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following steps to figure the amount to enter

1250 property held one year or less, all

Line 36, Column (a) – Enter the IRC Section

on line 25.

depreciation is additional depreciation.

179 expense claimed on your California return

under R&TC Section 17201, and R&TC

• Add depreciation or depletion allowed or

Line 29b – Use 100% as the percentage for

Sections 17267.2, 17267.6, 17268, 24356.5,

allowable, amortization or ACRS deduc-

this line unless you have low-income rental

24356.6, 24356.7, and 24356.8 expenses that

tions if it is recovery property.

property described in IRC Section

were deducted when the property was placed

• Add the IRC Section 179 expense and

1250(a)(1)(B).

in service.

R&TC Sections 17267.2, 17267.6, 17268,

Line 29d – Enter the additional depreciation

24356.5, 24356.6, 24356.7, and 24356.8

Column (b) – Enter the recovery deductions

after 12/31/70 and before 1/1/77. If the

expenses deducted.

allowable on the property in prior tax years.

straight-line depreciation is more than the

• Subtract any IRC Sections 179 and 280F

Any deduction allowable under IRC Section

additional depreciation after 12/31/70 and

recapture amount included in gross

179 on that property is treated as if that

before 1/1/77, reduce line 29a by the excess

income in a prior taxable year because the

deduction was a recovery deduction under

amount, but not below zero.

business use of the property dropped to

IRC Section 168.

Line 29f – Refer to the instructions for federal

50% or less. Also subtract any R&TC

Line 37, Column (a) – Enter the depreciation

Form 4797, line 26f. California law generally

Sections 17267.2, 17267.6, 17268,

allowable on the IRC Section 179 amount

follows IRC Section 291 except IRC

24356.5, 24356.6, 24356.7, and 24356.8

from the time it was placed in service (on or

Sections 291(a)(3) and 291(b)(1) have been

recapture amount included in gross

after 1/1/87) or, under R&TC Sections

modified. Enter the ordinary income amount

income in a prior taxable year because the

17267.2, 17267.6, 17268, 24356.5, 24356.6,

computed according to the federal instruc-

property ceased to be qualified property.

24356.7, and 24356.8, from the time the

tions using California figures.

Note: Use the amount claimed on your

property was placed in service to the current

IRC Section 1252 Property

California return under R&TC Section 17201

year.

when adding or subtracting IRC Section 179

Partnerships, skip line 30a through line 30c.

Column (b) – Enter the recovery deductions

expense.

Partners should enter on the applicable lines

that would have been allowed if the property

of Part III amounts subject to IRC Section

You may have to include depreciation allowed

had not been predominantly used in a

1252 according to instructions from the

or allowable on another asset (and recompute

qualified business. Figure the deductions from

partnership.

the basis amount for line 24) if you use its

the year it was placed in service to the current

adjusted basis in determining the adjusted

year.

You may have ordinary income on the

basis of the property described on line 22. An

disposition of certain farm land held more

Line 38 – If the recapture amount on your

example is property acquired by a trade-in.

than one year but less than 10 years.

federal Form 4797, Part IV, line 35, is different

(See Section 1.1245-2(a)(4) of the federal

from the recapture amount on Schedule D-1,

Gain from disposition of certain farm land is

regulations.)

line 38, an adjustment is required on your

subject to ordinary income rules under IRC

Partnerships, LLCs and S corporations that

California return as follows:

Section 1252 before being considered under

sale, exchange or otherwise dispose of

IRC Section 1231 (Part I).

Individuals: Figure the difference between the

property for which an IRC Section 179

federal amount and the California amount, and

Line 30b – Enter 100% of line 30a on line 30b

expense deduction was previously passed

enter on the line for reporting the type of

if your property was held for 10 years or

through to the partners, members, or

business income that resulted in the recapture

longer. If your property was held for less than

shareholders, see the instructions under

on Schedule CA (540 or 540NR) as follows:

10 years, use the same percentage required

General Information B, Special Rules.

by federal law.

• If the federal amount is more than the

In all other cases, partnerships and LLCs

California amount, enter the difference on

Part IV

should enter the depreciation or depletion

Schedule CA, column B.

Complete column (a) of line 36 through line

allowed or allowable or amortization on

• If the California amount is more than the

38 of Part IV to figure the amount to be

line 25. Enter any IRC Section 179 and R&TC

federal amount, enter the difference on

recaptured if:

Sections 17267.2, 17267.6, and 17268

Schedule CA, column C.

expenses on Schedule K-1 (565 or 568),

• You took a deduction under IRC Section

Corporations: Form 100 or Form 100W, line 8,

line 22.

179 for property placed in service on or

other additions; or line 16, other deductions

after 1/1/87 [other than listed property, as

In all other cases, S corporations should enter

for the difference between California and

defined in IRC Section 280F (d)(4)]; and

the depreciation or depletion allowed or

federal recapture amounts.

• The property was not used predominantly

allowable, amortization, ACRS or MACRS

S corporations: Form 100S, line 7, other

in your trade or business at any time; or

deductions on line 25. Enter any IRC Sec-

additions; or line 13, other deductions for the

• You took a deduction under R&TC

tion 179 and R&TC Sections 17267.2,

difference between California and federal

Section 17267.2, 17267.6, 17268,

17267.6, and 17268 expenses on Schedule

recapture amounts. Also, Schedule K (100S)

24356.5, 24356.6, 24356.7, or 24356.8;

K-1 (100S), line 23.

and Schedule K-1 (100S), line 6 or line 10.

and

IRC Section 1245 Property

• That property ceased to be qualified

Partnerships or Limited Liability Companies:

California law generally is the same as federal

property before the close of the second

Schedule K (565 or 568) and Schedule K-1

law. See federal Form 4797 for examples of

taxable year after it was placed in service.

(565 or 568), line 7 or line 11.

IRC Section 1245 property.

IRC Section 280F Property. If you have listed

property that you placed in service in a prior

IRC Section 1250 Property

year and the business use dropped to 50% or

California law generally is the same as federal

less this year, figure the amount to be

law except for certain modifications to IRC

recaptured. Complete column (b), line 36

Section 1250(b). See R&TC Section 18171.

through line 38, of Part IV.

Line 29a – Enter the additional depreciation

Note: If you have more than one property

for the period after 12/31/76. For IRC Section

subject to the recapture rules, use separate

1250 property held more than one year,

statements to figure the recapture amounts

additional depreciation is the excess of actual

for each property and attach the statements to

depreciation over depreciation figured using

your return.

the straight-line method. For IRC Section

Schedule D-1 Instructions 2003 Page 3

Instructions For Schedule D-1 - Sales Of Business Property - State Of California Franchise Tax Board Page 3

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