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Line 18 – Enter the difference between ordinary

Note: Use the amount claimed on your California

Part IV

federal gains or (losses) from line 18 on your

return under R&TC Section 17201 when adding

Complete column (a) of line 36 through line 38 of

return as follows:

or subtracting IRC Section 179 expense.

Part IV to figure the amount to be recaptured if:

•

Corporations: Form 100, line 7, other additions;

You may have to include depreciation allowed or

You took a deduction under IRC Section 179

or line 15, other deductions.

allowable on another asset (and recompute the

for property placed in service on or after

basis amount for line 24) if you use its adjusted

Exempt Organizations: Form 109, Part I,

1/1/87 (other than listed property, as defined

basis in determining the adjusted basis of the

line 4b, net gain (loss).

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

•

property described on line 22. An example is

The property was not used predominantly in

S corporations: Form 100S, line 7, other addi-

property acquired by a trade-in. (See

your trade or business at any time;

tions; or line 13, other deductions. Also, see

Section 1.1245-2(a)(4) of the federal regulations.)

instructions for Schedule K (100S), line 5 and

•

Partnerships and LLCs should enter the depreci-

You took a deduction under R&TC Section

line 6.

ation or depletion allowed or allowable or amorti-

17266, 17267.2, 17267.6, 17268, 24356.4,

Built-In Gains. For California purposes, when a

zation on line 25. Enter any IRC Section 179 and

24356.5, 24356.7 or 24356.8; and

•

C corporation elects to be an S corporation, cer-

R&TC Sections 17266, 17267.2 17267.6 and

That property ceased to be qualified property

tain items recognized in S corporation years are

17268 expenses on Schedule K-1 (565 or 568),

before the close of the second taxable year

subject to the C corporation tax rate instead of

line 22.

after it was placed in service.

the S corporation tax rate.

S corporations should enter the depreciation or

IRC Section 280F Property. If you have listed

Built-in gains are reported on Schedule D (100S),

depletion allowed or allowable, amortization,

property that you placed in service in a prior year

S Corporation Capital Gains and Losses and

ACRS or MACRS deductions on line 25. Enter

and the business use dropped to 50% or less

Built-In Gains. Get the Form 100S Booklet for

any IRC Section 179 and R&TC Sections

this year, figure the amount to be recaptured.

additional information.

17267.2, 17267.6 and 17268 expenses on

Complete column (b), line 36 through line 38, of

Partnerships and Limited Liability Companies:

Schedule K-1 (100S), line 23.

Part IV.

See instructions for Schedule K (565 or 568),

IRC Section 1245 Property

Note: If you have more than one property sub-

line 6 and line 7, and Schedule K-1 (565 or 568),

ject to the recapture rules, use separate state-

California law generally is the same as federal

line 6 and line 7.

ments to figure the recapture amounts for each

law except for amortization of railroad grading

Line 18b(1) – If the amount of your casualty and

property and attach the statements to your tax

and tunnel bores as provided for under IRC

theft loss is different for California and federal

return.

Section 185 (repealed) of the IRC.

purposes, enter the difference on California

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

See federal Form 4797 for examples of

Schedule CA (540 or 540NR), California

179 expense claimed on your California return

Section 1245 property.

Adjustments, line 38.

under R&TC Section 17201, and R&TC

IRC Section 1250 Property

Line 21 – Compare your federal amount entered

Sections 17266, 17267.2, 17267.6, 17268,

California law generally is the same as federal

on line 19 with your California amount entered on

24356.4, 24356.5, 24356.7 and 24356.8

law except for certain modifications to IRC

line 20. If the amount on line 19 is larger than

expenses that were deducted when the property

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

the amount on line 20, enter the difference on

was placed in service.

Line 29a – Enter the additional depreciation for

line 21(a) and on Schedule CA (540 or 540NR),

Column (b) – Enter the recovery deductions

line 14, column B. If the amount on line 20 is

the period after 12/31/76. For IRC Section 1250

allowable on the property in prior tax years. Any

property held more than one year, additional

larger than the amount on line 19, enter the dif-

deduction allowable under IRC Section 179 on

depreciation is the excess of actual depreciation

ference on line 21(b) and on Schedule CA (540

that property is treated as if that deduction was a

over depreciation figured using the straight-line

or 540NR), line 14, column C.

recovery deduction under IRC Section 168.

method. For IRC Section 1250 property held one

Part III

Line 37, Column (a) – Enter the depreciation

year or less, all depreciation is additional

allowable on the IRC Section 179 amount from

Generally, do not complete Part III for property

depreciation.

the time it was placed in service (on or after

held one year or less; use Part II instead.

Line 29b – Use 100% as the percentage for this

1/1/87) or, under R&TC Sections 17266,

Part III is used to compute recapture of deprecia-

line unless you have property described in IRC

17267.2, 17267.6, 17268, 24356.4, 24356.5,

tion and certain other items that must be

Section 1250(a)(1)(B).

24356.7 and 24356.8, from the time the property

reported as ordinary income upon the disposition

Line 29d – Enter the additional depreciation after

was placed in service until the current year.

of property. Complete line 22 through line 27 to

12/31/70 and before 1/1/77. If the straight-line

Column (b) – Enter the recovery deductions that

determine the gain on the disposition of the prop-

depreciation is more than the additional deprecia-

would have been allowed if the property had not

erty. If you have more than four transactions to

tion after 12/31/70 and before 1/1/77, reduce

been predominantly used in a qualified business.

report, use additional forms.

line 29a by the amount that the straight-line

Figure the deductions from the year it was

For examples of IRC Sections 1245, 1250, 1252,

depreciation exceeds additional depreciation, but

placed in service until the current year.

1254 and 1255 property, see instructions for

not below zero.

Line 38 – If the recapture amount on your fed-

federal Form 4797.

Line 29f – Refer to the instructions for federal

eral Form 4797, Part IV, line 35, is different from

Line 25 – Line 25 should reflect all adjustments

Form 4797, line 26f. California law generally fol-

the recapture amount on Schedule D-1, line 38,

due to deductions (whether for the same or other

lows IRC Section 291 except Section 291(a)(3)

an adjustment is required on the tax return as

property) allowed or allowable to you or any

and 291(b)(1). Enter the ordinary income amount

follows:

other person for depreciation or amortization. If

computed according to the federal instructions

Individuals: Schedule CA (540 or 540NR) as

you are not a partnership, LLC or an S corpora-

using California figures.

either a subtraction in column B or an addition in

tion, figure the amount to enter on line 25 as

IRC Section 1252 Property

column C on the line for reporting the type of

follows:

For partnerships, skip line 30a through

•

business income that resulted in the difference

Add depreciation or depletion allowed or

line 30c. Partners should enter on the applicable

between the state and federal recapture

allowable, amortization or ACRS deductions if

lines of Part III amounts subject to IRC

amounts.

it is recovery property.

Section 1252 according to instructions from the

•

Corporations: Form 100, line 7, other additions;

Add the IRC Section 179 expense and R&TC

partnership.

or line 15, other deductions for the difference

Sections 17266, 17267.2, 17267.6, 17268,

You may have ordinary income on the disposition

between state and federal recapture amounts.

24356.4, 24356.5, 24356.7 and 24356.8

of certain farm land held more than one year but

expenses deducted.

S corporations: Form 100S, line 7, other addi-

•

less than 10 years.

Subtract any IRC Section 179 and 280F

tions; or line 13, other deductions for the differ-

Gain from disposition of certain farmland is sub-

recapture amount included in gross income in

ence between state and federal recapture

ject to ordinary income rules under IRC

a prior taxable year because the business

amounts. Also, Schedule K (100S) and

Section 1252 before being considered under

use of the property dropped to 50% or less.

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

Section 1231 (Part I).

Also subtract any R&TC Sections 17266,

Partnerships or Limited Liability Companies:

17267.2, 17267.6, 17268, 24356.4, 24356.5,

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

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

24356.7 and 24356.8 recapture amount

your property was held for 10 years or longer. If

or 568) line 7 or line 11.

included in gross income in a prior taxable or

your property was held for less than 10 years,

income year because the property ceased to

use the same percentage required by federal.

be qualified property.

Page 2

Schedule D-1 Instructions 1998

Instructions For Schedule D-1 - Sales Of Business Property - California Franchise Tax Board Page 2

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