Forms & Instructions 100 - Franchise Tax Board … & Instructions 100 2002 Corporation Tax Booklet...

STATE OF CALIFORNIAFRANCHISE TAX BOARD

CaliforniaCaliforniaCaliforniaCaliforniaCaliforniaForms & Instructions

100100100100100

20022002200220022002Corporation Tax Booklet

(Not to be used byWater’s-Edge Taxpayers)

Members of the Franchise Tax Board

Kathleen Connell, ChairJohn Chiang, Member

B. Timothy Gage, Member

This booklet contains:Form 100, California CorporationFranchise or Income Tax ReturnSchedule H (100), Dividend IncomeDeductionSchedule P (100), Alternative MinimumTax and Credit Limitations — CorporationsFTB 3539, Payment Voucher for AutomaticExtension for Corporations and ExemptOrganizationsFTB 3565, Small Business StockQuestionnaireFTB 3805Q, Net Operating Loss (NOL)Computation and NOL and Disaster LossLimitations — CorporationsFTB 3885, Corporation Depreciation andAmortization

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Table of Contents

Form 100, California Corporation Franchise or Income Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Instructions for Form 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Schedule H (100), Dividend Income Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Instructions for Schedule H (100) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Schedule P (100), Alternative Minimum Tax and Credit Limitations — Corporations . . . . . . . . . . . . . . . . . . . . 25

Instructions for Schedule P (100) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

FTB 3539, Payment Voucher for Automatic Extension for Corporations and Exempt Organizations . . . . . . . . 39

Instructions for form FTB 3539 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

FTB 3565, Small Business Stock Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41


FTB 3805Q, Net Operating Loss (NOL) Computation and NOL andDisaster Loss Limitations — Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Instructions for form FTB 3805Q . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

FTB 3885, Corporation Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37


Form 100 Booklet 2002 (REV 03-04)

Form 100 Booklet 2002

Instructions for Form 100California Corporation Franchise or Income Tax ReturnReferences in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2001, and to the California Revenue and Taxation Code (R&TC).

What’s New/Tax Law ChangesIn general, California law conforms to theInternal Revenue Code (IRC) as of January 1,2001. Therefore, California has conformed tothe income tax changes made to the IRC bythe federal Internal Revenue Service Restruc-turing and Reform Act of 1998 (PublicLaw 105-206), the Tax and Trade ReliefExtension Act of 1998 (Public Law 105-277),the Surface Transportation Revenue Act of1998 (Public Law 105-178), the Ricky RayHemophilia Relief Fund Act of 1998 (PublicLaw 105-369), the Ticket to Work and WorkIncentives Improvement Act of 1999 (PublicLaw 106-170), the Miscellaneous Trade andTechnical Corrections Act of 1999 (Public Law106-36), the FSC Repeal and ExtraterritorialIncome Exclusion Act of 2000 (Public Law106-519), the Consolidated AppropriationsAct of 2001 (Public Law 106-554), and totechnical corrections made by the EconomicGrowth and Tax Relief Reconciliation Act of2001 (Public Law 107-16). However, thereare continuing differences between Californiaand Federal law. California has not conformedto some of the law changes made by theEconomic Growth and Tax Relief Reconcilia-tion Act of 2001 (Public Law 107-16) or thefederal Job Creation and Worker AssistanceAct of 2002 (Public Law 107-147).Note: Fiscal year taxpayers are subject toCalifornia tax law as it conforms to federal lawthat is applicable for taxable years beginningprior to January 1, 2002.For the 2002 taxable year only, no addition totax shall apply with respect to any underpay-ment of estimated tax to the extent theunderpayment of an installment was createdor increased by any provisions of law enactedor amended by an act chaptered during the2002 calendar year. To request a waiver ofunderpayment of estimated tax penalty, getform FTB 5806, Underpayment of EstimatedTax by Corporations.For taxable years beginning on or afterJanuary 1, 2002, California law conforms tothe federal law relating to:• Employer deductions for Vacation and

Severance Pay. For purposes of determin-ing whether an item of compensation isdeferred compensation under IRCSection. 404, the compensation is not"paid" or "received" until actually receivedby the employee. In addition, an item ofdeferred compensation is not "paid to anemployee" until actually received by theemployee.

• Trade receivables arising out of the sale ofnonfinancial goods and services that areheld by the taxpayer or a related person atall times since they were issued are noteligible for mark-to-market treatment.

• The denial of the deduction for lobbyingactivities, club dues, and employeeremuneration in excess of one milliondollar.

• The deduction for contributions ofappreciated property. Contributions ofappreciated property are no longer treatedas tax preference item for purposes ofAlternative Minimum Taxable Income.

• The methodology for calculating deduc-tions for bank bad-debt losses, whichlimits these deductions for large banks(have more than $500 million in assets) toactual losses rather than contributions to areserve for bad debts. Large banks mustrecognize 50% of their existing bad-debtreserve balances as income in taxable year2002. For more information, seequestion AA and Schedule G instructions.

For taxable years beginning on or afterJanuary 1, 2002, the credit for prior yearalternative minimum tax (AMT) has to beapplied before any credits that can reduce theregular tax below the tentative minimum tax(TMT) in accordance with California Revenueand Taxation Code (R&TC) Section 23036 (c).For taxable years beginning in 2002 and 2003,California has suspended the Net OperatingLoss (NOL) carryover deduction. Taxpayersmay continue to compute and carryover anNOL during the suspension period. However,the deduction for disaster losses is notaffected by the NOL suspension rules.The carryover period for suspended losses isextended by two years for losses incurredbefore January 1, 2002, and by one year forlosses incurred after January 1, 2002, andbefore January 1, 2003. For more information,see form FTB 3805Q included in this booklet.For taxable years beginning on or afterJanuary 1, 2002, the NOL carryover computa-tion for the California taxable income of anonresident or part-year resident is no longerlimited by the amount of net operating lossfrom all sources. Only your California sourcedincome and losses are considered in deter-mining if you have a California NOL. For moreinformation, get FTB Pub. 1100, Taxation ofNonresidents and Individuals Who ChangeResidency, and form FTB 3805V, Net Operat-ing Loss (NOL) Computation and NOL andDisaster Loss Limitations – Individuals,Estates, and Trusts.The authority of the Wildlife ConservationBoard to award Natural Heritage PreservationTax Credit has been suspended betweenJuly 1, 2002, and June 30, 2003, inclusive.Thus, any credits that were allocated beforeJune 30, 2002, may be claimed on the 2002tax return. Any credits that could have beenallocated, but were not allocated, or any newcredits that are allocated on or after July 1,2003, could be claimed on the 2003 taxreturn, or subsequent tax returns. Carryoveris not affected for previously awarded credits,credits awarded before June 30, 2002, or anycredits allocated on or after July 1, 2003.For taxable years beginning on or afterJanuary 1, 2002, California no longer allows afederal S corporation to elect to be a California

C corporation. Therefore, for the taxable yearbeginning in 2002, and thereafter, anycorporation with a valid federal S corporationelection is considered an S corporation forCalifornia purposes. The effective date of theelection is the first day of the corporation'staxable year beginning in 2002.California allows these corporations to requesta portion of their 2002 taxable year'sestimated tax payments be transferred to thepersonal income tax accounts of theirshareholders. Transfers are allowed only forS corporation taxable year beginning in 2002,and only if the total amount to be transferredis at least $500. For more information, getform FTB 3833, Application for Transfer ofS Corporation 2002 Overpayments toShareholders.Corporations that elect to be an S corporationfor federal purposes on or after January 1,2002, and have a California filing requirementare deemed to make the California S electionon the same date as the federal election.For taxable years beginning on or afterJanuary 1, 2002, if the corporation's totalreceipts (see page 15 of the instructions) forthe taxable year and total assets at the end ofthe taxable year are less than $250,000, theCorporation is not required to completeSchedules L, M-1, and M-2. However, thisinformation must be available in the futureupon request.California law has not conformed to federallaw regarding the additional 30% first-yeardepreciation allowance for qualified propertyor the additional 30%t first-year depreciationallowance for Qualified New York Liberty Zoneproperty as added by the federal Job Creationand Worker Assistance Act of 2002 (PublicLaw 107-147).

Important Information• You can download, view, and print

California tax forms, instructions,publications, FTB Notices and LegalRulings after 1995 from our Website:www.ftb.ca.gov. Information about otherstate agencies can be accessed throughthe State Agency Index located on theCalifornia State Website: www.ca.gov

• In Ceridian v. Franchise Tax Board (2000)85 Cal.App.4th 875, the Court of Appealhas determined that R&TC Section 24410,that provides a limited deduction fordividends received from an insurancecompany, is unconstitutional. As such, thestatute is invalid and unenforceable.Therefore, the deduction is not available.

• Check Out Your CPAThe California Board of Accountancy (CBA)licenses and regulates individual CertifiedPublic Accountants (CPA) and PublicAccountants (PA), as well as accountancyfirms and corporations, in California.If you currently use or are thinking aboutusing a CPA or PA for tax preparation or


other services, the California Board ofAccountancy can:• Verify online or by telephone that the

CPA, PA, or firm has a current licenseto practice.

• Provide information about anydisciplinary actions taken against thelicense.

• Answer your questions about whether aparticular service or activity of alicensee is regulated by the CBA.

• Provide you with the information andforms to file a complaint against anindividual or business regulated by theCBA. Complaints can be submittedonline, by mail, facsimile, or at the CBAoffice.

Web: www.cba.ca.govE mail enforcementinfo.cba.ca.govTelephone (916) 263-3680Fax: (916) 263-3675Mail: California Board of Accountancy

2000 Evergreen Street, Suite 250Sacramento, CA 95815

• Nonresidents who had tax withheld mayuse the withholding as a credit against taxwhen they file a California tax return. R&TCSection 18662 requires buyers to withholdincome taxes when purchasing Californiareal property from corporate sellers withno permanent place of business inCalifornia immediately after the transfer.For more information, see FTB Pub. 1016.Sellers of California real estate must attachcopy B of Form 597, Nonresident With-holding Tax Statement for Real EstateSales, to their tax return as proof ofwithholding. If you need to verify withhold-ing payments, you may call the Nonresi-dent Withholding Section at: toll free(888) 792-4900 or (916) 845-4900.

California conforms to federal law for thefollowing provisions:• AMT treatment of contributions of

appreciated property.• The disallowance of the deduction for club

membership fees and the disallowance ofthe deduction for employee remunerationin excess of $1 million.

• The disallowance of the deduction forlobbying expenses.

• Enhanced charitable contribution deduc-tion for corporate contributions ofcomputer technology and equipment.Corporations will receive an additionaldeduction for contributing computertechnology and equipment to be used foreducational purposes by schools located inCalifornia. The additional deduction isequal to the corporation’s basis in theproperty plus one-half of the amount ofordinary income that would have beenrealized if the property had been sold. Thisprovision does not apply to contributionsmade during any taxable year beginning onor after January 1, 2000.

• Expensing of Environmental RemediationCosts. Certain environmental remediationexpenditures that would otherwise bechargeable to capital accounts may beexpensed and taken as a deduction in the

year the expense was paid or incurred. Anelection to expense environmentalremediation costs for federal purposes isconsidered an election for state purposesand a separate election is not allowed.

• Shrinkage Estimates for InventoryAccounting. For purposes of inventoryaccounting, an adjustment for shrinkage,based on an estimate, may be made.Taxpayers can voluntarily change theirmethod of accounting if the methodcurrently being used does not utilizeestimates of inventory shrinkage and thetaxpayer now wishes to use that method.

• Timeshare associations may qualify fortax-exempt status like other homeowners’associations.

• Required recognition of gain on certainappreciated financial positions in personalproperty.

• Election of mark-to-market for securitiesand commodities traders. Allows securitiestraders and commodities traders anddealers to elect to use mark-to-marketaccounting similar to what is currentlyrequired for securities dealers. Commodi-ties would include only commodities of akind that are dealt with in the organizedcommodities exchange. An election to usethe mark-to-market method for federalpurposes is considered an election forstate purposes and a separate election isnot allowed.

• Limitation on exception for investmentcompanies under IRC Section 351.

• Expansion of deduction for certain interestand premiums paid for company-ownedlife insurance.

• Modification of holding period applicableto dividends received deduction.

• Repeal of special installment sales rule formanufacturers of tangible personalproperty.

• Required registration for abusive taxshelters.

• 1995 ESOPs provisions. Existing federallaw provides special tax rules for thepurchase of employer securities byemployees of the issuing company underIRC Section 1042. State law previouslyconformed to these provisions except forthe 1995 taxable year. California law nowconforms to these provisions for theyear 1995.

• Payment of estimated tax for closely heldREITs and income and services providedby REIT subsidiaries.

California law does not conform to federallaw for the following:• The additional 30% first-year depreciation

allowance for qualified property.• Temporary suspension of income

limitations on percentage depletion forproduction from marginal wells. Thepercentage depletion deduction, whichmay not exceed 65% of the taxpayer’staxable income, is restricted to 100% ofthe net income derived from the oil or gaswell property.

• Decreased capital gains tax rate.• Exemption from AMT for small corporations.

• Accelerated depreciation for property onIndian Reservations.

• The treatment of Subpart F and IRCSection 936 income.

• The IRC passive activity loss rules for realestate activities.

California Taxpayers That are 25% Foreign-Owned U.S. Corporations and ForeignCorporationsCorporations that are required to file federalForm(s) 5472, Information Return of a 25%Foreign-Owned U.S. Corporation or a ForeignCorporation Engaged in a U.S. Trade orBusiness, with the federal return must attach acopy(ies) to the California return. The penaltyfor failing to include Form(s) 5472 as requiredis $10,000 per form. See GeneralInformation M, Penalties, for moreinformation.Information Return for U.S. Taxpayers WhoHave Ownership (directly or indirectly) in aForeign CorporationFor taxable years beginning on or afterJanuary 1, 1997, U. S. taxpayers who have anownership interest (directly or indirectly) in aforeign corporation and are required to filefederal Form(s) 5471, Information Return ofU.S. Persons With Respect to Certain ForeignCorporations, with the federal return, mustattach a copy(ies) to the California return. Thepenalty for failing to include a copy of federalForm(s) 5471 as required is $1,000 per form.See General Information M, Penalties, formore information.Records Maintenance RequirementsAny taxpayer subject to the apportionmentand allocation provisions of the CorporationTax Law is required to keep and maintainrecords and make the following available uponrequest:• Any records needed to determine the

correct treatment of items reported on thecombined report for purposes of determin-ing the income attributable to California;

• Any records needed to determine thetreatment of items as nonbusiness orbusiness income; and

• Any records needed to determine theapportionment factors.

See R&TC Section 19141.6 and the relatedregulations, for more information. A corpora-tion may be required to authorize an agent toact on its behalf in response to requests forinformation or records pursuant to R&TCSection 19504.Note: For information about the Power ofAttorney, go to our Website: www.ftb.ca.govThe penalty for failure to maintain the aboverequired records is $10,000 for each taxableyear for which the failure applies. In addition,if the failure continues for more than 90 daysafter the FTB notifies the corporation of thefailure, a penalty of $10,000 may be assessedfor each additional 30-day period of continuedfailure. For taxable years beginning on or afterJanuary 1, 1996, there is no maximumamount of penalty that may be assessed. SeeGeneral Information M, Penalties, for moreinformation.


Small Business Stock QuestionnaireAn information questionnaire, form FTB 3565,Small Business Stock Questionnaire, isincluded in this booklet. The purpose of thisquestionnaire is to provide informationregarding an issuance of stock pursuant toR&TC Section 18152.5. For taxable yearsbeginning on or after January 1, 1996,corporations that issue stock intended to bequalified small business stock are required toattach form FTB 3565 to Form 100. See theinstructions for form FTB 3565.Publicly Traded PartnershipsCalifornia publicly traded partnerships that arenot eligible to make the special federalelection under IRC Section 7704(g)(2), andthat do not qualify for the exception forpartnerships with passive-type income underIRC Section 7704(c), must file Form 100 fortaxable years beginning on or afterJanuary 1, 1998. A federal election under IRCSection 7704(g)(2) is considered an electionfor state purposes. A separate election is notallowed.Financial Asset Securitization InvestmentTrusts (FASITs)The provisions of the IRC relating to FASITsapply for California with certain modifications.The FASIT is subject to the $800 minimumtax. A separate Form 100 should be filed toreport the $800 minimum tax. Write “FASIT”in red in the top margin of the return. If acorporation holds an ownership interest in aFASIT, it should report all the items of income,gain, deductions, losses, and credits on thecorporation’s return and attach a scheduleshowing the breakdown of items from theFASIT.Classification of Certain Business Trusts andCertain Foreign Single Member LimitedLiability Companies (LLCs)Normally, the classification of a businessentity should be the same for Californiapurposes as it is for federal purposes.However, an exception may apply for certaineligible business entities (business trusts andsingle member LLCs) existing prior toJanuary 1, 1997, that were taxed as corpora-tions for California purposes under formerR&TC Section 23038. If such an existingeligible business entity is, without an electionfor federal purposes, classified as a partner-ship (in the case of a business trust) ordisregarded (in the case of a single memberLLC) for taxable years beginning on or afterJanuary 1, 1997, the entity may elect to beclassified the same as federal for taxable yearsbeginning on or after January 1, 1997, forCalifornia. If this election is not made, theexisting eligible business entity will continueto be classified and taxed as a corporation forCalifornia purposes. Get form FTB 3574,Special Election for Business Trusts andCertain Foreign Single Member LLCs, for moreinformation.

General InformationForm 100 is California’s tax return forcorporations, banks, financial corporations,real estate mortgage investment conduits(REMICs), regulated investment companies

(RICs), real estate investment trusts (REITs),Massachusetts or business trusts, publiclytraded partnerships (PTPs), exempthomeowners’ associations (HOAs), politicalaction committees (PACs), FASITs and LLCs,and partnerships taxed as corporations.For taxable years beginning on or afterJanuary 1, 2000, corporations filing onwater’s-edge basis are required to useForm 100W to file their California tax return.Get the Form 100W, Water’s-Edge Booklet, formore information. REMICs that are partner-ships must file Form 565, Partnership Returnof Income. S corporations must fileForm 100S, California S Corporation Franchiseor Income Tax Return.An LLC classified as a partnership for federalpurposes should generally file Form 568,Limited Liability Company Return of Income.A limited partnership (LP) or limited liabilitypartnership (LLP) classified as a partnershipfor federal purposes should generally fileForm 565, Partnership Return of Income.

A Franchise or Income TaxCorporation franchise taxEntities subject to the corporation minimumfranchise tax include all corporations (e.g.LLCs electing to be taxed as corporations)that are:• Incorporated or organized in California;• Qualified or registered to do business in

California; or• Doing business in California, whether or

not incorporated, organized, qualified, orregistered under California law.

The measured franchise tax is imposed oncorporations doing business in California andis measured by the income of the currenttaxable year for the privilege of doingbusiness in that taxable year.The term “doing business” means activelyengaging in any transaction for the purpose offinancial gain or profit.The minimum franchise tax must be paidwhether the corporation is active, inactive, notdoing business in California, or operates at aloss.Note: A corporation incorporated in Califor-nia, but not doing business in this state, is notsubject to the measured franchise tax. In thecase of a corporation incorporated inCalifornia or qualified with the CaliforniaSecretary of State (SOS) but not doingbusiness in this state, careful attention shouldbe given to the term “doing business.” It isnot necessary that the corporation conductsbusiness or engages in transactions within thestate on a regular basis. Even an isolatedtransaction during the year may be enough tocause the corporation to be “doing business.”Corporation income taxThe corporation income tax is imposed on allcorporations that derive income from sourceswithin California but are not doing business inCalifornia.For purposes of the corporation income tax,the term “corporation” generally includes:• Associations;

• Massachusetts or business trusts;• REITs;• LLCs electing to be taxed as corporations

other than those subject to the corporatefranchise tax; and

• Other business entities, includingpartnerships, electing to be taxed ascorporations.

Political organizations that are exempt underR&TC Section 23701r and have politicaltaxable income in excess of $100 must fileForm 100. Political organization taxableincome is the amount by which gross income(other than exempt function income) lessdeductions directly connected with productionof such gross income exceeds $100. See theinstructions for Schedule F, Computation ofNet Income, included in this booklet. Exemptfunction income includes amounts receivedas:• Contributions of money or property;• Membership fees, dues, or assessments;

or• Proceeds from the sale of political cam-

paign material that are not received in theordinary course of any trade or business.

Get FTB Pub. 1075, Exempt Organizations -Guide for Political Organizations, for moreinformation.Homeowners’ associations that are exemptunder R&TC Section 23701t and havehomeowners’ association taxable incomemust file Form 100. Homeowners’ associationtaxable income is the amount by which grossincome (other than exempt function income)less deductions directly connected with theproduction of such gross income exceeds$100. See the instructions for Schedule F,Computation of Net Income, included in thisbooklet.Exempt function income means amountsreceived as membership fees, dues, andassessments. Nonexempt gross income of ahomeowners’ association is defined as allincome other than amounts received frommembership fees, dues, or assessments.Note: An exempt homeowners’ associationmay also be required to file Form 199,California Exempt Organization AnnualInformation Return. Get FTB Pub. 1028,Guidelines for Homeowners’ Associations, formore information.

B Tax RatesThe tax rates below apply to corporationssubject to either the corporation franchise taxor the corporation income tax.• Corporations other than banks and

financial corporations . . . . . . . . . . 8.84%• Banks and financial corporations 10.84%

C Minimum Franchise TaxAll corporations subject to the franchise tax,including banks, financial corporations,corporate general partners of partnerships,and corporate members of LLCs doing busi-ness in California, must file Form 100 and payat least the minimum franchise tax as requiredby law. The minimum franchise tax, as indi-cated below, must be paid whether the corpo-


ration is active, inactive, operates at a loss, orfiles a return for a short period of less than12 months.• Domestic qualified inactive gold or

quicksilver mining corporations . . . . . $25• All other corporations subject to

franchise tax (see General InformationA, Franchise or Income Tax, fordefinitions) . . . . . . . . . . . . . . . . . . . . . $800

A combined group filing a single return mustpay at least the minimum franchise tax foreach corporation in the group that is subjectto franchise tax.Note: For corporations that incorporate orqualify through the California SOS to dobusiness in California on or after January 1,2000, the prepayment of the minimumfranchise tax to the California SOS is nolonger required. For the first taxable year thecorporation will compute its tax liability bymultiplying its state net income by theappropriate tax rate and will not be subject tothe minimum franchise tax. The corporationwill become subject to minimum franchise taxbeginning in its second taxable year. This doesnot apply to corporations that are not qualifiedby the California SOS, or reorganize solely toavoid payment of their minimum franchisetax.There is no minimum franchise tax for:• Corporations that derive income from

sources within California but are subjectonly to income tax because they are not“doing business” in California, and are notincorporated or qualified under the laws ofCalifornia. For more information regardingdoing business, get FTB Pub. 1050,Application and Interpretation of PublicLaw 86-272; FTB Pub. 1060, Guide forCorporation Starting Business in Califor-nia; or FTB Pub 1063, Guide for Corpora-tions that May Be Subject to the Provisionsof the California Corporation Tax Law;

• Qualified non-profit farm cooperativeassociations;

• Credit unions;• Exempt homeowners’ associations;• Exempt political organizations;• Exempt organizations;• Corporations that are not incorporated

under the laws of California; whose soleactivities in this state are engaging inconvention and trade show activities forseven or fewer days during the taxable year;and do not derive more than $10,000 ofgross income reportable to Californiaduring the taxable year. These corporationsare not “doing business” in California. Formore information, get FTB Pub. 1060,Guide for Corporation Starting Business inCalifornia; or FTB Pub 1063, Guide forCorporations that May Be Subject to theProvisions of the California Corporation TaxLaw; and

• Newly formed or qualified corporationsfiling an initial return for a taxable yearbeginning on or after January 1, 2000.

D Accounting Period/MethodThe taxable year of a corporation must not bedifferent from the taxable year used for federalpurposes, unless initiated or approved by theFTB, see R&TC Section 24632.A change in accounting method requiresconsent from the FTB. However, a corporationthat obtains federal approval to change itsaccounting method, or that is permitted orrequired by federal law to change its account-ing method without prior approval and doesso, is deemed to have the FTB’s approval if:(1) the corporation files Form 100 consistentwith the change for the first year the changebecomes effective for federal law; and (2) thechange is consistent with California law.A copy of federal Form 3115, Application forChange in Accounting Method, and a copy ofthe federal consent to the change must beattached to Form 100 for the first year thechange becomes effective. See FTB Notice2000-8, for more information. The FTB maymodify a requested change if the changewould distort income for California purposes.Note: California is not following the automaticconsent procedure for a change of accountingmethod involving previously unclaimedallowable depreciation or amortization ofFederal Revenue Procedure 96-31. GetFTB Notice 96-3 for more information.If the corporation is a bank, a savings andloan association, or a financial corporation, itcan no longer use the bad debt reservemethod of accounting and elect to be, orcontinue to be, an S corporation for taxableyears beginning on or after January 1, 1997.However, the S corporation status can bemaintained or elected if the corporationchanges accounting method from the baddebt reserve method to the specific write-offmethod. Get FTB Notice 98-3 for moreinformation.

E When to FileFile Form 100 on or before the 15th day ofthe 3rd month after the close of the taxableyear unless the return is for a short period asrequired under R&TC Section 24634. Gener-ally, the due date of a short period return isthe same as the due date of the federal shortperiod return. See R&TC Section 18601(c) forthe due date of a short period return. Farmers’cooperative associations must file Form 100by the 15th day of the 9th month after theclose of the taxable year. See General Informa-tion O, Dissolution/Withdrawal, and P, CeasingBusiness, for information on final returns.

F Extension of Time to FileIf the corporation cannot file its California taxreturn by the 15th day of the 3rd month afterthe close of the taxable year, it may file on orbefore the 15th day of the 10th month withoutfiling a written request for an extension unlessthe corporation is suspended on the originaldue date. This does not extend the time forpayment of tax; the full amount of tax must bepaid by the original due date of Form 100. Ifthere is an unpaid tax liability, complete formFTB 3539, Payment Voucher for AutomaticExtension for Corporations and Exempt

Organizations, included in this booklet, andsend it with the payment by the original duedate of the Form 100.Note: If the corporation must pay its taxliability using electronic funds transfer (EFT),all payments must be remitted by EFT to avoidthe EFT penalty. Do not send form FTB 3539.

G Electronic Funds Transfer(EFT)

Corporations that meet certain requirementsmust remit all of their payments through EFTrather than by paper checks to avoid the 10%non-compliance EFT penalty. Corporationsthat remit an estimated tax payment or exten-sion payment in excess of $20,000 or thathave a total tax liability in excess of $80,000must remit all of their payments through EFT.The FTB will notify corporations that aresubject to this requirement. Those that do notmeet these requirements and wish to partici-pate on a voluntary basis may do so. If youare an EFT taxpayer, complete the formFTB 3539 worksheet for your records. DONOT SEND THE PAYMENT VOUCHER. Formore information, go to our Website:www.ftb.ca.gov, call (916) 845-4025, or getFTB Pub. 3817, Electronic Funds TransferProgram Information Guide.

H Where to FileIf tax is due, and the corporation is notrequired to use EFT, make the check or moneyorder payable to the Franchise Tax Board.Write the California corporation numberand “2002 Form 100” on the check or moneyorder. Mail the return and payment to:

FRANCHISE TAX BOARDPO BOX 942857SACRAMENTO CA 94257-0501

Mail all other returns, including those withpayment by EFT, to:


Private Delivery ServicesCalifornia law conforms to federal lawregarding the use of certain designated privatedelivery services to meet the “timely mailingas timely filing/paying” rule for tax returns andpayments. See federal Form 1120, U.S.Corporation Income Tax Return, for a list ofdesignated delivery services. If a privatedelivery service is used, address the return to:

FRANCHISE TAX BOARDSACRAMENTO CA 95827

Caution: Private delivery services cannotdeliver items to PO boxes. If using one ofthese services to mail any item to the FTB,DO NOT use an FTB PO box.Private Mailbox (PMB) NumberIf the corporation leases a PMB from a privatebusiness rather than a PO box from the UnitedStates Postal Service, include the box numberin the field labeled “PMB no.” in the addressarea.


I Net Income ComputationThe computation of net income from trade orbusiness activities generally follows thedetermination of taxable income as providedin the IRC. However, there are differences thatmust be taken into account when completingForm 100. There are two ways to completeForm 100, the federal reconciliation method orthe California computation method:1. Federal reconciliation method

a. Attach a copy of federal Form 1120 orForm 1120A, Page 1, U.S. CorporationIncome Tax Return, all pertinentsupporting schedules, or transfer theinformation from federal Form 1120 orForm 1120A, Page 1, to Schedule F andattach all pertinent schedules;

b. Enter the amount of federal ordinaryincome (loss) from trade or businessactivities before any net operating loss(NOL) on Form 100, Side 1, line 1; and

c. Enter state adjustments on line 2through line 16 to arrive at net incomeafter state adjustments, Side 1, line 18.

2. Schedule F – California computationIf the corporation has no federal filingrequirement or if the corporation maintainsseparate records for state purposes,complete Form 100, Schedule F, todetermine state ordinary income. Ifordinary income is computed underCalifornia laws, generally no stateadjustments are necessary. Transfer theamount from Schedule F, line 30, toForm 100, Side 1, line 1. CompleteForm 100, Side 1, line 2 through line 17,only if applicable.For more information, see the specific lineinstructions.

Note: Regardless of the net income computa-tion method used, the corporation mustattach any form, schedule, or supportingdocument referred to on the return, sched-ules, or forms filed with the FTB.

J Alternative Minimum TaxCorporations that claim certain types ofdeductions, exclusions, and credits may besubject to California’s alternative minimum tax(AMT). Generally, corporations that completefederal Form 4626, Alternative Minimum Tax— Corporations, must also completeCalifornia Schedule P (100), AlternativeMinimum Tax and Credit Limitations —Corporations. See Schedule P (100), includedin this booklet, for more information.

K Estimated TaxEvery corporation must pay estimated taxusing Form 100-ES, Corporation EstimatedTax. Estimated tax is generally due andpayable in four installments:• The 1st payment is due by the 15th day of

the 4th month of the taxable year (notethat this payment may not be less than theminimum franchise tax, if applicable); and

• The 2nd, 3rd, and 4th installments are dueand payable by the 15th day of the 6th,

9th, and 12th months respectively, of thetaxable year.

Caution: If no amount is due, do not mailForm 100-ES.California law has conformed to the federalexpanded annualization periods for thecomputation of estimate payments.For taxable years beginning on or afterJanuary 1, 1998, the applicable percentage forestimate basis is 100%.Get the instructions for Form 100-ES for moreinformation.Note: If the corporation must pay its taxliability using EFT, ALL estimate payments duemust be remitted by EFT to avoid the EFTpenalty.

L Commencing CorporationsFor taxable years beginning on or afterJanuary 1, 2000, no minimum tax is requiredfor the first taxable year if the corporationincorporated or registered through the SOS.For more information, see GeneralInformation C, Minimum Franchise Tax, or getFTB Pub. 1060, Guide for Corporation StartingBusiness in California.

M PenaltiesFailure to file a timely returnAny corporation that fails to file Form 100 onor before the extended due date is assessed apenalty. The penalty is 5% of the unpaid taxfor each month, or part of the month, thereturn remains unfiled from the due date ofthe return until filed. The penalty may notexceed 25% of the unpaid tax. If a corporationdoes not file its return by the extended duedate, the automatic extension will not applyand the late filing penalty will be assessedfrom the original due date of the return. SeeR&TC Sections 19131 and 23772, for moreinformation.Failure to pay total tax by the due dateAny corporation that fails to pay the total taxshown on Form 100 by the original due date isassessed a penalty. The penalty is 5% of theunpaid tax, plus 0.5% for each month, or partof the month (not to exceed 40 months), thetax remains unpaid. This penalty may notexceed 25% of the unpaid tax. See R&TCSection 19132, for more information.Note: If a corporation is subject to both thepenalty for failure to file a timely return and thepenalty for failure to pay the total tax by thedue date, a combination of the two penaltiesmay be assessed, but the total penalty may notexceed 25% of the unpaid tax.Underpayment of estimated taxAny corporation that fails to pay, pays late, orunderpays an installment of estimated tax isassessed a penalty. The penalty is a percent-age of the underpayment for the underpay-ment period.Get form FTB 5806, Underpayment ofEstimated Tax by Corporations, to determineboth the amount of underpayment and theamount of penalty.

See R&TC Sections 19142, 19144, 19145,19147, 19148, 19149, 19150, 19151, and19161, for more information.Note: If the corporation uses Exception B orException C either to compute or eliminateany of the four installments, form FTB 5806must be attached to the front of Form 100 andthe box on Side 1, line 41b should be checked.EFT PenaltyIf the corporation must pay its tax liabilityusing EFT, all payments must be remitted byEFT to avoid the EFT penalty. The EFT penaltyis 10% of the amount not paid by EFT. SeeR&TC Section 19011 and GeneralInformation G, Electronic Funds Transfer(EFT), for more information.Information reporting penaltiesFor taxable years beginning on or afterJanuary 1, 1997, U. S. corporations that havean ownership interest (directly or indirectly) ina foreign corporation and were required to filefederal Form(s) 5471, Information Return ofU.S. Persons With Respect to Certain ForeignCorporations, with the federal return, mustattach a copy(s) to the California return. Thepenalty for failure to include a copy of federalForm(s) 5471, as required, is $1,000 perrequired form for each year the failure occurs.The penalty applies for taxable years begin-ning on or after January 1, 1998. The penaltywill not be assessed if the taxpayer provides acopy of the form(s) within 90 days of requestfrom the FTB and the taxpayer agrees toattach a copy(s) of Form 5471 to all returnsfiled for subsequent years.Certain domestic corporations that are 25% ormore foreign-owned and foreign corporationsengaged in a U.S. trade or business mustattach federal Form(s) 5472, InformationReturn of a 25% Foreign-Owned U.S.Corporation or a Foreign Corporation Engagedin a U.S. Trade or Business, to Form 100. Thepenalty for failing to include Form(s) 5472, asrequired, is $10,000 per required form foreach year the failure occurs. SeeR&TC Section 19141.5, for more information.If the corporation does not file its Form 100by the due date or extended due date,whichever is later, copies of federalForm(s) 5472 must still be filed on time or thepenalty will be imposed. Attach a cover letterto the copies indicating the taxpayer’s name,California corporation number, and taxableyear. Mail to the same address used forreturns without payments. See GeneralInformation H, Where to File. When thecorporation files Form 100, also attach copiesof the federal Form(s) 5472.Record maintenance penaltiesThe penalty for failure to maintain certainrecords is $10,000 for each taxable year forwhich the failure applies. In addition, if thefailure continues for more than 90 days afterthe FTB notifies the corporation of the failure,in general, a penalty of $10,000 may beassessed for each additional 30-day period ofcontinued failure. For taxable years beginningon or after January 1, 1996, there is nomaximum amount of penalty that may beassessed.


See “Important Information” starting onpage 3 for a discussion of the recordsrequired to be maintained. See R&TCSection 19141.6 and the related regulationsfor more information.Accuracy and fraud related penaltiesCalifornia conforms to IRC Sections 6662through 6665 that authorize the imposition ofan accuracy-related penalty equal to 20% ofthe related underpayment, and the impositionof a fraud penalty equal to 75% of the relatedunderpayment. See R&TC Section 19164 formore information.California Secretary of State (SOS) penaltyThe California Corporations Code requires theFTB to assess a penalty for failure to file anannual statement of corporate officers withthe California SOS. See R&TC Section 19141for more information.For more information, contact:

CALIFORNIA SECRETARY OF STATEPO BOX 944230SACRAMENTO CA 94244-2300Telephone: (916) 657-3537

Other penaltiesOther penalties may be imposed for a checkreturned for insufficient funds, non-U.S.foreign corporations operating while forfeitedor without qualifying to do business inCalifornia, and domestic corporationsoperating while suspended in California. SeeR&TC Sections 19134 and 19135, for moreinformation.

N InterestInterest is due and payable on any tax due ifnot paid by the original due date of Form 100.Interest is also due on some penalties. Theautomatic extension of time to file Form 100does not stop interest from accruing.California follows federal rules for thecalculation of interest. Get FTB Pub. 1138,Refund/Billing Information, for more informa-tion.

O Dissolution/WithdrawalThe franchise tax for the period in which thecorporation formally dissolves or withdraws ismeasured by the income of the year in whichit ceased doing business in California, unlesssuch income has already been taxed at therate prescribed for the taxable year ofdissolution or withdrawal.A corporation that commenced doingbusiness in California before January 1, 1972,is allowed a credit that may be refunded in theyear of dissolution or withdrawal. The amountof the refundable credit is the differencebetween the minimum franchise tax for thecorporation’s first full 12 months of doingbusiness and the total tax paid for the sameperiod.To claim this credit, add this amount to thevalue on line 35. Make a notation to the rightof Side 1, line 35: “Dissolving/Withdrawing.”The return for the final taxable period is dueon or before the 15th day of the 3rd full monthafter the month during which the corporationformally dissolved or withdrew.

Get FTB Pub. 1149, Terminating aCorporation, for more information.Samples and/or forms for a dissolution,surrender, or merger agreement filing may beobtained by addressing your request to:

LEGAL REVIEWCALIFORNIA SECRETARY OF STATE1500 11TH ST 3RD FLOORSACRAMENTO CA 95814-5701Telephone: (916) 657-5448

P Ceasing BusinessA special tax computation is necessary when acorporation ceases to do business. For taxableyears beginning after December 31, 1972, andbefore January 1, 2000, the tax for the finalyear in which the corporation does businessin California is determined:• According to or measured by its net

income for the next preceding taxable year;PLUS

• Its net income for the taxable year duringwhich the corporation ceased doingbusiness.

For taxable years beginning on or afterJanuary 1, 2000 (other than the first taxableyear beginning on or after that date), the taxfor the final year in which the corporationdoes business in California is determined:• According to or measured by its net

income for the taxable year during whichthe corporation ceased doing business.

In any event, the tax for any taxable year shallnot be less than the minimum franchise tax.For more information, see R&TCSection 23151.1.The unreported income on installmentobligations, the distribution of notes, and thedistribution of corporate assets (land,buildings) at a gain must be included inincome in the year of cessation. There is nofederal law counterpart regarding this issue.For more information, see R&TCSections 24672 and 24451.Note: FTB will complete the final year orspecial tax computation approximately oneyear after dissolution/cessation of business.Generally, the corporation will remain subjectto the minimum franchise tax for each year itis in existence until a decree of dissolution ismade and entered by the California SOS. SeeGeneral Information O, Dissolution/Withdrawal, and R&TC Sections 23331through 23335, for more information.

Q Suspension/ForfeitureIf a corporation fails to file Form 100 and/orfails to pay any tax, penalty, or interest due, itspowers, rights, and privileges may besuspended (in the case of a domesticcorporation) or forfeited (in the case of aforeign corporation).Corporations that operate while suspended orforfeited are subject to a $2,000 penalty,which is in addition to any tax, penalties, andinterest already accrued. Also, any contractsentered into during suspension or forfeitureare voidable at the request of any party to the

contract other than the suspended or forfeitedcorporation.Such contracts will remain voidable andunenforceable unless the corporation appliesfor relief from contract voidability and the FTBgrants relief.See R&TC Sections 19135, 19719, 23301,23305.1, and 23305.2, for more information.

R Apportionment of IncomeCorporations with business income attribut-able to sources both within and outside ofCalifornia are required to apportion suchincome. To calculate the apportionmentpercentage, use Schedule R, Apportionmentand Allocation of Income. Be sure to answerQuestion M on Form 100, Side 2.

S Combined ReportIf two or more corporations are engaged in aunitary business and derive income fromsources within and outside of California, themembers of the unitary group that are subjectto California’s franchise or income tax arerequired to apportion the combined income ofthe entire unitary group in order to computethe measure of the tax.If the income of a unitary group is derivedwholly from California sources, its membersmay either file returns on a separate account-ing basis or file on a combined report basis.Members of a unitary group may elect to file agroup single return by filing Schedule R-7,Election to File a Unitary Taxpayers’ GroupReturn and List of Affiliated Corporations. Formore information, get Schedule R.A combined unitary group’s single return mustpresent the group’s data by separate corpora-tion, as well as totals for the combined group.The total combined tax, which must include atleast the applicable minimum franchise tax foreach corporation subject to the franchise tax,must be shown on Form 100, Side 1, line 24.For more information, get FTB Pub. 1061,Guidelines for Corporations Filing a CombinedReport.

T Preparer Tax IdentificationNumber

Tax preparers have the option of providingtheir individual Social Security Number (SSN)or Preparer Tax Identification Number (PTIN)on returns they prepare. Preparers who want aPTIN must complete and submit federalForm W-7P, Application for Preparer TaxIdentification Number, to the IRS.

U Amended ReturnTo correct or change a previously filedForm 100, file the most current Form 100X,Amended Corporation Franchise or IncomeTax Return. Using the incorrect form maydelay processing of the amended return. FileForm 100X within six months after thecorporation filed an amended federal return orafter the final federal determination, if theInternal Revenue Service (IRS) examined andchanged the corporation’s federal return.


V Information ReturnsEvery corporation engaged in a trade orbusiness and making or receiving certainpayments in the course of the trade orbusiness is required to file information returnsto report the amount of such payments.Payments that must be reported include, butare not limited to, compensation for servicesnot subject to withholding, commissions,fees, prizes and awards, payments toindependent contractors, rents, royalties, andpensions exceeding $600 annually, interestand dividends exceeding $10 annually, andcash payments over $10,000 received in atrade or business. Payments of any amount bya broker or barter exchange must also bereported.Report payments on federal Form 1099(series). Reports must be made for thecalendar year and are due to the IRS no laterthan February 28th of the year followingpayment. Corporations must also submitfederal Form 8300, Report of Cash PaymentsOver $10,000 Received in a Trade or Business,within 15 days after the date of thetransaction.Corporations must report interest paid onmunicipal bonds held by California taxpayersand issued by a state other than California, ora municipality other than a Californiamunicipality. Entities paying interest toCalifornia residents on these types of bondsare required to report interest paymentsaggregating $10 or more and paid afterJanuary 1, 2002. Information returns will bedue June 1, 2003. Get form FTB 4800,Federally Tax Exempt Non-California BondInterest and Interest-Dividend Payments, formore information.California conforms to the informationreporting requirements of IRC Section 6045(f)for certain payments made to attorneys. If thecorporation has complied with the federalrequirements, the corporation will be treatedas having complied with the requirements forCalifornia purposes and no penalty will beimposed.California conforms to the informationreporting requirements imposed under IRCSections 6038 through 6038C. Any federalForms 5471, 5472, or 926 required to be filedfor federal purposes under these IRC sectionsare also required to be filed for Californiapurposes. These federal information returnsshould be attached to the Form 100 whenfiled. If these information returns are notprovided, penalties may be imposed underR&TC Sections 19141.2 and 19141.5.For any information returns being filedseparate from the tax return mail to:


W Net Operating Loss (NOL)For taxable years beginning in 2002 and 2003,California has suspended the NOL carryoverdeduction. Taxpayers may continue tocompute and carryover an NOL during thesuspension period. However, the deduction

for disaster losses is not affected by the NOLsuspension rules.The carryover period for suspended losses isextended by two years for losses incurredbefore January 1, 2002, and by one year forlosses incurred after January 1, 2002, andbefore January 1, 2003. For more information,see form FTB 3805Q included in this booklet.For taxable years beginning on or afterJanuary 1, 2002, the NOL carryover computa-tion for the California taxable income of anonresident or part-year resident is no longerlimited by the amount of net operating lossfrom all sources. Only your California sourcedincome and losses are considered in deter-mining if you have a California NOL. For moreinformation, get FTB Pub. 1100, Taxation ofNonresidents and Individuals Who ChangeResidency, and form FTB 3805V, Net Operat-ing Loss (NOL) Computation and NOL andDisaster Loss Limitations – Individuals,Estates, and Trusts.Carryover periods varying from 5 to 15 yearsand carryover deductions varying from 50%to 100% are allowed for NOLs sustained bycorporations.R&TC Sections 24416 through 24416.7 andR&TC Section 25108 provide for NOLcarryovers incurred in the conduct of a tradeor business.R&TC Section 24347.5 provides specialtreatment for the carryover of disaster lossesincurred in an area designated by thePresident of the United States or the Governorof California as a disaster area. Losses takeninto account under the disaster provisionsmay not be included in computing regularNOL deductions.For more information, get form FTB 3805Q,Net Operating Loss (NOL) Computation andNOL and Disaster Loss Limitations —Corporations (included in this booklet), formFTB 3805D, Net Operating Loss (NOL)Computation and Limitation – Pierce’sDisease; form FTB 3805Z, Enterprise ZoneBusiness Booklet; form FTB 3806, LosAngeles Revitalization Zone Business Booklet;form FTB 3807, Local Agency Military BaseRecovery Area Business Booklet; or formFTB 3809, Targeted Tax Area BusinessBooklet.

X Limited Liability Companies(LLCs)

California law authorizes the formation ofLLCs and recognizes out-of-state LLCsregistered or doing business in California. Thetaxation of an LLC in California depends uponits classification as a corporation, partnership,or “disregarded entity” for federal taxpurposes.If an LLC elects to be taxed as a corporationfor federal tax purposes, it must file Form 100.LLCs electing to be taxed as corporations aresubject to the applicable provisions of theCorporation Tax Law.If an LLC is treated as a partnership for federaltax purposes, it generally must file Form 568.LLCs taxed as partnerships determine theirincome, deductions, and credits under the

Personal Income Tax Law and are subject toan annual tax as well as an annual fee basedon total income.If a single member LLC is disregarded forfederal tax purposes, it must file Side 1 ofForm 568. A disregarded LLC reports itsincome, deductions, and credits on the returnof its owner. However, an LLC that is disre-garded is subject to the annual LLC tax as wellas a fee based on total income. Form 568,Side 1, provides the FTB with information onthe sole owner of the LLC, contains theowner’s consent to be taxed on the income ofthe LLC, and provides for the computation ofthe LLC tax and fee.

Y New CorporationsNew corporations, which begin business on orafter January 1, 2000, are no longer requiredto prepay minimum franchise tax to theCalifornia SOS.For taxable years beginning on or afterJanuary 1, 2000, no minimum franchise taxwill be due with the initial return. However, thecorporation will compute its tax liability bymultiplying its state net income by theappropriate tax rates.

Specific Line InstructionsFor taxable years beginning on or afterJanuary 1, 2000, C corporations filing onwater’s-edge basis are required to useForm 100W to file their California tax return.Get the Form 100W, Water’s-Edge Booklet, formore information.Filing Form 100 without errors will expediteprocessing. Before mailing Form 100, makesure entries have been made for the:• California corporation number (seven

digits);• Federal employer identification number

(FEIN) (nine digits); and• Corporation name and address (include

PMB no., if applicable).File the 2002 Form 100 for calendar year 2002and fiscal years that begin in 2002. Entertaxable year beginning and ending dates onlyif the return is for a short year or a fiscal year.If the corporation reports its income using acalendar year, leave the date area blank. If thereturn is being filed for a short period of lessthan 12 months, write “short year” in red inthe top margin. Convert all foreign monetaryamounts to U.S. dollars.Note: The 2002 Form 100 may also be used if:• The corporation has a taxable year of less

than 12 months that begins and ends in2003; and

• The 2003 Form 100 is not available at thetime the corporation is required to file itsreturn. The corporation must show its2003 taxable year on the 2002 Form 100and incorporate any tax law changes thatare effective for taxable years beginningafter December 31, 2002.

Questions AA through ZAnswer all applicable questions and attachadditional sheets, if necessary. Be sure to


answer Questions E through Z on Form 100,Side 2. Note the following instructions whenanswering:Question AA - Bad debt reserve recaptureFor taxable years beginning on or afterJanuary 1, 2002, California has conformed tothe federal bad debt deduction rules. The baddebt deduction for financial corporations,savings and loans, and large banks (institu-tions that have more than 500 million dollar inassets) is limited to debts that becomeworthless within the taxable year. Thisconstitutes a change in accounting methodand the entities affected by the change mustrecognize 50% of their existing bad debtreserve balances into income in the year ofchange. Enter the recapture amount here andon Form 100, line 8. For those banksremaining on the reserve method of account-ing, the prior year's ending reserve is carriedover and the reserve is computed using thefederal rules contained in Section 585 of theInternal Revenue Code.Question E – Principal business activity(PBA) codeAll corporations must answer Question E.Include the six digit PBA code from the chartfound on page 15 through page 17 of thisbooklet. The code should be the number forthe specific industry group from which thegreatest percentage of California “totalreceipts” is derived. “Total receipts” meansgross receipts plus all other income. TheCalifornia PBA code number may be differentfrom the federal PBA code number.If, as its principal business activity, thecorporation: (1) Purchases raw material;(2) Subcontracts out for labor to make afinished product from the raw materials; and(3) Retains title to the goods, the corporationis considered to be a manufacturer and mustenter one of the codes under “Manufacturing.”Also, write in the business activity and theprincipal product or service on the linesprovided.Question J – Transfer or acquisition of votingstockAll corporations must answer Question J. Ifthe answer is “Yes,” a Statement of Change inControl and Ownership of Legal Entities(BOE-100-B), must be filed with the CaliforniaState Board of Equalization (BOE), orsubstantial penalties may result. Forms andinformation may be obtained from the BOE at(916) 323-5685.Answer “Yes” if:• The percentage of outstanding voting

shares of this corporation or itssubsidiary(ies) owned by one person orone entity cumulatively exceeded 50%during this year; or

• The total of voting shares transferred toone irrevocable trust cumulativelyexceeded 50% during this year; or

• One or more irrevocable proxies trans-ferred voting rights to more than 50% ofthe outstanding shares to one person orone entity during this year; or

• This corporation’s cumulative ownershipor control of the stock or other ownership

interest in any legal entity exceeded 50%during this year; or

• Cumulatively more than 50% of the totaloutstanding shares of this corporationhave transferred, changed ownership orcontrol during this year.

R&TC Section 64(e) requires this informationfor use by the California State BOE.Question S – Regulated Investment Company(RIC)California conforms to federal law for taxableyears beginning on or after January 1, 1998,for the provisions related to the repeal ofthe 30% gross income test for RICs.Question T – Real Estate MortgageInvestment Conduit (REMIC)If a corporation is a REMIC for federalpurposes, it is deemed to be a REMIC forCalifornia purposes. A REMIC is subject to theminimum franchise tax but is not subject tothe income or franchise tax. The income of aREMIC is taxable to the holders of the REMICinterests. In order to qualify, substantially allof the assets of the entity must consist of“qualified mortgages” and “permittedinvestments.” See the instructions for federalForm 1066, U.S. Real Estate MortgageInvestment Conduit Income Tax Return, todetermine if the corporation qualifies.California law is the same as federal law,except California does not impose a tax onprohibited transactions, as defined in IRCSection 860F. The income or gain from suchprohibited transactions remains includible inthe California tax base. If the corporation is aREMIC for federal purposes, answer “Yes” toQuestion T, complete Form 100 and attach acopy of federal Form 1066.Question U – Real Estate Investment Trust(REIT)California tax law has partially conformed tothe REIT provisions of the Ticket to Work andWork Incentives improvement Act of 1999(Public Law 106-170) for taxable yearsbeginning on or after January 1, 2001, exceptfor the provisions relating to income fromredetermined rents, redetermined deductions,and excess interest. Additionally, a federalelection to treat property as foreclosureproperty under IRC Section 856(e)(5) isconsidered to be an election for California aswell. No separate elections are allowed.Question V – Limited liability company (LLC)or Limited PartnershipAnswer “Yes” only if the business entity forwhich the Form 100 is being filed is organizedas an LLC or limited partnership but isclassified as a corporation for federal taxpurposes. An LLC classified as a partnershipfor federal purposes should generally fileForm 568. A limited partnership should fileForm 565.

Line 1 through Line 42Line 1 – Net income (loss) before stateadjustmentsCorporations using the federal reconciliationmethod to figure net income (see GeneralInformation I, Net Income Computation) must:

• Transfer the amount from federalForm 1120, line 28; or federal Form 1120A,line 24, to Form 100, Side 1, line 1; andattach a copy of the federal return and allpertinent supporting schedules; or copythe information from federal Form 1120 orForm 1120A, Page 1, onto Schedule F andtransfer the amount from Schedule F,line 30, to Form 100, Side 1, line 1.

• Then, complete Form 100, Side 1, line 2through line 17, State Adjustments.

Corporations using the California computationmethod to figure net income (see GeneralInformation I) must transfer the amount fromSide 3, Schedule F, line 30, to Side 1, line 1.Complete Form 100, Side 1, line 2 throughline 17, only if applicable.Line 2 through Line 17 – State adjustmentsTo figure net income for California purposes,corporations using the federal reconciliationmethod must enter California adjustments tothe federal net income on line 2 throughline 17. If a specific line for the adjustment isnot on Form 100, corporations must enter theadjustment on line 8, Other additions, orline 16, Other deductions, and attach aschedule that explains the adjustment.Line 2 and Line 3 – Taxes not deductibleCalifornia does not permit a deduction ofCalifornia corporation franchise or incometaxes or any other taxes on, according to, ormeasured by net income or profits. Suchtaxes that are shown on Form 100,Schedule A, must be added to income byentering the amount on Side 1, line 2 or line 3(see Schedule A, column (d) for the amount tobe added to income). California does notpermit a deduction for environmental taxesimposed by IRC Section 59A.The LLC fee is not a tax, R&TC Section 23092;therefore, it is deductible. Do not include anypart of an LLC fee on line 2 or line 3.Line 4 – Interest on government obligationsCorporations subject to California franchisetax must report all interest received ongovernment obligations (such as federal,state, or municipal bonds). On line 4, enter allinterest on government obligations that is notincluded in federal ordinary income (loss).Corporations subject to California corporationincome tax, see instructions for line 16.Line 5 – Net California capital gainComplete Schedule D, Side 2, and enter theCalifornia net capital gain from Schedule D,line 11.Line 6 and line 12 – Depreciation andamortizationCalifornia law is substantially different fromfederal law for corporations.Complete form FTB 3885, CorporationDepreciation and Amortization (included inthis booklet), to determine the amounts toenter on line 6 or line 12.Line 7 – Income not included in federalconsolidated returnUse this line to report the net income fromcorporations included in the combined reportbut not included in the federal consolidatedreturn.


Line 8 – Other additionsAny miscellaneous items that must be addedto arrive at net income after state adjustments(line 18) should be shown on this line. Attacha schedule to itemize amounts.If any federal contribution deduction wastaken in arriving at the amount entered onForm 100, Side 1, line 1, include that amounton line 8.California ordinary net gain or loss. Enterany California ordinary net gain or loss fromSchedule D-1, Sales of Business Property.Attach Schedule D-1.Line 10, and Line 11 – Dividend deductionSee instructions for Schedule H (100),Dividend Income Deduction, included in thisbooklet.Line 13 – Federal capital gain net incomeEnter the federal capital gain net income fromfederal Form 1120 or Form 1120A, line 8. TheCalifornia net capital gain should have beenadded to income on line 5.Line 14 – ContributionsThe contribution deduction for a Californiacorporation is limited to the adjusted basis ofthe assets being contributed.For taxable years beginning on or afterJanuary 1, 1996, the contribution deduction islimited to 10% of California net income.Carryover provisions per IRCSection 170(d)(2) apply for excess contribu-tions made during taxable years beginning onor after January 1, 1996.On a separate worksheet, using the Form 100format, complete Form 100, Side 1, line 1through line 18 without regard to line 14,Contributions. If any federal contributiondeduction was taken in arriving at the amountentered on Side 1, line 1, enter that amount asa positive number on line 8 of the Form 100formatted worksheet. Enter the adjusted basisof the assets contributed on line 5 of thefollowing worksheet. Then complete theworksheet that follows to determine thecontributions to enter on line 14.1. Net income after state adjustments

from Side 1, line 18 . . . . . . . . . . . _____2. Deduction for dividends

received . . . . . . . . . . . . . . . . . . . . _____3. Net income for contribution

calculation purposes. Addline 1 and line 2 . . . . . . . . . . . . . . _____

4. Contributions. Multiply line 3by 10% (.10) . . . . . . . . . . . . . . . . _____

5. Enter the amount actuallycontributed . . . . . . . . . . . . . . . . . . _____

6. Enter the smaller of line 4 orline 5 here and on Side 1, line 14 . _____

Get Schedule R to figure the contributioncomputation for apportioning corporations.Line 15 – EZ, TTA, or LAMBRA businessexpense and/or net interest deductionBusinesses conducting a trade or businesswithin an EZ, LAMBRA, or TTA may elect totreat a portion of the cost of qualified propertyas a business expense rather than a capitalexpense. For the year the property is placed inservice, the business may deduct a percentage

of the cost in that year rather than depreciateit over the life of the asset. For more informa-tion, get form FTB 3805Z; form FTB 3807; orform FTB 3809.Also, a deduction may be claimed on this linefor the amount of net interest on loans madeto an individual or company doing businesswithin an EZ. For more information, get formFTB 3805Z.Be sure to attach form FTB 3805Z; formFTB 3807; or form FTB 3809 if any of thesebenefits are claimed. If the proper form is notattached, these tax benefits may bedisallowed.Line 16 – Other deductionsInclude on this line deductions not claimed onany other line. Attach a schedule that clearlyshows how each deduction was computedand explain the basis for the deduction.For corporations subject to income tax(instead of the franchise tax), interest receivedon obligations of the federal government andon obligations of the State of California and itspolitical subdivisions is exempt from incometax. If such interest is reported on line 4, itmust be deducted on line 16.Federal ordinary net gain or loss. Enter anyfederal ordinary net gain or loss from federalForm 4797, Sales of Business Property.Line 19 – Net income (loss) for statepurposesIf all corporate income is derived fromCalifornia sources, transfer the amount online 18 directly to line 19.If only a portion of income is derived fromCalifornia sources, complete Schedule Rbefore entering any amount on line 19.Transfer the amount from Schedule R, line 24,to Form 100, line 19. Be sure to answer “Yes’’to Question M on Form 100, Side 2.Note: For corporations with multipleSchedule Rs from separate trade or busi-nesses or business income from prior years,combine the amounts on line 24 from allSchedule Rs, and enter the total on line 19.If this line is a net loss, complete and attachthe 2002 form FTB 3805Q to Form 100.Line 20, Line 21, and Line 22Note: The order in which line 20, line 21, andline 22 appear is not meant to imply the orderin which any NOL carryover deduction ordisaster loss deduction be taken if more thanone type of deduction is available.Line 20 – Net operating loss (NOL) carryoverdeductionCalifornia has suspended the NOL carryoverdeduction for taxable years beginning in 2002and 2003.Line 21 – Pierce's disease, EZ, LARZ, TTA,or LAMBRA NOL carryover deductionCalifornia has suspended the NOL carryoverdeduction for Pierce's disease, EZ, LARZ, TTA,or LAMBRA for taxable years beginning in2002 and 2003.Line 22 – Disaster loss carryover deductionIf you have a disaster loss carryover deduc-tion, enter the total amount from the 2002form FTB 3805Q, Part III, line 1, only if you

have income in the current year. The loss maynot reduce current year income below zero.Any excess loss must be carried forward.Line 24 – TaxUse rates listed in General Information B, TaxRates, and C, Minimum Franchise Tax.Line 25 through Line 27 – Tax creditsA variety of tax credits are available toCalifornia corporations to reduce tax.However, corporations may not reduce the tax(line 24) below the minimum franchise tax, ifapplicable.Also, the amount of the credit that a corpora-tion is allowed to claim may be limited.Generally, if the corporation completed federalForm 4626, Alternative Minimum Tax —Corporations, the corporation may havelimited credits. Complete Schedule P (100)(included in this booklet) to compute thislimitation.Corporations claiming only:• Enterprise zone hiring & sales or use tax

credit;• LARZ construction hiring & sales or use

tax credit carryover;• Solar energy credit carryover;• Commercial solar energy credit carryover;• Commercial solar electric system credit;• Research credit;• Orphan drug credit carryover;• Low-income housing credit;• Manufacturers’ investment credit;• Targeted tax area hiring and sales or use

tax credit;• Natural heritage preservation tax credit;• Program area sales and use tax and hiring

credit carryover; and• Clinical testing expense credit carryover.are not subject to the tentative minimum taxlimitation.Each credit is identified by a code number.See the credit code chart on page 14. To claimone or two credits, enter the credit name,code number, and the amount of the credit online 25 and line 26. To claim more than twocredits, use Schedule P (100). List two of thecredits on line 25 and line 26. Enter the totalof any remaining credits from Schedule P(100) on line 27. Do not make an entry online 27 unless line 25 and line 26 arecomplete.To figure tax credits, use the appropriate formor schedule. If the corporation claims a creditcarryover for an expired credit, use formFTB 3540, Credit Carryover Summary, tofigure the amount of credit, unless thecorporation is required to completeSchedule P (100). In that case, enter theamount of the credit on Schedule P (100) andcomplete Schedule P (100). Do not attachform FTB 3540.Attach the credit form or schedule andSchedule P (100), if applicable, to Form 100.Line 29 – BalanceSubtract line 28 from line 24. Enter the result orthe applicable minimum franchise tax, whichever


is more. See General Information C, MinimumFranchise Tax.Line 30 – Alternative minimum tax (AMT)Enter on this line the AMT from Schedule P(100), Part I, line 19, or Part II, line 18,whichever is applicable.Line 33 – 2002 estimated tax paymentsEnter the total amount of estimated taxpayments made during the 2002 taxable yearon this line.Line 34 – 2002 Nonresident WithholdingEnter the 2002 nonresident withholding creditfrom Form(s) 592-B, 594 or 597 if thiscorporation was withheld upon. Attach copy Bof Form 592-B, Form 594, or Form 597 thatthe corporation received from the withholdingentity to the front of Form 100, Side 1.Line 37 and Line 38 – Tax due oroverpaymentRevise the amount of tax due or overpayment, ifapplicable, by the amount on Side 2, Schedule J,line 6. See instructions for Schedule J.Line 39 – Amount to be credited to 2003estimated taxIf the corporation chooses to have theoverpayment credited to next year’s estimatedtax payment, the corporation cannot laterrequest that the overpayment be applied to theprior year to offset any tax due.Line 40 – RefundDirect Deposit of Refund (DDR)Direct deposit is fast, safe, and convenient. Tohave the refund directly deposited into thecorporation’s bank account, enter the accountinformation on Form 100, Side 1, line 40a,40b, and 40c. Please be sure to fill in all theinformation.Do not attach a voided check or deposit slip.The illustration on this page shows whichbank numbers to transfer to Form 100, Side 1,line 40a and line 40c.To cancel the direct deposit of refund, call FTBat (800) 852-2753. FTB is not responsiblewhen a financial institution rejects a directdeposit. If the bank or financial institutionrejects the direct deposit due to an error in therouting number or account number, FTB willissue a paper check.Line 41 – Penalties and interestEnter on line 41 the amount of any penaltiesand interest due. Complete and attach formFTB 5806, Underpayment of Estimated Tax byCorporations, to the front of Form 100, ifException B or Exception C is used incomputing or eliminating the penalty. Be sureto check the box on line 41b.Note: For the 2002 taxable year only, noaddition to tax shall apply with respect to anyunderpayment of estimated tax to the extentthe underpayment of an installment wascreated or increased by any provisions of lawenacted or amended by an act chapteredduring the 2002 calendar year. To request a

waiver of underpayment of estimated taxpenalty, attach form FTB 5806.

SchedulesSchedule A – Taxes DeductedEnter the nature of the tax, the taxingauthority, the total tax, and the amount of thetax that is not deductible for Californiapurposes on Form 100, Side 3, Schedule A.

Schedule D – Capital Gain orLossCalifornia law does not conform to the federalreduced capital gains tax rates. Californiataxes capital gains at the same rate as othertypes of income. California does not allow athree-year carryback of capital losses.Enter any unused capital loss carryover from2001 on Schedule D, line 3.

Schedule F – Computation ofNet IncomeSee General Information I, Net IncomeComputation, for information on net incomecomputation methods.Line 13 – Salaries and WagesGain from the exercise of California QualifiedStock Options (CQSOs) issued and exercisedon or after January 1, 1997, and beforeJanuary 1, 2001, can be excluded from grossincome if the individual’s earned income is$40,000 or less. The exclusion from grossincome is subject to AMT and the corporationis not allowed a deduction for the compensa-tion excluded from the employee’s grossincome. For more information, see R&TCSection 24602.Line 28 – Specific deduction for 23701r or23701t organizationsPolitical organizationsA political organization exempt under R&TCSection 23701r must file Form 100 and report“political taxable income” in excess of $100.“Political taxable income” means all amountsreceived during the taxable year other than:

• Contributions of money or other property;• Membership fees, dues, or assessments;

and• Proceeds from political fund raising or

entertainment events, or proceeds fromthe sale of political campaign material notreceived in the ordinary course of anytrade or business.

Political organizations are not subject to theminimum franchise tax nor are they requiredto make estimate payments. The tax iscomputed under Chapter 3 of the CorporationTax Law.Enter the $100 limit on Schedule F, line 28, asa qualified “specific deduction.”Exempt homeowners’ associationsA homeowners’ association exempt underR&TC Section 23701t must file Form 100 if itreceived nonexempt function gross income inexcess of $100. Form 100 may be required inaddition to Form 199, California ExemptOrganization Annual Information Return.Nonexempt function gross income meansgross income received during the taxable yearother than amounts received from member-ship fees, dues, or assessments. Nonexemptfunction gross income includes the grossamount of such items as, but not limited to:interest, dividends, rents, royalties, sale ofassets, and income from nonmembers.Exempt homeowners’ associations are notsubject to the minimum franchise tax. The taxis computed under Chapter 3 of the Corpora-tion Tax Law. Under Chapter 3, estimated taxpayments may be required. Form 100 is duewithin 2 months and 15 days after the close ofthe taxable year.Enter the $100 limit on Schedule F, line 28, asa qualified “specific deduction.”

Schedule G – Bad DebtsReserve MethodFor the purpose of the bad debt reservemethod, banks include savings and loanassociations, and other financial institutions.For more information, see IRC Section 581and 585. Only banks that are not a large bank,as defined in the IRC Section 585 (c) (2), mayuse the bad debt reserve method. Complete

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Schedule G on page 13 and attach it toForm 100.

Schedule J – Add-On Taxes andRecapture of Tax CreditsComplete Schedule J if the corporation hascredit amounts to recapture or is required toinclude installment payments of “add-on”taxes from:• Last-in, first-out (LIFO) recapture resulting

from an S corporation election;• Interest computed under the look-back

method for completed long-term contracts;• Interest on tax attributable to installment

sales of certain property or use of theinstallment method for non-dealerinstallment obligations; or

• IRC Section 197(f)(9)(B)(ii) election torecognize gain on the disposition of an IRCSection 197 intangible.

Revise the amount of tax due or overpaymenton Form 100, line 37 or line 38, as applicableby the amount from Schedule J, line 6.Installment payment of tax attributable tolast-in, first-out (LIFO) recapture forcorporations making an S corporationelection. A corporation that uses the LIFOinventory pricing method and makes anS corporation election must include a “LIFOrecapture amount” in income for its last yearas a C corporation. The corporation’s LIFOrecapture amount is equal to the excess of theinventory amount using the first-in, first-out(FIFO) method, over the inventory amountusing the LIFO method, at the close of thecorporation’s last taxable year as aC corporation.The additional tax resulting from inclusion ofthe LIFO recapture in income is payable infour equal installments. The first installment isdue on the original due date of Form 100 ofthe electing corporation’s last year as aC corporation.To determine the additional tax due to LIFOrecapture, the corporation must completeForm 100, Side 1, line 19 through line 31,based on income that does not include theLIFO recapture amount.On a separate worksheet using the Form 100format, the corporation must complete theequivalent of Form 100, Side 1, line 19through line 31, based on taxable incomeincluding the LIFO recapture amount.Form 100, Side 1, line 31, must then be

compared to line 31 of the worksheet. Thedifference is the additional tax due to LIFOrecapture.Since Form 100, Side 1, line 33, does notinclude the additional tax due to LIFOrecapture, corporations must include 1/4 ofthe additional tax on Schedule J, line 1 andadjust line 37 or line 38 accordingly. Attachthe worksheet showing the computation.Note: The electing S corporations must paythe remaining three installments of deferredtax with Form 100S.Long-term contracts. If the corporation mustcompute interest under the look-back methodfor completed long-term contracts, completeand attach form FTB 3834, Interest Computa-tion Under the Look-Back Method forCompleted Long-Term Contracts. Include theamount of interest the corporation owes orthe amount of interest to be credited orrefunded to the corporation on Schedule J,line 2. If interest is to be credited or refunded,enter as a negative amount. Attach formFTB 3834 to Form 100.Interest on tax attributable to paymentsreceived on installment sales of certaintimeshares and residential lots. If thecorporation elected to pay interest on theamount of tax attributable to paymentsreceived on installment obligations arisingfrom the disposition of certain timeshares andresidential lots under IRC Section 453(l)(3), itmust include the interest due on Schedule J,line 3a. For the applicable interest rates, getFTB Pub. 1138, Refund/Billing Information.Attach a schedule showing the computation.Interest on tax deferred under the install-ment method for certain nondealer install-ment obligations. If an obligation arisingfrom the disposition of property to which IRCSection 453A(c) applies is outstanding at theclose of the year, the corporation must includethe interest due under IRC Section 453A onSchedule J, line 3b. For the applicable interestrates, get FTB Pub. 1138.IRC Section 197(f)(9)(B)(ii) election.Complete Schedule J, line 4 if the corporationelected to pay tax on the gain from the sale ofan intangible under the related personexception to the anti-churning rules.Credit recapture.Complete Schedule J, line 5, if the corporationcompleted the credit recapture portion ofform:

• FTB 3501, Employer Child Care Program/Contribution Credit; or

• FTB 3805Z, Enterprise Zone Deduction andCredit Summary; or

• FTB 3807, Local Agency Military BaseRecovery Area Deduction and Credit; or

• FTB 3808, Manufacturing EnhancementArea Credit Summary; or

• FTB 3809, Targeted Tax Area Deductionand Credit Summary; or

• FTB 3535, Manufacturers’ InvestmentCredit; or

• FTB 3534, Joint Strike Fighter Credit; or• FTB 3508, Solar Energy System Credit.Also complete Schedule J, line 5, if thecorporation is subject to recapture of:• The Farmworker Housing Credits; or• The Community Development Financial

Institution Deposits Credit.

Schedule M-1 – Reconciliationof income (loss) per books withincome (loss) per return.Schedule M-1 is used to reconcile thedifference between book and tax accountingfor an income or expense item. The federaland state Schedule M-1 may be the samewhen you use the federal reconciliationmethod for net income computation. SeeGeneral Information I, Net Income Computa-tion, for more information. The Schedule M-1will be different from the federal Form 1120,Schedule M-1, if using the California compu-tation method for net income. The Californiacomputation method is generally used whenthe corporation has no federal filing require-ment, or if the corporation maintains separaterecords for state purposes.Note: If the corporation's total receipts (seepage 15 of the instructions) for the taxableyear and total assets at the end of the taxableyear are less than $250,000, the corporationis not required to complete Schedule L,Schedule M-1, and Schedule M-2. However,this information must be available in thefuture upon request.

Schedule G Bad Debts — Reserve Method. See instructions

Amount added to reserve (f)(a) (b) (c) (d) (e) Reserve for bad

Taxable Accounts outstanding at the end of the year Current year’s Recoveries Amount charged debts at end of yearyear provisions against reserve

199719981999200020012002


CREDIT NAME CODE DESCRIPTIONCurrent CreditsCommunity Development Financial Institution 209 20% of a qualified investments made into a community development financial institutionDeposits – Obtain certification from:

CALIFORNIA ORGANIZED INVESTMENTNETWORK (COIN)DEPARTMENT OF INSURANCE300 CAPITOL MALL, STE 1460SACRAMENTO CA 95814

Disabled Access for Eligible Small Businesses – 205 Similar to the federal credit, but limited to $125 per eligible small business, and basedFTB 3548 on 50% of qualified expenditures that do not exceed $250

Donated Agricultural Products Transportation – 204 50% of the costs paid or incurred for the transportation of agricultural productsFTB 3547 donated to nonprofit charitable organizations

Employer Child Care Contribution – FTB 3501 190 Employer: 30% of contributions to a qualified planEmployer Child Care Program – FTB 3501 189 Employer: 30% of the cost of establishing a child care program or constructing a child care facilityEnhanced Oil Recovery – FTB 3546 203 1/3 of the similar federal credit but limited to qualified enhanced oil recovery projects

located within CaliforniaEnterprise Zone Hiring & Sales or Use Tax – 176 Business incentives for enterprise zone businesses

FTB 3805ZFarmworker Housing – Construction 207 50% of qualified costs paid or incurred to construct or rehabilitate qualified farmworkersFarmworker Housing – Loan housingObtain certification from: 208 Banks and financial corporations: 50% of foregone interest income on qualified

FARMWORKER HOUSING ASSISTANCE farmworker housing loansPROGRAM, CALIFORNIA TAX CREDITALLOCATION COMMITTEE916 CAPITOL MALL, ROOM 485SACRAMENTO CA 95814

Joint Strike Fighter Wage – FTB 3534 215 50% of qualified wages paid or incurred in taxable years beginning on or after January 1, 2001, notto exceed $10,000 for each qualified employee, or a proportional amount for an employee who isemployed by the taxpayer for only part of the taxable year

Joint Strike Fighter Property – FTB 3534 216 10% of the cost of property placed in service in California for ultimate use in a joint strike fighter

Local Agency Military Base Recovery Area 198 Business incentives for LAMBRAs(LAMBRA) Hiring & Sales or Use Tax – FTB 3807Low-Income Housing – FTB 3521 172 Similar to the federal credit but limited to low-income housing in CaliforniaManufacturers’ Investment – FTB 3535 199 6% of the cost of qualified propertyManufacturing Enhancement Area – FTB 3808 211 Hiring Credit for Manufacturing Enhancement AreaNatural Heritage Preservation – FTB 3503 213 55% of the fair makret value of the qualified contribution of property donated to the state, any local

government, or any nonprofit organization designated by a local government.Prior Year Alternative Minimum Tax – FTB 3510 188 Must have paid alternative minimum tax in a prior year and have no alternative minimum

tax liability in the current yearPrison Inmate Labor – FTB 3507 162 10% of wages paid to prison inmatesResearch – FTB 3523 183 Similar to the federal credit but limited to costs for research activities in CaliforniaRice Straw 206 $15 per ton of rice straw grown in CaliforniaObtain certification from:

DEPARTMENT OF FOOD AND AGRICULTURE 1220 N STREET, ROOM 409 SACRAMENTO CA 95814

Solar Energy System – FTB 3508 217 A credit equal to the lesser of 15% of the net cost paid to purchase and install a solar energysystem for the production of electricity, or the $4.50 per rated watt of generating capacity of thatsystem.

Targeted Tax Area (TTA) Hiring & Sales or Use 210 Business incentives for TTA businessesTax – FTB 3809

Repealed Credits with Carryover ProvisionsAgricultural Products 175Commercial Solar Electric System 196Commercial Solar Energy 181 The expiration dates for these credits have passed. However, these credits had carryoverContribution of Computer Software 202 provisions. You may claim these credits if there is a carryover available from prior years. IfEmployer Ridesharing – Large employer 191 you are not required to complete Schedule P (100), get form FTB 3540, CreditEmployer Ridesharing – Small employer 192 Carryover Summary, to figure your credit carryover to future years.Employer Rideshare – Transit 193Energy Conservation 182Los Angeles Revitalization Zone (LARZ) Hiring

& Sales or Use Tax 159Low Emission Vehicles 160Orphan Drug 185Recycling Equipment 174Ridesharing 171Salmon & Steelhead Trout Habitat Restoration 200Solar Energy 180Solar Pump 179Technology Property Contributions 201


Principal Business Activity CodesThis list of principal business activities and their associated codes is designed toclassify a business by the type of activity in which it is engaged to facilitate theadministration of the California Revenue and Taxation Code. For taxable yearsbeginning on or after January 1, 1998, these principal business activity codes arebased on the North American Industry Classification System.

Using the list of activities and codes below, determine from which activity thecompany derives the largest percentage of its ‘’total receipts.’’ Total receipts isdefined as the sum of gross receipts or sales (Side 3, Schedule F, line 1a) plus allother income (Side 3, Schedule F, lines 4 through 10). If the company purchases rawmaterials and supplies them to a subcontractor to produce the finished product, butretains title to the product, the company is considered a manufacturer and must useone of the manufacturing codes (311110-339900).

Once the principal business activity is determined, entries must be made onForm 100, Question E. For the business activity code number, enter the six-digitcode selected from the list below. On the next line enter a brief description of thecompany’s business activity. Finally, enter a description of the principal product orservice of the company on the next line.

Agriculture, Forestry,Fishing, and HuntingCodeCrop Production111100 Oilseed & Grain Farming111210 Vegetable & Melon Farming

(including potatoes & yams)111300 Fruit & Tree Nut Farming111400 Greenhouse, Nursery, &

Floriculture Production111900 Other Crop Farming (including

tobacco, cotton, sugarcane,hay, peanut, sugar beet, & allother crop farming)

Animal Production112111 Beef Cattle Ranching &

Farming112112 Cattle Feedlots112120 Dairy Cattle & Milk Production112210 Hog & Pig Farming112300 Poultry & Egg Production112400 Sheep & Goat Farming112510 Animal Aquaculture (including

shellfish & finfish farms &hatcheries)

112900 Other Animal ProductionForestry and Logging113110 Timber Tract Operations113210 Forest Nurseries & Gathering

of Forest Products113310 LoggingFishing, Hunting and Trapping114110 Fishing114210 Hunting & TrappingSupport Activities for Agriculture andForestry115110 Support Activities for Crop

Production (including cottonginning, soil preparation,planting, & cultivating)

115210 Support Activities for AnimalProduction

115310 Support Activities for Forestry

Mining211110 Oil & Gas Extraction212110 Coal Mining212200 Metal Ore Mining212310 Stone Mining & Quarrying212320 Sand, Gravel, Clay, & Ceramic

& RefractoryMinerals Mining & Quarrying212390 Other Nonmetallic Mineral

Mining & Quarrying213110 Support Activities for Mining

Utilities221100 Electric Power Generation,

Transmission & Distribution221210 Natural Gas Distribution221300 Water, Sewage, & Other

Systems

ConstructionCodeConstruction of Buildings236110 Residential Building

Construction236200 Nonresidential Building

ConstructionHeavy and Civil EngineeringConstruction237100 Utility System Construction237210 Land Subdivision237310 Highway, Street, & Bridge

Construction237990 Other Heavy & Civil

Engineering ConstructionSpecialty Trade Contractors238100 Foundation, Structure, &

Building Exterior Contractors(including framing carpentry,masonry, glass, roofing, &siding)

238210 Electrical Contractors238220 Plumbing, Heating, & Air-

Conditioning Contractors238290 Other Building Equipment

Contractors238300 Building Finishing Contractors

(including drywall, insulation,painting, wallcovering,flooring, tile, & finishcarpentry)

238900 Other Specialty TradeContractors (including sitepreparation)

ManufacturingFood Manufacturing311110 Animal Food Mfg311200 Grain & Oilseed Milling311300 Sugar & Confectionery

Product Mfg311400 Fruit & Vegetable Preserving &

Specialty Food Mfg311500 Dairy Product Mfg311610 Animal Slaughtering and

Processing311710 Seafood Product Preparation &

Packaging311800 Bakeries & Tortilla Mfg311900 Other Food Mfg (including

coffee, tea, flavorings, &seasonings)

Beverage and Tobacco ProductManufacturing312110 Soft Drink & Ice Mfg312120 Breweries312130 Wineries312140 Distilleries312200 Tobacco ManufacturingTextile Mills and Textile Product Mills313000 Textile Mills314000 Textile Product MillsApparel Manufacturing315100 Apparel Knitting Mills

Code315210 Cut & Sew Apparel

Contractors315220 Men’s & Boys’ Cut & Sew

Apparel Mfg315230 Women’s & Girls’ Cut & Sew

Apparel Mfg315290 Other Cut & Sew Apparel Mfg315990 Apparel Accessories & Other

Apparel MfgLeather and Allied ProductManufacturing316110 Leather & Hide Tanning &

Finishing316210 Footwear Mfg (including rubber

& plastics)316990 Other Leather & Allied Product

MfgWood Product Manufacturing321110 Sawmills & Wood Preservation321210 Veneer, Plywood, & Engi-

neered Wood Product Mfg321900 Other Wood Product MfgPaper Manufacturing322100 Pulp, Paper, & Paperboard

Mills322200 Converted Paper Product MfgPrinting and Related SupportActivities323100 Printing & Related Support

ActivitiesPetroleum and Coal ProductsManufacturing324110 Petroleum Refineries

(including integrated)324120 Asphalt Paving, Roofing, &

Saturated Materials Mfg324190 Other Petroleum & Coal

Products MfgChemical Manufacturing325100 Basic Chemical Mfg325200 Resin, Synthetic Rubber, &

Artificial & Synthetic Fibers &Filaments Mfg

325300 Pesticide, Fertilizer, & OtherAgricultural Chemical Mfg

325410 Pharmaceutical & MedicineMfg

325500 Paint, Coating, & Adhesive Mfg325600 Soap, Cleaning Compound, &

Toilet Preparation Mfg325900 Other Chemical Product &

Preparation MfgPlastics and Rubber ProductsManufacturing326100 Plastics Product Mfg326200 Rubber Product MfgNonmetallic Mineral ProductManufacturing327100 Clay Product & Refractory Mfg327210 Glass & Glass Product Mfg327300 Cement & Concrete Product

Mfg327400 Lime & Gypsum Product Mfg327900 Other Nonmetallic Mineral

Product MfgPrimary Metal Manufacturing331110 Iron & Steel Mills & Ferroalloy

Mfg331200 Steel Product Mfg from

Purchased Steel331310 Alumina & Aluminum

Production & Processing331400 Nonferrous Metal (except

Aluminum) Production &Processing

331500 FoundriesFabricated Metal ProductManufacturing332110 Forging & Stamping332210 Cutlery & Handtool Mfg332300 Architectural & Structural

Metals Mfg332400 Boiler, Tank, & Shipping

Container Mfg332510 Hardware Mfg332610 Spring & Wire Product Mfg332700 Machine Shops, Turned

Product, & Screw, Nut, & BoltMfg

Code332810 Coating, Engraving, Heat

Treating, & Allied Activities332900 Other Fabricated Metal

Product MfgMachinery Manufacturing333100 Agriculture, Construction, &

Mining Machinery Mfg333200 Industrial Machinery Mfg333310 Commercial & Service

Industry Machinery Mfg333410 Ventilation, Heating, Air-

Conditioning, & CommercialRefrigeration Equipment Mfg

333510 Metalworking Machinery Mfg333610 Engine, Turbine, & Power

Transmission Equipment Mfg333900 Other General Purpose

Machinery MfgComputer and Electronic ProductManufacturing334110 Computer & Peripheral

Equipment Mfg334200 Communications Equipment

Mfg334310 Audio & Video Equipment Mfg334410 Semiconductor & Other

Electronic Component Mfg334500 Navigational, Measuring,

Electromedical, & ControlInstruments Mfg

334610 Manufacturing & ReproducingMagnetic & Optical Media

Electrical Equipment, Appliance, andComponent Manufacturing335100 Electric Lighting Equipment

Mfg335200 Household Appliance Mfg335310 Electrical Equipment Mfg335900 Other Electrical Equipment &

Component MfgTransportation EquipmentManufacturing336100 Motor Vehicle Mfg336210 Motor Vehicle Body & Trailer

Mfg336300 Motor Vehicle Parts Mfg336410 Aerospace Product & Parts

Mfg336510 Railroad Rolling Stock Mfg336610 Ship & Boat Building336990 Other Transportation

Equipment MfgFurniture and Related ProductManufacturing337000 Furniture & Related Product

ManufacturingMiscellaneous Manufacturing339110 Medical Equipment & Supplies

Mfg339900 Other Miscellaneous

Manufacturing

Wholesale TradeMerchant Wholesalers, DurableGoods423100 Motor Vehicle & Motor Vehicle

Parts & Supplies423200 Furniture & Home Furnishings423300 Lumber & Other Construction

Materials423400 Professional & Commercial

Equipment & Supplies423500 Metal & Mineral (except

Petroleum)423600 Electrical & Electronic Goods423700 Hardware, & Plumbing &

Heating Equipment & Supplies423800 Machinery, Equipment, &

Supplies423910 Sporting & Recreational

Goods & Supplies423920 Toy & Hobby Goods &

Supplies423930 Recyclable Materials423940 Jewelry, Watch, Precious

Stone, & Precious Metals423990 Other Miscellaneous Durable

Goods


CodeMerchant Wholesalers, NondurableGoods424100 Paper & Paper Products424210 Drugs & Druggists' Sundries424300 Apparel, Piece Goods, &

Notions424400 Grocery & Related Products424500 Farm Product Raw Materials424600 Chemical & Allied Products424700 Petroleum & Petroleum

Products424800 Beer, Wine, & Distilled

Alcoholic Beverages424910 Farm Supplies424920 Book, Periodical, &

Newspapers424930 Flower, Nursery Stock, &

Florists' Supplies424940 Tobacco & Tobacco Products424950 Paint, Varnish, & Supplies424990 Other Miscellaneous

Nondurable GoodsWholesale Electronic Markets andAgents and Brokers425110 Business to Business

Electronic Markets425120 Wholesale Trade Agents &

Brokers

Retail TradeMotor Vehicle and Parts Dealers441110 New Car Dealers441120 Used Car Dealers441210 Recreational Vehicle Dealers441221 Motorcycle Dealers441222 Boat Dealers441229 All Other Motor Vehicle

Dealers441300 Automotive Parts, Accessories,

& Tire StoresFurniture and Home FurnishingsStores442110 Furniture Stores442210 Floor Covering Stores442291 Window Treatment Stores442299 All Other Home Furnishings

StoresElectronics and Appliance Stores443111 Household Appliance Stores443112 Radio, Television, & Other

Electronics Stores443120 Computer & Software Stores443130 Camera & Photographic

Supplies StoresBuilding Material and GardenEquipment and Supplies Dealers444110 Home Centers444120 Paint & Wallpaper Stores444130 Hardware Stores444190 Other Building Material

Dealers444200 Lawn & Garden Equipment &

Supplies StoresFood and Beverage Stores445110 Supermarkets and Other

Grocery (except Convenience)Stores

445120 Convenience Stores445210 Meat Markets445220 Fish & Seafood Markets445230 Fruit & Vegetable Markets445291 Baked Goods Stores445292 Confectionery & Nut Stores445299 All Other Specialty Food

Stores445310 Beer, Wine, & Liquor StoresHealth and Personal Care Stores446110 Pharmacies & Drug Stores446120 Cosmetics, Beauty Supplies,

& Perfume Stores446130 Optical Goods Stores446190 Other Health & Personal Care

StoresGasoline Stations447100 Gasoline Stations (including

convenience stores with gas)

CodeClothing and Clothing AccessoriesStores448110 Men’s Clothing Stores448120 Women’s Clothing Stores448130 Children’s & Infants’ Clothing

Stores448140 Family Clothing Stores448150 Clothing Accessories Stores448190 Other Clothing Stores448210 Shoe Stores448310 Jewelry Stores448320 Luggage & Leather Goods

StoresSporting Goods, Hobby, Book, andMusic Stores451110 Sporting Goods Stores451120 Hobby, Toy, & Game Stores451130 Sewing, Needlework, & Piece

Goods Stores451140 Musical Instrument & Supplies

Stores451211 Book Stores451212 News Dealers & Newsstands451220 Prerecorded Tape, Compact

Disc, & Record StoresGeneral Merchandise Stores452110 Department stores452900 Other General Merchandise

StoresMiscellaneous Store Retailers453110 Florists453210 Office Supplies & Stationery

Stores453220 Gift, Novelty, & Souvenir

Stores453310 Used Merchandise Stores453910 Pet & Pet Supplies Stores453920 Art Dealers453930 Manufactured (Mobile) Home

Dealers453990 All Other Miscellaneous Store

Retailers (including tobacco,candle, & trophy shops)

Nonstore Retailers454110 Electronic Shopping & Mail-

Order Houses454210 Vending Machine Operators454311 Heating Oil Dealers454312 Liquefied Petroleum Gas

(Bottled Gas) Dealers454319 Other Fuel Dealers454390 Other Direct Selling Establish-

ments (including door-to-doorretailing, frozen food planproviders, party planmerchandisers, & coffee-breakservice providers)

Transportation andWarehousingAir, Rail, and Water Transportation481000 Air Transportation482110 Rail Transportation483000 Water TransportationTruck Transportation484110 General Freight Trucking, Local484120 General Freight Trucking,

Long-distance484200 Specialized Freight TruckingTransit and Ground PassengerTransportation485110 Urban Transit Systems485210 Interurban & Rural Bus

Transportation485310 Taxi Service485320 Limousine Service485410 School & Employee Bus

Transportation485510 Charter Bus Industry485990 Other Transit & Ground

Passenger TransportationPipeline Transportation486000 Pipeline Transportation Scenic

& Sightseeing TransportationScenic & Sightseeing Transportation487000 Scenic & Sightseeing

Transportation

CodeSupport Activities for Transportation488100 Support Activities for Air

Transportation488210 Support Activities for Rail

Transportation488300 Support Activities for Water

Transportation488410 Motor Vehicle Towing488490 Other Support Activities for

Road Transportation488510 Freight Transportation

Arrangement488990 Other Support Activities for

TransportationCouriers and Messengers492110 Couriers492210 Local Messengers & Local

DeliveryWarehousing and Storage493100 Warehousing & Storage

(except lessors ofminiwarehouses & self-storage units)

InformationPublishing Industries511110 Newspaper Publishers511120 Periodical Publishers511130 Book Publishers511140 Database & Directory

Publishers511190 Other Publishers511210 Software PublishersMotion Picture and Sound RecordingIndustries512100 Motion Picture & Video

Industries (except video rental)512200 Sound Recording IndustriesBroadcasting (except Internet)515100 Radio & Television

Broadcasting515210 Cable & Other Subscription

ProgrammingInternet Publishing and Broadcasting516110 Internet Publishing &

BroadcastingTelecommunications517000 Telecommunications (including

paging, cellular, satellite, cable& other program distribution,resellers, & othertelecommunications)

Internet Service Providers, WebSearch Portals, and Data ProcessingServices518111 Internet Service Providers518112 Web Search Portals518210 Data Processing, Hosting, &

Related ServicesOther Information Services519100 Other Information Services

(including news syndicates &libraries)

Finance and InsuranceDepository Credit Intermediation522110 Commercial Banking522120 Savings Institutions522130 Credit Unions522190 Other Depository Credit

IntermediationNondepository Credit Intermediation522210 Credit Card Issuing522220 Sales Financing522291 Consumer Lending522292 Real Estate Credit (including

mortgage bankers &originators)

522293 International Trade Financing522294 Secondary Market Financing522298 All Other Nondepository Credit

IntermediationActivities Related to CreditIntermediation522300 Activities Related to Credit

Intermediation (including loanbrokers)

CodeSecurities, Commodity Contracts,and Other Financial Investments andRelated Activities523110 Investment Banking &

Securities Dealing523120 Securities Brokerage523130 Commodity Contracts Dealing523140 Commodity Contracts

Brokerage523210 Securities & Commodity

Exchanges523900 Other Financial Investment

Activities (including portfoliomanagement & investmentadvice)

Insurance Carriers and RelatedActivities524140 Direct Life, Health, & Medical

Insurance & ReinsuranceCarriers

524150 Direct Insurance & Reinsur-ance (except Life, Health, &Medical) Carriers

524210 Insurance Agencies &Brokerages

524290 Other Insurance RelatedActivities

Funds, Trusts, and Other FinancialVehicles525100 Insurance & Employee Benefit

Funds525910 Open-End Investment Funds

(Form 1120-RIC)525920 Trusts, Estates, & Agency

Accounts525930 Real Estate Investment Trusts

(Form 1120-REIT)525990 Other Financial Vehicles“Offices of Bank Holding Companies”and “Offices of Other HoldingCompanies” are located underManagement of Companies (HoldingCompanies) below.

Real Estate and Rental andLeasingReal Estate531110 Lessors of Residential

Buildings & Dwellings531114 Cooperative Housing531120 Lessors of Nonresidential

Buildings (exceptMiniwarehouses)

531130 Lessors of Miniwarehouses &Self-Storage Units

531190 Lessors of Other Real EstateProperty

531210 Offices of Real Estate Agents& Brokers

531310 Real Estate PropertyManagers

531320 Offices of Real EstateAppraisers

531390 Other Activities Related toReal Estate

Rental and Leasing Services532100 Automotive Equipment Rental

& Leasing532210 Consumer Electronics &

Appliances Rental532220 Formal Wear & Costume

Rental532230 Video Tape & Disc Rental532290 Other Consumer Goods Rental532310 General Rental Centers532400 Commercial & Industrial

Machinery & EquipmentRental & Leasing

Lessors of Nonfinancial IntangibleAssets (except copyrighted works)533110 Lessors of Nonfinancial

Intangible Assets (exceptcopyrighted works)

Professional, Scientific, andTechnical ServicesLegal Services541110 Offices of Lawyers541190 Other Legal Services


CodeOther Ambulatory Health CareServices621900 Other Ambulatory Health Care

Services (including ambulanceservices & blood & organbanks)

Hospitals622000 HospitalsNursing and Residential CareFacilities623000 Nursing & Residential Care

FacilitiesSocial Assistance624100 Individual & Family Services624200 Community Food & Housing, &

Emergency & Other ReliefServices

624310 Vocational RehabilitationServices

624410 Child Day Care Services

Arts, Entertainment, andRecreationPerforming Arts, Spectator Sports,and Related Industries711100 Performing Arts Companies711210 Spectator Sports (including

sports clubs & racetracks)711300 Promoters of Performing Arts,

Sports, & Similar Events711410 Agents & Managers for Artists,

Athletes, Entertainers, & OtherPublic Figures

711510 Independent Artists, Writers, &Performers

Museums, Historical Sites, andSimilar Institutions712100 Museums, Historical Sites, &

Similar InstitutionsAmusement, Gambling, andRecreation Industries713100 Amusement Parks & Arcades713200 Gambling Industries713900 Other Amusement &

Recreation Industries(including golf courses, skiingfacilities, marinas, fitnesscenters, & bowling centers)

Accommodation and FoodServicesAccommodation721110 Hotels (except casino hotels) &

Motels721120 Casino Hotels721191 Bed & Breakfast Inns721199 All Other Traveler

Accommodation721210 RV (Recreational Vehicle)

Parks & Recreational Camps721310 Rooming & Boarding Houses

CodeFood Services and Drinking Places722110 Full-Service Restaurants722210 Limited-Service Eating Places722300 Special Food Services

(including food servicecontractors & caterers)

722410 Drinking Places (AlcoholicBeverages)

Other ServicesRepair and Maintenance811110 Automotive Mechanical &

Electrical Repair & Mainte-nance

811120 Automotive Body, Paint,Interior, & Glass Repair

811190 Other Automotive Repair &Maintenance (including oilchange & lubrication shops &car washes)

811210 Electronic & PrecisionEquipment Repair &Maintenance

811310 Commercial & IndustrialMachinery & Equipment(except Automotive &Electronic) Repair &Maintenance

811410 Home & Garden Equipment &Appliance Repair &Maintenance

811420 Reupholstery & FurnitureRepair

811430 Footwear & Leather GoodsRepair

811490 Other Personal & HouseholdGoods Repair & Maintenance

Personal and Laundry Services812111 Barber Shops812112 Beauty Salons812113 Nail Salons812190 Other Personal Care Services

(including diet & weightreducing centers)

812210 Funeral Homes & FuneralServices

812220 Cemeteries & Crematories812310 Coin-Operated Laundries &

Drycleaners812320 Drycleaning & Laundry

Services (except Coin-Operated)

812330 Linen & Uniform Supply812910 Pet Care (except Veterinary)

Services812920 Photofinishing812930 Parking Lots & Garages812990 All Other Personal ServicesReligious, Grantmaking, Civic,Professional, and SimilarOrganizations813000 Religious, Grantmaking, Civic,

Professional, & SimiliarOrganizations

CodeAccounting, Tax Preparation,Bookkeeping, and Payroll Services541211 Offices of Certified Public

Accountants541213 Tax Preparation Services541214 Payroll Services541219 Other Accounting ServicesArchitectural, Engineering, andRelated Services541310 Architectural Services541320 Landscape Architecture

Services541330 Engineering Services541340 Drafting Services541350 Building Inspection Services541360 Geophysical Surveying &

Mapping Services541370 Surveying & Mapping (except

Geophysical) Services541380 Testing LaboratoriesSpecialized Design Services541400 Specialized Design Services

(including interior, industrial,graphic, & fashion design)

Computer Systems Design andRelated Services541511 Custom Computer Program-

ming Services541512 Computer Systems Design

Services541513 Computer Facilities Manage-

ment Services541519 Other Computer Related

ServicesOther Professional, Scientific, andTechnical Services541600 Management, Scientific, &

Technical Consulting Services541700 Scientific Research &

Development Services541800 Advertising & Related

Services541910 Marketing Research & Public

Opinion Polling541920 Photographic Services541930 Translation & Interpretation

Services541940 Veterinary Services541990 All Other Professional,

Scientific, & Technical Services

Management of Companies(Holding Companies)551111 Offices of Bank Holding

Companies551112 Offices of Other Holding

Companies

Administrative and Supportand Waste Management andRemediation ServicesAdministrative and Support Services561110 Office Administrative Services561210 Facilities Support Services561300 Employment Services561410 Document Preparation

Services561420 Telephone Call Centers561430 Business Service Centers

(including private mail centers& copy shops)

561440 Collection Agencies561450 Credit Bureaus561490 Other Business Support

Services (including reposses-sion services, court reporting,& stenotype services)

Code561500 Travel Arrangement &

Reservation Services561600 Investigation & Security

Services561710 Exterminating & Pest Control

Services561720 Janitorial Services561730 Landscaping Services561740 Carpet & Upholstery Cleaning

Services561790 Other Services to Buildings &

Dwellings561900 Other Support Services

(including packaging & labelingservices, & convention & tradeshow organizers)

Waste Management and RemediationServices562000 Waste Management &

Remediation Services

Educational Services611000 Educational Services

(including schools, colleges, &universities)

Health Care and SocialAssistanceOffices of Physicians and Dentists621111 Offices of Physicians (except

mental health specialists)621112 Offices of Physicians, Mental

Health Specialists621210 Offices of DentistsOffices of Other Health Practitioners621310 Offices of Chiropractors621320 Offices of Optometrists621330 Offices of Mental Health

Practitioners (exceptPhysicians)

621340 Offices of Physical, Occupa-tional & Speech Therapists, &Audiologists

621391 Offices of Podiatrists621399 Offices of All Other Miscella-

neous Health PractitionersOutpatient Care Centers621410 Family Planning Centers621420 Outpatient Mental Health &

Substance Abuse Centers621491 HMO Medical Centers621492 Kidney Dialysis Centers621493 Freestanding Ambulatory

Surgical & Emergency Centers621498 All Other Outpatient Care

CentersMedical and Diagnostic Laboratories621510 Medical & Diagnostic

LaboratoriesHome Health Care Services621610 Home Health Care Services

FTB 100 Booklet 2002

THIS PAGE INTENTIONALLY LEFT BLANK

visit our Website:

www.ftb.ca.gov

Form 100 C1 2002 (REV 03-04) Side 1

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19 Net income (loss) for state purposes. Complete Sch. R if apportioning income. See instructions . . . . . . . . . . . � 1920 Net operating loss (NOL) carryover deduction. See instructions . . . . . . . . 2021 Pierce’s disease, EZ, LARZ, TTA, or LAMBRA NOL carryover deduction.

See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2122 Disaster loss carryover deduction. See instructions . . . . . . . . . . . . . . . . . � 2223 Net income for tax purposes. Subtract line 22 from line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 2324 Tax. __________% x line 23 (not less than minimum franchise tax, if applicable) . . . . . . . . . . . . . . . . . . . . . . . � 2425 Enter credit name __________________code no. __ __ __ and amount ��2526 Enter credit name __________________code no. __ __ __ and amount ��2627 To claim more than two credits, see instructions . . . . . . . . . . . . . . . . . . . . � 2728 Add line 25 through line 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 2829 Balance. Subtract line 28 from line 24 (not less than minimum franchise tax, if applicable) . . . . . . . . . . . . . . . � 2930 Alternative minimum tax. Attach Schedule P (100). See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 3031 Total tax. Add line 29 and line 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 3132 Overpayment from prior year allowed as a credit . . . . . . . . . . . . . . . . . . . � 3233 2002 estimated tax payments. See instructions . . . . . . . . . . . . . . . . . . . . . � 3334 2002 Nonresident Withholding. See instructions . . . . . . . . . . . . . . . . . . . . � 3435 Amount paid with extension of time to file tax return . . . . . . . . . . . . . . . . � 3536 Total payments. Add line 32 through line 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 3637 Tax due. If line 31 is more than line 36, subtract line 36 from line 31. Go to line 41 . . . . . . . . . . . . . . . . . . . . . � 3738 Overpayment. If line 36 is more than line 31, subtract line 31 from line 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 3839 Amount of line 38 to be credited to 2003 estimated tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 3940 Refund. Amount of line 38 to be refunded. Line 38 less line 39. See DDR instructions . . . . . . . . . . . . . . . . . . . � 40

Fill in the account information to have the refund directly deposited. a Routing number . . . . . . � 40ab Type: Checking � � Savings � � c Account number . . . . . . . . . . . . . . . . . . . . . . . . . � 40c

41 a Penalties and interest. b � � Check if estimate penalty computed using Exception B or C. See instructions � 41a42 Total amount due. Add line 37 and line 41a. Pay with tax return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

1 Net income (loss) before state adjustments. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 12 Amount deducted for foreign or domestic tax based on income or profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 23 Amount deducted for tax under the provisions of the Corporation Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 34 Interest on government obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 45 Net California capital gain from Schedule D, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 56 Depreciation and amortization in excess of amount allowed under California law. Attach form FTB 3885 . . . . . � 67 Net income from corporations not included in federal consolidated return. See instructions . . . . . . . . . . . . . . . � 78 Other additions. Attach schedule(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 89 Total. Add line 1 through line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 9

10 Intercompany dividend deduction. Attach Schedule H (100) . . . . . . . . . . . � 1011 Other dividend deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1112 Additional depreciation allowed under CA law. Attach form FTB 3885 . . . � 1213 Capital gain from federal Form 1120 or Form 1120A, line 8 . . . . . . . . . . . � 1314 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1415 EZ, LAMBRA, or TTA business expense and net interest deduction . . . . . � 1516 Other deductions. Attach schedule(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1617 Total. Add line 10 through line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1718 Net income (loss) after state adjustments. Subtract line 17 from line 9. See instructions . . . . . . . . . . . . . . . . . � 18

California CorporationFranchise or Income Tax Return (NOT TO BE USED BY WATER’S-EDGE TAXPAYERS)

TAXABLE YEAR

2002

For calendar year 2002 or fiscal year beginning month _______ day _______ year 2002, and ending month _______ day _______ year 20 ____ .Federal employer identification number (FEIN)

Corporation name

Address including Suite or Room no. PMB no.

City State ZIP Code

AA Enter the bad debt reserve recapture amount, see instruction _________________________

A Final return? � � Dissolved � Surrendered (withdrawn) � Merged/Reorganized� IRC Section 338 sale � QSub election. Enter date � ________________________

B Is income included in a combined report of a unitary group? . . . . . . . . � � Yes � NoIf yes, indicate: � wholly within CA (R&TC 25101.15) � within and outside of CA

C If the corp. filed on a water’s-edge basis pursuant to R&TC Sections 25110 and 25111

in previous years, enter the date the water’s-edge election ended � __________________

D Was the corporation’s income included in a consolidatedfederal return? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � � Yes � No

Questions continued on Side 2

California corporation number

10002103

FORM

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SUSPENDED

SUSPENDED

Side 2 Form 100 C1 2002 (REV 03-04)

DatePreparer’s Check if self-signature � employed � �

Signatureof officer � Title Date Telephone ( )

1

2 Short-term capital gain from installment sales from form FTB 3805E, line 26 or line 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Unused capital loss carryover from 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Net short-term capital gain (loss). Combine line 1 through line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Part II Long-Term Capital Gains and Losses – Assets held More Than One Year. Use additional sheet(s) if necessary.5

6 Enter gain from Schedule D-1, line 9 and/or any capital gain distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Long-term capital gain from installment sales from form FTB 3805E, line 26 or line 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Net long-term capital gain (loss). Combine line 5 through line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Enter excess of net short-term capital gain (line 4) over net long-term capital loss (line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

10 Net capital gain. Enter excess of net long-term capital gain (line 8) over net short-term capital loss (line 4) . . . . . . . . . . . . . . . . 1011 Total line 9 and line 10. Enter here and on Form 100, Side 1, line 5. Note: If losses exceed gains, carry forward losses to 2003 . 11Schedule J Add-On Taxes and Recapture of Tax Credits. See instructions.

1 LIFO recapture due to S corporation election, IRC Sec. 1363(d) deferral: $____________________ . . . . . . . . . . . . . . . . . . . . � 12 Interest computed under the look-back method for completed long-term contracts (Attach form FTB 3834) . . . . . . . . . . . . . . � 23 Interest on tax attributable to installment: a Sales of certain timeshares and residential lots . . . . . . . . . . . . . . . . . . . . . . . . � 3a

b Method for nondealer installment obligations . . . . . . . . . . . . . . . . . . . . . . . . . � 3b4 IRC Section 197(f)(9)(B)(ii) election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 45 Credit recapture name:_____________________________________________________________________ . . . . . . . . . . . � 56 Combine line 1 through line 5, Revise Side 1, line 37 or line 38, whichever applies, by this amount. Write

“Schedule J” to the left of line 37 or line 38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 6

Schedule D California Capital Gains and LossesPart I Short-Term Capital Gains and Losses – Assets Held One Year or Less. Use additional sheet(s) if necessary.

Questions (continued from Side 1)E Principal business activity code. (Do not leave blank): . . . . �

Business activity __________________________________________________________Product or service _________________________________________________________

F Date incorporated:_____________ � Where: State Country_______________G Date business began in California or date income was first derived from

California sources � _______________________________________________________H First return? � � Yes � No If “Yes” and this corporation is a successor to a

previously existing business, check the appropriate box.� (1) � sole proprietorship (2) � partnership (3) � joint venture (4) � corporation (5) � other(attach statement showing name, address and FEIN of previous business)

I “Doing business as” name: � ________________________________________________J Did this corporation or its subsidiary(ies) have a change in control or ownership,

or acquire ownership or control of any other legal entity this year? . . . . . � � Yes � NoK At any time during the taxable year, was more than 50% of the voting stock:

a Of the corporation owned by any single interest? . . . . . . . . . . . . . . . � � Yes � Nob Of another corporation owned by this corporation? . . . . . . . . . . . . . � � Yes � Noc Of this and one or more other corporations owned or controlled,

directly or indirectly, by the same interests? . . . . . . . . . . . . . . . . . . � � Yes � NoIf a or c is “Yes,” enter the country of the ultimate parent � _____________________If a, b or c is “Yes,” furnish a statement of ownership indicating pertinent names,addresses, and percentages of stock owned. If the owner(s) is an individual, providethe SSN.

L Was 50% or more of the stock of this corporation owned directly byanother corporation during this taxable year? . . . . . . . . . . . . . . . . . . . . � � Yes � No

M Is this corporation apportioning income to California using Schedule R? � � Yes � No

N How many affiliates in the combined report are claimingimmunity from taxation in California under Public Law 86-272? � _____________________

O Corporation headquarters are: � (1) � Within California(2) � Outside of California, within the U.S. (3) � Outside of the U.S.

P Location of principal accounting records _________________________________________Q Accounting method: � (1) � Cash (2) � Accrual (3) � OtherR Did this corporation or one of its subsidiaries make a federal election

to be treated as a foreign sales corporation (FSC) or a domesticinternational sales corporation (DISC): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � Yes � No

S Is this corporation or any of its subsidiaries a RIC ? . . . . . . . . . . . . . . . . . . � � Yes � NoT Is this corporation treated as a REMIC for California purposes? . . . . . . . . . � � Yes � NoU Is this corporation a REIT for California purposes? . . . . . . . . . . . . . . . . . . � � Yes � NoV Is this corporation an LLC or limited partnership electing to be taxed

as a corporation for federal purposes? . . . . . . . . . . . . . . . . . . . . . . . . . . . . � � Yes � NoW Is this corporation to be treated as a credit union? . . . . . . . . . . . . . . . . . . . � � Yes � NoX Is the corporation under audit by the IRS or has it been audited by

the IRS in a prior year? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � � Yes � NoY Have all required information returns (e.g. Federal Forms 1099, 5471,

5472, 8300, 8865, etc.) been filed with the Franchise Tax Board? . . � N/A � Yes � NoZ Were total receipts (see page 15 of the instructions) for the taxable year

and total assets at the end of the taxable year less than $250,000? . . . . . . . � Yes � NoIf "Yes," the corporation is not required to complete Schedules L, M-1, and M-2 on Side 4.Instead, enter here The total amount of cash distributions and the book value of propertydistributions (other than cash) made during the tax year. $ ___________________________

10002203 For Privacy Act Notice, get form FTB 1131.

PleaseSignHere

PaidPreparer’sUse Only

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it istrue, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Preparer’s SSN/PTIN

Firm’s name (or yours,if self-employed) �and address

FEIN

-

(f)Gain (loss)

((d) less (e))

(e)Cost or other basisplus expense of sale

(d)Gross sales price

(c)Date sold

(mo., day, yr.)

(b)Date acquired(mo., day, yr.)

(a)Kind of property and description(Example, 100 shares of Z Co.)

Telephone ( )�

�

��

Form 100 C1 2002 (REV 03-04) Side 3

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1 a) Gross receipts or gross sales____________ b) Less returns and allowance____________ c) Balance � 1c2 Cost of goods sold. Attach federal Schedule A (California Schedule V) . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 23 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 34 Dividends. Attach federal Schedule C, California Schedule H (100) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 45 a Interest on obligations of the United States and U.S. instrumentalities . . . . . . . . . . . . . . . . . . . . . . . . . . � 5a

b Other interest. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 5b6 Gross rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 67 Gross royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 78 Capital gain net income. Attach federal Schedule D (California Schedule D) . . . . . . . . . . . . . . . . . . . . . . . . . � 89 Ordinary gain (loss). Attach federal Form 4797 (California Schedule D-1) . . . . . . . . . . . . . . . . . . . . . . . . . . � 9

10 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1011 Total income. Add line 3 through line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1112 Compensation of officers. Attach federal schedule E or equivalent schedule � 1213 Salaries and wages (not deducted elsewhere) . . . . . . . . . . . . . . . . . � 1314 Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1415 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1516 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1617 Taxes (California Schedule A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1718 Interest. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1819 Contributions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 1920 Depreciation. Attach federal

Form 4562 and FTB 3885) . . . 2021 Less depreciation claimed

elsewhere on return . . . . . . . . 21a � 21b22 Depletion. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 2223 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2324 Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . . . . . . . . . . . . 2425 Employee benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2526 a) Total travel and entertainment_____________ b) Deductible amounts � 26b27 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . � 2728 Specific deduction for 23701r or 23701t organizations. See instructions . � 2829 Total deductions. Add line 12 through line 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 2930 Net income before state adjustments. Subtract line 29 from line 11. Enter here and one Side 1, line 1 . . . . � 30

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Schedule V Cost of Goods Sold1 Inventory at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 34 a Additional IRC Section 263A costs. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 4a

b Other costs. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 4b5 Total. Add line 1 through line 4b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Cost of goods sold. Subtract line 6 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Method of inventory valuation � __________________________________________________________________________________________________Was there any change in determining quantities, costs of valuations between opening and closing inventory? If “Yes,” attach an explanation . . . � Yes � NoEnter California seller’s permit number, if any � ______________________________________________________________Check if the LIFO inventory method was adopted this taxable year for any goods. If checked, attach federal Form 970 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . �If the LIFO inventory method was used for this taxable year, enter the amount of closing inventory under LIFO_______________________________________Do the rules of IRC Section 263A (with respect to property produced or acquired for resale) apply to the corporation? . . . . . . . . . . . . . . . . . . . � � Yes � No

10002303

(a)Nature of tax

(c)Total amount

(d)Nondeductible amount

Inco

me

Dedu

ctio

nsSchedule A Taxes Deducted. Use additional sheet(s) if necessary.

(b)Taxing authority

Total. Enter total of column (c) on Schedule F, line 17, and amounts in column (d) on Side 1, line 2 or line 3Schedule F Computation of Net Income. See instructions.

Side 4 Form 100 C1 2002 (REV 03-04)

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10002403

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Schedule L Balance Sheets Beginning of taxable year End of taxable yearAssets (a) (b) (c) (d)1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 a Trade notes and accounts receivable . . . . . . . . . . .

b Less allowance for bad debts . . . . . . . . . . . . . . . . .3 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Federal and state government obligations . . . . . . . . .5 Other current assets. Attach schedule(s) . . . . . . . . . .6 Loans to stockholders/officers. Attach schedule . . . .7 Mortgage and real estate loans . . . . . . . . . . . . . . . . .8 Other investments. Attach schedule(s) . . . . . . . . . . .9 a Buildings and other fixed depreciable assets . . . . .

b Less accumulated depreciation . . . . . . . . . . . . . . .10 a Depletable assets . . . . . . . . . . . . . . . . . . . . . . . . . .

b Less accumulated depletion . . . . . . . . . . . . . . . . . .11 Land (net of any amortization) . . . . . . . . . . . . . . . . . .12 a Intangible assets (amortizable only) . . . . . . . . . . .

b Less accumulated amortization . . . . . . . . . . . . . . .13 Other assets. Attach schedule(s) . . . . . . . . . . . . . . . .14 Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Liabilities and stockholders’ equity15 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Mortgages, notes, bonds payable in less than 1 year17 Other current liabilities. Attach schedule(s) . . . . . . . .18 Loans from stockholders . . . . . . . . . . . . . . . . . . . . . .19 Mortgages, notes, bonds payable in 1 year or more20 Other liabilities. Attach schedule(s) . . . . . . . . . . . . . .21 Capital stock: a Preferred stock . . . . . . . . . . . . . . .

b Common stock . . . . . . . . . . . . . . .22 Paid-in or capital surplus. Attach reconciliation . . . . .23 Retained earnings – Appropriated. Attach schedule24 Retained earnings – Unappropriated . . . . . . . . . . . . .25 Adjustments to shareholders’ equity (attach schedule)26 Less cost of treasury stock . . . . . . . . . . . . . . . . . . . .27 Total liabilities and stockholders’ equity.Schedule M-1 Reconciliation of income (loss) per books with income (loss) per return.1 Net income per books . . . . . . . . . . . . . . . . . . . . . . . . . . . . �2 Federal income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . �3 Excess of capital losses over capital gains . . . . . . . . . . . . . �4 Taxable income not recorded on books this year

(itemize) _______________________________________________________________________________________ �

5 Expenses recorded on books this year not deductedin this return (itemize)a Depreciation . . . . . . . . . . . . . . . . . . . . $_______________b State taxes . . . . . . . . . . . . . . . . . . . . . $_______________c Travel and entertainment . . . . . . . . . . $_____________________________________________________________ �

6 Total. Add line 1 through line 5 . . . . . . . . . . . . . . . . . . . . . . . .

( ) � ( )

( )

( ) ( )

( ) ( )

( ) ( )

�

��

��

�

�

��

��

��

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7 Income recorded on books this year notincluded in this return (itemize)a Tax-exempt interest $_____________________________________________________________________________________________________��

8 Deductions in this return not chargedagainst book income this year (itemize)a Depreciation . . . . . . . . . . . . . . $_______________b State tax refunds . . . . . . . . . . $______________________________________________________________________________________________ �

9 Total. Add line 7 and line 8 . . . . . . . . . . . . . . . . . . . . .10 Net income per return. Subtract line 9 from line 6 . . .

Schedule M-2 Analysis of unappropriated retained earnings per books (Schedule L, line 24)

�

�� ( )

�

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1 Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . �2 Net income per books . . . . . . . . . . . . . . . . . . . . . . . . . . . . �3 Other increases (itemize)__________________________

_______________________________________________________________________________________________________________________________________ �

4 Total. Add line 1 through line 3 . . . . . . . . . . . . . . . . . . . . . . . .

5 Distributions: a Cash . . . . . . . . . . . . . . . . . . . . . �b Stock . . . . . . . . . . . . . . . . . . . . . �c Property . . . . . . . . . . . . . . . . . . . �

6 Other decreases (itemize)_____________________ ___________________________________________ �7 Total. Add line 5 and line 6 . . . . . . . . . . . . . . . . . . . . .8 Balance at end of year. Subtract line 7 from line 4

The corporation is not required to complete Schedules L, M-1, and M-2 if question Z on Form 100, Side 2 is answered “Yes.”

Schedule H (100) 2002 (REV 03-04)

Dividend Income DeductionSee instructions for Schedule H (100). Use and attach additional sheets if necessary.

Part I Elimination of Intercompany Dividends (R&TC Section 25106)(a) (b) (c) (d) (e) (f) (g)

Dividend payer Dividend payee Total amount of Amount that qualifies Amount from column (d) Amount from column (d) Balance column (c)dividends received for 100% elimination paid out of current paid out of prior minus column (d)

year E&P year E&P

1 2 3 4 5 67 Total amounts in each column. Enter amount from Part I,

column (d) on Form 100, Side 1, line 10 . . . . . . . . . . . . . .

H (100)CALIFORNIA SCHEDULE

TAXABLE YEAR

2002

H10002103

What’s ChangedForms and instructions impacted by the courtdecision in Farmer Bros. Co. v. Franchise TaxBoard (2003) have been revised to disallowany deduction taken based on section 24402.In Farmer Bros. Co. v. Franchise Tax Board(2003) 108 Cal App 4th, 134 Cal Rptr. 2nd390, the California Court of Appeal found thatthe R&TC Section 24402 deductible dividendprovision discriminated against interstatecommerce in violation of the CommerceClause of the United States Constitution.R&TC Section 24402 provided for a deductionto the extent that the dividend payer wastaxable in California. A statute that is held tobe unconstitutional is invalid and unenforce-able. Therefore, the deduction is not available.

Important InformationIn Ceridian v. Franchise Tax Board (2000) 85Cal.App.4th 875, the Court of Appeal hasdetermined that R&TC Section 24410, whichprovides a limited deduction for dividendsreceived from an insurance company, isunconstitutional. As such, the statute isinvalid and unenforceable. Therefore, thededuction is not available

Instructions for Schedule H (100)Dividend Income Deduction

Specific InstructionsA corporation may eliminate or deductdividend income when certain requirementsare met. The available eliminations ordeductions are described below.Part I – Intercompany DividendsA corporation may eliminate dividendsreceived from unitary subsidiaries but only tothe extent that the dividends are paid fromunitary earnings and profits accumulatedwhile both the payee and payer weremembers of the combined report, R&TCSection 25106.Complete Schedule H (100), Part I and enterthe total of column (d) on Form 100, Side 1,line 10.

Form 100 Booklet 2002 (REV 03-04)


visit our Website:

www.ftb.ca.gov

Schedule P (100) 2002 Side 1

1 Net income (loss) after state adjustments. Enter the amount from Form 100, line 18; Schedule R, line 1c; or Form 109, line 6 12 Adjustments. See instructions

a Depreciation of tangible property placed in service after 1986 . . . . . . . . . . . . . . . . . . . . . � 2ab Amortization of certified pollution control facilities placed in service after 1986 . . . . . . . . 2bc Amortization of mining exploration and development costs incurred after 1987 . . . . . . . . 2cd Basis adjustments in determining gain or loss from sale or exchange of property . . . . . . 2de Long-term contracts entered into after February 28, 1986 . . . . . . . . . . . . . . . . . . . . . . . . . 2ef Installment sales of certain property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2fg Tax shelter farm activities (personal service corporations only) . . . . . . . . . . . . . . . . . . . . . 2gh Passive activities (closely held corporations and personal service corporations only) . . . 2hi Certain loss limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2ij Beneficiaries of estates and trusts. Enter the amount from Schedule K-1 (541), line 8 . . . 2jk Merchant marine capital construction funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2kl Combine line 2a through line 2k . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2l

3 Tax preference items. See instructionsa Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3ab Intangible drilling costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3bc Reserves for losses on bad debts. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3cd Accelerated depreciation of real property placed in service before 1987 . . . . . . . . . . . . . . . 3de Amortization of certified pollution control facilities placed in service before 1987 . . . . . . . 3ef Add line 3a through line 3e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3f

4 Pre-adjustment alternative minimum taxable income (AMTI):a Combine line 1, line 2l, and line 3f . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4ab Apportioned pre-adjustment AMTI. If income is derived from sources both within and outside of California,

see instructions. Otherwise, enter amount from line 4a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4b5 Adjusted current earnings (ACE) adjustment:

a Enter ACE. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . � 5ab Subtract line 4b from line 5a (even if one or both of the figures are negative).

If negative, use brackets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5bc Multiply line 5b by 75% (.75) and enter the result as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5cd Enter the excess, if any, of the corporation’s total increases in AMTI from prior year ACE adjustments over its total

reductions in AMTI from prior year ACE adjustments. Note: Enter an amount on line 5d (even if line 5b is positive) . . . . . 5de ACE adjustment:

• If line 5b is a positive amount or zero, enter the amount from line 5c on line 5e as a positive amount.• If line 5b is a negative amount, enter the smaller of line 5c or line 5d on line 5e as a negative amount . . . . . . . . . . . . . . 5e

6 Combine line 4b and line 5e. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 a Reduction for disaster loss carryover deduction, if any, from Form 100, line 22 . . . . . . . . 7a

b AMT net operating loss (NOL) deduction. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . 7bc For 2002 tax year, enter the amount from line 7a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7c

8 AMTI. Subtract line 7c from line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Enter $40,000 exemption. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

10 Enter $150,000 limitation. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1011 Subtract line 10 from line 8. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 Multiply line 11 by 25% (.25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1213 Exemption. Subtract line 12 from line 9. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1314 Subtract line 13 from line 8. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1415 Multiply line 14 by 6.65% (.0665) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1516 Banks and financial corps. Multiply Form 100, line 23, by 2.00% (.0200). See instructions . . . . . . . . 1617 TMT. Add line 15 and line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1718 Regular tax before credits. Enter amount from Form 100, line 24 or Form 109, line 7. See instructions . . . . . . . . . . . . . . . . . . 1819 AMT. Subtract line 18 from line 17. If zero or less, enter -0-. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Alternative Minimum Tax andCredit Limitations — Corporations

Corporation name California corporation number

P10002103

P (100)CALIFORNIA SCHEDULE

TAXABLE YEAR

2002

Part I Tentative Minimum Tax (TMT) and Alternative Minimum Tax (AMT) Computation

SUSPENDED

Attach to Form 100.

Side 2 Schedule P (100) 2002

Section A – Credits that reduce excess regular tax.3 Subtract line 2 from line 1. If zero or less, enter -0- and see instructions.

This is your excess regular tax which may be offset by credits . . . . . . . . . . . . . 3A1 Credits that reduce excess regular tax and have no carryover provisions.

4 Code: 162 Prison inmate labor credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4A2 Credits that reduce excess regular tax and have carryover provisions.

See instructions.5 Code: ___ ___ ___ Credit Name: ____________________________________ 56 Code: ___ ___ ___ Credit Name: ____________________________________ 67 Code: ___ ___ ___ Credit Name: ____________________________________ 78 Code: ___ ___ ___ Credit Name: ____________________________________ 89 Code: 188 Credit for prior year alternative minimum tax from Part III, line 3 . . 9

Section B – Credits that may reduce regular tax belowtentative minimum tax.

10 If Part II, line 3 is zero, enter the amount from line 1 minus the minimumfranchise tax, if applicable. If line 3 is more than zero, enter the total of Part II,line 2, minus the minimum franchise tax, if applicable, plus line 9, column (c) . 10

B Credits that reduce net tax and have carryover provisions.See instructions.

11 Code: ___ ___ ___ Credit Name: ____________________________________ 1112 Code: ___ ___ ___ Credit Name: ____________________________________ 1213 Code: ___ ___ ___ Credit Name: ____________________________________ 1314 Code: ___ ___ ___ Credit Name: ____________________________________ 14Section C – Credits that may reduce alternative minimum tax.15 Enter your alternative minimum tax from Side 1, Part I, line 19 . . . . . . . . . . . . . 1516 Code: 180 Solar energy credit carryover from Section B, column (d) . . . . . . . 1617 Code: 181 Commercial solar energy credit carryover from

Section B, column (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1718 Adjusted AMT. Enter the balance from line 17, column (c) here and on

Form 100, line 30 or Form 109, Side 1, line 19 . . . . . . . . . . . . . . . . . . . . . . . . . . 18Part III Credit for Prior Year AMT

1 Enter the alternative minimum tax from the 2001 Schedule P (100), Part I, line 19. See instructions . . . . . . . . . . . . . . . . . . 12 Carryover of unused credit for prior year alternative minimum tax. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Total available credit. Add line 1 and line 2. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

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Part II Credits that Reduce Tax1 Regular tax from Form 100, line 24 or Form 109, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Tentative minimum tax (before credits) from Part I, line 17 (but not less than the minimum franchise tax, if applicable) . . . 2

(a)Credit amount

(b)Credit used this

year

(c)Tax balance thatmay be offset by

credits

(d)Credit

carryover

P10002203


Instructions for Schedule P (100)Alternative Minimum Tax and Credit Limitations — CorporationsReferences in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2001, and to the California Revenue and Taxation Code (R&TC).

What’s NewFor taxable years beginning on or afterJanuary 1, 2002, California law conforms tothe federal law relating to:• The deduction for contributions of

appreciated property. Contributions ofappreciated property are no longer treatedas tax preference item for purposes ofAlternative Minimum Taxable Income.

• The methodology for calculating deductionsfor bank bad-debt losses, which limits thesedeductions for large banks (have more than$500 million in assets) to actual lossesrather than contributions to a reserve forbad debts. Large banks must recognize50% of their existing bad-debt reservebalances as income in taxable year 2002.

For taxable years beginning on or afterJanuary 1, 2002, the credit for prior yearalternative minimum tax (AMT) has to beapplied before any credits that can reduce theregular tax below the tentative minimum tax(TMT) in accordance with California Revenueand Taxation Code (R&TC) Section 23036 (c).For taxable years beginning in 2002 and 2003,California has suspended the Net OperatingLoss carryover deduction. Taxpayers maycontinue to compute and carryover an NOLduring the suspension period. However, thededuction for disaster losses is not affectedby the NOL suspension rules.The carryover period for suspended losses isextended by two years for losses incurredbefore January 1, 2002, and by one year forlosses incurred after January 1, 2002, andbefore January 1, 2003. For more informationsee form FTB 3805Q.For taxable years beginning on or afterJanuary 1, 2002, the NOL carryover computa-tion for the California taxable income of anonresident or part-year resident is no longerlimited by the amount of net operating lossfrom all sources. Only your California sourcedincome and losses are considered in deter-mining if you have a California NOL.The authority of the Wildlife ConservationBoard to award Natural Heritage PreservationTax Credit has been suspended between July1, 2002, and June 30, 2003, inclusive. Thus,any credits that were allocated before June 30,2002, may be claimed on the 2002 tax return.Any credits that could have been allocated, butwere not allocated, or any new credits that areallocated on or after July 1, 2003, could beclaimed on the 2003 tax return, or subsequenttax returns. Carryover is not affected forpreviously awarded credits, credits awardedbefore June 30, 2002, or any credits allocatedon or after July 1, 2003.

Important InformationIn general, California law conforms to theInternal Revenue Code (IRC) as of January 1,2001. Therefore, California has conformed tothe income tax changes made to the IRC by

the federal Internal Revenue Service Restruc-turing and Reform Act of 1998 (Public Law105-206), the Tax and Trade Relief ExtensionAct of 1998 (Public Law 105-277), SurfaceTransportation Revenue Act of 1998 (PublicLaw 105-178), the Ricky Ray HemophiliaRelief Fund Act of 1998 (Public Law 105-369),the Ticket to Work and Work IncentivesImprovement Act of 1999 (Public Law 106-170), the Miscellaneous Trade and TechnicalCorrections Act of 1999 (Public Law 106-36),the FSC Repeal and Extraterritorial IncomeExclusion Act of 2000 (Public Law 106-519),the Consolidated Appropriations Act of 2001(Public Law 106-554), and to technicalcorrections made by the Economic Growthand Tax Relief Reconciliation Act of 2001(Public Law 107-16). However, there arecontinuing differences between California andFederal law. California has not conformed tosome of the law changes made by theEconomic Growth and Tax Relief Reconcilia-tion Act of 2001 (Public Law 107-16) or thefederal Job Creation and Worker AssistanceAct of 2002 (Public Law 107-147).Note: Fiscal year taxpayers are subject toCalifornia tax law as it conforms to federal lawthat is applicable for taxable years beginningprior to January 1, 2002.Newly Formed or Qualified CorporationsFor corporations that incorporate or qualify todo business in California on or after January 1,2000, the prepayment of the minimum fran-chise tax to the California Secretary of State(SOS) is no longer required. For the first tax-able year the corporation will compute its taxliability by multiplying its state net income bythe appropriate tax rate and will not be subjectto the minimum franchise tax. The corporationwill become subject to minimum franchise taxbeginning in its second taxable year. The cor-poration will be required to make estimated taxpayments based on the projected measured taxfor its second and third taxable years.California law conforms to federal lawregarding:• The contribution deduction in excess of

adjusted basis for appreciated property.• The removal of the adjusted current

earnings (ACE) depreciation adjustment.• The use of the same depreciation recovery

periods for regular tax and AMT.• The repeal of the installment method AMT

adjustment for farmers. Farmers areallowed to use the installment method ofaccounting for purposes of AMT forpayments received in taxable yearsbeginning on or after January 1, 1997, forinstallment sales related to the sale ordisposition of farm property made intaxable years beginning on or afterJanuary 1, 1988.

• The treatment of merchant marine capitalconstruction account funds as an adjust-ment item for AMT.

California does not conform to the followingfederal AMT provisions:• The elimination of AMT for small

businesses.

General InformationUnless stated otherwise, the term “corpora-tion” as used in Schedule P (100) and inthese instructions, includes banks, financialcorporations, limited liability companies(LLCs) classified as corporations, and exemptorganizations other than exempt trusts, butnot S corporations.California tax laws give special treatment tosome types of income and allow specialdeductions and credits for some types ofexpenses. Corporations that benefit fromthese laws may have to pay AMT in addition tothe minimum franchise tax.Also use this schedule to figure credits thatare limited by the TMT or that may reduceAMT.See IRC Sections 55 through 59 for moreinformation on figuring AMT. But note thatR&TC Sections 23455, 23456, 23457, and23459 modify IRC Sections 55 through 59.Who Must File. Corporations should fileSchedule P (100) if the sum of: AMTadjustments, preference items, loss denials,other items as specified under IRC Section 59,and state net income exceeds $40,000.Exempt organizations, other than exempttrusts with unrelated business income, shouldfile Schedule P (100) if the sum of: AMTadjustments, preference items, loss denials,items specified under IRC Section 59, andstate net unrelated business taxable incomeexceeds $40,000. Exempt trusts should useSchedule P (541), Alternative Minimum Taxand Credit Limitations – Fiduciaries.In addition, if the corporation claims creditsthat are limited by TMT (Part I, line 17), or ifthe corporation claims credits that reduce theAMT (Part I, line 19), the corporation must fileSchedule P (100).Members of a Combined Report. Alternativeminimum taxable income (AMTI) and ACE areapportioned and allocated to California and toeach taxpayer in the same manner as netincome for purposes of regular tax. A separateAMT calculation is required for each memberof a combined report. Complete a separateSchedule P (100), Side 1 and Side 2, for eachtaxpayer included in the combined report.Attach the Schedule P (100) for each taxpayermember in the combined report behind thecombined Schedule P (100) for all members.See instructions for Part I, line 4b, line 5a, line5d, line 7b, line 9, and line 10.Short Period Return. For a short period return,use the formula in IRC Section 443(d) todetermine AMTI and AMT.Credit for Prior Year AMT. If the corporationpaid AMT for 2001 or has a carryover of credit


for prior year AMT and has no AMT liability for2002, the corporation may use this credit in2002 to reduce its regular tax liability.Complete Part III to figure this credit.

Specific Line InstructionsPart I — Tentative MinimumTax (TMT) and Alternative Mini-mum Tax (AMT) ComputationLine 1- Net income (loss) after stateadjustmentsEnter the amount from Form 100, line 18 orForm 109, line 6. If the corporation filed aSchedule R with the return, enter the amountfrom line 1c of Schedule R.Line 2a – Depreciation of tangible propertyplaced in service after 1986 and before 1999Do not include depreciation adjustmentsattributable to a tax shelter farm activity or apassive activity on this line. Instead, includethe adjustment on line 2g or line 2h.Refigure the depreciation as follows: Forproperty other than real property and propertyon which the straight-line method was used,use the 150% declining balance method,switching to straight-line for the first taxableyear in which that method will give a higherdepreciation deduction. Use the same lifeclasses as used on the federal Form 4626,Alternative Minimum Tax – Corporations. Forpersonal property having no asset deprecia-tion range (ADR) class life, use 12 years. Forresidential rental and nonresidential realproperty, use the straight-line method over 40years. Determine the depreciation adjustmentby subtracting the recomputed depreciationfrom the California depreciation on formFTB 3885, Corporation Depreciation andAmortization. Enter the difference on this line.If the corporation elected to depreciate agrapevine that was replanted in a vineyard asa result of phylloxera or Pierce’s diseaseinfestation over 5 years instead of 20 years forregular tax, it must depreciate the grapevineover 10 years for AMT.Note: Depreciation that is capitalized toinventory under the uniform capitalizationrules must be refigured using the rulesdescribed above. The depreciation adjustmentdoes not apply to property placed in serviceafter December 31, 1998.Line 2b – Amortization of certified pollutioncontrol facilitiesFor any certified pollution control facilityplaced in service in California after 1986 andbefore 1999, the five-year depreciationmethod available for such facilities for regulartax purposes must be replaced for AMTpurposes by the alternative depreciationsystem specified under IRC Section 168(g)(straight-line method, without regard tosalvage value.) A facility placed in service after1998 is depreciated using the IRC Section 168straight-line method.Line 2c – Amortization of mining explorationand development costs incurred after 1987If the corporation elected the optional ten yearwrite-off under IRC Section 59(e) for allassets in this category, skip this line.

With respect to each mine or other naturaldeposit, (other than an oil, gas, or geothermalwell) refigure the expenses before the 30%reduction under IRC Section 291(b) byamortizing them over 10 years beginning withthe year in which the expenses were paid orincurred. Figure the adjustment by subtractingthe refigured amount from the deductiontaken under IRC Section 616(a) or 617(a)after the 30% reduction. Enter the amount onthis line. If a loss resulted with respect tothose expenses, see IRC Section 56(a)(2)(B).Line 2d – Basis adjustments in determininggain or loss from sale or exchange ofpropertyIf the corporation disposed of property duringthe year, refigure the gain or loss from suchsale taking into account the AMT adjustmentson line 2a through line 2c. Enter the differencebetween the gain or loss reported for regulartax and the recomputed gain or loss. If therecomputed gain is less, or the loss is more,enter the difference as a negative amount.Otherwise, enter a positive amount.Line 2e – Long-term contracts entered intoafter February 28, 1986If the corporation entered into a long-termcontract after February 28, 1986, determinethe taxable income from the contract underthe percentage of completion method ofaccounting as modified by IRC Section 460(b)and R&TC Section 24673.2 using AMTadjustments and tax preference items.Determine the difference between that resultand the amount determined for the contract infiguring the regular tax and enter thedifference on this line. If the refigured taxableincome is less than the result when determin-ing the regular tax, enter the difference as anegative amount.California has conformed to IRCSection 460(b)(2). This section requires thetaxpayer to “look-back” to previous yearsduring which the contract work for certaincontracts was in progress. The taxpayer mustcompute interest on the difference betweenthe tax that was actually paid and the tax thatwould have been paid if the taxpayer hadknown the actual contract prices and coststhat would finally result.Get form FTB 3834, Interest ComputationUnder the Look-Back Method for CompletedLong-Term Contracts, to figure the interestdue or to be refunded under the “look-backmethod.”Line 2f – Installment sales of certainpropertyFor regular tax purposes, corporations may usethe installment method of accounting for salesof certain property. For AMT, corporations maynot determine income from dispositions ofinventory or other property described in IRCSection 1221(1) using the installment method,except for certain dispositions of timeshares orresidential lots, if the corporation elected to payinterest under IRC Section 453(l)(2)(B) (R&TCSection 24667).If the corporation used the installment methodfor regular tax purposes, but was required forAMT purposes to report the entire gain in theyear of disposition, the corporation may have

adjustments with respect to those dispositions.Enter on this line as a negative amount thecurrent year income the corporation reportedfor regular tax.Farmers that received payments for a taxableyear beginning on or after January 1, 1997, forqualified installment sales made in taxable yearsbeginning on or after January 1, 1988, do notneed to make an adjustment on this line.Line 2g – Tax shelter farm activities(personal service corporations only)Caution: To avoid duplication, if the corpora-tion included AMT adjustments or taxpreference items on this line, do not includethem on any other line of this schedule.Complete this line only if the corporation hasa gain or loss from a tax shelter farm activity,as defined in IRC Section 58(a)(2), that is nota passive activity. If the tax shelter farmactivity is a passive activity, the corporationmust include the gain or loss with its otherpassive activities on line 2h.Refigure all gains and losses reported forregular tax purposes from tax shelter farmactivities using the AMT adjustments and taxpreference items.Figure the tax shelter farm activity gain or lossfor AMT using the same rules the corporationused for regular tax except:• Do not take any refigured loss unless the

corporation is insolvent. See IRCSection 58(c)(1); and

• Do not offset gains from other tax shelteractivities with any refigured loss.

Instead, suspend and carry over the loss tofuture taxable years until:• The corporation has a gain in a future

taxable year from that same tax shelter farmactivity; or

• The corporation disposes of the activity.Enter on this line the difference between theAMT tax shelter farm loss and the regular taxshelter farm loss.Line 2h – Passive activities (closely heldcorporations and personal servicecorporations only)Caution: To avoid duplication, if the corpora-tion included AMT adjustments or taxpreference items on this line, do not includethem on any other line of this schedule.Corporations may enter two kinds of adjust-ments on this line:Regular passive activities. Refigure passiveactivity gains and losses for AMT by taking intoaccount all AMT adjustments, tax preferenceitems and AMT prior year unallowed lossesthat apply to the passive activity.Tax shelter passive farm activities. Refigureany gain or loss from a tax shelter passivefarm activity taking into account all AMTadjustments, tax preference items, and AMTprior year unallowed losses. If the amount is again, it may be included on form FTB 3802,Corporate Passive Activity Loss and CreditLimitations, but if it is a loss, the adjustmentfor tax shelter passive farm activity is the lossthe corporation reported for regular tax. TheAMT loss carryover is the refigured AMT loss.


Note: If, at the end of the taxable year, thecorporation’s liabilities exceed the fair marketvalue of the corporation’s assets (insolvency),increase the passive activity loss allowed bythat excess (but not more than the total loss).See IRC Section 58(c)(1).Line 2i – Certain loss limitationsRefigure the allowable losses from at-riskactivities and basis limitations applicable topartnerships, taking into account the AMTadjustments and tax preference items. SeeIRC Sections 59(h), 465, and 704(d). If therefigured loss is more than the loss reportedfor purposes of the regular tax, enter on thisline as a negative amount the differencebetween the loss reported on the tax returnfor purposes of the regular tax and therefigured loss.Line 2k – Merchant marine capitalconstruction fundsAmounts deposited in these funds are notdeductible for AMT. Earnings on these fundsare not excludable from gross income forAMT. If the corporation deducted theseamounts or excluded them from income forregular tax, add them back on line 2k.

Tax Preference ItemsLine 3a – DepletionIn the case of mines, wells, and other naturaldeposits, enter the amount by which thededuction for depletion under IRC Section 611is more than the adjusted basis of theproperty at the end of the corporation’staxable year. Figure the adjusted basis withoutregard to the depletion deduction and figurethe excess separately for each property.California conformed in 1993 to the federalrepeal of the AMT depletion adjustment forindependent oil and gas producers and royaltyowners. See federal Form 4626, AlternativeMinimum Tax, Corporations. However, yourCalifornia depletion costs may continue to bedifferent from the federal amounts because ofprior differences in law and differences inbasis.See IRC Section 291(a)(2) for reduction in theamount allowable as a deduction in the caseof iron ore and coal.Line 3b – Intangible drilling costsIf the corporation elected the optional60-month write-off under IRC Section 59(e)for all property in this category, skip this line.Enter the amount by which excess intangibledrilling costs exceed 65% of net income fromoil, gas, and geothermal properties.Figure excess intangible drilling costs asfollows: From the intangible drilling anddevelopment costs allowable under IRCSection 263(c) or 291(b) (except costs indrilling a nonproductive well), subtract theamount that would have been allowable ifthese costs had been capitalized and eitheramortized over 120 months starting whenproduction began or treated according to anelection made under IRC Section 57(b)(2).Net income from oil, gas, and geothermalproperties is gross income from them, minusthe deductions allocable to them, except forexcess intangible drilling costs and nonpro-ductive well costs.

Figure the line 3b amount separately for oiland gas properties that are not geothermaldeposits and for oil and gas properties thatare geothermal deposits.Note: California conformed in 1993 to thelimited federal repeal of intangible drillingcosts preferences for independent producers.California now conforms to the limit on thebenefit of the exclusion of the preference forintangible drilling costs of 40% of AMTI. Seethe instructions for federal Form 4626. Also,note that your intangible drilling costsamounts may differ from federal amountsbecause of prior differences in the law.Line 3c – Reserves for losses on bad debtsUse this line to adjust the reserves for losseson bad debts of banks to which IRC Section585 applies. For the purpose of the bad debtreserve method, banks include savings andloans associations, and other financialinstitution. For more information, see the IRCSection 581 and 585. Enter the excess of thededuction allowable for a reasonable additionto a reserve for bad debts, over the amountthat would have been allowable had theinstitution always maintained its bad debtreserve based on actual experience.Line 3d – Accelerated depreciation of realproperty placed in service before 1987Enter on this line, but not less than zero, thedifference between the depreciation taken forthis property in determining the regular taxand depreciation as refigured using thestraight-line method. Figure this amountseparately for each property and include onlypositive adjustments. Use the straight-linemethod over the life of the property using thehalf-year convention and no salvage value.Line 3e – Amortization of certified pollutioncontrol facilities placed in service before1987For any certified pollution control facility inCalifornia placed in service before 1987 (orbefore August 1, 1986, if an election wasmade), figure the amount by which theamortization allowable under IRC Section 169is more than the depreciation deductionotherwise allowable. Before figuring this taxpreference item, reduce the amortizable basisby 20% (15% if the facility was placed inservice in 1983 or 1984, 0% if placed inservice before 1983), as required under IRCSection 291. Multiply the difference above by59.6% (71.6% if the facility was placed inservice in 1983 or 1984, 100% if placed inservice before 1983). Enter only positiveamounts.Line 4b – Apportioned pre-adjustmentalternative minimum taxable income (AMTI)For taxpayers required to apportion theirincome, pre-adjustment AMTI is apportionedand allocated to California in the same manneras net income for purposes of the regular tax.This may be done by transferring the amountfrom line 4a to Schedule R, Apportionment andAllocation of Income, line 1a. Refigure theSchedule R taking into account any AMTadjustments, then transfer the refigured netincome from Schedule R, line 24 toSchedule P (100), line 4b.

For combined reports, each taxpayer’s pre-adjustment AMTI is the sum of (1) thatcorporation’s apportioned share of combinedbusiness pre-adjustment AMTI and (2) any ofthat corporation’s nonbusiness Californiasource pre-adjustment AMTI. For additionalguidance in making these computations, getFTB Pub. 1061, Guidelines for CorporationsFiling a Combined Report.Line 5a – Adjusted ACE adjustmentIf this schedule is for a regulated investmentcompany or a real estate investment trust,skip this line.The ACE adjustment is the pre-adjustmentAMTI from line 4b with additional adjust-ments. California’s ACE adjustment generallyfollows the federal ACE adjustment rules inIRC Section 56(g). To compute the CaliforniaACE, the federal ACE worksheet included inthe instructions for the federal Form 4626 canbe used by taking into account the modifica-tions of R&TC Sections 23456 (e) and (f), ifapplicable. For example:Taxes. Taxes on, according to, or measuredby income are not deductible from earningsand profits (E&P). Foreign taxes on, accord-ing to, or measured by income are notdeductible even though a foreign tax credit isnot taken for federal purposes. Environmentaltaxes imposed by IRC Section 59A are notdeductible from E&P.Depreciation and amortization. For propertyplaced in service on or after January 1, 1981,and before January 1, 1987, the amountallowable as depreciation or amortization mustbe determined using the straight-line methodfor each taxable year of useful life (determinedwithout regard to R&TC Section 24354.2) thatthe corporation has held the property.For property placed in service on or afterJanuary 1, 1987, and before January 1, 1990,the amount allowable as depreciation oramortization must be determined by using thestate AMTI depreciable basis as of the close ofthe taxable year beginning before January 1,1990, and applying IRC Section 168(g). Forproperty placed in service on or afterJanuary 1, 1990, and before January 1, 1998,use the ADS described in IRC Section 168(g).For property placed in service on or afterJanuary 1, 1998, the ACE depreciation is thesame as the AMT depreciation. Therefore, noACE depreciation adjustment is necessary forthose assets.Dividends. Dividends deductible for regularCalifornia tax purposes are deductible from E&P.The provision of IRC Section 56(g)(4)(C)(ii),for 100% dividend, does not apply.The provisions of IRC Sections 56(g)(4)(C)(iii)and (iv), for dividends from IRC Section 936companies and certain dividends received bycertain cooperatives, do not apply.Certain amortization provisions. IRCSection 56(g)(4)(D)(ii) was modified tospecify that circulation expenditures underR&TC Section 24364 and organizationalexpenditures under R&TC Section 24407 donot apply to expenditures paid or incurred intaxable years beginning on or afterJanuary 1, 1990, for E&P calculations.


Interest income. For entities not subject tothe minimum franchise tax, interest incomeincluded in E&P must not exceed the amountof interest income included for regular taxpurposes.Appropriate adjustments must be made tolimit deductions from ACE for interest expensein accordance with the provisions of R&TCSections 24344 and 24425.Apportioning taxpayers and members of acombined report. ACE is apportioned andallocated to California in the same manner asnet income for purposes of the regular tax andAMTI (FTB Legal Ruling 94-3). The methoddescribed in the instructions for line 4b may beused to compute the California ACE.Line 5d – Excess of AMTI increases overAMTI reductions from prior year ACEadjustmentsFor combined reports, each taxpayer corpora-tion enters the excess of its prior yearaccumulated positive California ACE adjust-ments over its prior years negative CaliforniaACE adjustments.Line 7a – If a disaster loss carryover isclaimed in 2002, enter the amount on this line.Line 7b – AMT net operating loss (NOL)deduction.California has suspended the NOL carryoverdeduction for taxable years beginning in 2002and 2003.Line 9 and Line 10 – The $40,000 exemptionand the $150,000 limitation apply to eachbank or corporation included in the combinedreport that has a filing requirement inCalifornia, to the extent that each bank orcorporation has AMTI.Line 16 – Banks and financial corporationsCorporations with negative or zero taxableincome on Form 100, line 23, enter -0-.Line 18 – Regular tax before creditsFor installment obligations subject to IRCSection 453(l)(2)(B) (Timeshares andResidential Lots) and IRC Section 453A(Nondealer dispositions greater than$150,000), do not include tax increases forinterest on the deferred tax liability.Line 19 – AMTIf line 17 is more than zero and if thecorporation has credits or credit carryovers,continue to Part II. Otherwise, stop here andenter the amount from line 19 on Form 100,line 30; or Form 109, line 19.

Part II — Credits that ReduceTaxComplete Part II only if the corporation hastax credits.Use Part II to determine:• The amount of credit that may be used to

offset tax;• The tax that may be offset;• The amount of credit, if any, that may be

carried over to future years; and• The order in which to claim credits, if the

corporation has more than one credit toclaim.

Note: Credits are applied against the tax on aseparate entity basis. Unless otherwise pro-vided by statutory authority, specific credit(s)are only available to the corporation that in-curred the expense that generated the credits.Before you begin Part II:• Complete Form 100 through line 24.• Figure the amount of credit(s) using a

schedule or the credit form identified in theCredit Table on the next page. Be sure toattach the credit form or schedule to the taxreturn, if applicable.

To complete Part II:• Complete line 1 through line 3 to figure the

amount of excess tax the corporation mayoffset by credits.

• Identify in which section(s) of Part II thecorporation may take tax credit(s). Creditswithout carryover provisions are listed onSchedule P (100) in Section A1 and may betaken only in that section. Credits withcarryover provisions are listed on the CreditTable on the next page. The table identifiesthe section(s) of Part II in which thecorporation may take these tax credits.

• If the corporation has credit(s) in Section B,be sure to complete line 10 in addition to theline(s) for the corporation’s credit(s).

• If the corporation’s credit is taken in SectionA2 or Section B, enter the credit code andthe credit name in the space provided. Referto the Credit Table for the credit code.

• Complete column (a) through column (d) foreach line on which the corporation is taking acredit. Refer to “column instructions.”

• If the corporation credit(s) are taken inmore than one section, complete eachsection before going to the next section.

• Once the corporation has completed Part II,see “How to Claim Credits” on the next page.

Section A — Credits that reduce excessregular taxSection A InstructionsLine 3 – Subtract line 2 from line 1. If theamount is zero or less than zero, continue toQuestion 1. If the amount is greater than zero,go to the Section A1 instructions.1. Does the Credit Table show that the

corporation may take the credit ONLY inSection A1 or A2?Yes. Do not take the credit this year. Go to

question 2.No. Go to Section B to figure the amount

of credit the corporation may takethis year. Then continue to Section Cif the corporation’s credit is listed inthat section.

2. Does the credit have carryover provisions?Yes. Enter the credit code, credit name

and credit amount in column (a) inthe section indicated by the table.Enter -0- in column (b). Enter thecredit amount in column (d). This isthe amount of the credit thecorporation may carry over and usein future years.

No. Do not take the credit this year or infuture years.

Section A1 InstructionsLine 4 – If the corporation has the credit listedin this section, complete column (a) throughcolumn (c).Section A2 InstructionsFor taxable years beginning on or afterJanuary 1, 2002, the credit for prior year AMThas to be applied before any credits that canreduce the regular tax below the tentativeminimum tax (TMT) in accordance withCalifornia Revenue and Taxation Code (R&TC)Section 23036 (c).Line 5 through Line 9 – Follow the CreditTable Instructions to find out in which sectionto claim the credit. Then complete column (a)through column (d) for each credit in eachsection before going to the next section.Note: Generally, it is to the corporation’sadvantage to apply credits with limitedcarryovers before credits with no limitation onthe carryover. However, the corporation maywant to apply credits with no limitation on thecarryover first if that is more advantageous.Corporations may use these credits to reduceregular tax but not below TMT. The corporationmay be able to, if applicable, use them inSection B or Section C or carry them over tofuture years. The credits that do not haveshading in column (d) can be used inSection B, or carried over to future years, ifapplicable, after reducing the regular tax downto TMT.Section B — Credits that may reduce regulartax below tentative minimum taxCorporations may use these credits to reducethe regular tax below TMT. And corporationsmay carry over to future taxable years anycredits remaining after reducing the regulartax down to the minimum franchise tax, ifapplicable. But, if the corporation has a taxbalance and can continue to use the credit inSection C, apply the carryover in Section C.Section B InstructionsLine 11 through Line 14 – Follow the CreditTable Instructions to find out in which sectionto claim your credit. Then completecolumn (a) through column (d) for each creditin each section before going to the nextsection.Section C — Credits that may reducealternative minimum taxIf the corporation has AMT and remainingsolar energy credit carryover and commercialsolar energy credit carryover after reducingthe regular tax down to the minimumfranchise tax, if applicable, the corporationmay reduce AMT using these credits. Also,corporations may carry over to future taxableyears any credits remaining after reducing theAMT to zero.Section C InstructionsLine 16 and Line 17 – If the corporation hasany of the credits listed in this section,complete column (a) through column (d) foreach credit in the order listed.Column Instructions – In column:(a) Enter the amount of credit available to

offset AMT;


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(b) Figure the amount of credit the corpora-tion is able to use this year by enteringthe smaller of the amount in column (a)or the amount in column (c) from theprevious line;

(c) Figure the amount of AMT remaining tobe offset by other credits by subtractingthe amount in column (b) from thebalance in column (c) of the previousline; and

(d) Enter the amount of credit carryoveravailable to use in future years bysubtracting the amount in column (b)from the amount in column (a).

How to Claim CreditsClaim credits by transferring them toForm 100 or Form 109 as follows:Credits on line 4 through line 17Form 100 – If the corporation claims only oneor two credits, enter the name, code number,and amount of the credit from column (b) onForm 100, line 25 and line 26. To claim creditsthat are listed in more than one section, totalcolumn (b) for the credits that have the samecode numbers. Then enter the name, codenumber, and amount of the credit on Form100, line 25 and line 26.If the corporation has any other credits toclaim, add the amounts from column (b) forthose credits. Enter the total on Form 100,line 27.Form 109 – If the organization claims onlyone to six credits, enter the name, codenumber, and amount of the credit fromcolumn (b) on Form 109, Schedule B, line 1through line 6. To claim credits that are listedin more than one section, total column (b) forthe credits that have the same code numbers.Then enter the name, code number, andamount of the credit on Form 109,Schedule B, line 1 through line 6.If the organization has any other credits toclaim, add the amounts from column (b) forthose credits. Enter the total on Form 109,Schedule B, line 7.Credit Table Instructions. To use the table:1. Find the corporation’s credit(s) listed in the

table.2. See which sections are identified in the

columns under “Offset Tax in Section.”3. Take the credit only in sections the table

identifies for the corporation’s credit.4. Use the credit in the earliest section

possible.5. Complete each section before going to the

next section.

Part III — Credit for Prior YearAMTUse this part to figure the 2002 credit for prioryear AMT if the corporation paid AMT for2001 or had an alternative minimum tax creditcarryover from 2001.For members of a unitary group filing acombined report, compute the credit for prioryear AMT for each entity in the current year’sgroup.

Code Current Credits Form Offset Tax in Section

209 Community Development Financial N/A A2Institution Deposits

205 Disabled Access for Eligible Small FTB 3548 A2Businesses

204 Donated Agricultural Products FTB 3547 A2Transportation

190 Employer Child Care Contribution FTB 3501 A2189 Employer Child Care Program FTB 3501 A2203 Enhanced Oil Recovery FTB 3546 A2176 Enterprise Zone Hiring & FTB 3805Z B1

Sales or Use Tax B21 = hiring2 = sales or use tax

207 Farmworker Housing – Construction N/A A2208 Farmworker Housing – Loan N/A A2215 Joint Strike Fighter Wage FTB 3534 A2216 Joint Strike Fighter Property FTB 3534 A2198 Local Agency Military Base Recovery FTB 3807 A2

Area (LAMBRA) Hiring & Sales or Use Tax172 Low-Income Housing FTB 3521 B199 Manufacturers’ Investment FTB 3535 B211 Manufacturing Enhancement Area FTB 3808 A2

(MEA) Hiring213 Natural Heritage Preservation FTB 3503 B188 Prior Year Alternative Minimum Tax FTB 3510 A2162 Prison Inmate Labor FTB 3507 A1183 Research FTB 3523 B206 Rice Straw N/A A2217 Solar Energy System FTB 3508 A2210 Targeted Tax Area (TTA) FTB 3809 B

Hiring & Sales or Use TaxCode Repealed Credits with Carryover Provisions Form Offset Tax in Section:

175 Agricultural Products FTB 3540 A2196 Commercial Solar Electric System FTB 3540 B181 Commercial Solar Energy FTB 3540 B C202 Contribution of Computer Software FTB 3540 A2

Employer Ridesharing191 Large Employer192 Small Employer FTB 3540 A2193 Transit182 Energy Conservation FTB 3540 A2159 Los Angeles Revitalization Zone (LARZ) FTB 3806 B

Hiring & Sales or Use Tax160 Low-Emission Vehicles FTB 3540 A2185 Orphan Drug FTB 3540 B184 Political Contributions FTB 3540 A2174 Recycling Equipment FTB 3540 A2171 Ridesharing FTB 3540 A2200 Salmon & Steelhead Trout FTB 3540 A2

Habitat Restoration180 Solar Energy FTB 3540 B C179 Solar Pump FTB 3540 A2201 Technological Property Contribution FTB 3540 A2

Credit Table

Line 1 – Enter the AMT from the 2001Schedule P (100), Part I, line 19. If thisamount was reduced by any commercial solarenergy credit carryover or solar energy creditcarryover, use the AMT from Section C,line 18 of the 2001 Schedule P (100.)

Line 2 – Enter the credit for prior yearcarryover from the 2001 Schedule P (100),Part II, line 9, column (d).Line 3 – Enter this amount on Part II, line 9,column (a).



visit our Website:

www.ftb.ca.gov

FTB 3805Q 2002

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Net Operating Loss (NOL) Computation and NOLand Disaster Loss Limitations — Corporations

Corporation name California corporation number

3805Q02103

3805QCALIFORNIA FORM

TAXABLE YEAR

2002Attach to your California tax return (Form 100, Form 100S, Form 100W, or Form 109).

FEINDuring the year the corporation incurred the NOL, the corporation was a(n): � C Corporation � S Corporation� Exempt Organization � Limited Liability Company (electing to be taxed as a corporation)If the corporation previously filed California tax returns under another corporate name, enter the corporation name and California corporation number:_________________________________________________________________________________________________________________________________Note: If the corporation is included in a combined report of a unitary group, see instructions, General Information C, Combined Reporting.

PART I Computation of current year NOL. If you do not have a current year NOL, go to Part II.1 Net loss from Form 100, line 19; Form 100W, line 19; Form 100S, line 16; or Form 109, line 2.

Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 _________________2 2002 disaster loss from line 1. Enter as a positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 _________________3 Subtract line 2 from line 1. If zero or less, enter -0- and see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 _________________4 a Enter the amount of the loss incurred by a new business included in line 3 . . . . . . . . . . . . . . . . . . . . 4a_________________

b Enter the amount of the loss incurred by an eligible small business included in line 3 . . . . . . . . . . . . 4b_________________c Add line 4a and line 4b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4c_________________

5 Subtract line 4c from line 3. If zero, skip to line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 _________________6 General NOL. Multiply line 5 by 60% (.60) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 _________________7 2002 NOL carryover. Add line 2, line 4c, and line 6. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 _________________

PART II NOL carryover and disaster loss carryover limitations. See Instructions.

1 Net income (loss) – Enter the amount from Form 100, line 19; Form 100W, line 19; Form 100S, line 16less line 17 (but not less than -0-); or Form 109, line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Prior Year NOLs(a) (b) (c) (d) (e) (f) (h)

Year of Code – See instructions for Type of NOL – Initial loss Carryover Amount used Carryover to 2003loss Part II, column (b) See below from 2001 in 2002 col. (e) - col. (f)

2 DIS

DIS

DISAll Other

TypeCurrent Year NOLs

3 2002 DIS

4 2002

2002

2002

2002

Type of NOL: General (GEN), New Business (NB), Eligible Small Business (ESB), Title 11 (T11), or Disaster (DIS).

PART III 2002 Disaster Loss deduction

1 Total the amounts in Part II, column (f). Enter the total here and on Form 100, line 22; Form 100W, line 22; Form 100S, line 20;or Form 109, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 __________________

col. (d) - col. (f)

(g)Available balance

SUSPENDED SUSPENDED


2002 Instructions for Form FTB 3805QNet Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations – CorporationsReferences in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2001, and to the California Revenue and Taxation Code (R&TC).

What’s NewFor taxable years beginning in 2002 and 2003,California has suspended the Net OperatingLoss (NOL) carryover deduction. Taxpayersmay continue to compute and carryover anNOL during the suspension period. However,the deduction for disaster losses is notaffected by the NOL suspension rules.The carryover period for suspended losses isextended by two years for losses incurredbefore January 1, 2002, and by one year forlosses incurred after January 1, 2002, andbefore January 1, 2003.For taxable years beginning on or afterJanuary 1, 2002, the NOL carryover computa-tion for the California taxable income of anonresident or part-year resident is no longerlimited by the amount of net operating lossfrom all sources. Only your California sourcedincome and losses are considered in deter-mining if you have a California NOL. For moreinformation, see form FTB 3805V, NetOperating Loss (NOL) Computation and NOLand Disaster Loss Limitations - Individuals,Estates, and Trusts.

General InformationIn general, California law conforms to theInternal Revenue Code (IRC) as of January 1,2001. Therefore, California has conformed tothe income tax changes made to the IRC bythe federal Internal Revenue Service Restruc-turing and Reform Act of 1998 (Public Law105-206), the Tax and Trade Relief ExtensionAct of 1998 (Public Law 105-277), SurfaceTransportation Revenue Act of 1998 (PublicLaw 105-178), the Ricky Ray HemophiliaRelief Fund Act of 1998 (Public Law 105-369),the Ticket to Work and Work IncentivesImprovement Act of 1999 (Public Law 106-170), the Miscellaneous Trade and TechnicalCorrections Act of 1999 (Public Law 106-36),the FSC Repeal and Extraterritorial IncomeExclusion Act of 2000 (Public Law 106-519),the Consolidated Appropriations Act of 2001(Public Law 106-554), and to technicalcorrections made by the Economic Growthand Tax Relief Reconciliation Act of 2001(Public Law 107-16). However, there arecontinuing differences between California andFederal law. California has not conformed tosome of the law changes made by theEconomic Growth and Tax Relief Reconcilia-tion Act of 2001 (Public Law 107-16) or thefederal Job Creation and Worker AssistanceAct of 2002 (Public Law 107-147). Note:Fiscal year taxpayers are subject to Californiatax law as it conforms to federal law that isapplicable for taxable years beginning prior toJanuary 1, 2002.The general NOL carryover percentage varies.For taxable years beginning on or after:

• January 1, 2000, and before January 1,2002, 55% of the NOL may be carriedforward;

• January 1, 2002, and before January 1,2004, 60% of the NOL may be carriedforward; and

• After January 1, 2004, 100% of the NOLmay be carried forward.

Also, any NOL incurred in any taxable yearbeginning on or after January 1, 2000, may becarried forward for 10 years.In 1998, the Franchise Tax Board (FTB)implemented the new principal businessactivity (PBA) code chart that is based on theNorth American Industry ClassificationSystem (NAICS) in the corporate tax booklets.However, the California R&TC still uses theStandard Industrial Codes (SIC) for purposesof the new business and eligible smallbusiness NOL.

A PurposeUse form FTB 3805Q to figure the current yearNOL and to limit NOL and disaster losscarryover deductions.Note: Exempt trusts should use formFTB 3805V, Net Operating Loss (NOL)Computation and NOL and Disaster LossLimitations – Individuals, Estates, and Trusts.The California NOL is figured the same way asthe federal NOL, except that for California:• An NOL may be carried over only to future

years (no carrybacks are allowed); and• The carryover period and the amount to be

carried over differ from federal allowances.Only a portion of the NOL may be eligible forcarryover to future years because Californiahas established different categories of NOL.See General Information F, Types of NOLs, formore information.Note: If the corporation has a current yearNOL under R&TC Section 24416.2, 24416.5,24416.6, and 24416.7 (relating to Pierce’sdisease, EZ, LAMBRA, or TTA NOLs), thecorporation must elect on its return for thetaxable year in which the loss is incurred tocarryover the loss either under that section orthe loss under R&TC Section 24416 (relatingto general NOLs). If the corporation elects tocompute the NOL under R&TCSection 24416.1(c) (relating to Pierce’sdisease, EZ, LAMBRA, or TTA NOLs), thecorporation must:• Make the election in a statement attached

to the original return; and• Use the applicable Pierce’s disease form or

economic development area (EDA) form tocalculate the NOL.

The election is irrevocable. Get formFTB 3805D, form FTB 3805Z, form FTB 3807,or form FTB 3809 for more information.

B Apportioning CorporationsThe loss carryover for a corporation thatapportions income is the amount of thecorporation’s loss, if any, after adding incomeor loss apportioned to California with incomeor loss allocable to California underChapter 17 of the Corporation Tax Law. Theloss carryover may be deducted from incomeof that corporation apportioned and allocableto California in subsequent years.

C Combined ReportingCorporations that are members of a unitarygroup filing a single return must use intrastateapportionment, separately computing the losscarryover for each corporation in the groupusing its individual apportionment factors(R&TC Section 25108). Complete a separateform FTB 3805Q for each taxpayer included inthe combined report. Attach the separateforms for each taxpayer member behind thecombined form FTB 3805Q for all members.Unlike the loss treatment for a federalconsolidated return, a California losscarryover for one member in a combinedreport may not be applied to the income ofanother member included in the combinedreport. Get FTB Pub. 1061, Guidelines forCorporations Filing a Combined Report, formore information.

D Water’s-EdgeFor Water's-Edge taxpayers, R&TC Section24416(c) imposes a limitation on the NOLdeduction if the NOL is generated during anon-Water's-Edge tax year. The NOL carryoveris limited to the lesser amount as re-determined by computing the income andfactors of the original worldwide combinedreporting group as if the Water's-Edgeelection had been in force for the year of theloss.If R&TC Section 24416(c) applies; theNOL carryover for each corporation may bedecreased, but not increased.

E S CorporationsAn S corporation is allowed to carry over aloss that is incurred during a year in which ithas in effect a valid election to be treated asan S corporation. The loss is also separatelycalculated under the pass through rules andpassed to the shareholders in the yearincurred and is taken into account in deter-mining each shareholder’s NOL carryover, ifany.If a corporation changes from a C corporationto an S corporation, the loss incurred whilethe corporation was a C corporation may notbe applied to offset income subject to the1.5% tax imposed on an S corporation.However, losses incurred while the corpora-


tion was a C corporation may be appliedagainst the built-in gains which are subject totax. If the corporation incurred losses while itwas a C corporation and an S corporation, andthe S corporation is using C corporationlosses to offset its built-in gains, the corpora-tion must complete two forms FTB 3805Q andattach them to Form 100S, CaliforniaS Corporation Franchise or Income Tax

Type of NOL and Description

General NOL (GEN)Available as a result of a loss incurred in years after 1986 and allowed under R&TC Section 24416.Does not include losses incurred from activities that qualify as a new business, an eligible small business, EZ,LARZ, LAMBRA, TTA, disaster loss, or Pierce’s disease.

New Business NOL (NB)Get FTB Legal Ruling 96-5 for more information.

Incurred by a trade or business that first commenced in California on or after January 1, 1994, during the first threeyears of business, 100% of an NOL may be carried over for ten years, but only to the extent of the net loss from thenew business. The term ‘’new business’’ also includes any taxpayer engaged in biopharmaceutical activities or otherbiotechnology activities described in Codes 2833 to 2836 of the SIC Manual. It also includes any taxpayer that has notreceived regulatory approval for any product from the United States Food and Drug Administration. See R&TCSection 24416(g)(7)(A) for more information.If a taxpayer’s NOL exceeds the net loss from the new business, the excess may be carried over as a general NOL.If a taxpayer acquires assets of an existing trade or business which is doing business in California, the trade orbusiness conducted by the taxpayer or related person is not a new business if the fair market value (FMV) of theacquired assets exceeds 20% of the FMV of the total assets of the trade or business conducted by the taxpayer or anyrelated person. To determine whether the acquired assets exceed 20% of the total assets, include only the assets thatcontinue to be used in the same trade or business activity as were used immediately prior to the acquisition. For thispurpose, the same trade or business activity means the same division classification listed in the SIC Manual.If a taxpayer or related person has been engaged in a trade or business in California within the preceding 36 monthsand then starts an additional trade or business in California, the additional trade or business qualifies as a newbusiness only if the activity is classified under a different division classification of the SIC Manual.Business activities conducted by the taxpayer or related persons wholly outside California are disregarded in determin-ing whether the trade or business conducted within California is a new business. Related persons are defined in IRCSections 267 or 318.

Eligible Small Business (ESB)Get Legal Ruling 96-5 for more information.Incurred in a trade or business activity that has gross receipts, less returns and allowances, of less than $1 millionduring the taxable year.100% of an NOL may be carried over, but only to the extent of the net loss from the eligible small business. If ataxpayer’s NOL exceeds the net loss from an eligible small business, the excess may be carried over as a general NOL.The corporation should use the same SIC Code division classifications described in the new business NOL section todetermine what constitutes a trade or business activity.

Title 11 Bankruptcy (T11)If the corporation is claiming an NOL carryover deduction under the provisions of R&TC Section 24416(e)(4)(A), enterthe carryover amount on Part II, line 2.

Disaster Losses (DIS)Casualty losses in areas of California declared by the President of the United States or the Governor of California to bein a state of disaster.An election may be made under IRC Section 165(i) permitting the disaster loss to be taken against the previous year’sincome. If you made this election, see current year NOLs, Part II, line 3 and Internal Revenue Service form 4684instructions for when the election must be filed. If special legislation is enacted under R&TC Section 24347.5 and thespecified disaster loss exceeds income in the year it is claimed, 100% of the excess may be carried over for up to fivetaxable years. If any excess loss remains after the five- year period, 50% of that remaining loss may be carried over forup to 10 additional taxable years for losses occurred in any taxable year beginning before January 1, 2000, 55% forlosses incurred in any taxable year beginning on or after January 1, 2000, and before January 1, 2002, 60% for lossesincurred in any taxable year beginning on or after January 1, 2002, and before January 1, 2004 or 100% for lossesincurred in any taxable year beginning on or after January 1, 2004.

Taxable Year NOL Carryover*NOL Incurred Carried Over Period

2002-2003 60% 10 Years2000-2001 55% 10 Years1997-1999 50% 5 Years1987-1996 None Expired

On or after 100%01/01/2000 For the 10 Years

first threeBefore years of

01/01/2000 business

Year ofBusiness

Year 1 100% 8 YearsYear 2 100% 7 YearsYear 3 100% 6 Years

On or after01/01/2000 100% 10 Years

On or after01/01/1994and before01/01/2000 100% 5 Years

1987-1993 50% 10 Years

See 100% First“Designated 5 Years

Disasterslist” on next See 10 Years

page. instructions Thereafter

Return. The unused losses incurred while thecorporation was a C corporation are “unavail-able” except as provided for above unless anduntil the S corporation reverts back to aC corporation or the carryover period expires.However, if an S corporation changes to aC corporation, any S corporation NOLs arelost.

F Types of NOLsThe table below shows the types of NOLsavailable, a description, and the percentagesand carryover periods for each type of loss.

*Note: The carryover period for suspended losses is extended by two years for losses incurred before January 1, 2002, and by one year for losses incurred afterJanuary 1, 2002, and before January 1, 2003.


Specific Line InstructionsPart IUse Part I of this form to figure the currentyear NOL eligible for carryover.Line 2 – If the corporation incurred a disasterloss during 2002, enter the amount of the losson this line. Enter as a positive number.Line 3 – If the amount is zero or less, thecorporation does not have a current yeargeneral NOL. Go to Part II for computation ofgeneral NOL carryovers, the current yeardisaster loss, and carryover from disasterlosses.Line 7 – Go to Part II, Current Year NOLs, torecord your 2002 NOL carryover to 2003.Complete columns (b), (c), (d), and (h) only,for each type of loss that you incurred.If you have an eligible qualified new businessor a small business and your NOL is greaterthan the amount of net loss from such abusiness, use the general NOL first. If youoperate one or more new businesses and oneor more eligible small businesses, determinethe amount of the loss attributable to the newbusiness(es), the small business(es), and thegeneral NOL in the following manner. The NOLis first treated as a new business NOL to theextent of the loss from the new business. Anyremaining NOL is then treated as an eligiblesmall business NOL to the extent of the lossfrom the eligible small business. Any furtherremaining NOL is treated as an NOL under thegeneral rules.

Part IIUse Part II to limit current year disaster lossto current year income and to record all of thecorporation’s loss carryover information.If the corporation has losses from more thanone source and/or more than one category,the corporation must compute the allowableNOL carryover for each loss separately.

When to use an NOL carryoverUse your NOLs in the order the disaster losseswere incurred. There is no requirement todeduct NOL carryovers (if allowed) beforedisaster loss carryovers.

Prior Year NOLsColumn (a) – Enter the year the loss wasincurred.Column (b) – Enter the disaster code from thelist below.List of events that have been declareddisasters:Year Code Event2000 21 Napa County earthquake1999 20 Wildfires and other related casualties*1999 19 Winter Freeze 98/9919981998 18 El Niño 981997 17 Disaster floods 96/9719961996 16 Firestorms 96*1995 15 Storms, flooding, and other related casualties1994 14 San Luis Obispo fire and other related

casualties1994 13 Los Angeles, Orange, and Ventura County

earthquake and other related casualties1993 12 Storms, floods, and other related casualties1992 11 Wildfires and other related casualties in

Calaveras and Shasta Counties1992 10 San Bernardino County earthquake and other

related casualties1992 9 Riots, arson, and related casualties in

California during April and May1992 8 Humboldt County earthquake and related

casualties1992 7 Storms, floods, and other related casualties1991 6 Oakland/Berkeley fire and other related

casualties1990 5 Santa Barbara fires and other related

casualties1989 4 Bay Area earthquake and other related

casualties1987 3 Forest fires, October earthquake, and other

related casualties1986 2 Storms, floods, and other related casualties1985 1 Forest fires and related casualties occurring in

California

*Carryover period and percentage are limited to theNOL rules. No special legislation was enacted.

Column (d) – Enter 100% of the initial loss forthe year given in column (a).Column (e) – Enter the disaster loss carryoveramount from the 2001 form FTB 3805Q, PartII, column (h).Column (f) – Enter the smaller of the amountin column (e) or the amount in column (g) ofthe previous line.Column (g) – Enter the result of subtractingcolumn (f) from the balance in column (g) ofthe previous line.Column (h) – Subtract the amount in column(f) from the amount in column (e) and enterthe result.

Current Year NOLsNote: As of the date of the publication of thisform, no California designated disaster losseshad occurred in tax year 2002. However, if adisaster loss occurs between the date of thepublication and the end of the taxable year,please go to our Website at: www.ftb.ca.govfor an updated version of this form, which willinclude the information for any subsequentdisaster loss and follow line 3 instructions.Line 3 – Current year Disaster LossIf you did not elect to deduct your current yeardisaster loss in the prior year:• Column (a) and (c) are entered.• In column (d), enter your 2002 disaster

loss from Part I, line 2.• In column (f), enter the disaster loss used

in 2002.• In column (h), enter column (d) less

column (f).If you elected to deduct your 2002 disasterloss on your 2001 tax return, and you have anexcess amount to be carried over to 2002,enter the carryover amount in Part II, line 2,column (e). Use the Prior Year NOL instruc-tions for column (a) through column (h)except:• In column (a), enter 2002;• In column (b), enter the new disaster code;

and• In column (d), enter the total disaster loss

incurred in 2002.

FTB 3885 2002

General InformationIn general, California law conforms to the InternalRevenue Code (IRC) as of January 1, 2001.Therefore, California has conformed to the income taxchanges made to the IRC by the federal InternalRevenue Service Restructuring and Reform Act of1998 (Public Law 105-206), the Tax and Trade ReliefExtension Act of 1998 (Public Law 105-277), SurfaceTransportation Revenue Act of 1998 (Public Law 105-178), the Ricky Ray Hemophilia Relief Fund Act of1998 (Public Law 105-369), the Ticket to Work andWork Incentives Improvement Act of 1999 (PublicLaw 106-170), the Miscellaneous Trade and TechnicalCorrections Act of 1999 (Public Law 106-36), the FSCRepeal and Extraterritorial Income Exclusion Act of2000 (Public Law 106-519), the ConsolidatedAppropriations Act of 2001 (Public Law 106-554),and to technical corrections made by the EconomicGrowth and Tax Relief Reconciliation Act of 2001(Public Law 107-16). However, there are continuingdifferences between California and Federal law.

California has not conformed to some of the lawchanges made by the Economic Growth and Tax ReliefReconciliation Act of 2001 (Public Law 107-16) or thefederal Job Creation and Worker Assistance Act of2002 (Public Law 107-147). Note: Fiscal yeartaxpayers are subject to California tax law as itconforms to federal law that is applicable for taxableyears beginning prior to January 1, 2002.California law has not conformed to federal lawregarding the additional 30% first-year depreciationallowance for qualified property or the additional 30%first-year depreciation allowance for Qualified NewYork Liberty Zone property as added by the JobCreation and Worker Assistance Act of 2002 (PublicLaw 107-147).For any taxable year beginning on or after January 1,2000, California law does not conform to federal lawregarding the temporary suspension of incomelimitations on percentage depletion for productionfrom marginal wells. The percentage depletiondeduction may not exceed 65% of the taxpayer’s

taxable income and cannot exceed 100% of the netincome derived from the oil or gas well property.

A PurposeUse this form to figure California depreciation andamortization for corporations, and for partnershipsand limited liability companies (LLCs) classified ascorporations only.S corporations must use Schedule B (100S).Individuals must use form FTB 3885A, Depreciationand Amortization – Individuals. Fiduciaries andexempt trusts must use form FTB 3885F, Depreciationand Amortization – Fiduciaries. Partnerships must useform FTB 3885P, Depreciation and Amortization –Partnerships. LLCs classified as partnerships mustuse form FTB 3885L, Depreciation and Amortization –Limited Liability Companies.Depreciation and amortization are deductionscorporations claim for reasonable exhaustion, wearand tear, and normal obsolescence of property used ina trade or business or held for the production ofincome.

Corporation Depreciation and Amortization��

2002California corporation number

Attach to Form 100 or Form 100W.

��

3885Corporation name

388502103

Part I Depreciation(a) (b) (c) (d) (e) (f) (g) (h)

Description of property Date acquired Cost or other basis Depreciation allowed or Method of Life or Depreciation for Additional firstallowable in earlier figuring rate this year year depreciation

years depreciation

2 Add the amounts in column (g) and column (h). The combined total of column (h) may not exceed $2,000.See instructions for line 1, column (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3 Total. Add the amounts on line 2, column (g) and column (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Total depreciation claimed for federal purposes from federal Form 4562, line 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Depreciation adjustment. If line 4 is greater than line 3, enter the difference here and on Form 100 or Form 100W, Side 1, line 6.

If line 4 is less than line 3, enter the difference here and on Form 100 or Form 100W, Side 1, line 12. (If California depreciationamounts are used to determine net income before state adjustments on Form 100 or Form 100W, no adjustment is necessary.) 5

Part II Amortization(a) (b) (c) (d) (e) (f) (g)

Description of property Date acquired Cost or other basis Amortization allowed or R&TC section Period or Amortization for this yearallowable in earlier years percentage

2 Total. Add the amounts in column (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Total amortization claimed for federal purposes from federal Form 4562, line 44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Amortization adjustment. If line 3 is greater than line 2, enter the difference here and on Form 100 or Form 100W,

Side 1, line 6. If line 3 is less than line 2, enter the difference here and on Form 100 or Form 100W, Side 1, line 12 . . . . . 4

1

1


For purposes of this form, depreciation is used inconnection with tangible property, while amortizationis used for intangible assets.Note: For amortizing the cost of certified pollutioncontrol facilities, use form FTB 3580, Application toAmortize Certified Pollution Control Facility.Important differences between federal and Californialaws affect the calculation of depreciation andamortization. Some of the major differences are brieflydescribed, as follows:• California law has not conformed to the additional

30% first-year depreciation allowance for qualifiedproperty

• California law allows additional first-yeardepreciation under Revenue and Taxation Code(R&TC) Section 24356, rather than an election toexpense the cost of the property as provided in IRCSection 179;

• California law has not conformed to federal statutesallowing accelerated depreciation for property onIndian Reservations;

• California law allows a useful life of five years,instead of ten years, for grapevines planted asreplacements for vines subject to Phylloxera orPierce’s disease;

• California corporation tax law has not conformed tothe federal special class life for gas stationconvenience stores and similar structures;

• California has not conformed to federal statutesallowing depreciation under Modified AcceleratedCost Recovery System (MACRS) for corporations,except to the extent such depreciation is passedthrough from a partnership or LLC classified as apartnership;

• California has adopted provisions of the federalClass Life Asset Depreciation Range System (ADR),which specifies a useful life for various types ofproperty. However, California law does not allowthe corporation to choose a depreciation periodthat varies from the specified asset guidelinesystem.

B Depreciation CalculationMethods

Depreciation methods are defined in R&TC Sec-tions 24349 through 24354. Depreciation calculationmethods, described in R&TC Section 24349, are asfollows:Straight-Line. The straight-line method divides thecost or other basis of property, less its estimatedsalvage value, into equal amounts over the estimateduseful life of the property. An asset may not bedepreciated below a reasonable salvage value.Declining Balance. Under this method, depreciationis greatest in the first year and smaller in eachsucceeding year. The property must have a useful lifeof at least three years. Salvage value is not taken intoaccount in determining the basis of the property, butthe property may not be depreciated below areasonable salvage value.

The amount of depreciation for each year issubtracted from the basis of the property and auniform rate of up to 200% of the straight-line rateis applied to the remaining balance.For example, the annual depreciation allowancesfor property with an original basis of $100,000 are:

DecliningRemaining balance Depreciation

Year basis rate allowanceFirst . . . . . . . $100,000 20% $20,000Second . . . . 80,000 20% 16,000Third . . . . . . 64,000 20% 12,800Fourth . . . . . 51,200 20% 10,240Sum-of-the-years-digits method. This method maybe used whenever the declining balance method isallowed. The depreciation deduction is figured bysubtracting the salvage value from the cost of the

property and multiplying the result by a fraction. Thenumerator of the fraction is the number of yearsremaining in the useful life of the property. Therefore,the numerator changes each year as the life of theproperty decreases. The denominator of the fraction isthe sum of the digits representing the years of usefullife. The denominator remains constant every year.Other consistent methods. Other depreciationmethods may be used as long as the total accumu-lated depreciation at the end of any taxable yearduring the first 2/3 of the useful life of the property isnot more than the amount that would have resultedfrom using the declining balance method.

C Period of DepreciationUnder CA Reg. 24349 (l), California conforms to thefederal useful lives of property.Use the following information as a guide to determinereasonable periods of useful life for purposes ofcalculating depreciation. Actual facts and circum-stances will determine useful life. Note, however, thatthe figures listed below represent the normal periodsof useful life for the types of property listed as shownin IRS Rev. Proc. 83-35.• Office furniture, fixtures, machines,

and equipment . . . . . . . . . . . . . . . . . . . . . . . 10 yrs.This category includes furniture and fixtures (thatare not structural components of a building) andmachines and equipment used in the preparation ofpaper or data.Examples include: desks; files; safes; typewriters,accounting, calculating, and data processingmachines; communications equipment; andduplicating and copying equipment.

• Computers and peripheralequipment (printers, etc.) . . . . . . . . . . . . . . . . 6 yrs.

• Transportation equipment andautomobiles (including taxis) . . . . . . . . . . . . . 3 yrs.General-purpose trucks:Light (unloaded weight less than13,000 lbs.) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 yrs.Heavy (unloaded weight 13,000 lbs.or more) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 yrs.

• BuildingsThis category includes the structural shell of abuilding and all of its integral parts that servicenormal heating, plumbing, air conditioning, fireprevention and power requirements, andequipment such as elevators and escalators.Type of building:Apartments . . . . . . . . . . . . . . . . . . . . . . . . . . 40 yrs.Dwellings (including rental

residences) . . . . . . . . . . . . . . . . . . . . . . . . 45 yrs.Office buildings . . . . . . . . . . . . . . . . . . . . . . . 45 yrs.Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . 60 yrs.

D Depreciation Methods to UseCorporations may use the straight-line method for anydepreciable property. Before using other methods,consider the kind of property, its useful life, whether itis new or used, and the date it was acquired. Use thefollowing chart as a general guide to determine whichmethod to use:

MaximumProperty description depreciation methodReal estate acquired 12/31/70 or earlier

New (useful life 3 yrs. or more) . . . 200% Declining balanceUsed (useful life 3 yrs. or more) . . 150% Declining balance

Real estate acquired 1/1/71 or laterResidential Rental:New . . . . . . . . . . . . . . . . . . . . . . . . 200% Declining balanceUsed (useful life 20 yrs. or more) . 125% Declining balanceUsed (useful life less than 20 yrs.) . Straight-lineCommercial and industrial:New (useful life 3 yrs. or more) . . . 150% Declining balance*Used . . . . . . . . . . . . . . . . . . . . . . . Straight-line

Personal propertyNew (useful life 3 yrs. or more) . . . 200% Declining balance*Used (useful life 3 yrs. or more) . . 150% Declining balance

*Other depreciation methods may be used as long asthe total accumulated depreciation at the end of anytaxable year during the first 2/3 of the useful life of theproperty is not more than the amount that would haveresulted from using the declining balance method.The Guideline Class Life System of depreciation maybe used for certain classes of assets placed in servicebefore 1971.The Class Life ADR System of depreciation may beused for designated classes of assets placed in serviceafter 1970.

E AmortizationCalifornia conformed to the 1993 federal RevenueReconciliation Act (Public Law 103-66) for the IRCSection 197 amortization of intangibles for taxableyears beginning on or after January 1, 1994.Generally, assets that meet the definition under IRCSection 197 are amortized on a straight-line basisover 15 years. There may be differences in the federaland California amounts for intangible assets acquiredin taxable years beginning prior to January 1, 1994.See R&TC Section 24355.5 for more information.Amortization of the following assets is governed byCalifornia law:Bond premiums R&TC 24360 – 24363.5Research expenditures R&TC 24365Reforestation expenses R&TC 24372.5Organizational expenditures R&TC 24407 – 24409Start-up expenses R&TC 24414Other intangible assets may be amortized if it isproved with reasonable accuracy that the asset has anascertainable value that diminishes over time and hasa limited useful life.

Specific Line InstructionsLine 1Corporations may enter each asset separately orgroup assets into depreciation accounts. Figure thedepreciation separately for each asset or group ofassets. The basis for depreciation is the cost or otherbasis reduced by a reasonable salvage value (exceptwhen using the declining balance method), additionalfirst-year depreciation (if it applies), and tax creditsclaimed on depreciable property (where specified).This may cause the California basis to be differentfrom the federal basis.If the Guideline Class Life System or Class Life ADRSystem is used, enter the amount, from a scheduleshowing the computation, on form FTB 3885,column (g), and identify as such.Line 1, Column (h), Additional first-yeardepreciationCorporations may deduct up to 20% of the cost of“qualifying property” in the year acquired in additionto the regular depreciation deduction. The maximumadditional first-year depreciation deduction is $2,000.Corporations must reduce the basis used for regulardepreciation by the amount of additional first-yeardepreciation claimed.“Qualifying property” is tangible personal propertyused in business and having a useful life of at least sixyears. Land, buildings, and structural components donot qualify. Property converted from personal use,acquired by gift, inheritance, or from related partiesalso does not qualify.See R&TC Section 24356 and the applicableregulations for more information.Note: An election may be made to expense up to 40%of the cost of property described in R&TC Sections24356.6, 24356.7, and 24356.8. For more informa-tion, get form FTB 3809, Targeted Tax Area Deductionand Credit Summary; form FTB 3805Z, EnterpriseZone Deduction and Credit Summary; or formFTB 3807, Local Agency Military Base Recovery AreaDeduction and Credit Summary.

EXT-CCalifornia corporation number Federal employer identification number

Corporation/exempt organization name

Address PMB no. Type of form filed.

City State ZIP Code

353902103

Payment Voucher for Automatic Extensionfor Corporations and Exempt Organizations

CALIFORNIA FORM

3539 (CORP)TAXABLE YEAR

2002For calendar year 2002 or fiscal year beginning month _____ day ____ year 2002, and ending month _____ day ____ year ____ .

IF NO PAYMENT IS DUE, DO NOT MAIL THIS FORM

FTB 3539 2002EFT TAXPAYERS, DO NOT MAIL THIS FORM

Instructions for Form FTB 3539Automatic Extension for Corporations and Exempt Organizations

General InformationUse form FTB 3539 only if:• You cannot file your 2002 California (CA) return by the

original due date; and• You owe tax for the 2002 taxable year.Use the worksheet on the following page to determine if youowe tax.• If you do not owe tax, there is nothing to file at this time

and no need to complete or mail this voucher.• If you owe tax, complete the voucher and mail it along

with your check or money order to the Franchise TaxBoard (FTB) by the original due date of the CA tax return.

If a corporation, including real estate investment trusts(REITs), real estate mortgage investment conduits (REMICs),regulated investment companies (RICs), limited liabilitycompanies (LLCs) electing to be treated as corporations, oran exempt organization in good standing, cannot file its CAtax return by the original due date, a seven month extensionto file will be allowed automatically without filing a writtenrequest. To qualify for the automatic extension, the corpora-tion or exempt organization must file its CA tax return by theextended due date and its powers, rights, and privileges mustnot be suspended or forfeited by the FTB or the CaliforniaSecretary of State (SOS) as of the original due date.The extended due date for corporations is the 15th day of the10th month following the close of the taxable year (fiscal yearfilers) or October 15, 2003 (calendar year filers). Theextended due date for exempt organizations filing Form 199or Form 109 is the 15th day of the 12th month following theclose of the taxable year (fiscal year filers) or December 15,2003 (calendar year filers).The extended due date for an employee’s trust defined in IRCSection 401(a) and an IRA filing Form 109 is the 15th day ofthe 11th month after the end of the taxable year (fiscal yearfilers) or November 17, 2003 (calendar year filers).Note: An extension of time to file the CA tax return is not anextension of time to pay the tax.To avoid late payment penalties and interest, 100% of the taxliability must be paid by the 15th day of the 3rd month (fiscalyear corporations), or the 15th day of the 5th month (fiscal

year exempt organizations) following the close of the taxableyear or March 17, 2003 (calendar year corporations), orMay 15, 2003 (calendar year exempt organizations).Employees’ trusts and IRAs must pay 100% of the tax liabilityby the 15th day of the 4th month after the end of the taxableyear.Save the completed worksheet as a permanent part of thecorporation’s or exempt organization’s tax records along witha copy of the CA tax return.

Electronic Funds Transfer (EFT)Corporations or exempt organizations that meet certainrequirements must remit all of their payments through EFTrather than by paper checks to avoid the EFT penalty.Corporations or exempt organizations that remit an estimatedtax payment or extension payment in excess of $20,000 orthat have a total tax liability in excess of $80,000 must remitall of their payments through EFT. The FTB will notifycorporations or exempt organizations that are subject to thisrequirement. Those that do not meet these requirements andwish to participate on a voluntary basis may do so. If you arean EFT taxpayer, complete the worksheet for your records.DO NOT SEND THE PAYMENT VOUCHER. For more informa-tion, go to our Website: www.ftb.ca.gov, call(916) 845-4025, or get FTB Pub. 3817, Electronic FundsTransfer Program Information Guide.

Where to FileIf tax is due and the corporation or exempt organization is notrequired to use EFT, attach a check or money order for the taxdue to form FTB 3539. Write the California corporationnumber or FEIN and 2002 FTB 3539 on the check or moneyorder. Mail only the voucher portion with the payment to:


Private Mailbox (PMB) NumberIf the corporation leases a private mailbox (PMB) from aprivate business rather than a PO box from the United StatesPostal Service, include the box number in the field labeled“PMB no.” in the address area.

(Calendar year corporations — Due March 17, 2003) (Fiscal year filers – see instructions)(Employees’ trust and IRA — Due April 15, 2003)(Calendar year exempt organizations — Due May 15, 2003)

Tax Due

� Form 100/100W� Form 100S� Form 109� Form 199

- .....

DETACH HERE IF NO PAYMENT IS DUE, DO NOT MAIL FORM DETACH HERE

,,,

�


Penalties and Interest• If the corporation or exempt organization fails to pay its

total tax by the original due date, a late payment penaltyplus interest will be added to the tax due.

• If the corporation or exempt organization does not file itsCA tax return by the extended due date, or thecorporation’s powers, rights, and privileges have beensuspended or forfeited by the FTB or the California SOS,as of the original due date, the automatic extension willnot apply and a delinquency penalty plus interest will beassessed from the original due date of the CA tax return.

• If the corporation or exempt organization is required toremit all of its payments through EFT and pays byanother method, a 10% non-compliance penalty will beassessed.

Note: For the 2002 taxable year only, no addition to tax shallapply with respect to any underpayment of estimated tax tothe extent the underpayment of an installment was createdor increased by any provisions of law enacted or amendedby an act chaptered during the 2002 calendar year. Torequest a waiver of underpayment of estimated tax penalty,see form FTB 5806, Underpayment of Estimated Tax byCorporations.

Combined Reports• If members of a combined unitary group have made or

intend to make an election to file a combined unitarygroup single return, only the key corporation designatedto file the return should submit form FTB 3539. The keycorporation must include payment of at least theminimum franchise tax for each corporation of thecombined unitary group that is subject to the franchisetax in California.

• If members of a combined unitary group intend to fileseparate returns with the FTB, each member must

How to Complete the Tax Payment WorksheetLine 1 – Enter the total tentative tax, including the alterna-tive minimum tax, if applicable, for the taxable year.• If filing Form 100, Form 100W, or Form 100S and subject

to franchise tax, the tentative tax may not be less than theminimum franchise tax and Qualified Subchapter SSubsidiary (QSub) annual tax (S corporations only).

• If filing Form 100, Form 100W, or Form 100S, andsubject to income tax, enter the amount of tax. Corpora-tions subject to the income tax do not pay the minimumfranchise tax.

• If a corporation incorporates or qualifies to do businessin California on or after January 1, 2000, the corporationwill compute its tax liability for the first taxable year bymultiplying its state net income by the appropriate taxrate and will not be subject to the minimum franchisetax. The corporation will become subject to minimumfranchise tax beginning in its second taxable year.

• If filing Form 109, enter the amount of tax. Form 109filers are not subject to the minimum franchise tax.

submit its own form FTB 3539 if there is an amountentered on line 3 of the Tax Payment Worksheet.

• If any member of a combined unitary group meets therequirements for mandatory EFT, all members must remittheir payments through EFT, regardless of their filingelection.

Exempt Organizations• Form 100 filers:

The due dates for corporations also apply to the filing ofForm 100, California Corporation Franchise or IncomeTax Return, by political action committees and exempthomeowners’ associations.Political action committees and exempt homeowners’associations that file Form 100 should not enter theminimum franchise tax on line 1 of the Tax PaymentWorksheet.

• Form 199 Filers:Generally, Form 199, California Exempt OrganizationAnnual Information Return, requires a $10 filing fee to bepaid with the return on the original or extended due date.

Use form FTB 3539 only if paying the fee early. Enter theamount of the fee on line 3 of the Tax PaymentWorksheet.

• Form 109 Filers:The due dates for filing Form 109, California ExemptOrganization Business Income Return, depend on thetype of organization filing the return. Employees’ pensiontrusts and IRAs (including education IRAs) must file onor before the 15th day of the 4th month after the close oftheir taxable year. All other exempt organizations (excepthomeowners’ associations and political organizations)must file on or before the 15th day of the 5th month afterthe close of their taxable year.

TAX PAYMENT WORKSHEET FOR YOUR RECORDS1 Total tentative tax. Include alternative minimum tax if applicable. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Estimated tax payments including prior year overpayment applied as a credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Tax Due. If line 2 is more than line 1, see instructions. If line 1 is more than line 2, subtract line 2 from line 1.

Enter the result here and on form FTB 3539 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Line 2 – Enter the estimated tax payments, including prioryear overpayment applied as a credit. S corporations includeany QSub annual tax payments.

Line 3Tax due. If the amount on line 1 is more than the amount online 2, then the corporation’s or exempt organization’stentative tax is more than its payments and credits. Thecorporation or exempt organization has tax due.Subtract line 2 from line 1. Enter this amount on line 3 andon form FTB 3539.If the amount on line 2 is more than the amount on line 1,the payments and credits are more than the tentative tax.The corporation or exempt organization has no tax due. DONOT SEND THE PAYMENT VOUCHER. The corporation orexempt organization will automatically qualify for anextension if the CA tax return is filed by the extended duedate and the corporation or exempt organization is in goodstanding with the FTB or SOS.

FTB 3565 C3 2002

�

Small Business Stock Questionnaire��

2002Corporation name California corporation number

Address PMB no. Federal employer identification no. (FEIN)

City State ZIP Code

A. Taxable year (beginning and ending) B. Date of incorporation C. State of incorporation

D. Date of qualification in California E. Principal business activity F. Principal business activity code (Do not leave blank)

��

3565

If the answer to any of the questions G through O is NO, STOP; do not complete this form because the stock issuance does not qualifyunder California Revenue and Taxation Code Section 18152.5.

G. Did the corporation issue non-treasury stock during the current taxable year? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes � No �Date of stock issuance for which this information applies: / /

Month Day YearH. Was the non-treasury stock issued, in whole or in part, for money, for property other than stock, or for services

provided to the corporation? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes � No �I. Were the corporation’s aggregate gross assets less than or equal to $50,000,000 from the period beginning

July 1, 1993, to the date of issuance of the non-treasury stock? See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes � No �J. Did the corporation’s assets (in excess of liabilities) consist of 10% or less of stocks or securities of a

non-subsidiary corporation(s)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes � No �K. Was at least 80% of the corporation’s payroll in California at the date of issuance of the non-treasury stock? . . . . . . . Yes � No �L. Was the corporation a California domestic corporation at the date of issuance of the non-treasury stock? . . . . . . . . . . Yes � No �M. Since the issuance of non-treasury stock, was this corporation a C corporation for California purposes? . . . . . . . . . . . Yes � No �N. Since the issuance of non-treasury stock, was this a corporation with a classification other than a:

• RIC, REIT, or REMIC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes � No �• DISC or former DISC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes � No �• Corporation with an IRC Section 936 election in effect or a direct or indirect subsidiary with an election? . . . . . . . . Yes � No �• Cooperative? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes � No �

O. Since the issuance of non-treasury stock, were at least 80% (by value) of the assets of the corporation used inthe active conduct of one or more qualified trades or businesses in California? See instructions . . . . . . . . . . . . . . . . . Yes � No �

P. What percentage of the total value of assets consisted of real property that was not used in the active conductof the trade or business? See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________%

Q. What was the aggregate subscription amount for all non-treasury stock issuances during the corporation’sexistence prior to the current issuance? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ __________

R. What was the aggregate subscription amount of non-treasury stock issued during the current taxable year? . . . . . . . . $ __________S. Of the amount in Question R, how much was received for qualified small business stock? . . . . . . . . . . . . . . . . . . . . . $ __________

T. What was the date of the first non-treasury stock issuance during the current taxable year? . . . . . .Month

/Day

/Year

U. What was the date of the last non-treasury stock issuance during the current taxable year? . . . . . .Month

/Day

/Year

V. What was the aggregate percentage of the total purchases of this corporation’s own stock (relative to the aggregatevalue of the corporation’s total stock for a two-year period beginning on the date one year before the issuance ofthis stock)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __________%(If the aggregate percentage is more than 5%, the stock does not qualify as small business stock.)

356502103

Under penalties of perjury, I declare that I have examined this form, and to the best of my knowledge and belief, it is true, correct, and complete.

Print name and title DateSignatureof officer �

2002 Instructions for Form FTB 3565Small Business Stock QuestionnaireReferences in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2001, and to the California Revenue and Taxation Code (R&TC).

General InformationIn general, California law conforms to theInternal Revenue Code (IRC) as of January 1,2001. Therefore, California has conformed tothe income tax changes made to the IRC bythe federal Internal Revenue Service Restruc-turing and Reform Act of 1998 (Public Law105-206), the Tax and Trade Relief ExtensionAct of 1998 (Public Law 105-277), SurfaceTransportation Revenue Act of 1998 (PublicLaw 105-178), the Ricky Ray HemophiliaRelief Fund Act of 1998 (Public Law 105-369),the Ticket to Work and Work IncentivesImprovement Act of 1999 (Public Law 106-170), the Miscellaneous Trade and TechnicalCorrections Act of 1999 (Public Law 106-36),the FSC Repeal and Extraterritorial IncomeExclusion Act of 2000 (Public Law 106-519),the Consolidated Appropriations Act of 2001(Public Law 106-554), and to technicalcorrections made by the Economic Growthand Tax Relief Reconciliation Act of 2001(Public Law 107-16). However, there arecontinuing differences between California andFederal law. California has not conformed tosome of the law changes made by theEconomic Growth and Tax Relief Reconcilia-tion Act of 2001 (Public Law 107-16) or thefederal Job Creation and Worker AssistanceAct of 2002 (Public Law 107-147). Note:Fiscal year taxpayers are subject to Californiatax law as it conforms to federal law that isapplicable for taxable years beginning prior toJanuary 1, 2002.

A PurposeUse form FTB 3565, Small Business StockQuestionnaire, to provide informationregarding issuance of stock pursuant to R&TCSection 18152.5.

B Who Must FileA corporation must file form FTB 3565 if itqualifies as a “qualified small business” andissued stock pursuant to R&TC Section18152.5 during the current taxable year.Note: If there was more than one issuance ofsmall business stock during the taxable year,fill out a separate form FTB 3565 for eachissuance. For purposes of this form, allcorporations which are members of the sameparent-subsidiary controlled group shall betreated as one corporation. A parent-subsidiary controlled group is defined in IRCSection 1563(a)(1), except that for Californiatax purposes “more than 50%” shall besubstituted for “at least 80%.”

C When and Where to FileFor taxable years beginning on or afterJanuary 1, 1996, a corporation is required tofile form FTB 3565 along with Form 100,

Corporation Franchise or Income Tax Returnor Form 100W, California CorporationFranchise or Income Tax Return - Water'sEdge Filers. Attach form FTB 3565 toForm 100 or Form 100W and file on or beforethe due date of the corporate return, includingextensions.Under authority granted in R&TCSection 18152.5, the Franchise Tax Board(FTB) requires the corporation to provide acopy of any completed form FTB 3565 to eachshareholder that acquired qualified smallbusiness stock as part of the stock issuancethat is reported on the completed formFTB 3565 during the current taxable year.Failure to file this form by the corporation’soriginal or extended return due date for thecurrent taxable year may result in a penaltybeing assessed to the corporation pursuant toR&TC Section 19133.5. The penalty amount is$50 per failure to file unless the failure is dueto negligence or intentional disregard, thenthe penalty amount is $100 per failure to filethe form.Failure of the corporation to file formFTB 3565 will not disqualify the stockholderfrom excluding gain from the sale or exchangeof stock. However, the stockholder bears theburden of proving that the gain from the saleor exchange qualifies for exclusion pursuantto R&TC Section 18152.5.Private Mailbox (PMB) NumberIf the corporation leases a PMB from a privatebusiness rather than a PO box from the UnitedStates Postal Service, include the box numberin the field labeled “PMB no.” in the addressarea.

Specific InstructionsItem F – Principal business activity (PBA)code – Do not leave blank. Enter the six-digitPBA code from the chart included in the 2002Form 100, Corporation Tax Booklet orForm 100W, Water’s-Edge Booklet. The codeshould be the number for the specific industrygroup from which the greatest percentage ofCalifornia “total receipts” is derived. “Totalreceipts” means gross receipts plus all otherincome. The California PBA code number maybe different than the federal PBA codenumber.Questions G through O – If the answer to anyof these questions is “No,’’ stop. The stockissuance does not qualify under R&TCSection 18152.5. You do not need to completethe rest of this form and do not attach thisform to the Form 100 or Form 100W.Question I – Disregard the stock and debt ofany subsidiary corporation. Include the ratableshare of the subsidiary’s assets and the valueof property received for this stock in deter-

mining the corporation’s aggregate grossassets at the date of issuance of the non-treasury stock.Question L – A domestic corporation isdefined in IRC Section 7701(a)(4) as anycorporation created or organized in any statein the United States.Question O – A qualified trade or business isdefined as any trade or business other than:• Any trade or business involving the

performance of services in the fields ofhealth, law, engineering, architecture,accounting, actuarial science, performingarts, consulting, athletics, financialservices, brokerage services, or any tradeor business where the principal asset ofthe trade or business is the reputation orskill of one or more of its employees;

• Any banking, insurance, financing, leasing,investing, or similar business;

• Any farming business (including thebusiness of raising or harvesting trees);

• Any business involving the production orextraction of products of a character withrespect to which a percentage depletiondeduction is allowable under IRC Sec-tion 613 or 613A; and

• Any business of operating a hotel, motel,restaurant, or similar business.

Question P – If more than 10% of the totalvalue of the corporation’s assets consists ofreal property that is not used in the activeconduct of a qualified trade or business, thestock issuance is not qualified. For thepurpose of calculating the total value of theassets, any ownership of, dealing in, orrenting of, real property shall not be treated asthe active conduct of a qualified trade orbusiness.Question R – Enter the aggregate subscriptionamount of non-treasury stock issued by thecorporation during the entire taxable year.Question S – Enter the amount included inQuestion R that was received for that part ofthe stock issuance that qualifies as smallbusiness stock under the provisions of R&TCSection 18152.5.The amounts that are entered in Question Rand Question S should not include the value ofstock issued in exchange for stock.Note: Records should be maintained showingthat the stock issuance met the requirementsof R&TC Section 18152.5.Question T – If there was more than oneissuance of small business stock during thecurrent taxable year, enter the date of the firstissuance here.Question U – If there was more than oneissuance of small business stock during thecurrent taxable year, enter the date of the lastissuance here.



Where To Get Tax Forms and PublicationsBy Internet – You can download, view, and print California tax forms,instructions, publications, FTB Notices and Rulings dated after 1995from our Website www.ftb.ca.govBy phone – To order current year California tax forms:• Refer to the list in the right column and find the code number for the

form you want to order.• Call (800) 338-0505.• Select “Business Entity Information.”• Select “Order Forms and Publications.”• Enter the three-digit code shown to the left of the form title when

you are instructed to do so.Please allow two weeks to receive your order. If you live outsideCalifornia, please allow three weeks to receive your order.In person – Many libraries and some quick print businesses have formsand schedules for you to photocopy (a nominal fee may apply).Note: Employees at libraries and quick print businesses cannot providetax information or assistance.By mail – Write to:

TAX FORMS REQUEST UNITFRANCHISE TAX BOARDPO BOX 307RANCHO CORDOVA CA 95741-0307

LettersIf you write to us, be sure to include your California corporation numberor federal employer identification number, your daytime and eveningtelephone numbers, and a copy of the notice with your letter. Send yourletter to:


We will respond to your letter within six weeks. In some cases, we mayneed to call you for additional information. Do not attach correspon-dence to your tax return unless the correspondence relates to an itemon the return.

General Toll-Free Phone ServiceOur general toll-free phone service is available:• Monday – Friday, 7 a.m. until 8 p.m.• Saturdays, 8 a.m. until 5 p.m. ( January through June, only)Note: We may modify these hours without notice to meet operationalneeds.From within the United States . . . . . . . . . . . . . . . . . . . (800) 852-5711From outside the United States (not toll-free) . . . . . . . (916) 845-6500For federal tax questions, call the IRS at . . . . . . . . . . . . (800) 829-1040Assistance for persons with disabilitiesWe comply with the Americans with Disabilities Act. Persons withhearing or speech impairment, please call:

TTY/TDD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800) 822-6268Asistencia bilingüe en español:Para obtener servicios en español y asistencia para completar sudeclaración de impuestos / formularios, llame al número telefónicoindicado arriba que le corresponda.

How To Get California Tax InformationCalifornia Tax Forms and Publications817 California Corporation Tax Forms and Instructions.

This booklet contains:Form 100, California Corporation Franchise or Income TaxReturn;Schedule H (100), Dividend Income DeductionsSchedule P (100), Alternative Minimum Tax and CreditLimitations — CorporationsFTB 3539, Payment Voucher for Automatic Extension forCorporations and Exempt OrganizationsFTB 3565, Small Business Stock QuestionnaireFTB 3805Q, Net Operating Loss (NOL) Computationand NOL and Disaster Loss Limitations — CorporationsFTB 3885, Corporation Depreciation and Amortization

816 California S Corporation Tax Forms and Instructions.This booklet contains:

Form 100S, California S Corporation Franchise or IncomeTax Return;Schedule B (100S), S Corporation Depreciation andAmortizationSchedule C (100S), S Corporation Tax CreditsSchedule D (100S), S Corporation Capital Gains andLosses and Built-In GainsSchedule H (100S), Dividend Income DeductionSchedule K-1 (100S), Shareholder’s Share of Income,Deductions, Credits, etc.Schedule QS, Qualified Subchapter S Subsidiary (QSub)Information WorksheetFTB 3539, Payment Voucher for Automatic Extension forCorporations and Exempt OrganizationsFTB 3805Q, Net Operating Loss (NOL) Computation andNOL Disaster Loss – Corporations

814 Form 109, Exempt Organization Business Income Tax Return818 Form 100-ES, Corporation Estimated Tax815 Form 199, Exempt Organization Annual Information Return820 FTB Pub. 1068, Exempt Organizations Requirements for Filing

Returns and Paying Filing Fees802 FTB 3500, Exemption Application803 FTB 3555, Request for Tax Clearance — Corporations831 FTB 3534, Joint Strike Fighter Credits835 FTB 3805D, Net Operating Loss (NOL) Computation and

Limitation – Pierce’s Disease

Your Rights As A TaxpayerOur goal at the FTB is to make certain that your rights are protected sothat you will have the highest confidence in the integrity, efficiency, andfairness of our state tax system. FTB Pub. 4058, California Taxpayers’Bill of Rights, includes information on your rights as a Californiataxpayer, the Taxpayers’ Rights Advocate Program, and how you canrequest written advice from the FTB on whether a particular transactionis taxable.See “Where to Get Tax Forms and Publications” on this page.


RecycledRecyclable

Our automated toll-free phone service is available 24 hours a day,7 days a week, in English and Spanish to callers with touch-tonetelephones. To order Business Entity forms, the automated service isavailable from 6 a.m. to 8 p.m. Monday through Friday, except stateholidays and from 6 a.m. to 4 p.m. Saturdays. You can:• Order current year California income tax forms, and• Hear recorded answers to many of your questions about California

taxes.Have paper and pencil ready to take notes.Call from within the United States . . . . . . . . . . . . . . . . . (800) 338-0505Call from outside the United States (not toll-free) . . . . . (916) 845-6600

To Order FormsSee “Where to Get Tax Forms and Publications” on the previous page.

To Get InformationIf you need an answer to any of the following questions, call(800) 338-0505, select “Business Entity Information,” then “General TaxInformation,” follow the recorded instructions, and enter the three-digitcode when instructed to do so.Code Filing Assistance715 If my actual tax is less than the minimum franchise tax,

what figure do I put on line 23 of Form 100 or Form 100W?717 What are the tax rates for corporations?718 How do I get an extension of time to file?722 When does my corporation have to file a short-period return?734 Is my corporation subject to franchise tax or income tax?

S Corporations704 Is an S corporation subject to the minimum franchise tax?705 Are S corporations required to file estimated payments?706 What forms do S corporations file?707 The tax for my S corporation is less than the minimum

franchise tax. What figure do I put on line 22 of Form 100S?708 Where do S corporations make adjustments for state and

federal law differences on Schedule K-1 (100S), and where dononresident shareholders find their California source income ontheir Schedule K-1 (100S)?Exempt Organizations

709 How do I get tax-exempt status?710 Does an exempt organization have to file Form 199?735 How can an exempt organization incorporate without

paying corporation fees and costs?736 I have exempt status. Do I need to file Form 100 or Form 109

in addition to Form 199?Minimum Tax and Estimate Tax

712 What is the minimum franchise tax?714 My corporation is not doing business; does it have to pay the

minimum franchise tax?716 When are my corporation’s estimated payments due?

Billings and Miscellaneous Notices503 How do I file a protest against a Notice of Proposed Assessment?723 I received a bill for $250. What is this for?728 Why was my corporation suspended?729 Why is my subsidiary getting a request for a return when we

filed a combined report?

� Automated Toll-Free Phone Service (Keep This Booklet For Future Use)Tax Clearance

724 How do I dissolve my corporation?725 What do I have to do to get a tax clearance?726 How long will it take to get a tax clearance certificate?727 My corporation was suspended/forfeited. Can I still get a

tax clearance?Limited Liability Companies (LLC)

750 How do I organize or register an LLC?751 How do I cancel the registration of my LLC?752 What tax forms do I use to file as an LLC?753 When is the annual tax payment due?754 What extension voucher do I use to pay the LLC fee and/or

member tax?755 Where does an LLC send its tax payments?756 As an LLC I never did any business or even opened a door, bank

account, or anything. Why do I owe the $800 annual tax?757 How are the LLC fees calculated?758 If a corporation converted to an LLC during the current year, is

it liable for tax as a corporation and as an LLC in the same year?Miscellaneous

700 Who do I need to contact to start a business?701 I need a state Employer ID number for my business. Who do I

contact?702 Can you send me an employer’s tax guide?703 How do I incorporate?719 How do I properly identify my corporation when dealing with

the Franchise Tax Board?720 How do I obtain information about changing my corporation’s

name?721 How does my corporation change its accounting period?737 Where do I send my payment?738 What is electronic funds transfer?739 How do I get a copy of my state corporation or partnership tax

return?740 What requirements do I have to report municipal bond interest

paid by a state other than California?759 If I have nonresident members and cannot get all their signatures

on the consent release form, can I still file the return?

Forms & Instructions 100 - Franchise Tax Board … & Instructions 100 2002 Corporation Tax Booklet...

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Transcript of Forms & Instructions 100 - Franchise Tax Board … & Instructions 100 2002 Corporation Tax Booklet...