California Form 593-C - Real Estate Withholding Certificate - 2017 Page 3
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4Part II – Certifications Which Fully Exempt
Line 6 – Corporation
A corporation has a permanent place of business in California when it
Withholding
is organized and existing under the laws of California or it has qualified
Line 1 through Line 9
through the CA SOS to transact intrastate business. A corporation not
Check all boxes that apply to the property being sold or transferred.
qualified to transact intrastate business (such as a corporation engaged
exclusively in interstate commerce) will be considered as having a
Line 1 – Principal Residence
permanent place of business in California only if it maintains an office in
To qualify as your principal residence under IRC Section 121, you (or the
California that is permanently staffed by its employees after the sale.
decedent) generally must have owned and lived in the property as your
main home for at least two years during the five-year period ending on
S corporations must withhold on nonresident S corporation
shareholders. Get FTB Pub. 1017, Resident and Nonresident Withholding
the date of sale. Military and Foreign Service, get FTB Pub. 1032, Tax
Information for Military Personnel.
Guidelines, for more information.
You can have only one main home at a time. If you have two homes and
Line 7 – Partnership or Limited Liability Company (LLC)
Partnerships and LLCs are required to withhold on nonresident partners
live in both of them, the main home is the one you lived in most of the
and members. For more information, get FTB Pub.1017.
time.
There are exceptions to the two-year rule if the primary reason you are
Withholding is not required if the title to the property transferred is
recorded in the name of a California partnership or it is qualified to do
selling the home is for a change in the place of employment, health,
business in California.
or unforeseen circumstances such as death, divorce or termination of
registered domestic partnership, or loss of job, etc. For more information
Withholding is not required if the title to the property transferred is in the
about what qualifies as your principal residence or exceptions to the two-
name of an LLC, and the LLC meets both of the following:
year rule, get federal Publication 523, Selling Your Home. To get federal
• It is classified as a partnership for federal and California income tax
publications, go to irs.gov, or call 800.829.3676.
purposes.
If only a portion of the property qualifies as your principal residence, a
• It is not an SMLLC that is disregarded for federal and California
second Form 593-C will need to be completed to certify an exemption on
income tax purposes.
the portion not used as a principal residence.
If the LLC meets these conditions, the LLC must still withhold on
The allocation method should be the same as the seller/transferor used to
nonresident members. Get FTB Pub. 1017 for more information.
determine depreciation.
If the SMLLC is classified as a corporation for federal and California
Line 2 – Property last used as your principal residence
income tax purposes, then the seller/transferor is considered a
If the property was last used as the seller’s/transferor’s, or decedent’s
corporation for withholding purposes. Refer to Line 6.
principal residence within the meaning of IRC Section 121 without regard
If the LLC is an SMLLC that is disregarded for federal and California
to the two-year time period, no withholding is required. If the last use of
income tax purposes, then that single member is considered the
the property was as a vacation home, second home, or rental, you do not
seller/transferor and title to the property is considered to be in the name
qualify for the exemption. You must have lived in the property as your
of the single member for withholding purposes.
main home.
When completing Form 593-C as the single member of a disregarded
If you have two homes and live in both of them, the main home is the one
LLC, write on the bottom of the form that the information on the form
you lived in most of the time.
is for the single member of the LLC, so the Real Estate Escrow Person
Line 3 – Loss or Zero Gain
(REEP) will understand why it is different from the recorded title holder.
You have a loss or zero gain for California income tax purposes when
the amount realized is less than or equal to your adjusted basis. You
If the single member is:
Complete Form 593-C using:
must complete Form 593-E, Real Estate Withholding – Computation of
An individual
The individual’s information
Estimated Gain or Loss, and have a loss or zero gain on line 16 to certify
that the transaction is fully exempt from withholding.
A corporation
The corporation’s information
You may not certify that you have a net loss or zero gain just because you
A partnership
The partnership’s information
do not receive any proceeds from the sale or because you feel you are
An LLC
The single member’s information
selling the property for less than what it is worth.
Line 4 – Involuntary Conversion
Line 8 – Tax-Exempt Entity
The property is being involuntarily or compulsorily converted when both
Withholding is not required if the seller/transferor is tax-exempt under
of the following apply:
either California or federal law (e.g., religious, charitable, educational, not
for profit organizations, etc.).
• The California real property is transferred because it was (or
threatened to be) seized, destroyed, or condemned within the
Line 9 – Insurance Company, Individual Retirement Account, Qualified
meaning of IRC Section 1033.
Pension or Profit-Sharing Plan, or Charitable Remainder Trust
• The seller/transferor intends to acquire property that is similar or
Withholding is not required when the seller/transferor is an insurance
related in service or use in order to be eligible for nonrecognition of
company, individual retirement account, qualified pension or profit-
gain for California income tax purposes.
sharing plan, or a charitable remainder trust.
Get federal Publication 544, Sales and Other Dispositions of Assets, for
more information about involuntary conversions.
Line 5 – Non-recognition Under IRC Section 351 or 721
The transfer must qualify for nonrecognition treatment under
IRC Section 351 (transferring to a corporation controlled by transferor)
or IRC Section 721 (contributing to a partnership in exchange for a
partnership interest).
Real Estate W/H Forms Booklet 2016
Page 13
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