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Line 7 – Royalties

Federal limitation amounts are different than California limitation amounts.

If you have an amount on Schedule K-1 (5 65), line 7, column (c), report this

The partnership will provide information on your share of the I R C

amount on Schedule CA (5 40 or 5 40N R), line 17, column B or column C,

Section 179 deduction and of the cost of the partnership’s I R C Section 179

whichever is applicable.

property so that you can compute this limitation. Your I R C Section 179

Line 8 and Line 9 – Net Short-term and Net Long-term Capital

deduction is also limited to your taxable income from all of your trades

Gain (Loss)

or businesses. Get form FTB 3885A, Depreciation and Amortization

If you have an amount on Schedule K-1 (565), line 8 or line 9, column (d),

Adjustments, and get federal Publication 534, Depreciating Property Placed

report this amount on the Schedule D (540 or 540NR), line 2.

In Service Before 1987, and Publication 946, How To Depreciate Property,

for more information.

Line 10a and Line 10b – Total Gain and Total Loss under I R C Section 1231

(Other Than Due to Casualty or Theft)

If the I R C Section 179 deduction is a passive activity amount, report it on

If the amounts on line 10a and line 10b relate to rental activity, the I R C

the applicable line of form FTB 3801. If it is not a passive activity amount and

Section 1231 gain (loss) is a passive activity amount. If the amounts on

there is an amount on Schedule K-1 (5 65), line 12, column (c), enter this

line 10a and line 10b relate to a trade or business activity and you are a

amount on Schedule CA (5 40 or 5 40N R), line 21f, column B or column C,

limited partner, the I R C Section 1231 gain (loss) is a passive activity amount.

whichever is applicable.

• If the amount is not a passive activity amount report it on Schedule D-1,

Refer to R&TC Sections 17267.2 and 17268 on how to figure the expense

line 2, column (g).

deduction for recovery property in an economic development area.

• If a gain is reported on line 10a, column (d), and it is a passive activity

Line 13a – Charitable Contributions

amount report the gain on Schedule D-1, line 2, column (g).

The partnership will provide a schedule that shows which contributions

• If a loss is reported on line 10b, column (d), and it is a passive activity

were subject to the 50%, 30%, and 20% limitations. See the instructions

amount, get form FTB 3801 to determine if your loss is limited.

for federal Form 10 40, U.S. Individual Income Tax Return, and federal

Line 11a – Other Portfolio Income (Loss)

Publication 526, Charitable Contributions, for more information.

The partnership uses line 11a, column (d), to report portfolio income

California has not conformed to any of the provisions of the Katrina

other than interest, dividend, royalty, and capital gain (loss) income. The

Emergency Disaster Relief Act of 2005.

partnership should attach a schedule to Schedule K-1 (5 65) to tell you what

If there is an amount on Schedule K-1 (5 65), line 13a, column (c), enter this

kind of portfolio income is reported on line 11a, column (d). An example of

amount on Schedule CA (5 40 or 5 40N R), line 41.

portfolio income that could be reported on line 11a, column (d), is from a

real estate mortgage investment conduit (REMIC) in which the partnership is

Line 13b – Investment Interest Expense

a residual interest holder.

If the partnership paid or accrued interest debts it incurred to buy or hold

investment property, the amount of interest you can deduct may be limited.

If the partnership has a residual interest in a R E M I C, it will report your share

For more information and the special provisions that apply to investment

of R E M I C taxable income (net loss) on the schedule. Report the adjustment

interest expense, get form FTB 3526, Investment Interest Expense

amount from column (c) on Schedule CA (5 40 or 5 40N R). The partnership

Deduction, and federal Publication 550, Investment Income and Expenses.

will also report your share of “excess inclusion” and your share of I R C

Section 212 expenses. If you itemize your deductions on federal Schedule A

Enter the amount from column (d) on form FTB 3526 along with your

(1040), Itemized Deductions, you may deduct these I R C Section 212

investment interest expense from any other sources. Form FTB 3526 will

expenses as a miscellaneous deduction.

help you determine how much of your total investment interest is deductible.

Line 11b and Line 11c – Total Other Income and Total Other Loss

Line 13c – I R C Section 59(e) Expenditures

Amounts reported on these lines are other items of income (loss) not

If you have an amount on Schedule K-1 (5 65) line 13c, see the instructions

included on line 1 through line 11a. The partnership should give you a

for the federal Schedule K-1 (10 65), box 13. The partnership should give you

description for each of these items.

a description and the amount of your share for each item applicable to this

category.

Use the instructions below to:

Line 13d – Deductions Related to Portfolio Income

• Report income or gain (not losses) from passive activities.

Amounts entered on this line are the deductions that are clearly and directly

• Report income, gain, or losses from all other passive activities.

allocable to portfolio income (other than investment interest expense and

If you have losses from passive activities, or a combination of income, gains,

expenses from a R E M I C). If you have an amount on Schedule K-1 (5 65),

and losses from passive activities, you must first complete form FTB 3801 or

line 13d, column (c), enter this amount on Schedule CA (5 40 or 5 40N R),

form FTB 3802 to determine if any of your losses are limited by the passive

line 41. If any of the line 13d amount should not be reported on Schedule CA

loss rules. Use the instructions below to report passive income and losses

(5 40 or 5 40N R), the partnership should identify these amounts.

after the passive loss limitations have been computed.

Line 13e – Other Deductions

Line 11b and line 11c items may include:

Amounts on this line are deductions not included on lines 12, 13a through

• Partnership gains from disposition of farm recapture property (get

13d. If there is an amount on Schedule K-1 (5 65), line 13e, column (c), enter

Schedule D-1) and other items to which I R C Section 1252 applies.

this amount on the applicable line of Schedule CA (5 40 or 5 40N R).

• Recoveries of bad debts, prior taxes, and delinquency amounts (I R C

See the instructions for federal Schedule K-1 (1065), box 13, for examples

Section 111). Report the amounts from line 11b and line 11c, column (c),

of other deductions. Also, get FTB Pub. 1001 for differences between federal

on Schedule CA (5 40 or 5 40N R), line 21f, column B or column C,

and California tax law for certain deductions.

whichever is applicable.

Line 14

• Gains and losses from wagering, I R C Section 165(d). Report the

The information reported in box 14 of the federal Schedule K-1(1065), does

amounts from line 11b and line 11c, column (c), on Schedule CA (5 40 or

not apply to California and therefore there is no line 14.

5 40N R), line 21f, column B or column C, whichever is applicable.

• Any income, gain, or loss to the partnership under I R C Section 751.

Credits

Report this amount on Schedule D-1, line 10.

If you have credits that are passive activity credits, complete form

• Specially allocated ordinary gain or loss. Report this amount on

FTB 3801-C R (use form FTB 3802 for corporations) in addition to the credit

Schedule D-1, line 10.

forms referenced. Get the instructions for form FTB 3801-C R (or form

• Net gain or loss from involuntary conversions due to casualty or theft.

FTB 3802) for more information.

The partnership will give you a schedule that shows the California

amounts to be entered on federal Form 4684, Casualties and Thefts,

Line 15a – Total Withholding

Section B, Part II, line 34, column (b)(i), column (b)(ii), and column (c).

Total Withholding is the sum of your distributive share of taxes withheld

from payments to the partnership by another entity (allocated to all partners

Deductions

according to their respective partnership interests) plus taxes withheld on

you by the partnership, or back up withholding on you as a domestic or

Line 12 – Expense Deduction for Recovery Property

foreign nonresident partner. If there is a pass-through withholding credit

For California the maximum amount of expense deduction for recovery

from another entity or taxes were withheld on you by the partnership,

property (I R C Section 179 deduction) that you can claim for all sources is

the partnership must provide a completed Form 592-B, Resident and

$25,000. The $25,000 limit is reduced if the total cost of I R C Section 179

Nonresident Withholding Tax Statement. Attach Form 592-B to the front of

property placed in service during the year exceeds $200,000.

Schedule K-1 (5 65) Instructions 2013 Page 5

Partner'S Instructions For Schedule K-1 (Form 565) - Partner'S Share Of Income, Deductions, Credits, Etc. - 2013 Page 5

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