California or • You can be claimed as a dependent as provided
trusts with nonresident fiduciaries, use form B Nonresidents Who Must File a in Internal Revenue Code (IRC) Section 63(c)(5)
FTB 3830 to: California Return when the individual’s gross income from all
• List the names and social security numbers or sources exceeds the standard deduction allowed
If you are a nonresident shareholder, in addition to under the IRC; or
federal employer identification numbers of all signing form FTB 3830, you may also need to file
shareholders; and • If you owe the State of California $1 or more of
Form 540NR, California Nonresident or Part-Year tax. (R&TC Section 18507).
• Obtain the signature of each nonresident Resident Income Tax Return. Form 540NR must be
shareholder or fiduciary evidencing consent to
the jurisdiction of California to tax their pro-rata
filed if you had income from California sources C Group Nonresident
and:
share of income attributable to California Shareholder Return
sources. For ease in gathering proper signa- • You were single or unmarried in 1999 and your
gross income from all sources was more than Certain nonresident shareholders of an
tures, multiple copies of the form FTB 3830 may S corporation doing business in California may
be used. $10,899; or adjusted gross income from all
sources was more than $8,719; or elect to file a group nonresident return using
Form 540NR. For more information, get FTB
Pub. 1067, Guidelines for Filing a Group
Form 540NR.

For Privacy Act Notice, see form FTB 1131. 383099109 FTB 3830 C1 1999
THIS PAGE INTENTIONALLY LEFT BLANK

visit our website:

www.ftb.ca.gov

Page 46 Form 100S Booklet 1999


INCOME YEAR
Shareholder’s Share of Income, CALIFORNIA SCHEDULE

1999 Deductions, Credits, etc. K-1 (100S)


For use by an S corporation and its shareholders only.
For calendar year 1999 or fiscal year beginning month ________ day ________ year 1999, and ending month ________ day ________ year ________
Shareholder’s identifying number California corporation number
Shareholder’s name, address, and ZIP Code Corporation’s name, address, and ZIP Code

A Shareholder’s percentage of stock ownership at income year end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  ___ ___ ___ . ___ ___ ___ ____ %
B Tax shelter registration number _____________________________________________ Type: __________________________________________________
C Check here if this is:  (1)  A final Schedule K-1 (2)  An amended Schedule K-1
D What type of entity is this shareholder? . . . . . . . . . . . . . . . . . . . . . . . . . . . .  (1)  Individual (2)  Estate/Trust (3)  Qualified Exempt Organization
E Is this shareholder a nonresident of California? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   Yes   No
Caution: Refer to the separate shareholder’s instructions for Schedule K-1 (100S) before entering information from this schedule on your tax return.
(b) Amount from (c) California (d) Total amounts (e) California
(a) Pro-rata share items federal Schedule K-1 adjustment using California law. source amounts
(1120S) Combine (b) and (c) and credits
where applicable

1 Ordinary income (loss) from trade or


business activities . . . . . . . . . . . . . . . . . . . . . . . . .  
2 Net income (loss) from rental real estate activities . .  
3 Net income (loss) from other rental activities . . . . . .
4 Portfolio income (loss):
Income a Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(Loss)
b Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
c Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
d Net short-term capital gain (loss) . . . . . . . . . . . .  
e Net long-term capital gain (loss) . . . . . . . . . . . . .  
f Other portfolio income (loss). Attach schedule . . .  
5 Net gain (loss) under IRC Section 1231 (other than
due to casualty or theft) . . . . . . . . . . . . . . . . . . . . .  
6 Other income (loss). Attach schedule . . . . . . . . . . .  123456789012345678

123456789012345678
7 Charitable contributions . . . . . . . . . . . . . . . . . . . . . 123456789012345678
123456789012345678
8 Expense deduction for recovery property (R&TC
Sections 17267.2, 17267.6, and 17268
Deduc- and IRC Section 179). Attach schedule . . . . . . . . . .
tions
9 Deductions related to portfolio income (loss).
Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 Other deductions. Attach schedule . . . . . . . . . . . . .
11 a Interest expense on investment debts . . . . . . . . . .  
Invest- b (1) Investment income included on line 4a,
ment line 4b, line 4c, and line 4f above . . . . . . . . .
Interest
(2) Investment expenses included on line 9 above 1234567890123456789012345678901212
1234567890123456789012345678901212
12 a Low-income housing credit. See instructions. 1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . .
1234567890123456789012345678901212 
b Credits related to rental real estate activities other 1234567890123456789012345678901212
1234567890123456789012345678901212
Tax
Credits than on line 12(a). Attach schedule . . . . . . . . . . . 1234567890123456789012345678901212
1234567890123456789012345678901212 
c Credits related to other rental activities. See
1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
instructions. Attach schedule . . . . . . . . . . . . . . .
1234567890123456789012345678901212 
13 Other credits. Attach schedule . . . . . . . . . . . . . . . . . 1234567890123456789012345678901212 

For Privacy Act Notice, get form FTB 1131. K100S99109 Schedule K-1 (100S) 1999 Side 1
(d) Total amounts
(b) Amount from (c) California using California law. (e) California
(a) Pro-rata share items federal Schedule K-1 adjustment Combine (b) and (c) source amounts
(1120S) and credits
1234567890123456789012345678901212
1234567890123456789012345678901212
where applicable

14 a Depreciation adjustment on property placed


1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
in service after 12/31/86 . . . . . . . . . . . . . . . . 1234567890123456789012345678901212
1234567890123456789012345678901212
Adjusted gain or loss . . . . . . . . . . . . . . . . . . 1234567890123456789012345678901212
b
1234567890123456789012345678901212
c Depletion (other than oil and gas) . . . . . . . . . 1234567890123456789012345678901212
1234567890123456789012345678901212
d (1) Gross income from oil, gas, and
1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
Adjustments geothermal properties . . . . . . . . . . . . . . . 1234567890123456789012345678901212
and Tax 1234567890123456789012345678901212
1234567890123456789012345678901212
Preference (2) Deductions allocable to oil, gas, and 1234567890123456789012345678901212
Items geothermal properties . . . . . . . . . . . . . . . 1234567890123456789012345678901212
1234567890123456789012345678901212
e
1234567890123456789012345678901212
Other adjustments and tax preference items. 1234567890123456789012345678901212
12345678901234567890123456789012121234567890123456789012345678901212
Attach schedule . . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678901212
12345678901234567890123456789012121234567890123456789012345678901212
15 a Type of income _________________________1234567890123456789012345678901212 1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
b
1234567890123456789012345678901212
Name of state __________________________1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
c Total gross income from sources outside
Other 1234567890123456789012345678901212
State California. Attach schedule . . . . . . . . . . . . . . 1234567890123456789012345678901212
1234567890123456789012345678901212
Taxes d Total applicable deductions and losses. 1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
Attach schedule . . . . . . . . . . . . . . . . . . . . . . 1234567890123456789012345678901212
1234567890123456789012345678901212
1234567890123456789012345678901212
e Total other state taxes. Check one:
1234567890123456789012345678901212
 Paid  Accrued . . . . . . . . . . . . . . 1234567890123456789012345678901212 
16 a Total expenditures to which an IRC
Section 59(e) election may apply . . . . . . . . . 1234567890123456789012345678901212345678901234567890123456789012123
1234567890123456789012345678901212345678901234567890123456789012123
b Type of expenditures _____________________1234567890123456789012345678901212345678901234567890123456789012123
17 Tax-exempt interest income . . . . . . . . . . . . . . .
Other 18 Other tax-exempt inome . . . . . . . . . . . . . . . . . .
Items 19 Nondeductible expenses . . . . . . . . . . . . . . . . . .
20 Total taxable dividend distribution paid from
accumulated earnings and profits . . . . . . . . . . .  
21 Property distributions (including cash) other
than dividend distributions reported to you on
federal Form 1099-DIV . . . . . . . . . . . . . . . . . . .  
22 Amount of loan repayments for “Loans from
Shareholders” . . . . . . . . . . . . . . . . . . . . . . . . .  
23 Supplemental information that is required to be reported separately to each shareholder. Attach additional sheet(s) if necessary.

________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________

Supple- Table 1 — Each shareholder’s share of nonbusiness income from intangibles


mental Interest $ ________________ Royalties $ __________________ Dividends $ _________________
Information
1231 Gains/Losses $ ________________ Capital Gains/Losses $ __________________ Other $ _________________

FOR USE BY APPORTIONING UNITARY SHAREHOLDERS ONLY — See instructions


Table 2 — Unitary shareholder’s pro-rata share of business income and factors
A. Shareholder’s share of the S corporation’s business income $________________________________
B. Shareholder’s share of the nonbusiness income from real and tangible property sourced or allocable to California:
Capital Gains/Losses $ ________________ Rents/Royalties $ __________________
1231 Gains/Losses $ ________________ Other $ __________________
C. Shareholder’s share of the S corporation’s property, payroll, and sales:
Factors Total within and outside California Total within California
Property: Beginning $ $
Ending $ $
Annual Rent Expense $ $
Payroll $ $
Sales $ $

Side 2 Schedule K-1 (100S) 1999 K100S99209


Shareholder’s Instructions for Schedule K-1 (100S)
For S Corporation Shareholder’s Use Only
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).

Purpose Adjustment Worksheet in the instructions for form


FTB 3801. Enter the total of your adjustments from
These items are not a complete list of factors
that determine basis. For example, please see
The S corporation uses Schedule K-1 (100S) to
report your share of the S corporation’s income, all passive activities from line 1 and line 2 of this Treas. Reg. §1.1367-1.
deductions, credits, etc. Please keep a copy of it worksheet on Schedule CA (540 or 540NR), as At-risk rules
for your records. applicable. Generally, if you have: (1) a loss or other
Although the S corporation is subject to various If you have losses, deductions, credits, etc., deduction from an activity carried on as a trade
taxes, you are liable for the income tax on your from a prior year that were not deductible or or business or for the production of income by
share of the S corporation’s income, whether or usable because of certain limitations, such as the corporation; and (2) amounts in the activity
not distributed, and you must include your the at-risk rules, these carryforward losses, for which you are not at-risk, you will have to
share on your tax return. deductions, and credits may be taken into complete federal Form 6198, At-Risk Limita-
account in determining your net income, loss, tions, to figure the allowable loss to report on
The amount of losses and deductions that you etc., for this year. However, do not combine the your return. For California purposes, you must
may claim on your tax return may be less than prior year amounts with any amounts shown on complete federal Form 6198 using California
the amount reported on Schedule K-1 (100S). this Schedule K-1 (100S) to get a net figure to amounts.
Generally, the amount of losses and deductions report on any supporting schedules, state-
you may claim is limited to your basis in the The at-risk rules generally limit the amount of
ments, or forms attached to your return. loss (including loss on disposition of assets)
S corporation, debt owed to you by the Instead, report the amounts on an attached
S corporation, and the amount for which you are and other deductions (such as IRC Section 179
schedule, statement, or form on a year-by-year or R&TC Sections 17267.2, 17267.6, and 17268
considered at-risk. If the S corporation has basis.
losses, deductions, or credits from a passive deductions) that you may claim to the amount
activity, you must also apply the passive activity Line 1 through Line 3 you could actually lose in the activity. See the
rules. It is your responsibility to consider and The amounts shown on line 1 through line 3 instructions for federal Schedule K-1
apply any applicable limitations. See Limitations reflect your share of income or loss from the (Form 1120S), At-Risk Limitations, for more
on Losses, Deductions, and Credits. Use these S corporation’s business or rental operations information.
instructions to help you report the items shown without reference to your limitations on losses Passive activity limitations
on Schedule K-1 (100S) on your California tax or adjustments that may be required because of: Caution: During 1993, the U.S. Congress made
return. • The adjusted basis of your S corporation changes to the passive activity loss provisions of
For the line items where “attach schedule” ownership interest per IRC Section 1366(d); the IRC relating to real estate professionals.
appears, the S corporation should have • The amount for which you are at-risk as California has not conformed to those changes.
provided additional information applicable to determined under IRC Section 465; and California tax law conforms to federal IRC
that line or the S corporation should have made • The passive activity limitations of IRC Section 469 rules that limit the deduction of
an entry on Side 2, line 23. Section 469. certain losses and credits.
Nonresident shareholders of an S corporation See the instructions for federal Schedule K-1 These rules apply to shareholders who:
that is doing business in California may qualify (Form 1120S) line 1 through line 3 for more
information. • Are individuals, estates, or trusts; and
to file a group nonresident return on
• Have a loss or credit from a passive activity.
Form 540NR, California Nonresident or Part-
Year Resident Income Tax Return. For more Limitations on Losses, A passive activity is generally a rental activity or
information on the election to file a group Deductions, and Credits a trade or business activity in which the
shareholder does not materially participate.
nonresident return, get FTB Pub. 1067,
Basis rules
Guidelines for Filing a Group Form 540NR. If you have a loss or deductions from a passive
Generally, you may not claim your share of the activity, you will need to complete form
Line 1 through Line 22 S corporation loss (including capital loss) that
FTB 3801 to figure the allowable amounts to
If you are an individual shareholder, take the is greater than the adjusted basis of your
amounts in column (c) that are from nonpassive report on your individual return. You will also
shareholder interest at the end of the
activities and enter these amounts on the need to complete form FTB 3801 if you have
S corporation’s income year. passive activity income from this S corporation
appropriate form or schedule as explained in Basis is increased by: and passive activity loss or deduction from
these instructions.
1. All income (including tax-exempt income) another source.
Report the amounts in column (d) or column (e) reported on Schedule K-1 (100S). The amounts reported on Schedule K-1 (100S)
that are from passive activities on the California 2. Money and adjusted basis in property
form or schedule where they are normally line 2 and line 3 are from rental activities of the
contributed to the corporation. S corporation and are generally passive activity
reported. Bring the total amounts figured on the 3. The excess of the deduction for depletion income (loss) to all shareholders.
appropriate California form or schedule to form over the adjusted basis of the property
FTB 3801, Passive Activity Loss Limitations, to There is an exception to this rule for losses
subject to depletion. incurred by qualified investors in qualified low-
figure the amount of your passive activity loss
limitation. Then transfer the passive activity loss Basis is decreased by: income housing projects. The S corporation will
back to the form or schedule it is normally 1. Fair market value of property distributions identify any of these qualified amounts on an
reported on to figure your California adjustment (including cash) made by the corporation attachment for line 2.
amount. Enter this adjustment amount on the (excluding dividend distributions reported Passive activity credits are also limited to passive
corresponding line of Schedule CA (540 or on Form 1099-DIV and distributions in income. See the instructions for line 13.
540NR), California Adjustments, or Form 541, excess of basis) reported on Schedule K-1
California Fiduciary Income Tax Return. (100S), line 21. California Adjustment —
If there is no California schedule or form to figure 2. All losses and deductions (including Column (c)
your passive activity loss adjustment amount on nondeductible expenses) reported on
Schedule K-1 (100S). Use this column to account for your proportion-
(i.e., rental loss from passive activities), you may
ate share of the differences in the computation
figure the adjustment amount on the California of federal and California income.

Schedule K-1 (100S) 1999 Page 49


The most common items are: amount is from an activity that is a passive • Enter line 4b, column (c) and/or column (e)
• California minimum franchise tax; activity to you. on Schedule CA (540 or 540NR), line 9
• Depreciation expense due to different basis If, in addition to this passive activity income, whichever column is applicable;
of the assets or depreciation method used; you have a passive activity loss from this • Enter line 4c, column (c) and/or column (e)
• Gain or loss on sale of assets due to the S corporation or from any other source, report on Schedule CA (540 or 540NR), line 17
effects of different depreciation methods or the line 1, column (d) or column (e) income on whichever column is applicable;
basis; and form FTB 3801. • Enter line 4d and line 4e, column (d) or
• Government bond interest income: column (e) on Schedule D; and
If a loss is reported on line 1, column (d) or • Enter line 4f, column (d) or column (e) on
a) U.S. bond interest is taxable for federal column (e), report the loss on the applicable the applicable schedule.
purposes but not for California line of form FTB 3801 to determine how much
of the loss is allowable. Caution: Generally, amounts reported on line 4d
purposes; and
and line 4e are gains or losses attributable to the
b) State bond interest (other than from Line 2 – Net income (loss) from rental real disposition of property held for investment and
California bonds) is taxable for California estate activities are therefore classified as portfolio income
franchise tax purposes but not for federal Generally, the income (loss) reported on line 2, (loss). If, however, an amount reported on line 4d
purposes. column (d) or column (e), is a passive activity or line 4e, column (d) or column (e), is a passive
amount to all shareholders. However, there is an
Total amounts using California exception for losses from a qualified low-
activity amount, the S corporation should identify
the amount.
law — Column (d) and income housing project. The loss limitations do
The S corporation uses line 4f, column (d) or
California source amounts and not apply to qualified investors in qualified low-
income housing projects. The S corporation will
column (e), to report portfolio income other
credits — Column (e) than interest, dividend, royalty, and capital gain
have attached a schedule for line 2 to identify (loss) income. A statement will be attached to
Shareholders who are California residents will use such amounts, if applicable. Enter the California
tell you what kind of portfolio income is
amounts shown in column (d) because California adjustment amount from column (c) on
reported on line 4f, column (d) or column (e).
resident individuals are subject to personal income Schedule CA (540 or 540NR) as applicable.
tax on all income from whatever source derived Line 5 – Net gain (loss)
Use the following instructions to determine
(R&TC Section 17041). Nonresident shareholders where to enter a line 2 amount. If the amount on line 5 relates to a rental
who do not conduct a trade or business that is activity, the IRC Section 1231 gain (loss) is a
• If you have a loss on line 2, column (d) or passive activity amount.
unitary with the S corporation should use the column (e) (other than a qualified low-
amounts in column (c), column (d) (for total income housing project loss), enter this • If the amount is not a passive activity
income purposes), column (e) (for California passive activity loss on the applicable line of amount to you, report it on Schedule D-1,
source income purposes), and Table 1. If the Sales of Business Property, line 2,
form FTB 3801 to determine how much of
nonresident shareholder conducts a unitary column (g) or column (h), whichever is
the loss is allowable.
business with the S corporation, data in applicable. You do not have to complete the
column (e) should not be used. Instead, the Note: If you are a qualified investor reporting information called for in column (b) through
shareholder must combine its share of the S a qualified low-income housing project loss, column (f). Write “From Schedule K-1
corporation’s income with the income from its enter the California adjustment amount from (100S)” across these columns.
trade or business and apportion that income using column (c) directly on Schedule CA (540 or • If a gain is reported on line 5, column (d) or
an apportionment percentage consisting of a 540NR). column (e), and it is a passive activity
combination of the factors from its trade or • If you have income on line 2, column (d) or amount to you, report the gain on
business and the shareholder’s share of the column (e) and no passive losses, enter the Schedule D-1, line 2, column (h), and refer
factors from the S corporation from Table 2. California adjustment from column (c) on to “Passive Loss Limitations” in the
Amounts in Table 1 should be sourced to the Schedule CA (540 or 540NR). instructions for Schedule D-1.
residency or commercial domicile of the • If a loss is reported on line 5, column (d) or
Line 3 – Net income (loss) from other rental
shareholder. column (e) and it is a passive activity
activities
amount to you, report the loss on
Income The amount on line 3, column (d) or column (e)
Schedule D-1, line 2, column (h), and refer
Inconsistent treatment of items is a passive activity amount for all shareholders.
to “Passive Loss Limitations” in the
Generally, shareholders must report IRC • If line 3, column (d) or column (e) is a loss, instructions for Schedule D-1. You will need
subchapter S items shown on their enter the loss on the applicable line of form to use form FTB 3801 to determine how
Schedule K-1 (100S), and any attached FTB 3801. much of the loss is allowed on
schedules, the same way the corporation • If income is reported on line 3, column (d) or Schedule D-1.
treated the items on its return. If the treatment column (e) and you have no passive losses,
enter the California adjustment from Line 6 – Other income (loss)
on a shareholder’s original or amended return is
inconsistent with the corporation’s treatment, or column (c) on Schedule CA (540 or 540NR). Amounts on this line are other items of income,
if the corporation has not filed a return, you gain, or loss not included on line 1 through
Line 4 – Portfolio income (loss) line 5. The S corporation should give you a
must attach a statement with your original or Income (loss) referred to as “portfolio” income description of your share for each of these
amended return to identify and explain any (loss) in these instructions is not part of a items.
inconsistency or to note that a corporate return passive activity subject to the rules of IRC
has not been filed. If a shareholder is required Report income or gain items that are passive
Section 469. Portfolio income includes income
to attach this statement but fails to do so, the activity amounts to you as instructed below. If,
not derived in the ordinary course of a trade or
shareholder may be subject to an accuracy in addition to this passive activity income or
business from interest, dividends, annuities, or
related penalty. gain, you have passive activity losses from any
royalties and gain (loss) on the sale of property
other source, also report the passive activity
Line 1 – Ordinary income (loss) from trade or that produces these types of income or is held
income or gain on form FTB 3801.
business activities for investment. If you have amounts on
The amount reported on line 1, column (d) or Schedule K-1 (100S), line 4a through line 4f, Line 6 items may include the following:
column (e) is your share of the ordinary income report these amounts as follows: • S corporation gains from the disposition of
(loss) from the trade or business activities of • Enter line 4a, column (c) and/or column (e) farm recapture property (refer to
the S corporation. Generally, where you report on Schedule CA (540 or 540NR), line 8 Schedule D-1) and other items to which IRC
this amount on Form 540, Form 540NR, or whichever column is applicable; Section 1252 applies;
Form 541 depends on whether or not the

Page 50 Schedule K-1 (100S) 1999


• Recovery of bad debts, prior taxes, and 17268, complete form FTB 3805Z, form Line 12a – Low-income housing credit
delinquency amounts (IRC Section 111). FTB 3809, or form FTB 3807, to report your Your share of the S corporation’s low-income
Report the amount from line 6, column (c), pro-rata share. housing credit is shown on line 12a, column (d)
on Schedule CA (540 or 540NR), line 21, Line 9 – Deductions related to portfolio or column (e). Any available credit is entered on
whichever column is applicable; income (loss) form FTB 3521, Low-Income Housing Credit. To
• Gains and losses from gambling claim this credit, attach a copy of form
Amounts entered on this line are the expenses
(IRC Section 165(d)); FTB 3521 to your return.
(other than investment interest expense and
• Any income, gain, or loss to the Caution: You may not claim the low-income
expenses from a REMIC) paid or incurred to
S corporation under IRC Section 751(b) housing credit on any qualified low-income
produce portfolio income. If you have an
from a partnership. Report this amount on housing project for which any person was
amount on Schedule K-1 (100S), line 9,
Schedule D-1, line 10; allowed any benefit under Section 502 of the
column (c), enter this amount on Schedule CA
• Specially allocated ordinary gain (loss) from federal Tax Reform Act of 1986. Also, the
(540 or 540NR), line 37. However, if any of the
a partnership. Report this amount on passive activity credit limitations of IRC
line 9 amount should not be reported on
Schedule D-1, line 10; Section 469 may limit the amount of credit you
Schedule CA (540 or 540NR), the S corporation
• Net gain (loss) from involuntary conversions may take. Get form FTB 3801-CR, Passive
will identify that amount for you.
due to casualty or theft. The S corporation Activity Credit Limitations, to figure the amount
will give you a schedule that shows the Line 10 – Other deductions
of credit that may be limited under the passive
California amounts to be entered on federal Amounts on this line are other deductions not activity rules.
Form 4684, Casualties and Thefts, line 34, included on line 7 through line 9. If there is an
column (b)(i), column (b)(ii), and amount on Schedule K-1 (100S), line 10, For more information, see the instructions for
column (c); column (c), enter this amount on the applicable line 13.
• Net short-term capital gain or loss, net long- line of Schedule CA (540 or 540NR). Line 12b – Credits related to rental real estate
term capital gain or loss, gain or loss from activities
Schedule D (100S) that is not portfolio Investment Interest If applicable, the S corporation may use this
income (e.g., gain or loss from the Line 11a and Line 11b line, through an attached schedule, to give you
disposition of nondepreciable personal If the S corporation paid or accrued interest on the information you need to compute credits
property used in a trade or business activity debts it incurred to buy or hold investment related to rental real estate activities other than
of the S corporation); property, the amount of interest you can deduct the low-income housing credit.
• Any new gain or loss from IRC Section 1256 may be limited. For more information, see the instructions for
contracts; and
For more information and the special provisions line 13.
• Eligible gain from the sale or exchange of that apply to investment interest expense, get form
qualified small business stock (as defined in Line 12c – Credits related to other rental
FTB 3526, Investment Interest Expense Deduction,
R&TC Section 18152.5). The S corporation activities
and federal Publication 550, Investment Income
should also give you the name of the If applicable, the S corporation will use this line,
and Expenses.
corporation that issued the stock and your through an attached schedule, to give you the
pro-rata share of the basis of that stock. Line 11a – Interest expense on investment information you need to compute credits related
debts to rental activities other than rental real estate
Note: Corporate shareholders are not eligible for
the R&TC Section 18152.5 exclusion. Enter the amount from column (d) or activities.
column (e) on form FTB 3526 along with your For more information, see the instructions for
Deductions investment interest expense from other sources. line 13.
Form FTB 3526 will help you determine how
Line 7 – Charitable contributions Line 13 – Other credits
much of your total investment interest is
The S corporation will give you a schedule that deductible. If applicable, the S corporation will use this line,
shows which contributions were subject to the through an attached schedule, to give you the
50%, 30%, and 20% limitations. Refer to the Line 11b(1) and Line 11b(2) – Investment
information you need to compute credits related
federal instructions for Form 1040 for more income and investment expenses
to a trade or business activity.
information. Use the column (d) or column (e) amounts on
these lines to determine the amount to enter on Credits that may be reported on line 12c or
If there is an amount on Schedule K-1 (100S), line 13 (depending on the type of activity they
line 7, column (c), enter this amount on form FTB 3526, line 4.
relate to) include but are not limited to:
Schedule CA (540 or 540NR), line 38. Caution: The amounts shown on line 11b(1) and
line 11b(2) include only investment income and • Enterprise zone hiring & sales or use tax
Line 8 – Expense deduction for recovery credit (FTB 3805Z);
expenses included on lines 4a, 4b, 4c, 4f, and
property • Targeted Tax Area (TTA) hiring & sales or
line 9 of this Schedule K-1 (100S). The
The maximum amount of expense deduction for S corporation should attach a schedule that use tax credit (FTB 3809);
recovery property (IRC Section 179 deduction) shows you the amount of any investment • Local Agency Military Base Recovery Area
that you may claim from all sources is $19,000. income and expenses included in any other lines (LAMBRA) hiring & sales or use tax credit
The S corporation will give you information on of your Schedule K-1 (100S). Use these (FTB 3807);
your share of the cost of the S corporation’s IRC amounts, if any, to adjust line 11b(1) and • Research credit (FTB 3523);
Section 179 property so that you can compute line 11b(2) to determine your total investment • Manufacturers’ investment credit
this limitation. Your IRC Section 179 deduction income and total investment expenses from this (FTB 3535); or
is also limited to your taxable income from all S corporation. Combine these totals with • Manufacturing Enhancement Area (MEA)
your trades or businesses. See form FTB 3885A, investment income and expenses from all other hiring credit (FTB 3808).
Depreciation and Amortization Adjustments – sources to determine the amount to enter on Note: The pass-through rules of IRC Sec-
Individuals, and federal Publication 534, form FTB 3526, line 4. tion 1366, the at-risk limitations of IRC Sec-
Depreciating Property Placed in Service Before tion 465, and the passive activity limitations of
1987, for more information. Tax Credits IRC Section 469 may limit the amount of credits
If the S corporation reported an EZ, TTA, or The S corporation must provide you the that you may take. Credits on line 12 and line 13
LAMBRA or business expense deduction on this information needed to compute a credit may be passive activity credits to shareholders
line from R&TC Sections 17267.2, 17267.6 or allowable on your tax return. who do not materially participate in the activities
of the S corporation.

Schedule K-1 (100S) 1999 Page 51


Passive activity credits are limited to tax Supplemental Information If the S corporation listed any credit recapture
attributable to passive activities. If you do not on this line, see your tax booklet for information
materially participate in the activities of the Line 23 on how to report the credit recapture.
S corporation, get form FTB 3801-CR, Passive The S corporation will provide supplemental Table 1
Activity Credit Limitations, to determine the information required to be reported to you on
The income data contained in Table 1 is not
amount of the credit you may take. this line. If the S corporation is claiming tax
reflected in column (e) because the source of
benefits from an EZ, LAMBRA, TTA or MEA, it
Adjustments and Tax will give you your pro-rata share of (1) business
such income must be determined at the
shareholder level. The shareholder must make a
Preference Items income apportioned to the EZ, LAMBRA, MEA,
determination whether the nonbusiness
or TTA, and (2) business capital gains and
Line 14a through Line 14e intangible income item is from a California
losses included in (1) on this line. Get form
Use the information reported on line 14a through source.
FTB 3805Z, FTB 3807, FTB 3808, or FTB 3809 to
line 14e (as well as adjustments and tax prefer- claim any applicable credit or business expense Net nonbusiness income is computed by
ence items from other sources) to prepare deduction. subtracting related nonbusiness expenses from
Schedule P (540, 540NR or 541), Alternative the nonbusiness income.
The S corporation may have provided an
Minimum Tax and Credit Limitations.
amount showing your proportionate interest in Table 2
For more information, get federal Schedule K-1 the S corporation’s aggregate gross receipts, If the shareholder and S corporation are
(Form 1120S), instructions for Adjustments and less returns and allowances on Schedule K-1 engaged in a single unitary business, the
Tax Preference Items. (100S), line 23. Legislation enacted in 1996 shareholder’s share of the S corporation’s
allows a qualified taxpayer to exclude from business income is entered on Table 2, Part A.
Other State Taxes alternative minimum taxable income adjust- The shareholder will then add that income to its
Line 15a through Line 15e ments and items of tax preference attributable own business income and apportion the
You may claim a credit against your individual to any trade or business. A “qualified taxpayer” combined business income.
tax for your share of net income taxes paid by is defined as an individual, estate, or trust that: The shareholder’s share of the S corporation’s
the S corporation to certain other states which • Is the owner of, or has an ownership interest payroll, property, and sales data is in Table 2,
either tax the corporation as an S corporation or in a trade or business; and Part C. The business income in Table 2, Part A is
do not recognize S corporation status. For • Has aggregate gross receipts, less returns combined with the taxpayer’s other business
purposes of this credit, net income taxes and allowances, of less than $1,000,000 income from the unitary business. The appor-
include your share of taxes on, according to, or from all trades or businesses that the tionment numerator and denominator data are
measured by income. taxpayer is an owner of, or has an ownership added to the appropriate numerator and
Residents are taxed on their pro-rata share of all interest in, in the amount of that taxpayer’s denominator of the shareholder’s payroll,
income and generally receive a credit for taxes proportionate interest in each trade or property, and sales factors.
paid to other states. Nonresidents and part-year business.
residents use column (e) for your pro-rata share “Aggregate gross receipts, less returns and
of California source pass-through income. allowances” means the sum of the gross
For more information, get California Schedule S, receipts of the trades or businesses which you
Other State Tax Credit. own and the proportionate interest of the gross
receipts of the trades or businesses which you
Other Items own and of pass-through entities in which you
Note: Amounts on line 16a through line 22 may hold an interest.
not necessarily be California source amounts. “Proportionate interest” is defined as:
However, enter the same amount in column (e)
• In the case of a pass-through entity which
as entered in column (d).
reports a profit for the taxable or income
Line 16a through Line 19 year, your profit interest in the entity at the
Refer to the instructions for federal end of your taxable year.
Schedule K-1 (1120S). • In the case of a pass-through entity which
reports a loss for the taxable or income year,
Line 20
your loss interest in the entity at the end of
The S corporation must issue a federal your taxable year.
Form 1099-DIV to you for this distribution. • In the case of a pass-through entity which is
Report this amount as a taxable dividend on sold or liquidates during the taxable or
your tax return. income year, your capital account interest in
Line 21 the entity at the time of the sale or
Reduce your basis in stock of the S corporation liquidation.
by the distributions on line 21. If these “Proportionate interest” includes an interest in a
distributions exceed your basis in stock, the pass-through entity including a partnership,
excess is treated as gain from the sale or S corporation, regulated investment company,
exchange of property and is reported on real estate investment trust, or real estate
Schedule D. mortgage investment conduit.
Line 22 For purposes of R&TC Section 17062(b)(4),
If the line 22 payments are made on indebted- “gross receipts” means the sum of gross
ness with a reduced basis, the repayments receipts from the production of business
result in income to you to the extent the income (within the meaning of subdivisions (a)
repayments are more than the adjusted basis of and (c) of R&TC Section 25120) and the gross
the loan. See IRC Section 1367(b)(2) for receipts from the production of nonbusiness
information on reduction in basis of a loan and income (within the meaning of subdivision (d)
restoration of basis of a loan with a reduced of R&TC Section 25120). “Proportionate
basis. See federal Revenue Ruling 68-537, interest” includes an interest in a pass-through
1968-2 C.B. 372, for more information. entity. See R&TC Section 17062 for more
information.

Page 52 Schedule K-1 (100S) 1999


Instructions for Form FTB 3539
Automatic Extension for Corporations and Exempt Organizations
General Information following the close of the income year or March 15, 2000
(calendar year corporations), or May 15, 2000 (calendar
Use form FTB 3539 only if: year exempt organizations). Employees’ trusts and IRAs
• You cannot file your 1999 return by the original due must pay 100% of the tax liability by the 15th day of the 4th
date; and month after the end of the income year.
• You owe tax for 1999. Save the completed worksheet as a permanent part of the
Use the worksheet on the following page to determine if you corporation’s or exempt organization’s tax records along
owe tax. with a copy of the return.
• If you do not owe tax, there is nothing to file at this time
and no need to complete or mail this voucher. Electronic Funds Transfer (EFT)
• If you owe tax, complete the voucher and mail it along Corporations or exempt organizations that meet certain
with your check or money order to the Franchise Tax requirements must remit all of their payments through EFT
Board by the original due date of the return. rather than by paper checks. Corporations or exempt
If a corporation, including real estate investment trusts organizations that remit an estimated tax payment or
(REITs), real estate mortgage investment conduits extension payment in excess of $20,000 or that have a total
(REMICs), regulated investment companies (RICs), limited tax liability in excess of $80,000 must pay through EFT. The
liability companies (LLCs) classified as corporations, or an FTB will notify corporations or exempt organizations that
exempt organization in good standing, cannot file its are subject to this requirement. If you are an EFT taxpayer,
California tax return by the original due date, a seven month DO NOT USE THIS FORM. Those that wish to participate on
extension to file will be allowed automatically without filing a voluntary basis may do so. For more information, call
a written request. To qualify for the automatic extension, the 1-800-852-2753 or get FTB Pub. 3817, Electronic Funds
corporation’s or exempt organization’s tax return must be Transfer Program Information Guide.
filed by the extended due date. The corporation’s powers,
rights, and privileges must not be suspended or forfeited by Where to File
the Franchise Tax Board (FTB) or the California Secretary of
State (SOS) as of the original due date. The extended due If tax is due and the corporation or exempt organization is
date for corporations is the 15th day of the 10th month not required to use EFT, attach a check or money order for
following the close of the income year or October 16, 2000 the tax due to form FTB 3539. Write the California corpora-
(calendar year filers). The extended due date for exempt tion number or FEIN and 1999 FTB 3539 on the check or
organizations filing Form 199 or Form 109 is the 15th day money order. Mail only the voucher portion with the
of the 12th month following the close of the taxable year payment to:
(fiscal year filers) or December 15, 2000 (calendar year FRANCHISE TAX BOARD
filers). PO BOX 942857
The extended due date for an employees’ trust defined in SACRAMENTO CA 94257-0551
IRC Section 401(a) and an IRA filing Form 109 is the 15th Private Mail Box (PMB) Number
day of the 11th month after the end of the income year
(fiscal year filers) or November 15, 2000 (calendar year If you lease a mail box from a private business rather than
filers). from the United States Postal Service, enter the box number
in the special field on the voucher labeled “PMB no.”
An extension of time to file the tax return is not an extension
of time to pay the tax. To avoid late payment penalties and
interest, 100% of the tax liability must be paid by the 15th
day of the 3rd month (fiscal year corporations), or the 15th
day of the 5th month (fiscal year exempt organizations)
DETACH HERE
(Calendar year corporations — Due March 15, 2000)
(Employees’ trust and IRA — Due April 17, 2000)
(Calendar year exempt organizations — Due May 15, 2000)
YEAR
Payment Voucher for Automatic Extension CALIFORNIA FORM

1999 for Corporations and Exempt Organizations 3539 (CORP)


For calendar year 1999 or fiscal year beginning month _____ day ____ year 1999, and ending month _____ day ____ year ____ .
California corporation number Federal employer identification number

- Tax Due
Corporation/exempt organization name

Address PMB no. Type of form filed.


첸 Form 100
City State ZIP Code
첸 Form 100S
첸 Form 109
첸 Form 199
IF NO PAYMENT IS DUE, DO NOT FILE THIS FORM

EFT TAXPAYERS, DO NOT USE THIS FORM 353999109 FTB 3539 1999
TAX PAYMENT WORKSHEET FOR YOUR RECORDS
1 Total tentative tax. Include alternative minimum tax if applicable. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Estimated tax payments including prior year overpayment applied as a credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Tax Due. If line 2 is more than line 1, see instructions. If line 1 is more than line 2, subtract line 2 from line 1.
Enter the result here and on form FTB 3539 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Penalties and Interest franchise tax (for income years beginning January 1,
1999 but before January 1, 2000) and Qualified Subchap-
If the corporation or exempt organization fails to pay its total ter S Subsidiary (QSub) annual tax (S corporations only).
tax by the original due date, a late payment penalty plus • If filing Form 100 or Form 100S, and subject to income
interest will be added to the tax due. If the corporation or tax, enter the amount of tax. Corporations subject to the
exempt organization does not file its return by the extended income tax do not pay the minimum franchise tax.
due date, or the corporation’s powers, rights, and privileges
have been suspended or forfeited by the FTB or the California • If a corporation incorporates or qualifies to do business
SOS, as of the original due date, the automatic extension will in California on or after January 1, 2000, the prepayment
not apply and a delinquency penalty plus interest will be of the minimum franchise tax to the Secretary of State
assessed from the original due date of the return. (SOS) is no longer required. For the first income year
(second taxable year) the corporation will compute its
tax liability by multiplying its state net income by the
Combined Reports appropriate tax rate and will not be subject to the
If members of a combined unitary group have made or minimum franchise tax. The corporation will become
intend to make an election to file a Combined Unitary Group subject to minimum franchise tax beginning in its
Single Return, only the key corporation designated to file second income year (third taxable year).
the return should submit form FTB 3539. The key corpora- • If filing Form 109, enter the amount of tax. Form 109
tion must include payment of at least the minimum filers are not subject to the minimum franchise tax.
franchise tax for each corporation of the combined unitary • Qualified New Corporation (QNC):
group that is subject to the franchise tax in California.
A qualified new corporation is a corporation that:
If members of a combined unitary group intend to file
separate returns with the FTB, each member must submit its • Reasonably estimates it will have gross receipts, less
own form FTB 3539 if there is an amount entered on line 3 returns and allowances, reportable to California of $1
of the worksheet. million or less during the income year; and
• Reasonably estimates it will have tax liability that
Exempt Organizations does not exceed $800; and
• Did not begin business operations as a sole propri-
• Form 100 filers: etorship, a partnership, or any other form of business
The due dates for corporations also apply to the filing of entity; and
Form 100, California Corporation Franchise or Income
• Began business operations at or after the time of its
Tax Return, by political action committees and exempt
incorporation.
homeowners’ associations.
If the corporation believed it was a QNC, paid less than an
Political action committees and exempt homeowners’ $800 prepayment to the SOS, and during the income year
associations that file Form 100 should not enter the the corporation did not meet the QNC criteria (see above),
minimum franchise tax on line 1 of the Tax Payment then include the appropriate amount(s) on line 1:
Worksheet.
• $500 , if the amount prepaid to the SOS was $300 for
• Form 199 Filers: income years commencing on or after January 1,
Generally, Form 199, California Exempt Organization 1999 and before January 1, 2000, and/or
Annual Information Return, requires a $10 filing fee to be
paid with the return on the original or extended due date. • $300 , if the minimum franchise tax paid for the
second taxable year was $500 for corporations that
Use form FTB 3539 only if paying the fee early. Enter the incorporated or qualified to do business on or after
amount of the fee on line 3 of the Tax Payment Work- January 1, 1999 and before January 1, 2000.
sheet.
Line 2 – Enter the estimated tax payments, including prior
• Form 109 Filers:
year overpayment applied as a credit. Also include any QSub
The due dates for filing Form 109, California Exempt
annual tax payments (S corporations only).
Organization Business Income Tax Return, depend on
the type of organization filing the return. Employees’ Line 3
pension trusts and IRAs (including education IRAs)
Tax due. If the amount on line 2 is more than the amount on
must file on or before the 15th day of the 4th month
line 1, the payments and credits are more than the tax. The
after the close of their income year. All other exempt
corporation or exempt organization has no tax due. DO NOT
organizations (except homeowners’ associations and
SEND THE PAYMENT VOUCHER. The corporation or exempt
political organizations) must file on or before the 15th
organization will automatically qualify for an extension if the
day of the 5th month after the close of their income year.
tax return is filed by the extended due date.
If the amount on line 1 is more than the amount on line 2,
How to Complete the Tax Payment Worksheet then the corporation’s or exempt organization’s tax is more
Line 1 – Enter the total tentative tax, including the alterna- than its payments and credits. The corporation or exempt
tive minimum tax for the income year. organization has tax due.
• If filing Form 100 or Form 100S and subject to franchise Subtract line 2 from line 1. Enter this amount on line 3 and
tax, the tentative tax may not be less than the minimum on form FTB 3539.

Page 54 FTB 3539 1999


How To Get California Tax Information
Where To Get Income Tax Forms California Tax Forms and Publications
By Internet – If you have Internet access, you may download, view, and 817 California Corporation Tax Forms and Instructions.
print 1999 California income tax forms, instructions, and publications. This booklet contains: Form 100, California Corporation
Legal Notices and Rulings dated 96-1 and later are also available. Go to Franchise or Income Tax Return; and the following forms which
our website at: www.ftb.ca.gov are also available separately:
By phone – To order 1999 California tax forms: 821 Schedule P (100), Alternative Minimum Tax and Credit
Limitations — Corporations
• Refer to the list in the right column and find the code number for the 822 FTB 3885, Corporation Depreciation and Amortization
form you want to order. 807 FTB 3805Q, Net Operating Loss (NOL) Computation
• Call (800) 338-0505. and NOL and Disaster Loss Limitations — Corporations
• Select business entity tax information. 808 FTB 3539, Payment Voucher for Automatic Extension for
• Select order tax forms. Corporations and Exempt Organizations
• Enter the three-digit code shown to the left of the form title when 816 California S Corporation Tax Forms and Instructions.
you are instructed to do so. This booklet contains: Form 100S, California S Corporation
Please allow two weeks to receive your order. If you live outside Franchise or Income Tax Return; Schedule QS, Qualified
California, please allow three weeks to receive your order. Subchapter S Subsidiary (QSub) Information Worksheet; and the
For prior year California tax forms, call our toll-free number listed under following forms which are also available separately:
“General Toll-Free Phone Service.” 823 Schedule B (100S), S Corporation Depreciation and
Amortization
In person – Most libraries, post offices, and banks provide free
Schedule C (100S), S Corporation Tax Credits
California personal income tax booklets during the filing season. Many
Schedule H (100S), Dividend Income
libraries and some quick print businesses have forms and schedules for
Schedule D (100S), S Corporation Capital Gains and
you to photocopy (you may have to pay a nominal fee). Note that
Losses and Built-In Gains
employees at libraries, post offices, banks, and quick print businesses
825 Schedule K-1 (100S), Shareholder’s Share of Income,
cannot provide tax information or assistance.
Deductions, Credits, etc.
By mail – Write to: TAX FORMS REQUEST UNIT, FRANCHISE TAX 826 FTB 3830, S Corporation’s List of Shareholders and
BOARD, PO BOX 307, RANCHO CORDOVA CA 95741-0307. Consents
808 FTB 3539, Payment Voucher for Automatic Extension for
Letters Corporations and Exempt Organizations
If you write to us, be sure to include your California corporation 814 Form 109, Exempt Organization Business Income Tax Return
number or federal employer identification number, your daytime and 818 Form 100-ES, Corporation Estimated Tax
evening telephone numbers, and a copy of the notice with your letter. 813 Form 100X, Amended Corporation Franchise or Income Tax
Send your letter to: Return
FRANCHISE TAX BOARD 815 Form 199, Exempt Organization Annual Information Return
PO BOX 942857 819 Schedule R, Apportionment and Allocation of Income
SACRAMENTO CA 94257-0540 812 FTB Pub. 1038, Guide for Corporations Dissolving, Withdrawing
We will respond to your letter within six to eight weeks. In some cases, or Merging
we may need to call you for additional information. Do not attach 809 FTB Pub. 1060, Guide for Corporations Starting Business
correspondence to your tax return unless the correspondence relates to in California
an item on the return. 810 FTB Pub. 1061, Guidelines for Corporations Filing a Combined
Report
General Toll-Free Phone Service 827 Form 100-WE, Water’s-Edge Booklet
829 FTB 3564, Authorization of Agent Under Revenue and
Between January 3 – April 17, 2000 , our general toll-free phone Taxation Code Section 19141.6
service is available: 820 FTB Pub. 1068, Exempt Organizations Requirements for Filing
• Monday – Friday, 6 a.m. until midnight; and Returns and Paying Filing Fees
• Saturdays and holidays, 7 a.m. until 4 p.m. 802 FTB 3500, Exemption Application
After April 17, 2000, our general toll-free phone service is available: 803 FTB 3555, Request for Tax Clearance
804 FTB 3557, Application for Revivor
• Monday – Friday, 7 a.m. until 8 p.m.; and 811 FTB 3560, S Corporation Election or Termination/Revocation
• Saturdays, 7 a.m. until 4 p.m. 806 FTB 5806, Underpayment of Estimated Tax by Corporations
The best times to call are before 10 a.m. and after 6 p.m. All times 800 FTB Pub. 1028, Guidelines for Homeowners’ Associations
listed are Pacific Standard Time (PST). 801 FTB Pub. 1075, Exempt Organizations — Guide for Political
From within the United States . . . . . . . . . . . . . . . . . . . (800) 852-5711 Organizations
From outside the United States (not toll-free) . . . . . . . (916) 845-6500 832 FTB 3555A, Request for Tax Clearance for Exempt Organizations
For federal tax questions, call the IRS at . . . . . . . . . . . (800) 829-1040
Assistance for persons with disabilities
Your Rights As A Taxpayer
The FTB complies with provisions of the Americans with Disabilities Our goal at the FTB is to make certain that your rights are protected so
Act. Persons with hearing or speech impairment call: that you will have the highest confidence in the integrity, efficiency, and
From voice phone (California Relay Service) . . . . . . . . (800) 735-2922 fairness of our state tax system. FTB Pub. 4058, California Taxpayers’
From TTY/TDD (Direct line to FTB customer service) . (800) 822-6268 Bill of Rights, includes information on your rights as a California
For all other assistance or special accommodations . . (800) 852-5711 taxpayer, the Taxpayers’ Rights Advocate Program, and how you can
request written advice from the FTB on whether a particular transaction
Asistencia bilingue en espanol
is taxable.
Para obtener servicios en espanol y asistencia para completar su
declaracion de impuestos/formularios, llame al numero de telefono See “Where to Get Income Tax Forms” on this page.
(anotado arriba) que le corresponde.

Form 100S Booklet 1999 Page 55


 Automated Toll-Free Phone Service (Keep This Booklet For Future Use)
Our automated toll-free phone service is available 24 hours a day, 7 Miscellaneous
days a week, in English and Spanish to callers with touch-tone 700 Who do I need to contact to start a business?
telephones. To order business entity forms, the automated service is 701 I need a state ID number for my business. Who do I contact?
available from 6 a.m. to 8 p.m. Monday through Friday, except state 702 Can you send me an employer’s tax guide?
holidays. You can: 703 How do I incorporate?
• Order current year California income tax forms, and 719 How do I properly identify my corporation when dealing with
• Hear recorded answers to many of your questions about California the Franchise Tax Board?
taxes. 720 How do I obtain information about changing my corporation’s
name?
Have paper and pencil ready to take notes. 721 How do I change my accounting period?
Call from within the United States . . . . . . . . . . . . . . . . (800) 338-0505 737 Where do I send my payment?
Call from outside the United States (not toll-free) . . . . (916) 845-6600 738 What is electronic funds transfer?
739 How do I get a copy of my state corporate tax return?
To Order Forms 740 What requirements do I have to report municipal bond interest
paid by a state other than California?
See “Where to Get Income Tax Forms” on the previous page.
750 How do I organize or register an LLC?
751 How do I cancel my registration as an LLC?
To Get Information 752 What tax forms do I use to file as an LLC?
If you need an answer to any of the following questions, call 758 If a corporation converted to an LLC during the current year, is
(800) 338-0505, select business entity tax information, then general tax the corporation liable for tax as a corporation and an LLC
information, follow the recorded instructions, and enter the three-digit tax/fee in the same year?
code when instructed to do so.
Code Filing Assistance Field Offices
715 If my actual tax is less than the minimum franchise tax, You can get information, pick up California tax forms, and resolve
what figure do I put on line 23 of Form 100? problems on your account if you visit one of our field offices. FTB field
717 What are the current tax rates for corporations? office locations are open Monday through Friday from 8 a.m. to 5 p.m.
718 How do I get an extension of time to file? The offices will remain open additional hours and days January 15
722 When do I have to file a short-period return? through April 17, 2000. For the extended hours of the office nearest
734 Is my corporation subject to franchise tax or income tax? you, call (800) 338-0505, select personal income tax information, then
S Corporations select general information, and enter code 110 when instructed.
704 Is an S corporation subject to the minimum franchise tax? Field Office Address
705 Are S corporations required to file estimate payments? Bakersfield 1800 30th St., Ste. 370
706 What forms do S corporations file? Burbank 333 N. Glenoaks Blvd., Ste. 200
707 The tax for my S corporation is less than the minimum Fresno 2550 Mariposa St., Rm. 3002
franchise tax. What figure do I put on line 22 of Form 100S? Long Beach 4300 Long Beach Blvd., Ste. 700B
708 Where do S corporations make adjustment for state and Los Angeles 300 S. Spring St., Ste. 5704
federal law differences on Schedule K-1 (100S) and where do Oakland 1515 Clay St., Ste. 305
nonresident shareholders find their California source income on Sacramento 3321 Power Inn Road, Ste. 250
their Schedule K-1 (100S)? San Bernardino 464 W. 4th St., Ste. 454
Exempt Organizations San Diego 5353 Mission Center Road, Ste. 314
709 How do I get tax exempt status? San Francisco 455 Golden Gate Avenue, Ste. 7400
710 Does an exempt organization have to file Form 199? San Jose 96 N. Third St., 4th Floor
735 How can an exempt organization incorporate without Santa Ana 600 W. Santa Ana Blvd., Ste. 300
paying corporation fees and costs? Santa Rosa 50 D St., Rm. 130
736 I have exempt status. Do I need to file Form 100 or Form 109 Stockton 31 East Channel St., Rm. 219
in addition to Form 199? Ventura 4820 McGrath St., Ste. 270
Minimum Tax and Estimate Tax West Covina 100 N. Barranca St., Ste. 600
712 What is the minimum franchise tax? Out of State Offices
714 My corporation is not doing business; does it have to pay the Chicago 1 N. Franklin, Ste. 400
minimum franchise tax? Chicago, IL 60606-3401
716 When are my estimate payments due? Houston 1415 Louisiana, Ste. 1515
Billings and Miscellaneous Notices Houston, TX 77002-7351
723 I received a bill for $250. What is this for? Long Island 1325 Franklin Avenue, Ste. 560
728 Why was my corporation suspended? Garden City, NY 11530
729 Why is my subsidiary getting a request for a return when we Manhattan 1212 Avenue of the Americas, 4th Floor
file a combined report? New York, NY 10036-1601
Tax Clearance
724 How do I dissolve my corporation?
725 What do I have to do to get a tax clearance?
726 How long will it take to get a tax clearance certificate?
727 My corporation was suspended/forfeited. Can I still get a
tax clearance?

Recycled
Recyclable

Page 56 Form 100S Booklet 1999