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property for which an IRC Section 179 expense

f. Depreciation allowed or allowable (not

Note: The gain on property subject to the IRC

deduction was claimed in prior years by a

including the IRC Section 179 expense

Section 179 Recapture should be reported on the

partnership, limited liability company, or

deduction).

Schedule K and Schedule K-1 as supplemental

S corporation.

g. Amount of IRC Section 179 expense

information as instructed on the federal

Form 4797.

deduction (if any).

If a gain from the sale, exchange or disposition

h. An indication if the disposition is from a

for which an IRC Section 179 expense deduction

The LLC must provide all of the following

casualty or theft.

was claimed in a prior year, special rules apply.

information with respect to a disposition of

i. If this is an installment sale, compute the

Members should follow the instructions in federal

business property if an IRC Section 179 expense

installment amount by using the method

Form 4797, Part III, line 22.

deduction was claimed in prior years:

provided in form FTB 3805E, Installment

a. Description of the property.

LLCs should follow the instructions in federal

Sale Income. Enter the gain on line 5 of

b. Date the property was acquired and placed

Form 4797 with the exception that the amount of

the worksheet.

in service.

gain on property subject to the IRC Section 179

Based on the information above, compute the

c. Date the property was sold or other

recapture must be included in the total income for

gain or loss for the LLC using the following

disposition.

the LLC. Report the gain on property subject to

d. Gross sales price or amount realized.

worksheet. Enter the gain on the Limited Liability

the IRC Section 179 expense deduction recapture

Company Income Worksheet, line 17d.

e. Cost or other basis plus expense of sale

on line 17d of the Limited Liability Company

(not including the entity's basis reduction

Income Worksheet.

in the property due to IRC Section 179

expense deduction).

Worksheet for Computation of Gain or Loss

Property A

Property B

Property C

Total

1 Gross Sales Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 Cost or other basis plus expense of sale (do not reduce the entity’s

cost in the property by the IRC Section 179 expense deduction) . . . .

3 Depreciation allowed or allowable (including the IRC Section 179

expense deduction) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 Adjusted basis. Subtract the amount on line 3 from the amount on line 2

5 Total gain. Subtract the amount on line 4 from the amount on line 1.

Enter the total gain on the Limited Liability Income Worksheet, Line 17d

For assistance, visit the State Board of

Common trust funds are required to use the PBA

Additional Information

Equalization’s Website at or call

Code 525920. Investment clubs are required to

California Use Tax

their Information Center at (800) 400-7115 or

use PBA Code 523910.

TTY/TDD (800) 735-2929. Income tax information

General Information

Item F – Total Assets at End of Taxable Year

is not available at this number.

The use tax has been in effect in California since

See the instructions for Schedule L – Balance

July 1, 1935. It applies to purchases from out-of-

Sheets before completing this item.

Specific Instructions

state sellers and is similar to the sales tax paid on

If the LLC is required to complete this item, enter

purchases made in California.

the total assets at the end of the LLC’s taxable

Form 568

In general, LLCs must pay California use tax on

year. This is determined by the accounting

Fill In All Applicable Lines and Schedules

purchases made from out-of-state (for example,

method regularly used to maintain the LLC’s

Enter any items specially allocated to the

by telephone, over the Internet, by mail, or in

books and records. If there are no assets at the

members on the appropriate line of the member’s

person) if:

end of the taxable year, enter the total assets as of

Schedule K-1 (568) and the total amount on the

the beginning of the taxable year.

• The seller does not collect California sales or

line of Schedule K (568). Do not enter these items

use tax, and

Question J

directly on Form 568, Side 2, or on Schedule A or

• The LLC uses, gives away, stores, or

Enter the maximum number of members in the

Schedule D.

consumes the item in this state.

LLC at any time during the taxable year. The

Reminder: Whole numbers should be shown on

number of Schedules K-1 (568) attached to the

Example: The LLC purchases a conference table

the return and accompanying schedules.

Form 568 must equal the number of members

from a company in North Carolina. The company

Name, Address, SOS File Number, and FEIN

entered on Question J. Do not use abbreviations

ships the table from North Carolina to the LLC’s

Filing Form 568 without errors will expedite

or terms such as “Various.”

address in California for the LLC’s use and does

processing. Before mailing, make sure entries

not charge California sales or use tax. The LLC

Question K through Question V

have been made for the:

owes use tax on the purchase.

Check the “Yes” or “No” box.

• SOS file number (12-digits);

Complete the Use Tax Worksheet on page 11 to

Note: SMLLCs are excluded from providing a

• FEIN (9-digits); and

calculate the amount due.

Schedule K-1 (568).

• LLC legal or trade name or doing business as

Extensions to file. If the LLC requests an

(DBA).

Question K

extension to file its tax return, wait until the LLC

If the LLC leases a private mailbox (PMB) from a

An “ investment partnership ” is a partnership that

files its tax return to report the purchases subject

private business, rather than a PO box from the

meets both of the following criteria:

to use tax and to make the use tax payment.

United States Postal Service, include the box

1. No less than 90% of the cost of the

To avoid late payment penalties for use tax, the

number in the field labeled “PMB no.” in the

partnership’s total assets consist of:

LLC must report and pay the use tax with a timely

address area of the Form 568.

• Qualifying investment securities;

filed income tax return.

• Deposits at banks or other financial

Item C – Principal Business Activity (PBA)

Changes in use tax reported. Do not file an

institutions; and

Code

Amended LLC Return of Income to revise the use

• Office equipment and office space

California uses the 6-digit federal PBA Code

tax previously reported. If the LLC has changes to

reasonably necessary to carry on the

based on the North American Industry Classifica-

the amount of use tax previously reported on the

activities of an investment partnership.

tion System (NAICS).

original income tax return, contact the State

Board of Equalization.

Form 568 Booklet 2005 Page 9

Instructions For Form 568 - Limited Liability Company Return Of Income - State Of California Franchise Tax Board - 2005 Page 9

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