Instructions For Schedule P (100) - 2013 (Page 3 of 5) in pdf

between the loss reported on the tax return for

to Schedule R, line 1c. Refigure the Schedule R

Appropriate adjustments must be made to

purposes of the regular tax and the refigured loss.

taking into account any AMT adjustments,

limit deductions from ACE for interest expense

then transfer the refigured net income from

in accordance with the provisions of R&TC

Line 2k – Merchant marine capital construction

Schedule R, line 35 to Schedule P (100), line 4b.

Sections 24344 and 24425.

funds

Amounts deposited in these funds are not

For combined reports, each taxpayer’s

Line 5b – Apportioned ACE

deductible for AMT. Earnings on these funds are

pre‑adjustment AMTI is the sum of (1) that

For apportioning taxpayers and members of

not excludable from gross income for AMT. If the

corporation’s apportioned share of combined

a combined report, ACE is apportioned and

corporation deducted these amounts or excluded

business pre‑adjustment AMTI and (2) any of that

allocated to California in the same manner as net

them from income for regular tax, add them back

corporation’s nonbusiness California source pre‑

income for purposes of the regular tax and AMTI

adjustment AMTI. For additional guidance in making

(FTB Legal Ruling 94‑3). The method described

on line 2k.

these computations, get FTB Pub. 1061, Guidelines

in the instructions for line 4b may be used to

Tax Preference Items

for Corporations Filing a Combined Report.

compute the California ACE.

Line 5a – ACE

Line 5e – Excess of AMTI increases over AMTI

Line 3a – Depletion

If this schedule is for a regulated investment

reductions from prior year ACE adjustments

In the case of mines, wells, and other natural

company or a real estate investment trust, skip

For combined reports, each taxpayer corporation

deposits, enter the amount by which the deduction

this line.

enters the excess of its prior year accumulated

for depletion under IRC Section 611 is more than

positive California ACE adjustments over its

the adjusted basis of the property at the end of

The ACE is the pre‑adjustment AMTI from line 4a

prior years accumulated negative California ACE

the corporation’s taxable year. Figure the adjusted

with additional adjustments. California’s ACE

adjustments.

basis without regard to the depletion deduction

adjustment generally follows the federal ACE

and figure the excess separately for each property.

adjustment rules in IRC Section 56(g). To compute

Line 7a – Reduction for disaster loss carryover

the California ACE, the federal ACE worksheet

deduction

California conformed in 1993 to the federal repeal

included in the instructions for the federal

If a disaster loss carryover is claimed in 2013,

of the AMT depletion adjustment for independent

Form 4626 can be used by taking into account the

enter the amount on this line.

oil and gas producers and royalty owners. Get

modifications of R&TC Sections 23456(e) and (f),

federal Form 4626 for more information. However,

Line 7b – AMT net operating loss (NOL) deduction

if applicable. For example:

the California depletion costs may continue to be

NOLs incurred in taxable years beginning on or

different from the federal amounts because of

Taxes. Taxes on, according to, or measured by

after January 1, 2013, shall be carried back to

prior differences in law and differences in basis.

income are not deductible from earnings and

each of the preceding two taxable years. For more

profits (E&P). Foreign taxes on, according to,

information, see What’s New section.

See IRC Section 291(a)(2) for reduction in the

or measured by income are not deductible even

amount allowable as a deduction in the case of

Any corporation entitled to a carryback period

though a foreign tax credit is not taken for federal

iron ore and coal.

pursuant to IRC Section 172(b)(3) may elect to

purposes. Environmental taxes imposed by IRC

relinquish/waive the entire carryback period with

Line 3b – Intangible drilling costs

Section 59A are not deductible from E&P.

respect to an NOL incurred in the 2013 taxable year.

If the corporation elected the optional 60‑month

Depreciation and Amortization. For property

By making the election, the corporation is electing

write‑off under IRC Section 59(e) for all property

placed in service on or after January 1, 1987, and

to carry an NOL forward instead of carrying it back

in this category, skip this line.

before January 1, 1990, the amount allowable as

in the previous two years. An election under IRC

Enter the amount by which excess intangible

depreciation or amortization must be determined

Section 172(b)(3) to forgo the carryback period for

drilling costs exceed 65% of net income from oil,

by using the state AMTI depreciable basis

the regular tax also applies for the AMT. Get form

gas, and geothermal properties.

as of the close of the taxable year beginning

FTB 3805Q for more information.

Figure excess intangible drilling costs as follows:

before January 1, 1990, and applying IRC

The AMT NOL is the NOL determined for regular

From the intangible drilling and development

Section 168(g). For property placed in service

tax except for the following:

costs allowable under IRC Section 263(c) or

in taxable years beginning on or after January 1,

1. For any taxable year beginning before 1988,

291(b) (except costs in drilling a nonproductive

1990, and before January 1, 1998, use the ADS

reduce the NOL amount by any preference

well), subtract the amount that would have been

described in IRC Section 168(g). For property

items attributable to the deferred tax that has

allowable if these costs had been capitalized and

placed in service in taxable years beginning on

not been paid.

either amortized over 120 months starting when

or after January 1, 1998, no ACE depreciation

2. In the case of a loss year beginning after

production began or treated according to an

adjustment is necessary.

1987, the NOL determined for regular tax for

election made under IRC Section 57(b)(2).

Dividends. Dividends deductible for regular

such year must be:

Net income from oil, gas, and geothermal properties

California tax purposes are deductible from E&P.

(a) Reduced by the positive AMT adjustments

is gross income from them, minus the deductions

The provision of IRC Section 56(g)(4)(C)(ii), for

and increased by the negative AMT

allocable to them, except for excess intangible

100% dividend, does not apply.

adjustments.

drilling costs and nonproductive well costs.

(b) Reduced by the tax preference items (but

The provisions of IRC Sections 56(g)(4)(C)(iii)

Figure the line 3b amount separately for oil and gas

only to the extent they increased the NOL

and (iv), for dividends from IRC Section 936

properties that are not geothermal deposits and for

as determined for regular tax).

companies and certain dividends received by

oil and gas properties that are geothermal deposits.

3. Reduce the AMT NOL by any expired losses.

certain cooperatives, do not apply.

4. The AMT NOL may not offset more than 90%

California conformed in 1993 to the limited federal

Certain Amortization Provisions. IRC

of the AMTI, Part I, line 6. Enter on line 7b the

repeal of intangible drilling costs preferences for

Section 56(g)(4)(D)(ii) was modified to specify that

smaller of the AMT NOL or 90% of the amount

independent producers. California now conforms

circulation expenditures under IRC Section 173

on line 6.

to the limit on the benefit of the exclusion of

(R&TC Section 24364) and organizational

the preference for intangible drilling costs of

Taxpayers that are members of a unitary group

expenditures under IRC Section 248 (R&TC

40% of AMTI. See the instructions for federal

filing a combined report must separately compute

Section 24407) do not apply to expenditures paid

Form 4626. Also, note that the intangible drilling

the NOL carryover or carryback and application

or incurred in taxable years beginning on or after

costs amounts may differ from federal amounts

of the NOL carryover or carryback for each

January 1, 1990, for E&P calculations.

because of prior differences in the law.

corporation in the group (R&TC Section 25108).

Interest Income. For entities not subject to the

Line 4b – Apportioned pre-adjustment AMTI

The amount carried over or carried back for AMT

minimum franchise tax, interest income included

is likely to differ from the amount (if any) that

For taxpayers required to apportion their income,

in E&P must not exceed the amount of interest

is carried over or carried back for regular tax;

pre‑adjustment AMTI is apportioned and allocated

income included for regular tax purposes.

therefore, it is essential that the corporation retain

to California in the same manner as net income

adequate records for both AMT and regular tax.

for purposes of the regular tax. This may be

done by transferring the amount from line 4a

Schedule P (100) Instructions 2013 Page 3

Instructions For Schedule P (100) - 2013 Page 3

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