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f) The tax rate in Los Banos prior to April 1, 2005,

Income and Expenses of a Partnership or an S

business activity. Complete and attach form

was 7.25%.

Corporation. Attach a copy of federal Form 8825

FTB 3885L, Depreciation and Amortization

g) The tax rate in Sand City prior to April 1, 2005,

to Form 568. Use California amounts and attach a

(included in this booklet), to figure depreciation

was 7.25%.

statement reconciling any differences between

and amortization. Transfer the total from form

h) The tax rate in San Juan Bautista prior to April 1,

federal and California amounts.

FTB 3885L, line 6, to Form 568, Side 2, line 17a,

2005, was 7.25%.

or federal Form 8825, as appropriate (use

Note: Use worldwide amounts determined under

i) The tax rate in Montclair prior to April 1, 2005,

California amounts).

California law when completing these lines.

was 7.75%.

Do not include any expense deduction for

j) The tax rate in El Cajon prior to April 1, 2005, was

Note: Form 568, Schedule B, lines 4 through

depreciable property (IRC Section 179; Enterprise

7.75%.

line 12 has been separated to report total gains

Zones, R&TC Section 17267.2; Targeted Tax Area,

k) The tax rate in Stockton prior to April 1, 2005, was

and total losses. Net amounts are not longer

R&TC Section 17267.6; or Local Agency Military

7.75%.

reported.

Base Recovery Area, R&TC Section 17268) on

l) The tax rate in Capitola prior to April 1, 2005, was

Line 6 - Total Farm Profit

8.00%.

this line. This expense is not deducted by the

Line 7 - Total Farm Loss

m)The tax rate in Sebastopol prior to April 1, 2005,

LLC. Instead, the expense is passed through

Enter on line 6 the LLC's total farm profit from

was 7.625%.

separately to the members and is reported on

federal Schedule F (Form 1040), Line 36, Profit or

n) The tax rate in Santa Rosa prior to April 1, 2005,

line 9 of Schedule K (568) and Schedule K-1

Loss From Farming. Enter on line 7 the LLC's

was 7.50%.

(568).

o) The tax rate in Farmersville prior to April 1, 2005,

total farm loss from federal Schedule F

Schedule L — Balance Sheets

was 7.25%.

(Form 1040), Line 36, Profit and Loss From

Farming. Attach federal Schedule F to Form 568.

Line 15 – Penalties and Interest

Note: If Question 5a through Question 5c on

If the amount includable for California purposes is

Enter penalties and interest. See General

federal Form 1065, Schedule B, are all answered

different from the amount on federal Schedule F,

Information G, Penalties and Interest.

"Yes" and the LLC has 10 or fewer members, the

enter the California amount and attach an

LLC is not required to complete Schedules L,

Single Member LLC Information and Consent

explanation of the difference.

M-1, M-2, or Item F on Side 1 of Form 568 or

Please complete all requested information. If the

Line 8 - Total Gain from Schedule D-1

Item I on Schedule K-1 (568).

owner has both a federal Taxpayer Identification

Line 9 - Total Loss from Schedule D-1

Number (TIN) and a California SOS file number,

California’s reporting requirements for LLCs

Include only ordinary gains or losses from the

enter both. Provide the identification numbers of

classified as partnerships, are the same as the

sale, exchange, or involuntary conversion of

the entity that will report the items of income,

federal reporting requirements for partnerships.

assets used in a trade or business activity.

deductions, credits, etc., of the disregarded entity

The amounts reported on the balance sheet

Ordinary gains or losses from the sale, exchange,

and the type of return the owner will file. The

should agree with the books and records of the

or involuntary conversion of rental activity assets

owner will be responsible for limiting any credits

LLC and should include all amounts whether or

must be reported separately on Schedule K (568)

attributable to the disregarded entity.

not subject to taxation. Attach a statement

and Schedule K-1 (568), generally as part of the

explaining any differences between federal and

The LLC must treat the failure of the sole owner

net income (loss) from the rental activity.

state amounts or the balance sheet and the LLC’s

to sign this consent in the same manner as the

books and records. Follow the instructions for

An LLC that is a member in another LLC or

failure of a nonresident member to sign form

federal Form 1065, Schedule L.

partner in a partnership must include on

FTB 3832. See the Specific Line Instructions for

Schedule D-1, Sales of Business Property, its

Schedule T.

Schedule M-1 — Reconciliation

share of ordinary gains (losses) from sales,

If the single owner of the LLC signs the consent,

of Income (Loss) per Books With

exchanges, or involuntary conversions (other

complete only Form 568, Side 1, Schedule K, and

than casualties or thefts) of the other LLC’s or

Income (Loss) per Return, and

pay the amount due. Multiple member LLCs will

partnership’s trade or business assets.

Schedule M-2 — Analysis of

complete the remaining schedules, as

appropriate.

Line 13 through Line 22

Members’ Capital Accounts

California’s reporting requirements for LLCs are

Schedule A — Cost of Goods Sold

If the LLC is required to complete Schedule M-1

generally the same as the federal reporting

and Schedule M-2, the amounts shown should

California’s reporting requirements for LLCs are

requirements for partnerships.

agree with the LLC’s books and records and the

generally the same as the federal reporting

Follow the instructions for federal Form 1065 and

balance sheet amounts. Attach a statement

requirements for partnerships. Follow the

include only trade or business activity deductions

explaining any differences.

instructions for federal Form 1065, Schedule A.

on line 13 through line 21. Line 21 (Other

Note: Use worldwide amounts determined under

Deductions) includes repairs, rents and taxes. Do

Schedule B — Income and

California law when completing Schedule M-1.

not include any rental activity expenses or

Deductions

Also, the amounts on Schedule M-2 should equal

deductions that are allocable to portfolio income

the total of the amounts reported in Item I,

on these lines. Rental activity deductions and

Line 1 through Line 12

column (c), of all the members’ Schedules K-1

deductions allocable to portfolio income are

California’s reporting requirements for LLCs

(568).

separately reported on Schedule K (568) and

classified as partnerships are generally the same

Schedule K-1 (568).

as the federal reporting requirements for

Schedule O — Amounts from

partnerships.

Federal reporting requirements for organization

Liquidation Used to Capitalize a

and syndication expenses and uniform capitaliza-

Follow the instructions for federal Form 1065 and

Limited Liability Company

tion rules apply for California.

include only trade or business activity income on

line 1 through line 12. However, for California tax

Complete Schedule O if “initial return” is checked

Note: Use worldwide amounts determined under

purposes, business income of the LLC is defined

in Question I of Form 568.

California law when completing these lines.

using the rules set forth in R&TC Section 25120.

Schedule O is a summary of the entities

Claim of Right. To claim the deduction, enter a

Therefore, certain income that may be portfolio

liquidated to capitalize the LLC and the amount of

deduction on line 21. If you elect to take the

income for federal purposes may be included as

gains recognized in such liquidations.

credit instead of the deduction, remember to use

business income for California sourcing

the California tax rate, add the credit amount to

Include the complete names and identification

purposes. Do not include rental activity income or

the total on line 9, Total payments. To the left of

numbers of all entities liquidated. Check the

portfolio income on these lines. Rental activity

this total, write IRC 1341 and the amount of the

appropriate box for the type of entity liquidated.

income and portfolio income are separately

credit.

Include the amount of liquidation gains recog-

reported on Schedule K (568) and Schedule K-1

Line 17a – Depreciation and Amortization

nized in order to capitalize the LLC.

(568). Rental real estate activities are also

Enter on line 17a only the total depreciation and

reported on federal Form 8825, Rental Real Estate

amortization claimed on assets used in a trade or

Page 12 Form 568 Booklet (REV 01-06)

Instructions For Form 568 - Limited Liability Company Return Of Income - State Of California Franchise Tax Board - 2005 Page 12

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