California Form 593-I - Real Estate Withholding Installment Sale Acknowledgement - 2013 Page 2
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1
2
3Instructions for Form 593-I
Real Estate Withholding Installment Sale Acknowledgement
What’s New
If you are the buyer, you must withhold on the
Foreign Address – Enter the information in
principal portion of each installment payment
the following order: City, Country, Province/
Promissory Note – The Franchise Tax Board
and complete Form 593-
I
. Have your real
Region, and Postal Code. Follow the country’s
(FTB) requires the real estate escrow person
estate escrow person send the completed
practice for entering the postal code. Do not
to attach a copy of the promissory note
Form 593-
I
, a copy of the promissory note, the
abbreviate the country’s name.
to Form 593-
I
, Real Estate Withholding
seller’s certified Form 593, and Form 593-V, to
Part III – Installment
Installment Sale Acknowledgement. To
the FTB with the withholding on the principal
facilitate the processing of this form, also enter
portion of the first installment payment.
Acknowledgement
the information from the promissory note
The withholding agent retains this form for a
requested in the new line added in Part III of
Attach to Form 593-
I
, a copy of the signed
minimum of five years and must provide it to
the form.
promissory note. If the buyer elected and
the FTB upon request.
certified the Optional Gain on Sale withholding
General Information
amount, also attach an executed copy of the
Specific Instructions
seller’s certification of Form 593 to Form 593-
I
.
For taxable years beginning January 1, 2010,
use Form 593-V, Payment Voucher for Real
Buyer Instructions
Promissory Note – Enter the terms of the
Estate Withholding, to submit real estate
promissory note and include the principal
Complete all four parts of Form 593-
I
.
withholding payments. Do not use Form 593,
amount, payment amount, interest rate, and
Real Estate Withholding Tax Statement, or
terms of repayment in months.
Part I – Buyer’s Information
Form 593-
I
to remit payments.
Part IV – Buyer’s
Enter your name as it is shown on the escrow
Installment Sales – For installment sales
instructions. Each buyer is required to withhold
Acknowledgement to Withhold
occurring on or after January 1, 2009, buyers
on individual payments and must complete
are required to withhold on the principal
By signing Part IV, you acknowledge that you
a separate Form 593-
I
. However, if you are
portion of each installment payment if the sale
will:
purchasing the property with your spouse/
of California real property is structured as an
RDP and both of you will be on the promissory
• Withhold on the principal portion of each
installment sale.
note, then include both of your names, social
installment payment.
Withhold on Installment Sale Elect-out
security numbers (SSNs) or individual taxpayer
• Authorize the real estate escrow person to
Method – If the seller elects not to report
identification numbers (ITINs), and signatures
withhold the required amount only on the
the sale on the installment method (Internal
on one form. If the buyer is a business, enter
first installment payment.
Revenue Code Section 453[d]), the seller must
the business name in the business name field.
• Withhold 3 1/3% (.0333) or the Optional
file a California tax return and report the entire
Gain on Sale withholding percentage, as
The buyer’s identification number (SSN, ITIN,
sale on Schedule D-1. After filing the tax return
specified by the seller on Form 593, on
federal employer identification number (FEIN),
and reporting the entire gain, the seller must
the principal portion of all subsequent
CA corporation (Corp) no., or CA Secretary of
submit a written request to the FTB to release
installment payments.
State (SOS) file no.) is required on each form
the buyer from withholding on the installment
• Give one copy of Form 593 to the seller by
to be valid.
sale payments. Once the request is received,
the 20th day of the month following the
FTB will issue an approval or denial within
Foreign Address – Enter the information in
month of the installment payments.
the following order: City, Country, Province/
30 days.
• Send each withholding payment, with
Region, and Postal Code. Follow the country’s
Registered Domestic Partners (RDP) – For
Form 593-V, and the completed Form 593
practice for entering the postal code. Do not
purposes of California income tax, references
to the FTB by the 20th day of the month
abbreviate the country’s name.
to a spouse, husband, or wife also refer to a
following the month of the installment
California RDP, unless otherwise specified.
payment (you do not need to obtain
Part II – Seller’s Information
When we use the initials RDP they refer to both
seller’s signature on each subsequent and
a California registered domestic “partner” and
Enter the seller’s name as it is shown on
completed Form 593).
a California registered domestic “partnership,”
the escrow instructions. Use a separate
• Promptly inform the FTB if the terms of
as applicable. For more information on
Form 593-
I
for each seller included on the
the installment sale, promissory note, or
RDPs, get FTB Pub. 737, Tax Information for
promissory note. However, if the sellers are
payment schedule change.
Registered Domestic Partners.
spouses/RDPs and both of them will be on the
• Be subject to penalties if you do not:
promissory note, then include both of their
– Withhold on the principal portion of
Purpose
names and SSNs or ITINs on one form. If the
each installment payment.
seller is a business, enter the business name in
– Send the withholding along with form
When California real estate is sold on an
the business name field.
593 to the FTB by the due date.
installment basis, the buyer is required to
– Send one copy of form 593 to the seller
withhold on the principal portion of each
The seller’s identification number (SSN, ITIN,
by the due date.
installment payment, an amount based on
FEIN, CA Corp no., or CA SOS file no.) is
either 3 1/3% (.0333) of the total sales price,
required on each form to be valid.
Make sure you copy all pages so you will have
or the Optional Gain on Sale withholding
the instructions for withholding on subsequent
If the seller is electing the Optional Gain
amount from Form 593, line 5, which is
payments. Give the original, with a copy of the
on Sale withholding amount, ask the seller
certified by the seller. There is no withholding
promissory note, and a completed Form 593,
to provide you the installment withholding
on the interest portion of the installment
to your real estate escrow person.
percentage that the seller calculated in the
payment.
instructions for the Form 593. Include this
installment withholding percentage in the
appropriate box and use this percentage as
part of the calculation for withholding on the
principal portion of each installment payment.
Form 593-
I
Instructions 2012 Page 1
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