Instructions For Form 568 - Limited Liability Company Return Of Income

Form 568 Instructions

•

Compute Schedule P (100, 540, 540NR or 541), up to the

Make the check or money order payable to the ‘‘Franchise Tax

line where the credit is to be taken.

Board.’’ Write the LLC’s federal employer identification number

•

Determine the credit to be utilized. The amount allowed is

(FEIN), SOS file number and ‘‘1998 Form 568’’ on the check or

the lesser of:

money order.

1. The total credit or the limitation based on the LLC’s

Mail Form 568 without payment to:

business income; or

FRANCHISE TAX BOARD

2. The net tax balance that may be offset by credits on

PO BOX 942857

Schedule P (100, 540, 540NR or 541) on the line above

SACRAMENTO CA 94257-0600

the line where the credit is to be taken.

If the LLC cannot file Form 568 by the due date, it is granted an

The following example shows the credit limit calculation for an

automatic 6 month extension without filing a request for

SMLLC that is owned by a C corporation. The SMLLC has a

extension.

LAMBRA credit of $4,000. The computation of the

The automatic extension does not extend the time to pay the

C corporation’s regular tax liability with the SMLLC income is

LLC fee or nonconsenting nonresident members’ tax. If the LLC

$5,000. The computation of the C corporation’s regular tax

is filing the return on extension, see form FTB 3537, Payment

liability without the SMLLC income is $3,000. The difference in

Voucher for Automatic Extension for Limited Liability

tax is $2,000, which is the C corporation’s credit limitation on all

Companies, to submit the required payment.

LLC credits. The owner of the SMLLC then performs the

If the 1998 annual LLC tax of $800 was not paid on or before

following steps:

the 15th day of the 4th month after the beginning of the taxable

1. Compute Schedule P (100), Side 2 down to line 4,

year, the tax should be remitted using the 1998 form FTB 3522,

column (c). The amount is $1,000.

Limited Liability Company Tax Voucher. To assure proper

2. Enter the limitation amount from Schedule P (100), Side 2,

application of the tax payment to the LLC account, do not send

line 4, column (c) in column (f).

the $800 with Form 568.

3. Enter the following amounts from the table below on the

Note: The 1999 annual LLC tax of $800 is due on or before the

Schedule P (100):

•

15th day of the 4th month after the beginning of the 1999

$4,000 from column (d) of the table below, to

taxable year (April 15, 1999, for calendar year filers). The

Schedule P (100), Side 2, line 5, column (a);

•

payment is sent with form FTB 3522. Do not mail the $800

$1,000 from column (f) of the table below, to Schedule P

annual LLC tax with Form 568.

(100), Side 2, line 5, column (b);

•

$3,000 from column (g) of the table below, to

Private Delivery Services

Schedule P (100), Side 2, line 5, column (d).

California law conforms to federal law regarding the use of

certain designated private delivery services to meet the ‘‘timely

(a) Credit

(b) Credit

(d) Total

(e)

(f) Credit

(g)

mailing as timely filing/paying’’ rule for tax returns and

name

amount

prior year

credit:

Limitation

used on

Carryover:

payments. See the instructions for federal Form 1065 for a list

credit

add

based on

Sch P

col. (d)

of designated delivery services. If a private delivery service is

carryover

col. (b) &

LLC

(but not

minus the

used, address the return to:

col. (c)

business

greater

smaller of

FRANCHISE TAX BOARD

income

than col

col. (e) or

SACRAMENTO CA 95827

(d) or

col. (f)

Caution: Private delivery services cannot deliver items to PO

col. (e))

boxes. If using one of these services to mail any item to the

FTB, DO NOT use an FTB PO box.

LAMBRA

$4,000

4,000

2,000

1,000

$3,000

H Limited Liability Company Tax and Fee

IMPORTANT: There is an exception to the general rule that

California classification is the same as federal classification. The

Annual Limited Liability Company Tax

exception exists in the case of an eligible business entity, other

LLCs are subject to an annual tax of $800 if they are doing

than one which, within the 60-month period preceding

business in California or have articles of organization accepted,

January 1, 1997:

or a certificate of registration issued by the SOS. The annual tax

•

Was not doing business in California;

is prepaid for the privilege of doing business in California, and is

•

Did not derive income from sources within California; or

due and payable on or before the 15th day of the 4th month

•

Had no members who were residents of California;

after the beginning of the taxable year. The annual tax must be

paid for each taxable year until a Form LLC-4/7, Certificate of

and that was properly classified as an association taxable as a

Cancellation, is filed with the SOS. See General Information S,

corporation (R&TC Section 23038(b)(1)(c)).

Cancelling a Limited Liability Company, for more information.

These entities are generally: 1) business trusts that were

Use form FTB 3522 to submit payment of the $800 annual LLC

classified as corporations under California law, but were

tax. Make the check or money order payable to the ‘‘Franchise

classified as partnerships for federal tax purposes for taxable or

Tax Board.’’ Write the LLC’s FEIN, SOS file number and ‘‘1999

income years beginning before January 1, 1997; and 2)

Form 3522’’ on the check or money order.

previously existing foreign SMLLCs that were classified as

corporations under California law but claimed to be partnerships

If the 15th day of the 4th month of an existing foreign LLC’s

for federal tax purposes for taxable or income years beginning

taxable year has passed before the existing foreign LLC

before January 1, 1997. These business trusts and previously

commences business in California or registers with the SOS, the

existing foreign SMLLCs will continue to be classified as

annual LLC tax should be paid immediately after commencing

corporations for California tax purposes and must continue to

business or registering with the SOS.

file Form 100, California Corporation Franchise or Income Tax

Limited Liability Company Fee

Return, unless they make an irrevocable election to be

In addition to the annual LLC tax, every LLC must pay a fee

classified or disregarded the same as they are for federal tax

based on total annual income. The LLC fee is due on or before

purposes. See form FTB 3574 and Title 18, Cal. Code of Reg.

the 15th day of the 4th month after the close of the LLC’s

Sections 23038(a)-(b).

taxable year. For taxable years beginning on or after January 1,

G When and Where to File

1996, use the following chart to compute the fee:

An LLC must file Form 568 (described in General Information H)

If total annual income from

The

and pay the LLC fee and any nonconsenting member’s tax by

Form 568, Side 1, line 1 is:

fee is:

the 15th day of the 4th month following the close of its taxable

over –

but not over –

year.

250,000

499,999

$ 500

Mail Form 568 with payment to:

500,000

999,999

1,500

FRANCHISE TAX BOARD

1,000,000

4,999,999

3,000

PO BOX 942857

5,000,000

and over

4,500

SACRAMENTO CA 94257-0601

Page 4

Form 568 Booklet 1998

Instructions For Form 568 - Limited Liability Company Return Of Income - 1998 Page 3

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