California Schedule H (100) - Dividend Income Deduction - 2012 Page 2
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1
2Instructions for Schedule H (100)
Dividend Income Deduction
Important Information
In Farmer Bros. Co. v. Franchise Tax Board (2003)
The amount of the dividends that qualify for
108 Cal App 4th 976, 134 Cal Rptr. 2nd 390,
the dividends received deduction is the total
Revenue and Taxation Code (R&TC)
the California Court of Appeal found R&TC
amount of dividends received from that insurer,
Section 24410 was repealed and re-enacted
Section 24402 to be unconstitutional. A statute
multiplied by the insurer’s qualified dividend
to allow a “Dividends Received Deduction”
that is held to be unconstitutional is invalid and
percentage. The qualified dividend percentage
for qualified dividends received from an
unenforceable. Therefore, R&TC Section 24402
is determined under R&TC Section 24410(c).
insurer subsidiary. The deduction is allowed
deduction is not available.
To complete Part II:
whether or not the insurer is engaged in
Specific Instructions
1. Fill in columns (a) through (c).
business in California, if at the time of each
2. Enter in column (d) the total amount of
payment, at least 80% of each class of stock
A corporation may eliminate or deduct dividend
insurance dividends received.
of the insurer was owned by the corporation
income when certain requirements are met.
3. Enter the qualified dividend percentage in
receiving the dividend. For taxable years
The available eliminations or deductions are
column (e).
beginning on or after January 1, 2004, and
described below.
4. Multiply the amount in column (d) by the
before January 1, 2008, an 80% deduction
qualified dividend percentage in column (e)
was allowed for qualified dividends. For taxable
Part I – Elimination of
and enter that amount in column (f).
years beginning on or after January 1, 2008,
Intercompany Dividends (R&TC
5. Multiply the amount in column (f) by 85%
the deduction is increased to 85%. A portion
and enter the result in column (g).
Section 25106)
of the dividends may not qualify if the
6. Total the amounts on Part II, line 4,
insurer subsidiary paying the dividend is
A corporation may eliminate dividends received
column (g). Enter the amount from Part II,
overcapitalized for the purpose of the dividends
from unitary subsidiaries but only to the
line 4, column (g) on Form 100, Side 1,
received deduction. See Specific Instructions,
extent that the dividends are paid from unitary
line 11.
Part II, for more information.
earnings and profits accumulated while both
The calculation of the qualified dividend
For taxable years beginning on or after
the payee and payer were members of the
percentage should be presented in a
January 1, 2008, dividend elimination is
combined report. See R&TC Section 25106 for
supplemental schedule that is attached to
allowed regardless of whether the payer/
more information.
the taxpayer’s return. That schedule should
payee are taxpayer members of the California
Complete Part I and enter the total of Part I,
identify the amount of the net written
combined unitary group return, or whether
line 4, column (d) on Form 100, Side 1, line 10.
premiums for all the insurance companies
the payer/payee had previously filed California
in the commonly controlled group for the
tax returns, as long as the payer/payee filed
Part II – Deduction for Dividends
preceding five years (including an identification
as members of a comparable unitary business
Paid to a Corporation by an
of property/casualty premiums, life insurance
outside of California when the earnings and
Insurance Company (R&TC
premiums, and financial guarantee premiums),
profits from which the dividends were paid
the relative weight given to each class of net
arose.
Section 24410)
written premiums, and the total income of
In addition, dividend elimination is allowed
R&TC Section 24410 provides that a
the insurance companies in the commonly
for dividends paid from a member of a
corporation that owns 80% or more of
controlled group (including premium and
combined unitary group to a newly formed
each class of stock of an insurer is entitled
investment income for the preceding five
member of the combined unitary group if the
to 85% dividends received deduction for
years). For more information, see R&TC
recipient corporation has been a member of
qualified dividends received from that
Section 24410.
the combined unitary group from its formation
insurer. The deduction would be allowed
to its receipt of the dividends. Earnings and
regardless of whether the insurer does
profits earned before becoming a member of
business in California. The 85% deduction
the unitary group do not qualify for elimination.
applies to taxable years beginning on or after
See R&TC Section 25106 for more information.
January 1, 2008.
Page 24 Form 100 Booklet 2012
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