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amount on the applicable line of Schedule CA (540 or 540NR).

the amount on Form 592-B because of the difference in accounting

periods.

Enter the amount of other deductions from federal Schedule K-1 (1065),

box 13.

Line 13b – Low-Income Housing Credit

See the instructions for federal Schedule K-1 (1065), box 13, for examples

Any allowable credit is entered on form FTB 3521, Low-Income Housing

of other deductions. Also get FTB Pub. 1001 for differences between

Credit. However, the passive activity credit limitations of IRC Section 469

federal and state tax law for certain deductions.

may limit the amount of credit. Credits from passive activities are generally

limited to tax attributable to passive activities.

C Investment Interest

Caution: You cannot claim the low-income housing credit on any qualified

If the LLC paid or accrued interest on debts it incurred to buy or hold

low-income housing project for which any person was allowed any benefit

investment property, the amount of interest you can deduct may be limited.

under IRC Section 502 of the Tax Reform Act of 1986.

For more information and the special provisions that apply to investment

Line 13c – Other Credits Related to Rental Real Estate

interest expense, get form FTB 3526, Investment Interest Expense

Deduction, and federal Publication 550, Investment Income and Expenses.

Activities

The information you need to compute credits related to rental real estate

Line 12a – Interest Expense on Investment Debts

activities other than the low-income housing credit is provided with an

Enter the amount from column (d) on form FTB 3526 along with your

attached schedule.

investment interest expense from any other sources. Form FTB 3526 will

help you determine how much of your total investment interest is

Line 13d – Credits Related to Other Rental Activities

deductible.

Any information you need to compute credits related to rental activities

other than rental real estate activities is provided on this line with an

Line 12b(1) & Line 12b(2) – Investment Income and

attached schedule.

Investment Expenses

Line 13e – Nonconsenting Nonresident Member’s Tax Paid by

Use the column (d) amounts to determine the amount to enter on form

FTB 3526, line 1.

LLC

Caution: The amounts shown include only investment income and

This line shows any income tax paid on your behalf by the LLC if, as a

expenses included on lines 4a, 4b, 4c, 4e, and 10 of this

nonresident member, you did not sign form FTB 3832, Limited Liability

Schedule K-1 (568). The LLC should attach a schedule that shows the

Company’s Nonresident Members’ Consent, consenting to California’s

amount of any investment income and expenses included in any other lines

jurisdiction to tax your distributive share of the LLC income attributable to

of this Schedule K-1 (568). Use these amounts, if any, to adjust line 12b(1)

California sources.

and line 12b(2) to determine your total investment income and total

This line also shows any income tax paid on behalf of your LLC, by another

investment expenses from this LLC.

LLC of which your LLC is a member. This applies if form FTB 3832, Limited

Combine these totals with investment income and expenses from all other

Liability Company Nonresident Members’ Consent, is not signed on behalf

sources to determine the amount to enter on form FTB 3526, line 1.

of your LLC. This means that your LLC is not consenting to California’s

jurisdiction to tax your LLC’s distributive share of another LLC’s income

D Credits

attributable to California sources.

If you have credits that are passive activity credits, complete form

Note: You must attach a copy of Schedule K-1 (568) to your California

FTB 3801-CR Passive Activity Credit Limitations (corporations use form

return to claim the tax paid by the LLC on your behalf.

FTB 3802), in addition to the credit forms referenced. Get the instructions

For taxable years beginning on or after January 1, 2005, the tax may be

for form FTB 3801-CR (or form FTB 3802) for more information.

reduced by the amount of tax previously withheld and paid by the limited

liability company with respect to each nonconsenting, nonresident

Line 13a(1) – Withholding on LLC Allocated to All Members

member.

If taxes were withheld from payments to the LLC by another entity, this

If there was income tax paid on behalf of your LLC, you must attach a copy

withholding is allocated to all members according to their respective LLC

of the following to your California return to claim your share of the tax paid

interests. Your share is entered on line 13a(1).

by another LLC on behalf of your LLC:

Line 13a(2) – LLC Withholding on Nonresident Members

• The Schedule K-1 (568) issued to your LLC by another LLC.

• The Schedule K-1 (568) issued by your LLC.

If taxes were withheld-at-source on you as a domestic or foreign nonresi-

dent member, the amount of the withholding is entered on line 13a(2).

Line 14 – Other Credits

Line 13a(3) – Total Withholding

This line is used to report information you need to compute pass-through

Add the amounts on line 13a(1) and line 13a(2) together to get the total

credits and other items that are not includable on 13a through 13d but are

related to the trade or business activity. The LLC should provide a schedule

amount of withholding credit you have for the LLC year. If taxes were

and/or statement explaining any items.

withheld by the LLC or if there is a pass-through withholding credit from

another entity, the LLC must provide a completed Form 592-B, Nonresident

Credits that may be reported on line 14 (depending on the type of activity

Withholding Tax Statement. Attach Form 592-B to the front of your

they relate to) include:

California return to claim the amount withheld. The amount shown on

• Community Development Financial Institution Deposits Credit. Use

Form 592-B should be claimed on:

credit code 209.

• Form 540, California Resident Income Tax Return, line 40; or

• Disabled Access Credit for Eligible Small Businesses. Get form

• Form 540NR, California Nonresident or Part-Year Resident Income Tax

FTB 3548.

Return (Long Form), line 48; or

• Donated Agricultural Products Transportation Credit. Get form

• Form 541, California Fiduciary Income Tax Return, line 31; or

FTB 3547.

• Form 109, California Exempt Organization Business Income Tax Return,

• Employer Child Care Program/Contribution Credit. Get form FTB 3501.

line 22; or

• Enhanced Oil Recovery Credit. Get form FTB 3546.

• Form 100, California Corporation Franchise or Income Tax Return,

• Enterprise Zone (EZ) Hiring and Sales or Use Tax Credit. Get form

line 34; or

FTB 3805Z.

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

• Environmental Tax Credit. Get form FTB 3511.

line 33.

• Farmworker Housing Credit-Construction. Use credit code 207.

• Farmworker Housing Credit-Loan. Use credit code 208.

Schedule K-1 (568) may not be used to claim the withholding credit. If the

• Joint Strike Fighter Credit. Get form FTB 3534.

LLC is not on a calendar year, the amount on line 13a(3) may not match

Page 38 Schedule K-1 (568) Instructions 2005

Instructions For Form 568 - Limited Liability Company Return Of Income - State Of California Franchise Tax Board - 2005 Page 25

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