Shareholder'S Instructions For Schedule K-1 (100s)

Basis is decreased by:

•

Gain or loss on sale of assets due to the effects

If you are a qualified investor reporting a

of different depreciation methods or basis.

qualified low-income housing project loss,

1. Fair market value of property distributions

•

Government bond interest income:

enter the California adjustment amount from

(including cash) made by the S corporation

column (c) directly on Schedule CA (540 or

a) U.S. bond interest is taxable for federal

(excluding dividend distributions reported on

540NR), as applicable.

purposes but not for California purposes.

Form 1099-DIV, Dividends and Distributions,

b) State bond interest (other than from

and distributions in excess of basis) reported on

•

If you have income on line 2, column (d) or

California bonds) is taxable for California

Schedule K-1 (100S), line 16d.

column (e) and no passive losses, enter the

purposes but not for federal purposes.

2. All losses and deductions (including

California adjustment from column (c) on

nondeductible expenses) reported on

Schedule CA (540 or 540NR), as applicable.

E Total amounts using

Schedule K-1 (100S).

Line 3 – Other net rental income (loss)

These items are not a complete list of factors that

California law – column (d)

The amount on line 3, column (d) or column (e) is a

determine basis. For examples, see Treas. Reg.

passive activity amount for all shareholders.

and California source

Section 1.1367-1.

•

If line 3, column (d) or column (e) is a loss, enter

amounts and credits –

At-risk rules

the loss on the applicable line of form FTB 3801.

Generally, if you have: (1) a loss or other deduction

•

If income is reported on line 3, column (d) or

column (e)

from an activity carried on as a trade or business

column (e) and you have no passive losses, enter

or for the production of income by the corporation;

the California adjustment from column (c) on

Shareholders who are California residents will use

and (2) amounts in the activity for which you are not

Schedule CA (540 or 540NR), as applicable.

amounts shown in column (d) because California

at-risk, you will have to complete federal Form 6198,

resident individuals are subject to personal income

Line 4 through Line 8 and Line 10a – Portfolio

At-Risk Limitations, to figure the allowable loss to

tax on all income from whatever source derived

income (loss)

report on your tax return. For California purposes,

(R&TC Section 17041). Nonresident shareholders

Income (loss) referred to as “portfolio” income

you must complete federal Form 6198 using

who do not conduct a trade or business that is

(loss) in these instructions is not part of a passive

California amounts.

unitary with the S corporation should use the

activity subject to the rules of IRC Section 469.

The at-risk rules generally limit the amount of loss

amounts in column (c), column (d) (for total

Portfolio income includes income not derived in the

(including loss on disposition of assets) and other

income purposes), column (e) (for California source

ordinary course of a trade or business from interest,

deductions (such as IRC Section 179 or R&TC

income purposes), and Table 1. If the nonresident

dividends, annuities, or royalties and gain (loss)

Sections 17267.2 and 17268 deductions) that you

shareholder conducts a unitary business with the

on the sale of property that produces these types

may claim to the amount you could actually lose in

S corporation, data in column (e) should not be

of income or is held for investment. If you have

the activity. Get the instructions for federal Schedule

used. Instead, the shareholder must combine its

amounts on Schedule K-1 (100S), line 4 through

K-1 (Form 1120S), for more information about the

share of the S corporation’s income with the income

line 8 and line 10a, report these amounts as follows:

At-Risk Limitation.

from its trade or business and apportion that income

•

Enter line 4, column (c) and/or column (e) on

using an apportionment percentage consisting of a

Passive activity limitations

Schedule CA (540 or 540NR), line 8, whichever

combination of the factors from its trade or business

Generally, California tax law conforms to federal IRC

column is applicable.

and the shareholder’s share of the factors from the

Section 469 rules that limit the deduction of certain

•

Enter line 5, column (c) and/or column (e) on

S corporation from Table 2. Amounts in Table 1

losses and credits.

Schedule CA (540 or 540NR), line 9, whichever

should be sourced to the residence or commercial

column is applicable.

These rules apply to shareholders who meet both of

domicile of the shareholder.

•

Enter line 6, column (c) and/or column (e) on

the following:

Schedule CA (540 or 540NR), line 17, whichever

Specific Line Instructions

•

Are individuals, estates, or trusts.

column is applicable.

•

Have a loss or credit from a passive activity.

•

Enter line 7 and line 8, column (d) or column (e)

Income (Loss)

A passive activity is generally a rental activity or a

on Schedule D (540 or 540NR).

trade or business activity in which the shareholder

•

Enter line 10a, column (d) or column (e) on the

Line 1 – Ordinary business income (loss)

does not materially participate.

applicable schedule.

The amount reported on line 1, column (d) or

If you have a loss or deductions from a passive

Generally, amounts reported on line 7 and line 8

column (e) is your share of the ordinary income

activity, you will need to complete form FTB 3801

are gains or losses attributable to the disposition

(loss) from the trade or business activities of

to figure the allowable amounts to report on your

of property held for investment and are therefore

the S corporation. Generally, where you report

individual tax return. You will also need to complete

classified as portfolio income (loss). If, however,

this amount on Form 540, Long Form 540NR, or

form FTB 3801, if you have passive activity income

an amount reported on line 7 or line 8, column (d)

Form 541 depends on whether or not the amount is

from this S corporation and passive activity loss or

or column (e), is a passive activity amount, the

from an activity that is a passive activity to you.

deduction from another source.

S corporation should identify the amount.

If, in addition to this passive activity income, you

The amounts reported on Schedule K-1 (100S),

The S corporation uses line 10a, column (d) or

have a passive activity loss from this S corporation

line 2 and line 3 are from rental activities of the

column (e), to report portfolio income other than

or from any other source, report the line 1,

S corporation and are generally passive activity

interest, dividend, royalty, and capital gain (loss)

column (d) or column (e) income on form FTB 3801.

income (loss) to all shareholders.

income. A statement will be attached to tell you what

If a loss is reported on line 1, column (d) or

kind of portfolio income is reported on line 10a,

There is an exception to this rule for losses incurred

column (e), report the loss on the applicable line of

column (d) or column (e).

by qualified investors in qualified low-income housing

form FTB 3801 to determine how much of the loss

projects. The S corporation will identify any of these

Line 9 – Net Section 1231 gain (loss)

is allowable.

qualified amounts on an attachment for line 2.

If the amount on line 9 relates to a rental activity,

Line 2 – Net rental real estate income (loss)

the IRC Section 1231 gain (loss) is a passive activity

Passive activity credits are also limited to passive

Generally, the income (loss) reported on line 2,

amount.

income. See the instructions for line 13d.

column (d) or column (e), is a passive activity

•

If the amount is not a passive activity amount

During 1993, the U.S. Congress made changes to the

amount to all shareholders. However, there is an

to you, report it on Schedule D-1, Sales of

passive activity loss provisions of the IRC relating

exception for losses from a qualified low-income

Business Property, line 2, column (g). You do

to real estate professionals. California has not

housing project. The loss limitations do not apply

not have to complete the information called for

conformed to those changes.

to qualified investors in a qualified low-income

in column (b) through column (f). Write “From

housing project. The S corporation will have attached

D California Adjustment –

Schedule K-1 (100S)” across these columns.

a schedule for line 2 to identify such amounts, if

•

If a gain is reported on line 9, column (d) or

applicable. Enter the California adjustment amount

Column (c)

column (e), and it is a passive activity amount

from column (c) on Schedule CA (540 or 540NR), as

to you, report the gain on Schedule D-1,

applicable.

Use this column to account for your proportionate

line 2, column (g), and refer to “Passive Loss

share of the differences in the computation of federal

Use the following instructions to determine where to

Limitations” in the instructions for Schedule D-1.

and California income.

enter a line 2 amount.

•

If a loss is reported on line 9, column (d) or

The most common adjustment items are as follows:

column (e) and it is a passive activity amount

•

If you have a loss on line 2, column (d) or

to you, report the loss on Schedule D-1,

column (e) (other than a qualified low-income

•

California minimum franchise tax.

line 2, column (g), and refer to “Passive Loss

housing project loss), enter this passive activity

•

Depreciation expense due to different basis of the

Limitations” in the instructions for Schedule D-1.

loss on the applicable line of form FTB 3801 to

assets or depreciation method used.

You will need to use form FTB 3801 to determine

determine how much of the loss is allowable.

how much of the loss is allowed on Schedule D-1.

Page 2 Schedule K-1 (100S) Instructions 2013

Shareholder'S Instructions For Schedule K-1 (100s) - 2013 Page 2

Related Articles

Related forms

Related Categories