Instructions For Schedule Ca (540) - State Of California Franchise Tax Board (Page 4 of 7) in pdf

annuity rules for federal purposes, enter in column C the amount of the

Paid Family Leave Insurance (PFL) benefits, also known as Family

annuity payments you excluded for federal purposes.

Temporary Disability Insurance. If you received payments from the

PFL Program in 2004, enter the amount reported on your Form 1099-G

Caution: You may have to pay an additional tax if you received a

in Column B, line 19. For additional information, get FTB Pub. 1001,

taxable distribution from a qualified retirement plan before reaching age

Supplemental Guidelines to California Adjustments.

59½ and the distribution was not rolled over into another qualified plan.

Line 20 – U.S. Social Security Benefits

See Form 540, line 36 instruction; or Form 3805P, Additional Taxes on

Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.

California does not tax U.S. social security benefits or equivalent Tier 1

railroad retirement benefits. Enter in column B the amount of U.S.

Line 17 – Rental Real Estate, Royalties, Partnerships, S

social security benefits or equivalent Tier 1 railroad retirement benefits

Corporations, and Trusts, etc.

shown in column A.

Adjustments to federal income or loss you reported in column A

generally are necessary because of the difference between California

Line 21 – Other Income

and federal law relating to depreciation methods, special credits, and

a. California Lottery Winnings. California does not tax California

accelerated write-offs. As a result, the recovery period or basis you use

lottery winnings. Enter in column B the amount of California lottery

to figure California depreciation may be different from the recovery

winnings included in the federal amount on line 21 in column A.

period or amount used for federal purposes, and you may need to make

Note: Do not make an adjustment for lottery winnings from other

an adjustment to your income or loss. For more information, see the

states. They are taxable by California. California and federal laws allow

instructions for column B and column C, line 12.

gambling losses only to the extent of reported gambling income. If you

Note: California law does not conform to federal law for material

reduced your gambling income for California lottery income, you may

participation in rental real estate activities. Beginning in 1994, and for

need to reduce the losses included in the federal itemized deductions

federal purposes only, rental real estate activities conducted by persons

on line 37. Enter these losses on line 40 as a negative number.

in real property business are not automatically treated as passive

b. Disaster Loss Carryover from form FTB 3805V, line 6. If you have a

activities. Get form FTB 3801, Passive Activity Loss Limitations, for

California disaster loss carryover from your 2003 form FTB 3805V, Net

more information.

Operating Loss (NOL) Computation and NOL and Disaster Loss

Use form FTB 3801, Passive Activity Loss Limitations, to figure the total

Limitations, enter that amount as a positive number in column B.

adjustment for line 17 if you have:

c. Federal NOL deduction from Form 1040, line 21. If the amount on

• One or more passive activities that produce a loss; or

line 21 in column A includes a federal NOL, enter the amount of the

• One or more passive activities that produce a loss and any

federal NOL deduction as a positive number in column C. Get form

nonpassive activity reported on federal Schedule E.

FTB 3805V, Net Operating Loss (NOL) Computation and NOL and

Use form FTB 3885A, Depreciation and Amortization Adjustments, to

Disaster Loss Limitations – Individuals, Estates, and Trusts, to figure

figure the total adjustment for line 17 if you have:

the allowable California NOL deduction.

• Only nonpassive activities which produce either gains or losses (or

d. NOL Carryover from form FTB 3805V, Part III, line 5. The allowable

combination of gains and losses); or

NOL carryover under California law is different from the allowable NOL

• Passive activities that produce gains.

carryover under federal law. Use form FTB 3805V to figure the

Note: LLCs that are classified as partnerships for California purposes

allowable California NOL deduction and enter it as a positive number in

and limited liability partnerships (LLPs) are subject to the same rules as

column B.

other partnerships. LLCs report distributive items to members on

e. NOL deduction from form FTB 3805D, FTB 3805Z, FTB 3806,

Schedule K-1 (568), Member's Share of Income, Deductions, Credits,

FTB 3807, or FTB 3809. Enter in column B the total NOL deduction

etc. LLPs report to partners on Schedule K-1 (565), Partner's Share of

figured on the following forms.

Income, Deductions, Credits, etc.

• FTB 3805D, Net Operating Loss (NOL) Computation and Limitation –

Get FTB Pub. 1001 for more information about accumulation distribu-

Pierce's Disease;

tions to beneficiaries for which the trust was not required to pay

• FTB 3805Z, Enterprise Zone Deduction and Credit Summary, line 4b;

California tax because the beneficiary’s interest was contingent.

• FTB 3806, Los Angeles Revitalization Zone Deduction and Credit

Summary, line 2b,

Line 18 – Farm Income or (Loss)

• FTB 3807, Local Agency Military Base Recovery Area Deduction and

Adjustments to federal income or loss you report in column A generally

Credit Summary, line 4b; or

are necessary because of the difference between California and federal

• FTB 3809, Targeted Tax Area Deduction and Credit Summary, line 3b.

law relating to depreciation methods, special credits, and accelerated

write-offs. As a result, the recovery period or basis you use to figure

f. Other (describe).

California depreciation may be different from the amount used for

Reward from a crime hotline. Enter in column B the amount of a

federal purposes, and you may need to make an adjustment to your

reward authorized by a government agency that you received from a

farm income or loss.

crime hotline established by a government agency or nonprofit

Use form FTB 3801, Passive Activity Loss Limitation, to figure the total

organization and that is included in the amount on line 21 in column A.

adjustment for line 18 if you have:

Note: You may not make this adjustment if you are an employee of the

• One or more passive activities that produce a loss; or

hotline or someone who sponsors rewards for the hotline.

• One or more passive activities that produce a loss and any

Federal foreign earned income or housing exclusion. Enter in

nonpassive activity reported on federal Schedule F.

column C the amount deducted from federal income on Form 1040,

Use form FTB 3885A, Depreciation and Amortization Adjustments, to

line 21.

figure the total adjustment for line 18 if you have:

Beverage container recycling income. Enter in column B the amount

• Only nonpassive activities which produce either gains or losses (or

of this type of income that you included in the amount on line 21 in

combination of gains and losses); or

column A.

• Passive activities that produce gains.

Rebates or vouchers from a local water agency, energy agency, or

Line 19 – Unemployment Compensation

energy supplier. California law allows an income exclusion for rebates

California does not tax unemployment compensation. Enter on line 19,

or vouchers from a local water agency, energy agency, or energy

column B the amount of unemployment compensation shown in

supplier for the purchase and installation of water conservation

column A.

appliances and devices. Enter in column B the amount of this type of

income that you included in the amount on line 21 in column A.

Page 4 Schedule CA (540) Instructions 2004

Instructions For Schedule Ca (540) - State Of California Franchise Tax Board Page 4

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