ftb publication 1100 taxation of nonresidents
DESCRIPTION
TRANSCRIPT
State of CaliforniaFranchise Tax Board
Taxation ofNonresidentsand IndividualsWho ChangeResidency
FTB Publication 1100(REV 11-2007)
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� FTBPublication1100(REV11-2007)
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . �
B. PresentTaxComputationMethod . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 4
C. Installment Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 6
D. IndividualRetirementAccounts,Employer-Sponsored RetirementPlans,andCompensation . . . . . . . . . . . . . . . . . . . 7–9
E. StockOptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10–11
F. DeferredGainsandLosses(like-kindexchanges) . . . . . . . . . . . . 12–13
G. GainsandLossesFromtheSaleofTradeorBusinessProperty. . . . . 14
H. CapitalGainsandLosses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15–18
I. PassiveActivities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19–22
J. NetOperatingLosses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . �3 – �6
K. BasisinPass-ThroughEntities. . . . . . . . . . . . . . . . . . . . . . . . . . . 27–29
L. Partnerships,Scorporations,andCertainTrusts . . . . . . . . . . . . . 30–33
M. AlternativeMinimumTax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 – 35
Contents
A. IntroductionThelawsguidingCalifornia’staxationofnonresidents,formernonresidents,andpart-yearresidentschangedfortaxableyearsbeginningonorafterJanuary1,2002.Thepresentlawssetrulesforcalculatinglosscarryovers,deferreddeductions,anddeferredincome.Thepresentlawsalsochangethetaxcomputationmethodtorecognizethoseitems.Thispublicationprovidesinformationonthecurrentmethodforcomputingtaxifyouareanonresidentorpart-yearresidentofCaliforniaandhowtocalculatelosscarryovers,deferreddeductions,anddeferredincomeifyou:
• HavealwaysbeenaCalifornianonresident.• ChangeresidencyfromCalifornia(move-out).• ChangeresidencytoCalifornia(move-in).
FTBPub.1031,Guidelines for Determining Resident Status,willhelpyoudetermineyourresidencystatusandwhetheryourincomeistaxablebyCalifornia.
FTBPublication1100(REV11-2007) 3
California taxable income
Californiaadjustedgrossincome(AGI)lessCaliforniaitemizedorstandarddeductions.
California AGI
GrossincomeanddeductionsderivedfromCaliforniasourcesforanypartofthetaxableyearduringwhichyouwereanonresidentplusallitemsofgrossincomeandalldeductions,regardlessofsource,foranypartofthetaxableyearduringwhichyouwerearesident.
Total AGI
Theadjustedgrossincomefromallsourcesfortheentiretaxableyear.
California itemized or standard deductions
DeterminedbyapplyingtheratioofCaliforniaAGItototalAGItoallitemizedorstandarddeductionsallowed to California residents.
Total taxable income
TheentiretaxableincomedeterminedasifyouwereaCaliforniaresidentforthecurrenttaxableyear,andforallpriortaxableyearsforanycarryoveritems,deferredincome,suspendedlosses,orsuspendeddeductions.
Restate
Torefigureprioryearcarryoversorpass-throughentitybasisamountstodeterminetheallowableamountinthecurrentyear.Prioryeartaxreturnsarenotamended.
B. New Tax Computation Method
Proratedtax =
Californiataxableincomex Taxontotaltaxableincome Totaltaxableincome
FortaxableyearsbeginningonorafterJanuary12002,ifyouareanonresidentorapart-yearresident,youdetermineyourCaliforniataxbymultiplyingyourCaliforniataxableincomebyaneffectivetaxrate.TheeffectivetaxrateistheCaliforniataxonallincomeasifyouwereaCaliforniaresidentforthecurrenttaxyearandforallpriortaxyearsforanycarryoveritems,deferredincome,suspendedlosses,orsuspendeddeductions,dividedbythatincome.Usethefollowingformula:
Key Definitions
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Example 1 . . . . . . . . YouwereaFloridaresidentuntilMarch31,2002.WhileaFloridaresident,youearnedandreceivedwageincomeof$15,000andinterestincomeof$1,000.OnApril1,2002,youpermanentlymovedtoCalifornia.WhileaCaliforniaresident,youearnedandreceivedwageincomeof$65,000andinterestincomeof$3,000.Youaresingleandhadthefollowingitemizeddeductionsin2002:Realestatetaxes: $1,200 (Californiahouse) 800 (Floridahouse)Mortgageinterest: 17,000 (Californiahouse) 3,500 (Floridahouse)Charitablecontributions: 1,500 (NewYorkFirefighters’Fund) $24,000. . . . . Determination: Calculateyour2002Californiataxliabilityasfollows:CaliforniaAGI: $65,000 (Californiawages) +3,000 (InterestearnedwhileaCaliforniaresident) $68,000 TotalAGI: $80,000 (Wagesfromallsources) +4,000 (Interestincomefromallsources) $84,000Californiaitemizeddeductions: $24,000 (Totalitemizeddeductions) x.8095 (CaliforniaAGI÷TotalAGI) $19,428Californiataxableincome: $68,000 (CaliforniaAGI) -19,428 (Californiaitemizeddeductions) $48,572Totaltaxableincome: $84,000 (TotalAGI) -24,000 (Totalitemizeddeductions) $60,000Taxontotaltaxableincome: $3,705 (Taxtable)Proratedtax: $48,572 (Californiataxableincome) x.0618 (Taxontotaltaxableincome÷totaltaxableincome) $3,002 Proratedexemptioncredit: $80 (Personalexemptioncredit*) x.8095 (Californiataxableincome÷totaltaxableincome) $ 65 Taxliability: $3,002 (Proratedtax) - 65 (Proratedexemptioncredit) $2,937*Thenewcomputationmethoddoesnotchangetheprorationofexemptionscredits;thenewcomputationmethodmakestheprorationmoreexplicit.
Itemized or standard deductions — DividetheCaliforniaAGIbythetotalAGI(theresultcannotexceed1.0): California AGI Total AGITax rate — Dividethetaxontotaltaxableincomebythetotaltaxableincome: Taxontotaltaxableincome TotaltaxableincomeCredits — DividetheCaliforniataxableincomebythetotaltaxableincome: Californiataxableincome Totaltaxableincome
Note: Thispercentagedoesnotapplytorenter’scredit,otherstatetaxcredit,orcreditsconditionaluponatransactionoccurringwhollywithinCalifornia.Californiaallowsthesecreditsinfull.
The following example shows how the calculation works.
Percentage Calculations
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C. Installment SalesFortaxableyearsbeginningonorafterJanuary1,2002,Californiataxesinstallmentgainsreceivedbyanonresidentfromthesaleoftangiblepropertyandintangiblepropertyonasourcebasis.Californiataxesrealpropertybaseduponwherethepropertyislocated.Installmentgainsfromthesaleofintangiblepropertyaregenerallysourcedtotherecipient’sstateofresidenceatthetimeofthesale.Californiataxesresidentsonallincomeregardlessofsource.
Example 3 . . . . . . . .YouhavealwaysbeenanonresidentofCalifornia.OnJune4,2001,yousoldaparcelof land located in Idaho on an installment basis.During2001and2002,youreceivedinstallmentproceedscomprisedofcapitalgainincome and interest income.
. . . . . Determination:YourcapitalgainincomeisnottaxablebyCaliforniabecausethesourceofthegainisIdaho.TheinterestincomeisnottaxablebyCaliforniaandhasasourceinyourstateofresidence.
ThepresentlawsdonotchangethetaxationofCaliforniapropertyinstallmentproceedsifyouhavealwaysbeenanonresidentofCalifornia.CaliforniataxestheinstallmentproceedsreceivedbyanonresidenttotheextenttheincomefromthesalewasfromaCaliforniasource.
Example 2 . . . . . . . . YouhavealwaysbeenanonresidentofCalifornia.OnMarch1,2001,yousoldaCaliforniarentalpropertyinaninstallmentsale.During2001and2002,youreceivedinstallmentproceedscomprisedofcapitalgainincome and interest income.
. . . . . Determination:ThecapitalgainincomeistaxablebyCaliforniainboth2001and2002,becausethepropertywaslocatedinCalifornia.TheinterestincomeisnottaxablebyCaliforniaandhasasourceinyourstateofresidence.
Always a Nonresident
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Example 5 . . . . . . . .OnSeptember1,2000,whileanonresidentofCalifornia,yousoldstock(intangibleproperty)inaninstallmentsale.OnJune1,2002,youbecameaCaliforniaresidentandonOctober1,2002,youreceivedinstallmentproceedscomprisedofcapitalgainincomeand interest income.
. . . . . Determination: YourcapitalgainincomeandinterestincomereceivedonOctober1,2002,aretaxablebyCaliforniabecauseyouwereaCaliforniaresidentwhenyoureceivedtheproceeds.
IfyouareaCaliforniaresidentwhosoldpropertylocatedoutsideCaliforniaontheinstallmentbasiswhileanonresident,theinstallmentproceedsyoureceivewhileaCaliforniaresidentarenowtaxablebyCalifornia.
Example 4 . . . . . . . . OnJuly1,2001,whileanonresidentofCalifornia,yousoldaTexasrentalpropertyinaninstallmentsale.OnMay15,2002,youbecameaCaliforniaresidentandonAugust1,2002,youreceivedinstallmentproceedscomprisedofcapitalgainincomeand interest income.
. . . . . Determination:YourcapitalgainincomeandinterestincomereceivedonAugust1,2002,aretaxablebyCaliforniabecauseyouwereaCaliforniaresidentwhenyoureceivedtheproceeds.
Example 7 . . . . . . . .InMarch2000,whileaCaliforniaresident,yousoldaparcelofrealpropertylocatedin California in an installment sale.OnJune1,2002,youbecameaWashingtonresident,andonAugust1,2002,youreceivedinstallmentproceedscomprisedofcapitalgainincome and interest income.
. . . Determination: ThecapitalgainincomeistaxablebyCaliforniabecausethepropertyyousoldwaslocated in California. The interestincomeisnottaxablebyCaliforniabecauseyouwereanonresident of California when youreceivedtheproceeds.
IfyouareaformerCaliforniaresident,theinstallmentproceedsyoureceivefromthesaleofpropertylocatedoutsideCaliforniathatyousoldwhileyouwereaCaliforniaresidentarenolongertaxablebyCalifornia.
Example 6 . . . . . . . . InJune1999,whileaCaliforniaresident,yousoldaparcelofrealpropertylocatedinWashingtoninaninstallmentsale.OnMarch1,2002,youbecameanOhioresident,andonJune1,2002,youreceivedinstallmentproceedscomprisedofcapitalgainincomeandinterest income.
. . . . . Determination: ThecapitalgainincomeisnottaxablebyCaliforniabecausethepropertywasnotlocatedin California. The interest incomeisnottaxablebyCaliforniabecauseyouwereanonresident of California when youreceivedtheproceeds.
Example 8 . . . . . . . . InSeptember1999,whileaCaliforniaresident,yousoldstock(intangibleproperty)inaninstallmentsale.OnFebruary1,2002,youbecameaFloridaresident,andonMay1,2002,youreceivedinstallmentproceedscomprisedofcapitalgainincomeandinterestincome.
. . . . . Determination:ThecapitalgainincomefromthesaleofthestockistaxablebyCaliforniabecauseyouwereaCaliforniaresidentwhenyousoldthestock.TheinterestincomeisnottaxablebyCaliforniabecauseyouwereanonresident of California when youreceivedtheproceeds.
Change of Residency to California (move-in)
Change of Residency From California (move-out)
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D. Individual Retirement Accounts, Employ-er-Sponsored Retirement Plans, and Com-pensation
Example 10 . . . . . . . .YoulivedandworkedexclusivelyinCaliforniauntilyouretiredonDecember31,2002.YoumovedtoNevadaonJanuary1,2003.YourformerCaliforniaemployerpaysitsemployeesonthe5thofeverymonth.OnJanuary10,2003,youreceivedinthemailyourlastpaycheckof$4,000fromyourformerCaliforniaemployer.
. . . . . Determination:The$4,000ofcompensationistaxablebyCaliforniabecausetheincomehasasourceinCalifornia,thestatewhereyouperformedyourservices.
Thepresentlawsdonotchangethetaxationofdeferredincomesuchasindividualretirementaccount(IRA)income,incomefromemployer-sponsoredretirementplans,andcompensationincome,whetheryouhavealwaysbeenanonresidentofCaliforniaorwereformerlyaCaliforniaresident.CaliforniadoesnottaxtheIRAdistributions,qualifiedpension,profitsharing,andstockbonusplansofanonresident.Californiataxescompensationreceivedbyanonresidentforperformanceofservicesonasourcebasis.IftheservicesareperformedinCalifornia,thecompensationincomeissourcedtoCalifornia.
Example 9 . . . . . . . . YouareanonresidentofCaliforniaandliveandworkinWyoming.YourWyomingemployertemporarilyassignsyoutoCaliforniaforfourmonthstocompleteaproject.Youcontinuetoreceiveyourpaycheckfromyouremployer’sWyomingheadquarters.Youearn$5,000permonth.
. . . . . Determination: BecauseyouperformedfourmonthsofservicesinCalifornia,$20,000($5,000x4months)ofyourcompensationhasasourceinCaliforniaandistaxablebyCalifornia.
Nonresident
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FortaxableyearsbeginningonorafterJanuary1,2002,thepresentlawsaffectthetaxationofyourIRAincome,incomefromemployer–sponsoredretirementplans,andcompensationincomeifyouareaCaliforniaresidentandwereformerlyanonresident.
Individual Retirement Accounts
Example 11 . . . . . . . . YoubecameaCaliforniaresidentonJanuary1,2001.ThefairmarketvalueofyourIRAonJanuary1,2001,was$9,000.YourcontributionsinexcessofCaliforniadeductionlimitsduring1982-1986were$2,500.YoureceivedIRAdistributionsof$1,500in2001,and$3,000in2002.
. . . . . Determination:
Taxable year 2001 (prior law): CaliforniaIRAbasis,January1,2001 $9,000 (Fairmarketvalueon1/1/01) Less:IRAdistribution 1,500 CaliforniaIRAbasis,December31,2001 $7,500
Taxable year 2002 (new law): IRAdistribution,2002 $3,000 Less:CaliforniaIRAbasis ContributionsinexcessofCaliforniadeductionlimits $2,500 Less:CaliforniaIRAbasisrecoveredin2001 1,500 CaliforniaIRAbasisavailablein2002 1,000 TaxableIRAincome $2,000
GetFTBPub.1005,Pension and Annuity Guidelines,formoreinformationregardingIRAs.
Younolongerreceiveastepped-upbasisforannualcontributionsandearningsonthemsimplybecauseyouwereanonresidentwhenyoumadethecontributions.Thepresentlawstreatyouasthoughyouwerearesidentforallprioryearsforallitemsofdeferredincome,whichincludesindividualretirementaccounts(IRAs).Accordingly,youwillbeallowedabasisforcontributionsthatyouactuallymade,whichwouldnothavebeenallowedunderCalifornialawhadyoubeenaCaliforniaresident.Californiadidnotconformtothe$2,000or100percentofcompensationannualcontributionlimitpermittedunderfederallawfrom1982through1986.Duringtheseyears,Californialimitedthedeductiontothelesserof15percentofcompensationor$1,500anddeniedadeductionaltogethertoindividualswhowereactiveparticipantsinqualifiedorgovernmentplans.AnyamountsanindividualcontributedinexcessofCaliforniadeductionlimitsduringtheseyearscreateabasisintheIRA.
Change of Residency to California (move-in)
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Example 13 . . . . . . . . YoulivedandworkedinNewYorkuntilApril30,2002.YoupermanentlymovedtoCaliforniaonMay1,2002.YourformerNewYorkemployerpaysitsemployeesonthe5thofeverymonth.OnMay8,2002,youreceivedinthemailyourlastpaycheckof$3,000fromyourformerNewYorkemployer.
. . . . . Determination:The$3,000ofcompensationistaxablebyCaliforniabecauseyouwereaCaliforniaresidentwhenyoureceivedtheincome.IfyoualsopaidtaxtoNewYorkonthiscompensation,youareallowedacreditfortaxespaid.
Employer-Sponsored Retirement Plans
CompensationyoureceiveasaCaliforniaresidentthataccruedbeforeyoubecameaCaliforniaresidentisnowtaxablebyCalifornia.
Example 12 . . . . . . . . YoupermanentlymovedfromFloridatoCaliforniaonJanuary1,2002.Youreceivedpensionincomeduring2002throughaqualifiedplanfromyourformerFloridaemployer.
. . . . . Determination: YourqualifiedpensionincomeistaxablebyCaliforniabecauseyouwereaCaliforniaresidentwhenyoureceivedtheincome.
GetCaliforniaScheduleS,Other State Tax Credit,formoreinformation.
Californiataxesqualifiedpension,profitsharing,andstockbonusplanincomeyoureceiveasaresidentforservicesperformedoutsideCaliforniawhileyouwereanon-resident.
Compensation
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E. Stock Options
Californiataxesthewageincomereceivedbyanonresidentfromemployeestockoptionsonasourcebasis,whetheryouwerealwaysanonresidentorwereformerlyaCaliforniaresident.
Example 14 . . . . . . . . OnFebruary1,1999,whileaCaliforniaresident,youweregrantednonstatutorystockoptions.YouperformedallofyourservicesinCaliforniafromFebruary1,1999,toMay1,2002,thedateyouleftthecompanyandpermanentlymovedtoTexas.OnJune1,2002,youexercisedyournonstatutorystockoptions.
. . . . . Determination: TheincomeresultingfromtheexerciseofyournonstatutorystockoptionsistaxablebyCaliforniabecausetheincomeiscompensationforserviceshavingasourceinCalifornia,thestatewhereyouperformedallofyourservices.
Nonresident
FTBPublication1100(REV11-2007) 11
IfyouexercisenonstatutorystockoptionswhileaCaliforniaresident,theresultingcompensationistaxablebyCaliforniabecausethewageincomeisrecognizedwhileyouareaCaliforniaresident.Ifyoudisposeofstatutorystockoptionsinadisqualifyingdisposition,theresultingcompensationandcapitalgain,ifany,aretaxablebyCaliforniabecausethewageincomeandcapitalgainarerecognizedwhileyouarea California resident.Californiaalsotaxesthecapitalgainincomereceivedbyaformernonresidentfromthesaleofstockinaquali-fyingdispositionofstatutorystockoptionsbecausethestockissoldwhilethetaxpayerisaresident.
Example 16 . . . . . . . .OnFebruary1,1998,whileaTexasresident,youweregrantedincentivestockoptions.OnFebruary1,2001,youexercisedyouroptions.OnDecember1,2001,youpermanentlymovedtoCaliforniaandsoldyourstockonMarch1,2002,foragain.
. . . . . Determination:TheresultingcapitalgainistaxablebyCaliforniabecauseyouwereaCaliforniaresidentwhenyousoldthestock.
Example 15 . . . . . . . . OnMarch1,1998,whileaNevadaresident,youweregrantednonstatutorystockoptions.OnApril1,2002,youretiredandpermanentlymovedtoCalifornia.OnMay1,2002,youexercisedyouroptions.
. . . . . Determination:ThecompensationresultingfromtheexerciseofyournonstatutorystockoptionsistaxablebyCaliforniabecauseyouwereaCaliforniaresidentwhentheincomewasrecognized.Californiaalsotaxesthecapitalgainincomereceivedbyaformernonresidentfromthesaleofstockinaqualifyingdispositionofstatutorystockoptionsbecausethestockissoldwhilethetaxpayerisaresident.
Change of Residency to California (move-in)
GetFTBPub.1004,Stock Option Guidelines,foradditionalinformationontheCaliforniataxationofstockoptions.
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F. Deferred Gains and Losses (like-kind exchanges)
WhenyouexchangeonekindofpropertyforthesamekindofpropertyundertherequirementsofInternalRevenueCode(IRC)Section1031,yourealizeagainorlossonthetransactionanddeferpayingtaxonthegainorclaimingthelossuntilthepropertyissoldorotherwisedisposedof.AgainorlossfromthesaleorexchangeofrealortangiblepersonalpropertylocatedinCaliforniaissourcedtoCaliforniaatthetimethegainorlossisrealized.
IfyouareanonresidentandexchangerealortangiblepropertylocatedwithinCaliforniaforrealortangiblepropertylocatedoutsideCalifornia,therealizedgainorlosswillbesourcedtoCalifornia.Taxationwillnotoccuruntilthegainorlossisrecognized.ThisrequiresyoutokeeptrackofyourdeferredCaliforniasourcedgainsandlossestoreportthemtoCaliforniaintheyearyousellorotherwisedisposeofthepropertyreceivedintheexchange.
Example 17 . . . . . . . . AsaresidentofTexas,youexchangedacondominiumlocatedinCaliforniaforlike-kindpropertylocatedinTexas.Yourealizedagainof$15,000ontheexchangethatwasproperlydeferredunderIRCSection1031.YouthensoldtheTexaspropertyinanon-deferredtransactionandrecognizedagainof$20,000.
. . . . . Determination:The$15,000deferredgain(thelesserofthedeferredgainorthegainrecognizedatthetimeyoudisposedoftheTexasproperty)hasasourceinCaliforniaandistaxablebyCalifornia.
California Property Exchanged for Out-of-State Property
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Example 18 . . . . . . . .AsaresidentofNevada,youexchangedNevadabusinesspropertyforlike-kindCaliforniabusinessproperty.Yourealizeda$10,000gainontheexchangethatwasproperlydeferredunderIRCSection1031.YouthensoldtheCaliforniabusinesspropertyinanon-deferredtransactionandrecognizedagainof$50,000.
. . . . . Determination:BecausethepropertyislocatedinCalifornia,the$50,000gainhasaCaliforniasourceandistaxablebyCalifornia.
IfyouexchangerealortangiblepropertylocatedoutsideCaliforniaforrealortangiblepropertylocatedwithinCalifornia,thegainrecognizedwhenyousellorotherwisedisposeoftheCaliforniapropertyinanon-deferredtransactionhasaCaliforniasourceandistaxablebyCalifornia.
Example 19 . . . . . . . .WhilearesidentofKansas,youexchangedrealpropertylocatedinKansasforlike-kindrealpropertylocatedinCalifornia.Yourealizeda$12,000gainontheexchangethatwasproperlydeferredunderIRCSection1031.YouthenbecameaCaliforniaresidentand,whilearesident,yousoldtheCaliforniapropertyinanon-deferredtransactionandrecognizedagainof$40,000.
. . . . . Determination:Californiataxesthe$40,000gainbecauseyouwere a California resident at the time of the sale.IfyoupaidtaxtoKansasonthe$12,000deferredgain,youareallowedacreditfortaxespaid.
Out-of-State Property Exchanged for California Property
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Example 21 . . . . . . . . YouarearesidentofFlorida.In2002,yourCaliforniaandnon-CaliforniasourceSection1231gainsandlossesincludeda$2,500Californiagain,a$3,000Californialoss,a$1,000Floridagain,anda$500Florida loss.
. . . . . Determination:BaseduponthenettingofyourtotalandCaliforniasourceSection1231gainsandlosses,determineyourcapitalgainorordinarylossasfollows:
G. Gains and Losses From the Sale of Trade or Business Property
Whenyousellpropertyusedinatradeorbusinessorcertaininvoluntaryconversions(IRCSection1231property),lossesarenettedagainstgains.IfSection1231lossesexceedSection1231gains,thelossesreceiveordinarytaxtreatment.IfSection1231gainsexceedSection1231losses,thegainsreceivecapitalgaintaxtreatment.Section1231gainsandlossesretainthischaracterizationregardlessofwhetheryouchangeyourresidencystatus.ForpurposesofcomputingCaliforniataxableincome,netonlyCaliforniasourceSection1231gainsandlosses.
Taxable year 2002: Total taxable CA taxable income incomeCASection1231gain $2,500 $2,500CASection1231loss (3,000) (3,000)FLSection1231gain 1,000FLSection1231loss (500)
Ordinaryloss $0 $(500)
Example 20 . . . . . . . . YouarearesidentofWashington.In2002,yourCaliforniaandnon-CaliforniasourceSection1231gainsandlossesincludeda$3,000Californiagain,a$2,000Californialoss,a$4,000Washingtongain,anda$5,000Washingtonloss.
. . . . . Determination:BaseduponthenettingofyourtotalandCaliforniasourceSection1231gainsandlosses,determineyourcapitalgainorordinarylossasfollows:
Taxable year 2002: Total taxable CA taxable income incomeCASection1231gain $3,000 $3,000CASection1231loss (2,000) (2,000)WASection1231gain 4,000WASection1231loss (5,000)Capitalgain $0 $1,000
FTBPublication1100(REV11-2007) 15
Example 22 . . . . . . . . YouhavealwaysbeenaNewYorkresident.In2002,yourCaliforniaandnon-CaliforniasourcecapitalgainsandlossesincludedCaliforniacapitalgainsof$2,000,Californiacapitallossesof$6,000,NewYorkcapitalgainsof$5,000,andNewYorkcapitallossesof$2,000.Youhadnocapitallosscarryoverspriorto2002.
. . . . . Determination: Netyourcapitalgainsandlossestodeterminethecapitallossesallowedin2002(the$3,000limitationapplies)andthecapitallosscarryoverto2003.
H. Capital Gains and LossesFortaxableyearsbeginningonorafterJanuary1,2002,thepresentlawsproviderulesfordeterminingcapitallosscarryoversandlimitationsifyouareanonresidentofCaliforniaorifyouchangeyourresidencystatus.
IfyouhavealwaysbeenanonresidentofCalifornia,youdeterminecapitallosscarryoversandcapitallosslimitationsbasedonlyuponCaliforniasourceincomeandlossitemsinordertocomputeCaliforniataxableincome.
Taxable year 2002: Total taxable CA taxable income incomeCAcapitalgain $2,000 $2,000CAcapitalloss (6,000) (6,000)NYcapitalgain 5,000NYcapitalloss (2,000) Total $(1,000) $(4,000)
Capitallossallowedin2002 1,000 3,000Capitallosscarryoverto2003 $0 $(1,000)
Always a Nonresident
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Example 23 . . . . . . . . AssumethesamefactsasExample22.OnJanuary1,2003,youbecomeaCaliforniaresident.During2003,yousellpropertylocatedinWyomingforacapitalgainof$5,000andincura$4,000capitallossfromthesaleofpropertylocatedinCalifornia.
. . . . . Determination:
FortaxableyearsbeginningonorafterJanuary1,2002,ifyouhavecapitallosscarryoversandwereanonresidentofCaliforniainprioryears,thecapitallosscarryoversneedtoberestatedasifyouhadbeenaCaliforniaresidentforallprioryears.
Step 2: Netyourcapitalgainsandlossestodeterminetheamountofcapitalgainincometoincludeintotaltaxableincome.
Taxable year 2003: Total taxable incomeCAcapitalloss $(4,000)WYcapitalgain 5,000Capitallosscarryover 0Capitalgainincome $1,000
Step 1: Restateyour2002capitallosscarryoverasifyouhadbeenaCaliforniaresidentforallprioryears.
2002 Restatement: Total taxable incomeCAcapitalgain $2,000CAcapitalloss (6,000)NYcapitalgain 5,000NYcapitalloss (2,000) Total $(1,000)Capitallossallowedin2002 1,000 Capitallosscarryoverto2003 $0
Change of Residency to California (move-in)
FTBPublication1100(REV11-2007) 17
FortaxableyearsbeginningonorafterJanuary1,2002,ifyouhavecapitallosscarryoversandyoubecomeanonresidentofCalifornia,yourcapitallosscarryoversneedtoberestatedasifyouhadbeenanonresidentofCaliforniaforallprioryears.
Example 24 . . . . . . . . AssumethesamefactsasExamples22and23.OnJanuary1,2004,youbecomeanonresidentofCaliforniaagain.During2004,yousellpropertylocatedinTexasforacapitalgainof$8,000,sellpropertylocatedinCaliforniafora$9,000capitalgain,andincura$5,000capitallossfromthesaleofpropertylocated in California.
. . . . . Determination:Step 1: RestateyourcapitallosscarryoversasifyouhadbeenanonresidentofCaliforniaforallprior
yearsbynettingyourcapitalgainsandlossesfromCaliforniasourcesonly.
2002 Restatement: Total taxable CA taxable income incomeCAcapitalgain $2,000 $2,000CAcapitalloss (6,000) (6,000)NYcapitalgain 5,000NYcapitalloss (2,000) Total $(1,000) $(4,000)Capitallossallowedin2002 1,000 3,000
Capitallosscarryoverto2003 $0 $(1,000)
2003 Restatement: Total taxable CA taxable income incomeCAcapitalloss,2003 $(4,000) $(4,000)WYcapitalgain 5,000Capitallosscarryoverfrom2002 (1,000)Capitalgainorloss $1,000 $(5,000)Capitallossallowedin2003 3,000Capitallosscarryoverto2004 $0 $(2,000)
Step 2: NetyourcapitalgainsandlossestodeterminetheamountofcapitalgainincometoincludeintotaltaxableincomeandCaliforniataxableincome.
Taxable year 2004: Total taxable CA taxable income incomeCAcapitalgain $9,000 $9,000CAcapitalloss (5,000) (5,000)TXcapitalgain 8,000 Total $12,000 $4,000Capitallosscarryoverfrom2003 0 (2,000) Capitalgainincome $12,000 $2,000
Change of Residency From California (move-out)
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Example 25 . . . . . . . . YoubecameaCaliforniaresidentonJuly1,2002.YourtotalandCaliforniasourcecapitalgainsandlossesfor2002areasfollows:BeforeJuly1,2002 AfterJuly1,2002 Totalcapitalgains $10,000 Totalcapitalgains $8,000 CAsourcecapitalgains 7,000 CAsourcecapitalgains 4,000 Totalcapitallosses (2,000) Totalcapitallosses (3,000) CAsourcecapitallosses (1,000) CAsourcecapitallosses (3,000)Yourcapitallosscarryoverfrom2001was$7,000,asifyouhadbeenaCaliforniaresidentforallprioryearsand$5,000,asifyouhadbeenanonresidentforallprioryears.
. . . . . Determination:Step 1: NetyourtotalcapitalgainsandlossesfortheperiodofresidencyandyourCaliforniasource
capitalgainsandlossesfortheperiodofnonresidency.CAcapitalgains,beforeJuly1,2002 $7,000CAcapitallosses,beforeJuly1,2002 (1,000)Totalcapitalgains,afterJuly1,2002 8,000Totalcapitallosses,afterJuly1,2002 (3,000) Capitalgainbeforecarryoverlosses $11,000
Step 2: ProrateyourcapitallosscarryoveramountsbaseduponperiodsofCaliforniaresidencyandnonresidencyduring2002.Period of Residency Period of Nonresidency2001carryover,asifaCA 2001carryover,asifanon- residentforallprioryears $(7,000) residentforallprioryears $(5,000)CAresidentdays÷totaldays Nonresidentdays÷totaldays 184÷365 x.5041 181÷365 x.4959Prorated2001capital Prorated2001capital losscarryover $(3,529) losscarryover $(2,479)
Step 3: ComputeyourcapitalgainorlosstoincludeinCaliforniataxableincome.
Taxable year 2002: CA taxable incomeCapitalgainbeforecarryoverlosses $11,000Capitallosscarryover,residentperiod (3,529)Capitallosscarryover,nonresidentperiod (2,479) Capitalgain,2002 $4,992
GetCalifornia540NR, 2002 Nonresident or Part-Year Resident Booklet, formoreinformationregardingthereportingofcapitalgainsandlosses.
Ifyouchangedyourresidencyduring2002,computeincomeanddeductionsusingresidentrulesfortheperiodoftheyearyouwereaCaliforniaresidentandnonresidentrulesfortheperiodoftheyearyouwereanonresident.ComputeanyprioryearcarryoverlossasifyouwereaCaliforniaresidentforallprioryearsand asifyouwereanonresidentforallprioryears.ProratebothcapitallosscarryoveramountsbasedupontheperiodofCaliforniaresidencyandtheperiodofnonresidencyduringtheyear.
Part-Year Resident
FTBPublication1100(REV11-2007) 19
Example 26 . . . . . . . . YouhavealwaysbeenaresidentofTexas.Priorto2002,youwerenotengagedinanypassiveactivities.During2002,youpurchasedrentalpropertiesinbothCaliforniaandTexas.In2002,yourCaliforniaandnon-CaliforniasourcepassiveincomeandlossesincludedCaliforniarentalincomeof$2,000,Californiarentallossesof$30,000,andTexasrentalincomeof$4,000.
. . . . . Determination:Baseduponthenettingofyourpassiveincomeandlossesandtheallowanceofupto$25,000forrentallosses,determineyourpassivelossesallowedin2002andsuspendedto2003asfollows:
I. Passive Activities FortaxableyearsbeginningonorafterJanuary1,2002,thepresentlawsproviderulesfordeterminingtheamountofallowedpassiveactivitylossesandsuspendedlossesifyouareanonresidentofCaliforniaorifyouchangeyourresidencystatus.
IfyouhavealwaysbeenanonresidentofCalifornia,youdeterminetheallowedpassiveactivitylossesandsuspendedlossesbasedonlyuponCaliforniasourcepassiveincomeandlossitemstocomputeCaliforniataxableincome.OnlyCaliforniasourcepassivelossescarryforwardintothefollowingyear.
Taxable year 2002: Total taxable CA taxable income incomeCArentalincome $2,000 $2,000CArentallosses (30,000) (30,000)TXrentalincome 4,000 Total $(24,000) $(28,000)Allowedrentallosses 24,000 25,000 Suspendedlossto2003 $0 $(3,000)
Always a Nonresident
20 FTBPublication1100(REV11-2007)
Example 27 . . . . . . . . YouhavealwaysbeenaresidentofNewYork.Priorto2002,youwerenotengagedinanypassiveactivities.During2002,youbecameengagedinCaliforniaandnon-Californiapassiveactivities.In2002,yourpassiveincomeandlossesincludedCaliforniasourcepartnershipincomeof$2,000,CaliforniasourceScorporationlossesof$8,000,andNewYorkpartnershipincomeof$3,000.
. . . . . Determination:Baseduponthenettingofyourpassiveincomeandlosses,determineyoursuspendedlossestobecarriedforwardto2003asfollows:
Example 28 . . . . . . . . AssumethesamefactsasExample27.OnJanuary1,2003,youbecomeaCaliforniaresident.In2003,yourpassiveincomeandlossesincludeCaliforniasourcepartnershipincomeof$3,000,CaliforniasourceScorporationlossesof$1,000,andNewYorksourcepartnershipincomeof$7,000.
. . . . . Determination:
FortaxableyearsbeginningonorafterJanuary1,2002,ifyouhadsuspendedpassivelossesandwereanonresidentofCaliforniainprioryears,thesuspendedpassivelossesneedtoberestatedasifyouhadbeenaCaliforniaresidentforallprioryears.
Step 2: Netyourpassiveincomeandlossestodeterminetheamountofpassiveincometoincludeintotaltaxableincome.
Taxable year 2003: Total taxable incomeCApartnershipincome $3,000CAScorporationloss (1,000)NYpartnershipincome 7,000Total $9,000Suspendedpassiveloss,2002 (3,000)Passiveincome,2003 $6,000
Step 1: Restateyour2002suspendedpassivelossasifyouhadbeenaCaliforniaresidentfor2002.
2002 Restatement: Total taxable incomeCApartnershipincome $2,000CAScorporationloss (8,000)NYpartnershipincome 3,000Suspendedpassiveloss to2003$ (3,000)
Taxable year 2002: Total taxable CA taxable income incomeCApartnershipincome $2,000 $2,000CAScorporationloss (8,000) (8,000)NYpartnershipincome 3,000 Suspendedlossto2003 $(3,000) $(6,000)
Change of Residency to California (move-in)
FTBPublication1100(REV11-2007) 21
FortaxableyearsbeginningonorafterJanuary1,2002,ifyouhavesuspendedpassivelossesandyoubecomeanonresidentofCalifornia,yoursuspendedpassivelossesneedtoberestatedasifyouhadbeenanonresidentofCaliforniaforallprioryears.
Example 29 . . . . . . . . AssumethesamefactsasExamples27and28.OnJanuary1,2004,youbecomeanonresidentofCaliforniaagain.During2004,yourpassiveincomeandlossesincludeCaliforniasourcepartnershipincomeof$15,000,CaliforniasourceScorporationlossesof$7,000,andNewYorksourcepartnershipincomeof$2,000.
. . . . . Determination:Step 1: RestateyoursuspendedpassivelossesasifyouhadbeenanonresidentofCaliforniaforall
prioryearsbynettingpassiveincomeandpassivelossesfromCaliforniasourcesonly.
2002 Restatement: Total taxable CA taxable income incomeCApartnershipincome $2,000 $2,000CAScorporationloss (8,000) (8,000)NYpartnershipincome 3,000Suspendedpassivelossto2003 $(3,000) $(6,000)
2003 Restatement: Total taxable CA taxable income incomeCApartnershipincome $3,000 $3,000CAScorporationloss (1,000) (1,000)NYpartnershipincome 7,000 Total $9,000 $2,000Suspendedlossfrom2002 (3,000) (6,000)Incomeorsuspendedloss,2003 $6,000 $(4,000)
Step 2: NetyourpassiveincomeandlossestodeterminetheamountofpassiveincometoincludeintotaltaxableincomeandCaliforniataxableincome.
Taxable year 2004: Total taxable CA taxable income incomeCApartnershipincome $15,000 $15,000CAScorporationloss (7,000) (7,000)NYpartnershipincome 2,000Total $10,000 $8,000Suspendedlossfrom2003 0 (4,000) Passiveincome,2004 $10,000 $4,000
Change of Residency From California (move-out)
�� FTBPublication1100(REV11-2007)
Example 30 . . . . . . . . YoubecameanonresidentofCaliforniaonOctober1,2002.Yourpassiveactivitiesdidnotincludeanyrentalproperties.YourtotalandCaliforniasourcepassiveincomeandlossesfor2002wereasfollows:BeforeOctober1,2002 AfterOctober1,2002 Totalpassiveincome $13,500 Totalpassiveincome $4,500 CApassiveincome 7,500 CApassiveincome 2,500 Totalpassivelosses (3,000) Totalpassivelosses (1,000) CApassivelosses (6,000) CApassivelosses (2,000)
Yoursuspendedpassivelossfrom2001was$7,000,restatedasifyouhadbeenaCaliforniaresidentforallprioryearsand$5,000,restatedasifyouhadbeenanonresidentforallprioryears.
. . . . . Determination:Step 1: NetyourtotalpassiveincomeandlossesfortheperiodofresidencyandyourCaliforniasource
passiveincomeandlossesfortheperiodofnonresidency.Totalpassiveincome,beforeOctober1,2002 $13,500Totalpassivelosses,beforeOctober1,2002 (3,000)CApassiveincome,afterOctober1,2002 2,500CApassivelosses,afterOctober1,2002 (2,000)Passiveincomebeforesuspendedlosses $11,000
Step 2: ProrateyoursuspendedpassivelosscarryoveramountsbaseduponperiodsofCaliforniaresidencyandnonresidencyduring2002.Period of Residency Period of Nonresidency2001suspendedloss,asifaCA 2001suspendedloss,asifanon- residentforallprioryears $(7,000) residentforallprioryears $(5,000)CAresidentdays÷totaldays Nonresidentdays÷totaldays 273÷365 x.7479 92÷365 x.2521Prorated2001suspendedloss $(5,235) Prorated2001suspendedloss $(1,260)
Step 3: Computeyourpassiveincomeorsuspendedlossfortaxableyear2002.
Taxable year 2002: CA taxable incomePassiveincomebeforesuspendedlosses $11,000Suspendedpassiveloss,residentperiod (5,235)Suspendedpassiveloss,nonresidentperiod (1,260)Passiveincome,2002 $4,505
GetFTBForm3801, 2002 Passive Activity Loss Limitations, formoreinformationregardingthereportingofpassiveactivitylosses.
Ifyouchangedyourresidencyduring2002,computeincomeanddeductionsusingresidentrulesfortheperiodoftheyearyouwereaCaliforniaresidentandnonresidentrulesfortheperiodoftheyearyouwereanonresident.ComputeanysuspendedpassivelossesasifyouwereaCaliforniaresidentforallprioryearsand asifyouwereanonresidentforallprioryears.ProratebothsuspendedpassivelossamountsbasedupontheperiodofCaliforniaresidencyandtheperiodofnonresidencyduringtheyear.
Part-Year Resident
FTBPublication1100(REV11-2007) �3
Example 31 . . . . . . . . YouarearesidentofNevadaandoperatetwobusinesses.OnebusinessisconductedwhollywithinCaliforniaandtheotherbusinessisconductedwhollywithinNevada.In2001and2002,yourbusinessesproducedthefollowingresults:
J. Net Operating Losses FortaxableyearsbeginningonorafterJanuary1,2002,yournetoperatingloss(NOL)deductionisnolongerlimitedbytheamountofNOLfromallsourcesifyouareanonresidentorpart-yearresidentofCalifornia.Note: OtherpresentlawssuspendedtheNOLdeductionfornetoperatinglosscarryoversforthe2002and2003taxableyears.GetFTB3805V,2002 Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations- Individuals, Estates and Trusts,formoreinformationregardingnetoperatinglosses.
FortaxableyearbeginningonorafterJanuary1,2002,youareallowedanetoperatinglossdeductioncarryoverto2004forCaliforniataxableincomebaseduponCaliforniasourcedincomeanddeductions,regardlessofwhetheryouhaveanNOLincomputingtotaltaxableincome.
Taxable year 2001: Income/loss CA source all sources income/lossNVbusiness $7,000CAbusiness (2,000) $(2,000) Total $5,000 $(2,000)
Taxable year 2002: Total taxable CA taxable income incomeNVbusiness $9,000CAbusiness (3,000) $(3,000) Total $6,000 $(3,000)
. . . . . Determination:Taxable year 2001 (prior law): YourNOLdeductionislimitedbytheamountofyourNOLfromallsources.Becauseyoudidnot
haveanNOLfromallsources,youwerenotallowedanNOLdeductionforCaliforniataxpurposes.
Taxable year 2002 (present law): OnlyyourCaliforniasourcedincomeandlossesareconsideredindeterminingifyouhavea
CaliforniaNOL.For2002,youhaveaCaliforniaNOLof$3,000.Youmaycarryforward$1,800(60percentofthe$3,000NOL)to2004tooffsetCaliforniataxableincome.
Always a Nonresident
�4 FTBPublication1100(REV11-2007)
Example 32 . . . . . . . . YoumovedtoCaliforniaonJanuary1,2002.In2001,youoperatedabusinesslocatedinTexasandincurredanNOLcarryoverbasedonCalifornialawof$6,000fromthisbusiness.In2002,youincurreda$3,000lossfromyourCaliforniabusinessandyouearnedincomeof$1,000fromyourTexasbusiness.
. . . . . Determination:
FortaxableyearsbeginningonorafterJanuary1,2002,ifyouhaveNOLcarryoversandwereanonresidentofCaliforniainprioryears,theNOLcarryoversneedtoberestatedasifyouhadbeenaCaliforniaresidentforallprioryears.
Step 2: Netyour2002businessincomeandlossestodeterminetheamountof yourNOLtocarryforwardto2004.
Taxable year 2002: Total taxable incomeTXbusinessincome $1,000CAbusinessloss (3,000)Total $(2,000)CANOLallowedpercentage, 2002 x60%NOL,2002 $(1,200)PrioryearNOLcarryover (3,300)NOLcarryoverto2004 $(4,500)
Step 1: Restateyour2001NOLcarryoverasifyouhadbeenaCaliforniaresidentfor2001.
2001 Restatement: Total taxable incomeNOLcarryover $(6,000)CANOLallowed percentage,2001 x55% NOLcarryoverto2002 $(3,300)
Change of Residency to California (move-in)
FTBPublication1100(REV11-2007) �5
FortaxableyearsbeginningonorafterJanuary1,2002,ifyouhaveNOLcarryoversandyoubecomeanonresidentofCalifornia,yourNOLcarryoversneedtoberestatedasifyouhadbeenanonresidentofCaliforniaforallprioryears.
Example 33 . . . . . . . . AssumethesamefactsasExample32.YourTexasandCaliforniabusinessesearnedincomein2003.OnJanuary1,2004,youbecomeanonresidentofCalifornia.In2004,yourTexasandCaliforniabusinessesearnincomeof$5,000and$4,000,respectively.
. . . . . Determination:RestateyourNOLcarryoverasifyouhadbeenanonresidentofCaliforniaforallprioryearsbynettingbusinessincomeandlossesfromCaliforniasourcesonly.
2001 Restatement: Total taxable CA taxable income incomeTexassourcebusinessloss $(6,000)CANOLallowedpercentage,2001 x55% NOLcarryoverto2002 $(3,300) $0
2002 Restatement: Total taxable CA taxable income incomeTXbusinessincome $1,000CAbusinessloss (3,000) $(3,000)Total $(2,000) $(3,000)CANOLallowedpercentage,2002 x60% x60% NOL,2002 $(1,200) $(1,800)PrioryearNOLcarryover (3,300)NOLcarryoverto2004 $(4,500) $(1,800)
Change of Residency From California (move-out)
�6 FTBPublication1100(REV11-2007)
Example 34 . . . . . . . . YoumovedtoCaliforniaonMay1,2004.YourtotalandCaliforniasourceincomeandlossesfromyourbusinessoperationsfor2004wereasfollows:BeforeMay1,2004 AfterMay1,2004Totalbusinessincome $12,000 Totalbusinesslosses $(16,000)CAbusinesslosses (2,000) CAbusinessincome 10,000YourNOLcarryoverfrom2003was$6,000,restatedasifyouhadbeenaCaliforniaresidentforallprioryearsand$3,000,restatedasifyouhadbeenanonresidentforallprioryears.
. . . . . Determination:
Step 1: ComputeyourcurrentyearNOLbynettingyourtotalbusinessincomeandlossesfortheperiodofresidencyandyourCaliforniasourcebusinessincomeandlossesfortheperiodofnonresidency:
CAbusinesslosses,beforeMay1,2004 $(2,000)Totalbusinesslosses,afterMay1,2004 (16,000)Total $(18,000)CANOLallowedpercentage,2004 x100%CurrentyearNOL,2004 $(18,000)
Step 2: ProrateyourNOLcarryoveramountsbaseduponperiodsofCaliforniaresidencyandnonresidencyduring2004.
Period of Residency Period of NonresidencyNOLcarryover,asifaCA NOLcarryover,asifa residentforallprioryears $(6,000) nonresidentforallprioryears $(3,000)CAresidentdays÷totaldays Nonresidentdays÷totaldays 245÷366 x .6694 121÷366 x .3306ProratedNOLcarryover $(4,016) ProratedNOLcarryover $(992)
Step 3: ComputeyourprioryearNOLcarryover:NOLCarryoverfrom2003,residentperiod $(4,016)NOLcarryoverfrom2003,nonresidentperiod (992)TotalNOLcarryoverfrom2003 $(5,008)
Ifyouchangedyourresidencyduring2004,computeyourNOLdeductionusingresidentrulesfortheperiodoftheyearyouwereaCaliforniaresidentandnonresidentrulesfortheperiodoftheyearyouwereanonresident.ComputeanyNOLcarryoversasifyouwereaCaliforniaresidentforallprioryearsandasifyouwereanonresidentforallprioryears.ProratebothNOLcarryoveramountsbasedupontheperiodofCaliforniaresidencyandtheperiodofnonresidencyduringtheyear.
Part-Year Resident
FTBPublication1100(REV11-2007) 27
Example 35 . . . . . . . . YouarearesidentofNevada.In2002,youinvested$10,000inapartnershipandbecamea50percentpartner.Atthecloseof2002,thepartnershipgenerateda$4,000loss.ThirtypercentofthelosshasaCaliforniasource.
. . . . . Determination: Computeyouryear-endbasisinthepartnershipasfollows:
K. Basis in Pass-Through EntitiesPass-throughentitiesincludepartnerships,Scorporations,andlimitedliabilitycompaniesthatelecttobetreatedaspartnerships.
Yourbasisinapass-throughentityforCaliforniapurposesisequaltoyourcontributionstocapital,adjustedbyCaliforniasourceditemsonly.
Taxable year 2002: BasisContributiontocapital $10,000Partnershiploss $(4,000)Californiasourcelosspercentage x30%Partnershipsourceloss $(1,200)Partner’spercentageofloss x50%Partner’sloss $(600)Partner’sbasis,December31,2002 $9,400
Always a Nonresident
28 FTBPublication1100(REV11-2007)
Change of Residency to California (move-in)
FortaxableyearsbeginningonorafterJanuary1,2002,yourbasisinapass-throughentityneedstoberestatedunderCalifornialawasifyouhadbeenaCaliforniaresidentforallprioryears.Basisisadjustedforyourshareofflow-throughitems,regardlessofsource,generatedduringyourperiodofnonresidency.
Example 36 . . . . . . . . AssumethesamefactsasExample35.OnJanuary1,2003,youbecomeaCaliforniaresident.Atthecloseof2003,thepartnershipgeneratesa$3,000loss.TwentypercentofthepartnershiplosshasaCaliforniasource.
. . . . . Determination:
Step 1: RestateyourbasisinthepartnershipasifyouhadbeenaCaliforniaresidentforallprioryears.
2002 Restatement: BasisContributiontocapital $10,000Partnershiploss $(4,000)Partnershippercentage x50%Partner’sshareofloss $ (2,000)Partner’sbasis,December31,2002 $8,000
Step 2: Computeyouryear-endbasisinthepartnership.
Taxable Year 2003: BasisPartner’sbasis,2002 $8,000Partnershiploss $(3,000)Partnershippercentage x50%Partner’sshareofloss $(1,500)Partner’sbasis,December31,2003 $6,500
FTBPublication1100(REV11-2007) 29
Change of Residency From California (move-out)
FortaxableyearsbeginningonorafterJanuary1,2002,ifyoubecomeanonresidentofCalifornia,yourbasisinapass-throughentityneedstoberestatedasifyouhadbeenanonresidentofCaliforniaforallprioryears.
Example 37 . . . . . . . . Assumethesamefactsasexamples35and36.OnJanuary1,2004youbecomeanonresidentofCaliforniaagain.Atthecloseof2004,thepartnershipgeneratesa$5,000loss.FortypercentofthepartnershiplosshasaCaliforniasource.
. . . . . Determination:Step 1: RestateyourbasisinthepartnershipasifyouhadbeenanonresidentofCaliforniaforallprior
years.
2002 Restatement BasisContributiontocapital $10,000Partnershiploss $(4,000)Californiasourcelosspercentage x30%Partnershipsourceloss $(1,200)Partner’spercentageofloss x50%Partner’sloss $(600)Partner’sbasis,December31,2002 $9,400
2003 Restatement BasisPartner’sbasis,December31,2002 $9,400Partnershiploss $(3,000)Californiasourcelosspercentage x20%Partnershipsourceloss $(600)Partner’spercentageofloss x50%Partner’sloss $(300)Partner’sbasis,December31,2003 $9,100
Step 2: Computeyourbasisinthepartnershipfor2004. Taxable Year 2004 BasisPartner’sbasis,December31,2003 $9,100Partnershiploss $(5,000)Californiasourcelosspercentage x40%Partnershipsourceloss $(2,000)Partner’spercentageofloss x50%Partner’sloss $(1,000)Partner’sbasis,December31,2004 $8,100
30 FTBPublication1100(REV11-2007)
L. Partnerships, S corporations, and Certain Trusts
Example 38 . . . . . . . . YouareanonresidentofCaliforniaandholdapartnershipinterestinaCaliforniapartnership.YoureceivedaScheduleK-1fromtheCaliforniapartnershipthatincludednetincomeof$10,000fromCaliforniasources.
. . . . . Determination:Your$10,000distributiveshareofpartnershipnetincomehasasourceinCaliforniaandistaxablebyCalifornia.
Californiataxesyourdistributiveshareofpartnership,Scorporation,andtrustincomederivedfromCaliforniasourcesifyouareanonresidentofCalifornia.Incomefromasimpletrust(onewhichdistributesitsincomeannually)issubjecttotheserules.Incomefromothertrustsmayalsobesubjecttotheserules.
Nonresident
FTBPublication1100(REV11-2007) 31
Example 39 . . . . . . . . Youholda50percentScorporationinterestinaWashingtonScorporationthatreportsincomeandlossesonafiscalyearendingOctober31stofeachyear.OnJune10,2002,youbecameanonresidentofCalifornia.YouobtainedinterimstatementsfromtheScorporationthatincludethefollowingScorporationnetincomeamounts:November1,2001-June9,2002 June10,2002-October31,2002Washingtonnetincome $5,600 Washingtonnetincome $4,400California net income 4,000 California net income 2,000Totalnetincome $9,600 Totalnetincome $6,400
. . . . . Determination:
Step 1: ComputeyourdistributiveshareincomebaseduponperiodsofCaliforniaresidencyandnonresidencyduringtheScorporation’staxableyear.
Period of Residency Period of NonresidencyTotalnetincome $9,600 Californianetincome $2,000%interestinScorporation x50% %interestinScorporation x50% 2002distributiveshare $4,800 2002distributiveshare $1,000
Step 2: ComputeyourdistributiveshareincometoincludeinCaliforniataxableincome.
Taxable year 2002: CA taxable incomeDistributiveshare,periodofresidency $4,800Distributiveshare,periodofnonresidency 1,000Distributiveshareincome,2002 $5,800
Ifyouchangedyourresidencyduring2002,orduringyourpartnership’s,Scorporation’s,ortrust’staxableyearbeginningonorafterJanuary1,2002,Californiataxesyourdistributiveshareofpartnership,Scorporation,andcertaintrustincomebaseduponyourperiodofCaliforniaresidencyandyourperiodofnonresidencyduringthepartnership’s,Scorporation’s,ortrust’staxableyear.Theallocationofincomebetweentheperiodofresidencyandtheperiodofnonresidencymustbemadeinamannerthatreflectstheactualdateofrealization.Intheabsenceofinformationthatreflectstheactualdateofrealization,youmustallocateanannualamountonaproportionalbasisbetweenthetwoperiods,usingadailyproratamethod.
Part-Year Resident
3� FTBPublication1100(REV11-2007)
Example 40 . . . . . . . . Youholda60persentinterestinaWashingtonpartnershipthatreportsincomeandlossesonacalendaryearbasis.OnSeptember22,2002,youbecameanonresidentofCalifornia.Youobtainedacopyofthepartnershiptaxreturnfor2002.ThetotalnetincomefromthepartnershipconsistedofthefollowingcapitalgainsonitemssoldduringyourperiodsofCaliforniaresidencyandnonresidency:January1,2002–September21,2002 September22,2002–December31,2002SaleofWArealproperty $15,200 SaleofWArealproperty $4,400Saleofstock 2,000 SaleofCArealproperty 10,300Totalnetincome $17,200 Totalnetincome $14,700
. . . . . Determination:Step 1: ComputeyourdistributiveshareincomebaseduponperiodsofCaliforniaresidencyandnonresi-
dencyduringthepartnership’staxableyear.Period of Residency Period of NonresidencyTotalnetincome $17,200 Californianetincome $10,300%interestinpartnership x60% %interestinpartnership x60%2002distributiveshare $10,320 2002distributiveshare $6,180
Step 2: ComputeyourdistributiveshareincometoincludeinCaliforniataxableincome.Taxable year 2002: CA taxable incomeDistributiveshare,periodofresidency $10,320Distributiveshare,periodofnonresidency 6,180Distributiveshareincome,2002 $16,500
Example 41 . . . . . . . . YouholdapartnershipinterestinaTexaspartnershipthatreportsitsincomeandlossesonacalendaryearbasis.OnApril1,2002,youbecameanonresidentofCalifornia.YoureceivedaScheduleK-1fromtheTexaspartnershipthatincludednetincomeof$10,000,comprisedof$4,000fromCaliforniasourcesand$6,000fromTexassources.
. . . . . Determination:Step 1: DeterminethenumberofCaliforniaresidentdaysandnonresidentdaysduringthepartnership’s
taxableyear. CaliforniaResidentDays CaliforniaNonresidentDays January1,2002,throughMarch31,2002 April1,2002,throughDecember31,2002=90days =275daysStep 2: ProrateyourdistributiveshareincomebaseduponperiodsofCaliforniaresidencyandnonresi-
dencyduringthepartnership’staxableyear.Period of Residency Period of NonresidencyDistributiveshareincomefrom Distributiveshareincomefrom allsources $10,000 Californiasources $4,000CAresidentdays÷totaldays Nonresidentdays÷totaldays90÷365 x .�466 275÷365 x.7534Prorated2002distributiveshare $2,466 Prorated2002distributiveshare $3,014
Step 3: ComputeyourdistributiveshareincometoincludeinCaliforniataxableincome.Taxable year 2002: CA taxable incomeDistributiveshare,periodofresidency $2,466Distributiveshare,periodofnonresidency 3,014Distributiveshareincome,2002 $5,480
FTBPublication1100(REV11-2007) 33
Example 42 . . . . . . . . YouholdanScorporationinterestinaFloridaScorporationthatreportsincomeandlossesonafiscalyearendingMay31stofeachyear.OnFebruary1,2002,youbecamearesidentofCalifornia.YoureceivedaScheduleK-1fromtheFloridaScorporationforfiscalyearendingMay31,2002,thatincludednetincomeof$10,000,comprisedof$4,000fromCaliforniasourcesand$6,000fromFloridasources.
. . . . . Determination:Step 1: DeterminethenumberofCaliforniaresidentdaysandnonresidentdaysduringthe
Scorporation’staxableyear. CaliforniaResidentDays CaliforniaNonresidentDays February1,2002,throughMay31,2002 June1,2001,throughJanuary31,2002=120days =245daysStep 2: ProrateyourdistributiveshareincomebaseduponperiodsofCaliforniaresidencyand
nonresidencyduringtheScorporation’staxableyear.Period of Residency Period of NonresidencyDistributiveshareincomefrom Distributiveshareincomefrom allsources $10,000 Californiasources $4,000CAresidentdays÷totaldays Nonresidentdays÷totaldays120÷365 x.3288 245÷365 x.6712Prorated2002distributiveshare $3,288 Prorated2002distributiveshare $2,685
Step 3: ComputeyourdistributiveshareincometoincludeinCaliforniataxableincome.Taxable year 2002: CA taxable incomeDistributiveshare,periodofresidency $3,288Distributiveshare,periodofnonresidency 2,685Distributiveshareincome,2002 $5,973
Example 43 . . . . . . . . YouarethesolebeneficiaryofasimpletrustthatreportedyourdistributiveshareincomefortheshortperiodofJanuary1,2002,throughSeptember30,2002.OnApril1,2002,youbecamearesidentofCalifornia.YoureceivedaScheduleK-1fromthetrustthatincludesnetincomeof$10,000,comprisedof$4,000fromCaliforniasourcesand$6,000fromNevadasources.
. . . . . Determination:Step 1: DeterminethenumberofCaliforniaresidentdaysandnonresidentdaysduringthetrust’staxable
year.CaliforniaResidentDays CaliforniaNonresidentDaysApril1,2002,throughSeptember30,2002 January1,2002,throughMarch31,2002=183days =90days
Step 2: ProrateyourdistributiveshareincomebaseduponperiodsofCaliforniaresidencyandnonresidencyduringthetrust’staxableyear.Period of Residency Period of NonresidencyDistributiveshareincomefrom Distributiveshareincomefrom allsources $10,000 Californiasources $4,000CAresidentdays÷totaldays Nonresidentdays÷totaldays183÷273 x.6703 90÷273 x.3297Prorated2002distributiveshare $6,703 Prorated2002distributiveshare $1,319
Step 3: ComputeyourdistributiveshareincometoincludeinCaliforniataxableincome.Taxable year 2002: CA taxable incomeDistributiveshare,periodofresidency $6,703Distributiveshare,periodofnonresidency 1,319Distributiveshareincome,2002 $8,022
34 FTBPublication1100(REV11-2007)
M. Alternative Minimum TaxThepresentlawschangethealternativeminimumtaxcomputationfornonresidentsandpart-yearresidentstoparallelthechangesintheregulartaxcomputation.
The California alternative minimum taxofanonresidentorpart-yearresidentistheamountbywhichtheCaliforniatentativeminimumtaxexceedstheproratedregulartax.Thecomputationisasfollows:
The California tentative minimum taxistheCaliforniaalternativeminimumtaxableincomemultipliedbyarate.Therateistheamountoftaxontotaltentativeminimumtaxdividedbythetotalalternativeminimumtaxableincome.Thecomputationisasfollows:
The California alternative minimum taxable incomeisthecombinedtotalofthefollowing:• ThealternativeminimumtaxableincomederivedfromCaliforniasources
foranypartofthetaxableyearthetaxpayerwasanonresident.• Thealternativeminimumtaxableincomefromallsourcesforanypartof
thetaxableyearthetaxpayerwasaresident.
Fortheperiodofnonresidency,anycarryovers,deferredincome,suspendedlosses,orsuspendeddeductionsareincludedorallowableonlytotheextenttheywerederivedfromCaliforniasources.
The total alternative minimum taxable incomeisthealternativeminimumtaxableincomedeterminedasifthenonresidentorpart-yearresidentwereaCaliforniaresidentinthebothofthefollowing:• Currentyear.• Allprioryearsforanycarryovers,deferredincome,suspendedlosses,or
suspendeddeductions.
Total tentative minimum taxisthetaxonthetotalalternativeminimumtaxincome.Thefollowingexampleshowshowthecalculationworks:
Californiaalternativeminimumtax=Californiatentativeminimumtax – Proratedregulartax
Californiatentativeminimumtax=Californiaalternative
minimumtaxableincomeTotaltentativeminimumtax
TotalalternativeminimumtaxableincomeX
FTBPublication1100(REV11-2007) 35
Example 44 . . . . . . . . Youandyourspouse/RDPmovedtoCaliforniaandbecameresidentsonMay1,2002.Combinedwagesfortheyeartotaled$170,000.Youreceived$100,000afteryourmovetoCalifornia.OnOctober1,2002,youexercisedanincentivestockoptionvaluedat$90,000,forwhichyoupaid$10,000(preferenceamount$80,000).Yourtotaltaxableincomefortheyearwas$150,000,with$20,000initemizeddeductions.Fivethousanddollars($5,000)oftheitemizeddeductionswererealandpersonalpropertytaxes,whicharepreferenceitems.Yourproratedregulartaxwas$6,000.
. . . . . DeterminationTotal alternative minimum taxable income Realandpersonalpropertytaxpreference . . . . . . . . . . . . . . . . . . . . . . 5,000 Plus:Incentivestockoptionpreference . . . . . . . . . . . . . . . . . . . . . . . . . +80,000 Plus:Totaltaxableincome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . +150,000 Totalalternativeminimumtaxableincome . . . . . . . . . . . . . . . . . . . . . . . 235,000Total tentative minimum tax Totalalternativeminimumtaxableincome . . . . . . . . . . . . . . . . . . . . . . . 235,000 Less:Exemptionamount -65,114 169,886 Alternativeminimumtaxrate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x.07 Totaltentativeminimumtax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,892California alternative minimum tax adjusted gross income California(regulartax)adjustedgrossincome . . . . . . . . . . . . . . . . . . . 100,000 Plus:Incentivestockoptionpreferenceamount . . . . . . . . . . . . . . . . . . +80,000 Californiaalternativeminimumtaxadjustedgrossincome. . . . . . . . . . . 180,000Total alternative minimum tax adjusted gross income Totalalternativeminimumtaxableincome . . . . . . . . . . . . . . . . . . . . . . . 235,000 Totalitemizeddeductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Less:Realandpersonalpropertytaxpreference . . . . . . . . . . . . . . . . . -5,000 Totalalternativeminimumtaxitemizeddeductions . . . . . . . . . . . . . . . . +15,000 Totalalternativeminimumtaxadjustedgrossincome . . . . . . . . . . . . . . 250,000California alternative minimum taxable income Totalalternativeminimumtaxitemizeddeductions. . . . . . . . . . . . . . . . . 15,000 Multiplybytheratio: Californiaalternativeminimumtaxadjustedgrossincome 180,000 = Totalalternativeminimumtaxadjustedgrossincome 250,000 x.7200
Proratedalternativeminimumtaxitemizeddeductions . . . . . . . . . . . . . -10,800 Californiaalternativeminimumtaxableincome . . . . . . . . . . . . . . . . . . . 169,200California alternative minimum tax Californiaalternativeminimumtaxableincome . . . . . . . . . . . . . . . . . . . 169,200 Multiplybytheratio: Totaltentativeminimumtax 11,892 = Totalalternativeminimumtaxableincome 235,000 x.0506 Californiatentativeminimumtaxableincome . . . . . . . . . . . . . . . . . . . . 8,561 Less:Proratedregulartax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6,000 Californiaalternativeminimumtax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,561
GetCaliforniaScheduleP(540NR),2002 Alternative Minimum Tax and Credit Limitations – Nonresidents and Part-Year Residents,formoreinformationregardingCaliforniaalternativeminimumtax.