Instructions For Form 568 - Limited Liability Company Return Of Income

Form 568 Instructions

allocable to portfolio income should be reported on line 12a of

Line 13c – Credits Related to Rental Real Estate Activities

Schedule K (568) and Schedule K-1 (568) (rather than line 10 of

Other Than Line 13b

Schedule K (568) and Schedule K-1 (568)).

Report any information that the members need to figure credits

related to a rental real estate activity, other than the low-income

Property held for investment includes a member’s interest in a

housing credit. Attach to each member’s Schedule K-1 (568) a

trade or business activity that is not a passive activity to the

schedule showing the amount to be reported and the applicable

LLC and in which the member does not materially participate.

form on which the amount should be reported.

An example would be the rule concerning a member’s working

interest in an oil and gas property (i.e., the member’s interest is

Line 13d – Credits Related to Other Rental Activities

not limited if the member does not materially participate in the

Use this line to report information that the members need to

oil and gas activity). Investment interest does not include

figure credits related to a rental activity. Attach to each

interest expense allocable to a passive activity. For more

member’s Schedule K-1 (568) a schedule showing the amount

information, get form FTB 3526, Investment Interest Expense

to be reported and the applicable form on which the amount

Deduction.

should be reported.

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

Line 13e – Nonconsenting Member Tax Paid by LLC

and Expenses

(Schedule K-1 (568) only)

Enter on line 12b(1) only the investment income included on

If income tax was paid by the LLC on behalf of nonresident

line 4a, line 4b, line 4c and line 4e of Schedule K (568) and

members who did not sign form FTB 3832, the amount paid is

Schedule K-1 (568). Enter on line 12b(2) only the investment

entered on the member’s Schedule K-1 (568), line 13e. This is

expense included on line 10 of Schedule K (568) and

not a distributive item. Members must attach a copy of

Schedule K-1 (568).

Schedule K-1 (568) to their California tax return to claim the tax

If items of investment income or expense are included in the

paid by the LLC on their behalf.

amounts that are required to be passed through separately to

the member on Schedule K-1 (568) (items other than the

Line 14 – Other Credits

amounts included on line 4 and line 10 of Schedule K-1 (568)),

Enter on an attached schedule each member’s allocable share

give each member a schedule identifying these amounts.

of any credit or credit information that is related to a trade or

Investment income includes gross income from property held for

business activity.

investment, gain attributable to the disposition of property held

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

for investment and other amounts that are gross portfolio

of activity they relate to) include:

income. Generally, investment income and investment expense

•

Community Development Financial Institution Deposits

do not include any income or expense from a passive activity.

credit. Use credit code 209.

Property subject to a net lease is not treated as investment

•

Disabled Access Credit for Eligible Small Businesses — get

property because it is subject to the passive loss rules. Do not

form FTB 3548.

reduce investment income by losses from passive activities.

•

Donated Agricultural Products Transportation credit — get

Investment expenses are deductible expenses (other than

form FTB 3547.

•

interest) directly connected with the production of investment

Employer Child Care Program/Contribution credit — get

income. Get the instructions for form FTB 3526 for more

form FTB 3501.

•

information on investment income and expenses.

Enhanced Oil Recovery credit — get form FTB 3546.

•

Enterprise Zone (EZ) Hiring & Sales or Use Tax credit —

Credits

get form FTB 3805Z.

•

Farmworker Housing Credit-Construction. Use credit

Line 13a(1) – Withholding on Payments to the Limited Liability Company

code 207.

•

Allocated to All Members

Farmworker Housing Credit-Loan. Use credit code 208.

•

If taxes were withheld from payments to the LLC by another

Los Angeles Revitalization Zone (LARZ) Hiring & Sales or

entity, this withholding is allocated to all members according to

Use Tax credit — get form FTB 3806.

•

their LLC interests.

Local Agency Military Base Recovery Area (LAMBRA) Hiring

& Sales or Use Tax credit — get form FTB 3807.

•

Line 13a(2) – Limited Liability Company Withholding on Nonresident

Manufacturers’ Investment credit — get form FTB 3535.

•

Members (Schedule K-1 (568) only)

Prison Inmate Labor credit — get form FTB 3507.

•

Research credit — get form FTB 3523.

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

•

Rice Straw credit. Use credit code 206.

nonresident member, the amount of this withholding is entered

•

Salmon and Steelhead Trout Habitat Restoration credit. Use

on the member’s Schedule K-1 (568), line 13a(2). This is not a

credit code 200.

distributive item.

•

Manufacturing Enhancement Area (MEA) Hiring Credit —

get form FTB 3808.

Line 13a(3) – Total Withholding (Schedule K-1 (568) only)

•

Targeted Tax Area (TTA) Hiring and Sales or Use Tax

The amounts on a member’s Schedule K-1 (568), line 13a(1)

Credit — get form FTB 3809.

and line 13a(2) are added together to get the total amount of

Line 14 may also include the distributive share of net income

withholding credit for that member for the LLC year. If taxes

were withheld by the LLC or if there is a pass-through

taxes paid to other states by the LLC. Subject to limitations of

R&TC Section 18001 and Section 18006, members may claim a

withholding credit from another entity, the LLC must provide

credit against their individual income tax for net income taxes

each affected member (including California residents) a

paid by the LLC to another state. The amount of tax paid must

completed Form 592-B. Members must attach Form 592-B to

be supported by a schedule of the credits, the states paid, and

the front of their California tax return to claim amounts withheld.

Schedule K-1 (568) may not be used to claim this withholding

evidence of payment of the tax. Refer the members to

Schedule S for more information.

credit.

Adjustments and Tax Preference Items

Line 13b

through

Line 13e – These lines relate to rental activities. Use line 14 to report

Line 15a

credits related to trade or business activities.

through

Line 15e – Enter each member’s distributive share of income and

Note: California line numbers are different from federal line

deductions that are adjustments and tax preference items. Get

numbers in this section.

Schedule P (540), Alternative Minimum Tax and Credit

Line 13b – Low-Income Housing Credit

Limitations — Residents; Schedule P (540NR), Alternative

Minimum Tax and Credit Limitations — Nonresidents or

IRC Section 42 provides a credit that may be claimed by

Part-Year Residents; Schedule P (541), Alternative Minimum

owners of residential rental projects providing low-income

Tax and Credit Limitations — Fiduciaries; or Schedule P (100),

housing. Generally, the credit is effective for buildings placed in

Alternative Minimum Tax and Credit Limitations — Corporations,

service after 1986. Get form FTB 3521, Low-Income Housing

Credit, for more information.

to determine amounts and for other information.

Page 12 Form 568 Booklet 1998

Instructions For Form 568 - Limited Liability Company Return Of Income - 1998 Page 11

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