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

Line 16e – Repayment of loans from shareholders

“Aggregate gross receipts, less returns and

Net nonbusiness income is computed by subtracting

If the line 16e payments are made on indebtedness

allowances” means the sum of the gross receipts

related nonbusiness expenses from the nonbusiness

with a reduced basis, the repayments result in

of the trades or businesses which you own and the

income.

income to you to the extent the repayments are

proportionate interest of the gross receipts of the

Table 2 – The S corporation will complete Schedule

more than the adjusted basis of the loan. See IRC

trades or businesses which you own and of pass-

K-1(100S), Table 2, Item A - C to report the

Section 1367(b)(2) for information on reduction in

through entities in which you hold an interest.

shareholder’s distributive share of property, payroll

basis of a loan and restoration of basis of a loan with

“Proportionate interest” is defined as follow:

and sales total within California.

a reduced basis. See federal Revenue Ruling 68-537,

•

In the case of a pass-through entity which

The shareholders will use Schedule K-1(100S),

1968-2 C.B. 372, for more information.

reports a profit for the taxable year, your profit

Table 2, Item C to determine if they meet threshold

Other Information

interest in the entity at the end of your taxable

amounts of California property, payroll, and sales.

year.

If the shareholder and S corporation are engaged in

•

In the case of a pass-through entity which

Line 17a and Line 17b – Investment income and

a single unitary business, the shareholder’s share of

reports a loss for the taxable year, your loss

investment expenses

the S corporation’s business income is entered on

interest in the entity at the end of your taxable

If the S corporation paid or accrued interest on debts

Table 2, Item A. The shareholder will then add that

year.

it incurred to buy or hold investment property, the

income to its own business income and apportion

•

In the case of a pass-through entity which is sold

amount of interest you can deduct may be limited.

the combined business income.

or liquidates during the taxable year, your capital

For more information and the special provisions

The shareholder’s share of the S corporation’s

account interest in the entity at the time of the

that apply to investment interest expense, get form

payroll, property, and sales data is in Table 2, Item C.

sale or liquidation.

FTB 3526, and federal Publication 550.

The business income in Table 2, Item A is combined

“Proportionate interest” includes an interest in

Use the column (d) or column (e) amounts on these

with the taxpayer’s other business income from the

a pass-through entity including a partnership,

lines to determine the amount to enter on form

unitary business. The apportionment numerator

S corporation, regulated investment company, real

FTB 3526, line 4a and line 5.

and denominator data are added to the appropriate

estate investment trust, or real estate mortgage

numerator and denominator of the shareholder’s

The amounts shown on line 17a and line 17b include

investment conduit.

payroll, property, and sales factors.

only investment income and expenses included on

For purposes of R&TC Section 17062(b)(4),

line 4 through line 6, line 10a, and line 12d of this

R&TC Section 23101 provides that for taxable years

“gross receipts” means the sum of gross receipts

Schedule K-1 (100S). The S corporation should

beginning on or after January 1, 2011, a taxpayer

from the production of business income, within

attach a schedule that shows you the amount of

is doing business if it actively engages in any

the meaning of subdivisions (a) and (c) of R&TC

any investment income and expenses included in

transaction for the purpose of financial or pecuniary

Section 25120, and the gross receipts from the

any other lines of your Schedule K-1 (100S). Use

gain or profit in California or if any of the following

production of nonbusiness income, within the

these amounts, if any, to adjust line 17a and line 17b

conditions are satisfied:

meaning of subdivision (d) of R&TC Section 25120.

to determine your total investment income and

“Proportionate interest” includes an interest in a

•

The taxpayer is organized or commercially

total investment expenses from this S corporation.

domiciled in California.

pass-through entity. See R&TC Section 17062 for

Combine these totals with investment income and

•

The sales as defined in subdivision (e) or (f)

more information.

expenses from all other sources to determine the

of R&TC Section 25120, of the taxpayer in

The pro-rata share of gain or loss on property subject

amount to enter on form FTB 3526, line 4a and

California, including sales by the taxpayer’s

to the IRC Section 179 expense deduction recapture

line 5.

agents and independent contractors, exceed the

should be reported on the Schedule K-1 (100S) as

Line 17c – Total taxable dividend distributions

lesser of $518,162 or 25% of the taxpayer’s total

other information. Follow the instructions on the

The S corporation must issue a federal

sales.

federal Form 4797 and federal Schedule K-1 (1120S)

Form 1099-DIV to you for this distribution. Report

•

The real property and tangible personal property

for the reporting requirements.

this amount as a taxable dividend on your tax return.

of the taxpayer in California exceed the lesser

If the S corporation listed any credit recapture on

of $51,816 or 25% of the taxpayer’s total real

Supplemental Information

line 17d, see your tax booklet for information on how

property and tangible personal property.

to report the credit recapture.

Line 17d – Other information

•

The amount paid in California by the taxpayer

The S corporation will provide supplemental

for compensation, as defined in subdivision (c)

Other State Taxes

information required to be reported to you on this

of R&TC Section 25120, exceeds the lesser of

line. If the S corporation is claiming tax benefits from

$51,816 or 25% of the total compensation paid

Line 18a through Line 18e

an EZ, LAMBRA, TTA, or MEA, the S corporation will

by the taxpayer.

You may claim a credit against your individual

give you your pro-rata share of (1) business income

If the shareholder’s distributive share of property,

tax for your share of net income taxes paid by

apportioned to the EZ, LAMBRA, MEA, or TTA,

payroll, or sales in California, when combined with

the S corporation to certain other states which

and (2) business capital gains and losses included

the shareholder’s property, payroll, or sales in

either impose a tax on the S corporation or do not

in (1) on this line. Get form FTB 3805Z, FTB 3807,

California from other pass-through entities or its own

recognize S corporation status. For purposes of this

FTB 3808, or FTB 3809 to claim any applicable credit

activities, exceeds the threshold amounts set forth

credit, net income taxes include your share of taxes

or business expense deduction.

in R&TC Section 23101, the shareholder is “doing

on, according to, or measured by income.

The S corporation may have provided an amount

business” in California and must file a return and pay

Residents are taxed on their pro-rata share of all

showing your proportionate interest in the

all applicable taxes, including the minimum franchise

income and generally receive a credit for taxes paid

S corporation’s aggregate gross receipts, less

tax if the member is a corporation or the applicable

to other states. Nonresidents and part-year residents

returns and allowances on Schedule K-1 (100S),

annual tax if the member is a business entity that is

use column (e) for your pro-rata share of California

line 17d. Legislation enacted in 1996 allows a

required to pay an annual tax.

source pass-through income.

qualified taxpayer to exclude from alternative

For more information, see R&TC Section 23101 or

minimum taxable income adjustments and items of

For more information, get California Schedule S,

go to ftb.ca.gov and search for law changes. Under

tax preference attributable to any trade or business.

Other State Tax Credit.

law changes, see general information and specific

A “qualified taxpayer” is defined as an individual,

examples on the application of doing business rules in

Other Shareholder Information

estate, or trust that meets both of the following:

California, especially if you are an out-of-state taxpayer

•

Is the owner of, or has an ownership interest in a

or have ownership interest in pass-through entities.

Table 1

trade or business.

The income data contained in Table 1 is not reflected

•

Has aggregate gross receipts, less returns and

in column (e) because the source of such income

allowances, of less than $1,000,000 from all

must be determined at the shareholder level. The

trades or businesses that the taxpayer is an

shareholder must make a determination whether

owner of, or has an ownership interest in, or

the nonbusiness intangible income item is from a

in the amount of that taxpayer’s proportionate

California source.

interest in each trade or business.

Page 4 Schedule K-1 (100S) Instructions 2013

Shareholder'S Instructions For Schedule K-1 (100s) - 2013 Page 4

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