Form 109 - California Exempt Organization Business Income Tax Return - 1998 Page 5
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5a. Organizations performing research for the
power of all classes of stock entitled to vote and
are available on California Form 592, Nonresident
government;
at least 80% of the total number of shares of all
Withholding Annual Return.
b. A college, university or hospital performing
other classes of stock of the corporation; or
Salaries, wages or other compensation for personal
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research for any person; and
Nonstock organization – an organization of which
services are reported on federal Form W-2 and Cali-
c. Organizations operating primarily for
at least 80% of the directors or trustees of such
fornia Form DE-7. For more information regarding
fundamental research.
organization are either representative of or are
information reporting requirements for wages and
directly or indirectly controlled by an exempt
6. Certain investment income for pension funds.
other compensation, contact the Employment Devel-
organization.
These include:
opment Department.
R Exempt Function Income
a. The gains or losses on the lapse or
A reporting requirement exists for interest paid on
termination of securities options
municipal bonds issued by a state other than Califor-
Exempt function income is:
(IRC Section 512(b)(5));
nia, or a municipality other than a California munici-
a. The amount derived from dues, fees, charges or
b. Loan commitment fees (IRC Section
pality and that are held by California taxpayers.
similar amounts of gross income from members;
512(b)(1)); and
Entities paying interest to California taxpayers on
b. The amount (other than gross income derived
c. The gains from the sale, exchange or
these types of bonds are required to report interest
from any unrelated trade or business that is reg-
disposition of real property and mortgages
payments aggregating $10 or more paid after
acquired from financial institutions in conser-
ularly carried on) set aside for religious, charita-
January 1, 1998. Information returns are due June 1,
ble, scientific, literary or educational purposes or
vatorship or receivership (IRC Section
1999. For more information get form FTB 4800, Fed-
for the prevention of cruelty to children or
512(b)(16)).
eral Tax-Exempt Non-California Bond Interest and
animals; and
Interest Dividend Payment.
7. Annual dues not exceeding $100 paid to an
c. In the case of an organization described in
agricultural or horticultural organization described
T Federal Form 990-T
R&TC Section 23701i, the amount set aside for
in IRC Section 512(d).
the payment of life, sick, accident or other
Refer to the Instructions for federal Form 990-T,
Exception
benefits.
Schedule E for further information regarding:
The exclusion rules described above do not apply to
S Information Returns
1. Debt-financed property;
social and recreational clubs (R&TC Section
2. Allocation rules for debt-financed property;
23701g), voluntary employees’ beneficiary associa-
Organizations engaged in an unrelated trade or busi-
3. Acquisition indebtedness;
tions (R&TC Section 23701i) and supplemental
ness may be required to file a federal information
4. Average acquisition indebtedness;
unemployment compensation benefits trusts (R&TC
return with the IRS and the FTB to report certain
5. Average adjusted basis; and
Section 23701n).
payments. Refer to the Instructions for federal
6. Adjusted basis of property.
California law is the same as federal law for organi-
Form 990-T, Other Forms You May Need To File, for
For the special rules for holding companies
zations described in IRC Section 501(c)(7) or
further information.
(R&TC Sections 23701h and 23701x and
501(c)(9).
There are severe penalties for failure to file informa-
IRC Sections 501(c)(2) and 501(c)(25)), see federal
Controlled organization means either a:
tion returns or include correct payee identification
Form 990-T, General Instructions for Consolidated
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numbers on the returns. Detailed filing instructions
Stock corporation – the ownership of stock pos-
Returns.
sessing at least 80% of the total combined voting
1998 Tax Rate Schedule for Trusts
IF THE TAXABLE INCOME IS . . .
COMPUTED TAX IS . . .
over—
but not over—
of the amount over—
$
0
$
5,131
$
0
+
1.0%
$
0
5,131
12,161
51.31
+
2.0%
5,131
12,161
19,193
191.91
4.0%
12,161
+
19,193
26,644
473.19
6.0%
19,193
+
26,644
33,673
920.25
8.0%
26,644
+
33,673
and over
1,482.57
9.3%
33,673
+
Specific Line Instructions
Apportionment Formula Worksheet
Side 1
(a) Total within
(b) Total within
(c) Percent within
Use only for unrelated trade or
and outside
California
California
(b) ÷ (a)
business amounts
Line 2 – Apportionment Formula
California
Apportion business income of corporations and
1. Property factor: Use the
associations attributable to sources within and out-
average yearly value of owned
side California is apportioned. Use the Apportion-
and rented real and tangible
ment Formula Worksheet to determine the
personal property used in the
apportionment percentage. Retain the worksheet in
your files.
business. See instructions . . . .
2. Payroll factor: Wages,
Instructions for Apportionment Formula
Worksheet —
and other compensation of
employees . . . . . . . . . . . . .
Line 1 – Property factor — Owned property is val-
ued at its original cost. Rented property is valued at
3. Sales factor: Gross sales
eight times its net annual rental.
and/or receipts less returns
Line 6 – Average apportionment percentage —
and allowances . . . . . . . . . .
Divide the total percentage on line 5 by the number
4. Multiply line 3, column (c) by 2 .
of factors that have amounts in column (a). The
sales factor must be counted as two factors. Organi-
5. Total percentage: Add the
zations that have all factors would have a denomina-
percentages in column (c)
tor of four (property, payroll and twice the sales
line 1, line 2 and line 4 . . . . . .
factor). However, do not include those factors with a
zero in the totals of both column (a) and column (b).
6. Average apportionment
Note: Specific Line Instructions are continued on
percentage: Divide line 5 by 4
page 13.
and enter the result here and
on Form 109, Side 1, line 2.
See instructions . . . . . . . . . .
Page 4
Form 109 Instructions 1998
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