Outline
The California Schedule R form is an essential component for corporations operating within the state, particularly those engaged in multi-state activities. This form is designed to facilitate the apportionment and allocation of income, ensuring that businesses accurately report their income derived from California sources. It must be attached to the California tax return, specifically behind Form 100 or Form 100W, and is applicable for both calendar and fiscal years. Corporations must provide a comprehensive account of their net income or loss after state adjustments, incorporating various income sources such as dividends, interest, and rental income. Additionally, Schedule R includes provisions for reporting nonbusiness income and business income before apportionment, alongside detailed calculations for determining the appropriate apportionment percentage. For corporations electing the Water’s-Edge method, specific instructions regarding controlled foreign corporations must also be adhered to. Completing this form involves not only filling out the primary lines but also potentially attaching several supplementary schedules that delve deeper into the intricacies of income allocation and apportionment. Understanding the nuances of Schedule R is vital for compliance and for optimizing tax obligations in California.
Sample - California Schedule R Form
Schedule R 2011 Side 1
Corporation name California corporation number
Apportionment and Allocation of Income
8011113
CALIFORNIA SCHEDULE
R
TAXABLE YEAR
2011
Attach this schedule behind the California tax return and prior to the supporting schedules.
For calendar year 2011 or fiscal year beginning month________ day______ year _________, and ending month________day______ year _________ .
Water’s-Edge Filers Only: If controlled foreign corporations are included in the combined report, attach form FTB 2416.
Complete Schedule R (Side 1 and Side 2) and all applicable Schedules (R-1 through R-7). See General Information for Schedule R.
1 a Net income (loss) after state adjustments from Form 100 or Form 100W, Side 1, line 18; Form 100S, Side 1,
line 15; Form 100X, line 4. Form 565 and Form 568 filers: Include the total of line 1 through line 11c from
Schedule K (565 or 568) less the total of line 12 through line 13e from Schedule K (565 or 568) . . . . . . . . . . . 1a 00
b Water’s-edge foreign investment interest offset from form FTB 2424, line 17. . . . . . . . . . . . . . . . . . . . . . . . . . . 1b 00
c Total. Combine line 1a and line 1b. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1c 00
Nonbusiness Income (Loss) from All Sources. See General Information A for definitions and examples.
2 Dividends included on line 1a and not deducted on Form 100, Side 1, line 11;
Form 100W, Side 1, lines 11a/b; or Form 100S, Side 1, lines 9 and 10
. . . . . . . . 2 00
3 Interest. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 00
4 Net income (loss) from the rental of property from Schedule R-3,
line 3, column (c)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 00
5 Royalties. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 00
6 Gain (loss) from the sale of assets from Schedule R-4, line 2, column (e). . . . . . 6 00
7 Gain (loss) from sale of a nonbusiness interest in a partnership or LLC .
Attach schedule
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 00
8 Miscellaneous nonbusiness income (loss). Attach schedule . . . . . . . . . . . . . . . . 8 00
9 Total nonbusiness income (loss). Combine line 2 through line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 00
Business Income (Loss) before Apportionment (subject to a separate apportionment formula)
10 Nonunitary partnership or LLC business income (loss) . . . . . . . . . . . . . . . . . . . . 10 00
11 Income (loss) from a separate trade or business.
Attach supplemental Schedule R
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 00
12 Business income (loss) deferred from prior years, see General Information L. . . 12 00
13 Capital gain (loss) netting subject to separate apportionment.
See General Information M
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 00
14 Total separately apportionable business income (loss). Combine line 10 through line 13 . . . . . . . . . . . . . . . . . . . 14 00
15 Total business income (loss) subject to apportionment for this trade or business, subtract the sum of line 9
and line 14 from line 1c. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 00
16 Interest offset from Schedule R-5, line 7 or line 16 (California domiciliaries only). . . . . . . . . . . . . . . . . . . . . . . . . 16 00
17 Business income (loss) for this trade or business subject to apportionment. Combine line 15 and line 16 . . . . . . 17 00
18 a Apportionment percentage from Schedule R-1, Part A, line 5 or Part B, line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . .
18a
b Business income (loss) apportioned to California. Multiply line 17 by line 18a. . . . . . . . . . . . . . . . . . . . . . . . . . 18b 00
Nonbusiness Income (Loss) Allocable to California. If no income (loss) is allocable to California, do not complete
line 19 through line 26, enter -0- on line 27 and go to Side 2, line 28.
19 Dividends and interest income (if taxpayer’s commercial domicile is in California):
a Dividends included in line 2 above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19a 00
b Interest included in line 3 above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19b 00
20
Net income (loss) from the rental of property within California from Schedule R-3, line 3, column (b) . . . . . . . . . 20 00
21 Royalties. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 00
22
Gain (loss) from the sale of assets within California from Schedule R-4, line 2, total of column (b) and
column (d). Combined reporting groups, see General Information M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 00
23
Gain (loss) from sale of a nonbusiness interest in a partnership or LLC. Attach schedule . . . . . . . . . . . . . . . . . . . 23 00
24
Miscellaneous nonbusiness income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 00
25 Total nonbusiness income (loss) allocable to California. Combine line 19a through line 24. . . . . . . . . . . . . . . . . . 25 00
26
Interest offset from line 16 allocated to income included on line 19a and line 19b (California domiciliary only).
See General Information J . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 00
27
Net nonbusiness income (loss) allocable to California. Subtract line 26 from line 25 . . . . . . . . . . . . . . . . . . . . . . 27 00
__ __ __
.
__ __ __ __ %
Side 2 Schedule R 2011 8012113
California Business Income (Loss) subject to a separate apportionment formula.
28
California business income (loss) from a nonunitary partnership or LLC. . . . . . . 28 00
29 California income (loss) from a separate trade or business. Attach
supplemental schedule R.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 00
30 California business income (loss) deferred from prior years,
see General Information L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 00
31 Total business income (loss) separately apportioned to California. Combine line 28 through line 30. . . . . . . . . . . 31 00
Net Income (Loss) for California Purpose
32 Post-apportioned and allocated amounts from capital gain (loss) netting (combined reporting groups).
See General Information M. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 00
33
Net income (loss) for California purposes before contributions adjustment. Combine lines 18b, 27, 31, and 32 . 33 00
34
Contributions adjustment from Schedule R-6, line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 00
35
Net income (loss) for California purposes. Combine line 33 and line 34. Enter here and on Form 100 or
Form 100W, Side 1, line 19 or Form 100S, Side 1, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 00
Complete the applicable
Schedules R-1 through R-7,
starting on Side 3.
Schedule R 2011 Side 38013113
Schedule R-1 Apportionment Formula.
Is this corporation electing the Alternate Method – Single-Sales Factor Formula? m Yes m No
If “Yes,” skip Part A and complete Part B. If “No,” complete Part A and skip Part B.
(a)
Total within and outside California
(b)
Total within California
(c)
Percent within
California (b) ÷ (a)
.
%
.
%
.
%
.
%
.
%
1 Property: Use the average yearly value of owned real and tangible
personal property used in the business at original cost. See General
Information E. Exclude property not connected with the business
and the value of construction in progress.
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment (including delivery equipment) . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other tangible assets. Attach schedule. . . . . . . . . . . . . . . . . . . . . . . .
Rented property used in the business. See General Information E. . .
Total property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Payroll: Use employee wages, salaries, commissions, and other
compensation related to business income. See General Information F.
Total payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Sales: Gross receipts, less returns, and allowances . . . . . . . . . . . . .
a Sales delivered or shipped to California purchasers.
See General Information G.
(i) Shipped from outside California . . . . . . . . . . . . . . . . . . . . . . . .
(ii) Shipped from within California . . . . . . . . . . . . . . . . . . . . . . . . .
b Sales shipped from California to:
(i) The United States Government . . . . . . . . . . . . . . . . . . . . . . . . .
(ii) Purchasers in a state where the taxpayer is not taxable.
See General Information G . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c Other gross receipts (rents, royalties, interest, etc.). . . . . . . . . . . .
Total sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Divide total sales column (b) by total sales column (a) and multiply by 2 (except for qualified business activities). See General Information G
4 Total percent. Add the percentages in column (c).
See General Information H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 Apportionment percentage. Divide line 4 by 4 (qualified business
activities divide by 3, see General Information G) and enter the result
here and on Schedule R, Side 1, line 18a. See General Information H
Part A Standard Method – Three-Factor Formula. Complete this part only if the corporation uses the three-factor formula. (The three-
factor formula includes the single-weighted or double-weighted sales factor.)
Part B Alternate Method – Single-Sales Factor Formula. Complete this part only if the corporation elects the single-sales factor
formula. This is an irrevocable annual election.
(a)
Total within and outside California
(b)
Total within California
(c)
Percent within
California (b) ÷ (a)
1 Sales: Gross receipts, less returns, and allowances . . . . . . . . . . . . .
a Sales delivered or shipped to California purchasers.
See General Information G.
(i) Shipped from outside California . . . . . . . . . . . . . . . . . . . . . . . .
(ii) Shipped from within California . . . . . . . . . . . . . . . . . . . . . . . . .
b Sales shipped from California to:
(i) The United States Government . . . . . . . . . . . . . . . . . . . . . . . . .
(ii) Purchasers in a state where the taxpayer is not taxable.
See General Information G . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c Other gross receipts (rents, royalties, interest, etc.). . . . . . . . . . . .
Total sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 Apportionment percentage. Divide total sales column (b) by total
sales column (a) and enter the result here and on Schedule R,
Side 1, line 18a. See General Information H. . . . . . . . . . . . . . . . . . . .
.
%
Side 4 Schedule R 2011
Schedule R-2 Sales and General Questionnaire. Attach additional sheets if necessary.
1 Describe briefly the nature and location(s) of the California business activities: _____________________________________________________________
__________________________________________________________________________________________________________________________
2 State the exact title and principal business activity of all joint ventures, partnerships, or LLCs in which the corporation has an interest: _________________
__________________________________________________________________________________________________________________________
3
Does the California sales figure on Schedule R-1 (or a comparable schedule in a combined report) include all sales shipped from California where the
purchaser is the U.S. Government? m Yes m No If “No,” explain. __________________________________________________________________
4 Does the California sales figure on Schedule R-1 (or a comparable schedule in a combined report) include all sales shipped from California to states in which
the taxpayer is not subject to tax? See General Information G. m Yes m No If “No,” explain. _____________________________________________
5
Are the nonbusiness items reported on Schedule R, Side 1, line 2 through line 8, and the apportionment factor items reported on Schedule R-1 treated
consistently on all state tax returns filed by the taxpayer? m Yes m No If “No,” explain. _________________________________________________
6 Has this corporation or any member of its combined unitary group changed the way income is apportioned or allocated to California from prior year tax
returns? See General Information I.m Yes m No If “Yes,” explain. ________________________________________________________________
__________________________________________________________________________________________________________________________
7 Does the California sales figure on Schedule R-1 (or comparable schedule in a combined report) include all sales shipped to California destinations?
m Yes m No If “No,” indicate the name of the selling member and the nature of the sales activity believed to be immune. ________________________
__________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________
8 Does the California sales figure on Schedule R-1 (or comparable schedule in a combined report) include all sales delivered to customers outside
California which have an ultimate destination in California? m Yes m No If “No,” explain. _______________________________________________
Schedule R-3 Net Income (Loss) from the Rental of Nonbusiness Property
1 Income from rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 Rental deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 Net income (loss) from rents. Subtract line 2 from line 1. Enter the
result here and enter column (c) on Side 1, line 4; enter column (b)
on Side 1, line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule R-4 Gain (Loss) from the Sale of Nonbusiness Assets
California sales of nonbusiness assets include transactions involving: (1) real property located in California; (2) tangible personal property, if it had a situs in
California at the time of sale, or if the corporation is commercially domiciled in California and not taxable in the state where the property had a situs at the time of
sale; and (3) intangible personal property if the corporation’s commercial domicile is in California or the income is otherwise allocable to California.
(a)
Total outside
California
(b)
Total within
California
(c)
Total outside and within
California (a) + (b)
2 Total gain (loss) . . . . . . . . . . . . . . . . . .
Enter total gain (loss) line 2, column (e) on Side 1, line 6 and enter total of line 2, columns (b) and (d) on Side 1, line 22
Description of property sold
1
Real estate and other tangible assets Intangible assets Total
(a)
Gain (loss) from outside
California
(b)
Gain (loss) from
within California
(c)
Gain (loss) from
outside California
(d)
Gain (loss) from
within California
(e)
Gain (loss)
(a)+(b)+(c)+(d)
8014113
Schedule R 2011 Side 58015113
Schedule R-5 Computation of Interest Offset. Complete only if there are entries on line 2 and/or line 3 of
Schedule R and if Schedule R-1 is required. See General Information J. (California domiciliary only)
1 Total interest expense deducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Water’s-edge foreign investment interest offset from Side 1, line 1b . . . . . . . . . . . . . . . . . 2
3 Balance. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Total interest income (Form 100 or Form 100W, Side 1, line 4 and Schedule F, line 5a
and line 5b; or Form 100S, Side 1, line 3 and interest income included on Schedule F,
line 5 or Schedule K, line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Nonbusiness interest income from Side 1, line 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Business interest income. Subtract line 5 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Excess interest expense over business interest income. Subtract line 6 from line 3. If line 6 exceeds line 3,
enter -0- here and on Side 1, line 16, and do not complete the rest of this schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Total dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Deducted dividends from Form 100, Side 1, lines 10 and 11; Form 100W, Side 1,
lines 10 and 11a/b; or Form 100S, Side 1, lines 9 and 10
. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Net dividend income. Subtract line 9 from line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Business dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Deducted dividends from Form 100, Side 1, lines 10 and 11; Form 100W, Side 1,
lines 10 and 11a/b; or Form 100S, Side 1, lines 9 and 10, attributable to business
dividend income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Net business dividend income. Subtract line 12 from line 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 Net nonbusiness dividend income. Subtract line 13 from line 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 Total nonbusiness interest and dividend income. Add line 5 and line 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16 Enter the lesser of line 7 or line 15. Enter here and on Side 1, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
If interest and/or dividend income is reported on Side 1, line 19a or line 19b, enter the allocable portion of Schedule R-5, line 16 on Side 1, line 26.
See General Information J. If no interest or dividend income is reported on Side 1, line 19a or line 19b, do not deduct any interest expense on Side 1, line 26.
Schedule R-6 Contributions Adjustment. See General Information N.
1 Total contributions paid (current year and carryover amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Net income (loss) after state adjustments from Side 1, line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Portion of dividends deductible under R&TC Sections 24410 and 24411 (from Side 1 of the Form 100, line 11;
Form 100W, lines 11a/b; or Form 100S, lines 9 and 10), and other adjustments. See General Information N
. . . . . . . . . . . . 3
4 Contributions deducted on Form 100, Form 100W, or Form 100S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Total. Add line 2 through line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Multiply line 5 by 10% (.10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7 Net income (loss) for state purposes before contributions adjustment from Side 2, line 33 . . . . . . . . . . . . . . . . . . . . . . . . . 7
8 Business dividends deductible on line 3 multiplied by the average apportionment percentage from Schedule R-1, Part A,
line 5 or Part B, line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9 Amount of line 3 attributable to nonbusiness dividends reported on Side 1, line 19a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Contributions deducted (from line 4 above) multiplied by the average apportionment percentage from Schedule R-1, Part A,
line 5 or Part B, line 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11 Total. Add line 7 through line 10. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Multiply line 11 by 10% (.10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Contributions Adjustment
13 Enter the amount shown on line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
14 Amount of contributions allowable:
a If line 1 equals or exceeds line 6, enter the lesser of line 1 or line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14a
b If line 1 is less than line 6, divide line 11 by line 5. Then multiply line 1 by the result and enter here . . . . . . . . . . . . . . . . . 14b
15 Contributions adjustment. Subtract line 14a or line 14b from line 13. Enter here and on Side 2, line 34.
If the result is a negative amount, enter in brackets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Side 6 Schedule R 2011
Fill out the Schedule R-7 Election completely to make a valid election.
Name of corporation filing the single group return (key corporation
*
) California corporation number
This election is an integral part of the return of all taxpayers participating in the election, and must be filed annually with Schedule R. Signing the California tax
return is an acknowledgement that the key corporation and its electing affiliates agree to comply with the terms and conditions contained in this Schedule R-7
Election. (See Side 7 for the terms of this election).
Part I – Taxpayers Electing to File, or No Longer Included in the Single Group Return. See instructions below Section A and
Section B before completing the tables.**
Section A – List of Taxpayers Making Election to File a Single Group Tax Return. Attach additional sheets using the same format, if necessary.
Electing taxpayer corporation
(Enter the legal name that is filed with the California SOS.
Do not use abbreviations unless the abbreviation is part of the legal name.)
A B C California
corporation number
(if one is assigned)
FEIN Total self-assessed tax
(California key corporation name
*
)
Total group self-assessed tax
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*For definition of a key corporation, see Side 7.
**
In order for a group return to satisfy the individual subsidiary’s filing requirements, the Schedule R-7 must include all of the information requested in Part I, Section A,
(see Cal. Code Regs., tit. 18 section 25106.5-11). If the information in Part I, Section A, is not filled out completely, the electing member(s) Schedule R-7 election may be
disallowed. If an electing member(s) Schedule R-7 election is disallowed, they must file a separate California return.
Check box A if the electing member is incorporated, organized, qualified, or registered to do business in California.
Check box B if the electing member has any property, payroll, sales in California, or derives income from sources within California, but is not doing business in
California.
Check box C if the Corporation is a new electing member for this current group.
Enter the California corporation number if one was assigned by the California Secretary of State (SOS) or the Franchise Tax Board (FTB).
Schedule R-7, Part I, Section A, should only contain information of corporations that are required to file a return in California, and who are subject to California income
or franchise tax. If a corporation does not have a California return filing requirement, the entity should not be listed in this Part I, Section A. The entity should be listed
in Part II, Other Affiliated Corporations. The first corporation listed should be the “key corporation.” The “key corporation” information entered in Schedule R-7, Part I,
Section A, must match the information of the corporation entered on Form 100 or Form 100W, Side 1.
Total the number of members (including parent/key corporation) listed above, and enter the result on Form 100 or 100W, Side 1, Schedule Q, Question B4.
Election to File a Unitary Taxpayers’ Group Return
CALIFORNIA SCHEDULE
R-7
TAXABLE YEAR
2011
8016113
Schedule R 2011 Side 7
Schedule R-7 – Terms and Conditions
This election is an integral part of the return of all taxpayers participating in the election, and must be filed annually with Schedule R. Signing the California tax
return is an acknowledgement that the key corporation and its electing affiliates agree to comply with the following terms and conditions:
Each of the taxpayers listed in Schedule R-7, Part I,
Section A, hereby elect to file a single unitary
taxpayers’ group return. The unitary taxpayers’
group return constitutes the return for each
member of the electing group and satisfies the
requirement of each electing member to file its own
return.
Each corporation that elects to participate in a
group return agrees to be bound by the terms
and conditions specified in this schedule and
instructions under General Information P, Group
Return Election. The filing of its group return
indicates acceptance of all terms and conditions.
To be eligible, each corporation must meet all of
the following:
1) Be a taxpayer required to file a return in
California.
2) Be a member of a combined report for its entire
taxable year.
3) Have the same taxable year as the key
corporation or have a taxable year that is wholly
included within the taxable year of the key
corporation.
4) Have the same statutory filing date as the key
corporation for the taxable year.
The key corporation must file the unitary
taxpayers’ group return. With the initial return and
thereafter, any payment of taxes for the taxable
year shall be made using the key corporation’s
California corporate number as designated in
Part I, Section A.
The key corporation must be taxable in California
and, where applicable, be the parent corporation. If
the parent corporation is not a California taxpayer,
the key corporation should be the taxpayer with
the largest property factor numerator in California.
For the election to be valid, the key corporation’s
powers, rights, and privileges must not be
suspended or forfeited. The key corporation agrees
to act as surety and agent for each member of
the group. In addition, all electing members agree
that subsequent adjustments to the liability of the
members of the group may be assessed, billed, or
paid to the key corporation on behalf of its members,
either in the name of the key corporation or the name
of the members. Adjustments to the liability of the
members of the group will ordinarily be reflected in
a single notice. However, supplemental schedules
reflecting the adjusted liability of each member will
be provided upon request.
A California waiver of a statute of limitation
(SOL) by the key corporation will waive the SOL
for all electing member corporations. If the key
corporation does not fulfill its obligation to pay tax
or act on behalf of its members, each member may
be independently assessed or billed for its own tax
liability. If that becomes necessary, each member
will generally be credited with taxes previously paid
in accordance with the member’s self-assessed tax
liability (see FTB Legal Ruling 95-2).
It is the responsibility of the members of the
group to assure that amounts paid by one member
on behalf of another are properly accounted for
between the members. For electing members
subject to the franchise tax, the liability for each
electing corporation cannot be less than the
minimum tax. See General Information P.
The election is binding on all members for all
matters for the taxable year of the election. If some
or all of the corporations included in the election
to file a unitary taxpayers’ group return are later
determined not to be members of the unitary
group of the key corporation, the key corporation
and electing members agree that any subsequent
adjustment for any and all members included in the
original group return may still be assessed, billed,
or paid by the key corporation.
The election remains in effect for the payment
of estimated tax and tax paid with an extension
of time to file for the following year by the key
corporation on behalf of the group, unless a written
notice of termination of the election is provided to
the FTB on or before the time of payment.
8017113
Part I – Taxpayers Electing to File, or No Longer Included in the Single Group Return. See instructions below Section A and
Section B before completing the tables.** (continued)
Section B – List of Taxpayers No Longer Included in the Single Group Tax Return After the Last Filing. Attach additional sheets using the same format, if
necessary.
Taxpayer’s name
(Enter the legal name that is filed with the
California SOS).
California
corporation number
(if one is assigned)
FEIN Effective date
**Use Part I, Section B, to list each taxpayer that is no longer included in the single group tax return from prior year Part I, Section A. Include each taxpayer’s legal name,
California corporation number or federal employer identification number (FEIN), and effective date in the space provided. The effective date is the date that the entity is
removed from the single group tax return.
Part II – Other Affiliated Corporations
List each affiliated corporation not listed in Part I, Section A. A corporation is an affiliated corporation for this purpose if it is a member of the same commonly
controlled group (see R&TC Section 25105(b) and FTB Pub. 1061, Guidelines for Corporations Filing a Combined Report, for more information). All affiliated
corporations should be listed whether or not they are California taxpayers or are unitary with the key corporation. Include the California corporation number for each
taxpayer. If the California corporation number is not available, then include the FEIN.
List of Affiliates Not Included in Part I, Section A. Attach additional sheets using the same format, if necessary.
Affiliate corporation’s name California
corporation number
(if applicable) or FEIN
Is this corporation
unitary with the
electing group?
Does this corporation
file a California tax return
on a different fiscal year
than the electing group?
Was this corporation
acquired or disposed of
during the year?
Yes No Yes No Acq. Dis. Date
Form Information
| Fact Name | Description |
|---|---|
| Purpose of Schedule R | The California Schedule R is used for the apportionment and allocation of income for corporations. It must be attached to the California tax return to report business income and nonbusiness income accurately. |
| Applicable Forms | Corporations must refer to various forms when completing Schedule R, including Form 100, Form 100W, and Form 100S. Additionally, filers of Forms 565 and 568 should also include specific income calculations from their respective schedules. |
| Filing Requirements | Schedule R must be completed and submitted with the California tax return for the taxable year. It is critical to ensure that all relevant sections, including Schedules R-1 through R-7, are filled out as necessary. |
| Governing Law | The California Schedule R is governed by the California Revenue and Taxation Code, particularly sections related to corporate income taxation and apportionment rules. |
Detailed Guide for Filling Out California Schedule R
Completing the California Schedule R form involves several steps to ensure accurate reporting of income and apportionment. Follow these instructions carefully to fill out the form correctly.
- Enter the taxable year at the top of the form.
- Provide the corporation name and California corporation number.
- If applicable, indicate if you are a Water’s-Edge filer and attach form FTB 2416.
- Complete Schedule R, both Side 1 and Side 2, as well as any relevant Schedules R-1 through R-7.
- For line 1a, input the net income or loss after state adjustments from the appropriate form (Form 100, 100W, 100S, or 100X).
- For line 1b, enter the water’s-edge foreign investment interest offset from form FTB 2424, line 17.
- Calculate the total for line 1c by combining lines 1a and 1b.
- Report nonbusiness income (loss) on lines 2 through 8, attaching any necessary schedules.
- Combine lines 2 through 8 to get total nonbusiness income (loss) on line 9.
- Input business income (loss) before apportionment on line 10 and any other applicable lines (11 through 14).
- Calculate the total business income (loss) subject to apportionment for this trade or business on line 15.
- Complete lines 16 through 18b, including entering the apportionment percentage and multiplying it by the business income (loss) subject to apportionment.
- For nonbusiness income (loss) allocable to California, complete lines 19 through 26, if applicable.
- Calculate the net nonbusiness income (loss) allocable to California on line 27.
- Report California business income (loss) from nonunitary partnerships or LLCs on line 28.
- Complete lines 29 through 31 for total business income (loss) separately apportioned to California.
- Combine all relevant lines to calculate net income (loss) for California purposes on line 35.
- Finally, ensure all applicable Schedules R-1 through R-7 are completed starting on Side 3.
Obtain Answers on California Schedule R
-
What is the purpose of the California Schedule R form?
The California Schedule R form is used by corporations to report the apportionment and allocation of income. It helps determine how much of a corporation's income is subject to California tax based on its business activities within and outside the state.
-
Who needs to file Schedule R?
Corporations that conduct business in California and have income that needs to be apportioned or allocated must file Schedule R. This includes both California corporations and foreign corporations doing business in California.
-
What types of income are reported on Schedule R?
Schedule R reports both business and nonbusiness income. Business income includes income from activities conducted in California, while nonbusiness income may include dividends, interest, and rental income from properties located in California.
-
How is the apportionment percentage calculated?
The apportionment percentage is calculated using either a three-factor formula (property, payroll, and sales) or a single-sales factor formula. The corporation must choose one method and apply it consistently across reporting periods.
-
What is the significance of the Water’s-Edge election?
The Water’s-Edge election allows certain corporations to limit their reporting to income from U.S. sources, excluding foreign income. This can simplify tax reporting and potentially reduce tax liability for qualifying corporations.
-
What schedules must be completed in conjunction with Schedule R?
Corporations must complete all applicable Schedules R-1 through R-7 alongside Schedule R. Each schedule addresses different aspects of income apportionment and allocation, ensuring comprehensive reporting.
-
Can a corporation amend its Schedule R after filing?
Yes, a corporation can amend its Schedule R if it discovers errors or needs to adjust its reported income. This is typically done by filing an amended tax return with the corrected Schedule R attached.
-
What are the consequences of not filing Schedule R?
Failure to file Schedule R can result in penalties, interest on unpaid taxes, and potential audits by the California Franchise Tax Board. It is crucial to file accurately and on time to avoid these issues.
-
Where should Schedule R be submitted?
Schedule R should be attached to the corporation's California tax return (Form 100, Form 100W, or Form 100S) and submitted to the California Franchise Tax Board as part of the overall tax filing process.
Common mistakes
Filling out the California Schedule R form can be challenging, and mistakes can lead to delays or inaccuracies in tax filings. Here are five common errors to avoid.
One frequent mistake is failing to include all necessary schedules. Schedule R requires the completion of additional Schedules R-1 through R-7. Omitting any of these can result in incomplete information, which may trigger requests for further documentation or corrections from the tax authority.
Another common error involves miscalculating income figures. Taxpayers sometimes confuse net income with gross income or fail to accurately report nonbusiness income. It is essential to ensure that all figures align with the corresponding lines on the main tax return and any applicable schedules. Double-checking these numbers can prevent discrepancies.
Many people also overlook the apportionment percentage. This percentage is crucial for determining how much income is taxable in California. If the apportionment percentage is incorrectly calculated or not reported at all, it can lead to significant errors in tax liability. Make sure to follow the guidelines for calculating this percentage carefully.
Additionally, inconsistent reporting across different tax years can create complications. Taxpayers should maintain consistency in how they report income and deductions from year to year. Any changes in reporting methods should be clearly explained in the form to avoid confusion.
Lastly, neglecting to review the General Information section can lead to misunderstandings of specific requirements or definitions. This section provides vital context and instructions that can help clarify what is needed for accurate reporting. Taking the time to read this information can save headaches later on.
Documents used along the form
The California Schedule R form is an essential document for corporations filing their taxes in California, particularly for those with complex income streams. Alongside this form, several other documents are often required to ensure accurate reporting and compliance with state tax regulations. Below is a list of commonly associated forms that help clarify various aspects of a corporation's financial activities.
- Form FTB 2416: This form is used exclusively by Water’s-Edge filers to report controlled foreign corporations included in a combined report. It provides additional details necessary for accurate apportionment.
- Schedule R-1: This schedule outlines the apportionment formula used by the corporation. It helps determine how income is allocated between California and other states, using either a standard or alternate method.
- Schedule R-2: This document serves as a sales and general questionnaire. It collects information about the nature and location of business activities, ensuring that all sales figures are accurately reported.
- Schedule R-3: This schedule details the net income or loss from the rental of nonbusiness property. It breaks down income and deductions associated with rental activities within and outside California.
- Schedule R-4: This form reports gains or losses from the sale of nonbusiness assets. It categorizes transactions based on their location and provides necessary calculations for tax purposes.
- Schedule R-5: This schedule computes the interest offset for California domiciliary corporations. It helps determine the allowable interest expense deductions related to business and nonbusiness income.
- Schedule R-6: This document is used for contributions adjustments. It calculates the allowable contributions based on net income and ensures compliance with California tax regulations regarding charitable donations.
Each of these forms plays a crucial role in the overall tax reporting process for California corporations. Together, they provide a comprehensive view of a corporation's financial activities, ensuring compliance and facilitating accurate tax calculations.
Similar forms
The California Schedule R form is a critical document for corporations filing taxes in California. It focuses on the apportionment and allocation of income. Several other forms share similarities with Schedule R in terms of purpose and content. Below is a list of documents that are comparable to the California Schedule R form:
- Form 100: This is the California Corporation Franchise or Income Tax Return. Like Schedule R, it requires corporations to report income and deductions, but it serves as the primary tax return rather than a supporting schedule.
- Form 100W: This form is for corporations that qualify as "water’s-edge" filers. Similar to Schedule R, it includes provisions for reporting income from foreign sources and requires the allocation of income to California.
- Form 100S: This is used by S corporations in California. Like Schedule R, it involves the apportionment of income but is specifically designed for S corporations, which have different tax implications.
- Form 565: This form is for partnerships in California. It shares similarities with Schedule R in that it requires the reporting of income, deductions, and the allocation of income to California.
- Form 568: This is the Limited Liability Company Return of Income. Similar to Schedule R, it focuses on income reporting and allocation for LLCs, which are taxed differently than corporations.
- Schedule K: Found within Forms 565 and 568, this schedule is used to report income, deductions, and credits for partnerships and LLCs. It parallels Schedule R in its focus on income allocation.
- Schedule R-1: This is a specific part of the Schedule R that details the apportionment formula. It directly relates to the calculations necessary for completing the main Schedule R form.
- Schedule R-3: This schedule is used to report net income or loss from the rental of property. It is similar to Schedule R as it deals with income allocation from specific sources.
- Schedule R-4: This is for reporting gains or losses from the sale of nonbusiness assets. Like Schedule R, it requires detailed reporting of income and its allocation to California.
Each of these forms plays a role in the overall process of reporting and allocating income for tax purposes in California, similar to the function of the California Schedule R form.
Dos and Don'ts
When filling out the California Schedule R form, there are important dos and don'ts to keep in mind. Here’s a straightforward list to guide you:
- Do ensure you attach Schedule R behind your California tax return.
- Do complete both Side 1 and Side 2 of the form.
- Do accurately calculate your net income or loss from the appropriate forms.
- Do include all applicable Schedules R-1 through R-7 as needed.
- Do check the box for Water’s-Edge Filers if applicable.
- Don't leave any required fields blank; this can delay processing.
- Don't forget to attach any necessary supporting documents or schedules.
- Don't report income or losses that are not relevant to California.
- Don't assume that previous years' figures are still valid; always verify current data.
Misconceptions
- Misconception 1: The Schedule R form is only for large corporations.
- Misconception 2: Completing Schedule R is optional.
- Misconception 3: Schedule R is the same for all tax years.
- Misconception 4: Nonbusiness income does not need to be reported.
- Misconception 5: Only California-based income needs to be reported.
- Misconception 6: The apportionment percentage is always the same.
- Misconception 7: Once filed, Schedule R cannot be amended.
This form is applicable to various types of corporations, including smaller businesses that need to report their apportionment and allocation of income in California.
For corporations that are required to apportion income, completing Schedule R is mandatory. It must be attached to the California tax return.
Each tax year may have specific requirements or changes in the form. It’s important to use the correct version of Schedule R for the applicable tax year.
Nonbusiness income must be reported on Schedule R, as it can affect the overall tax liability of the corporation.
Schedule R requires reporting both California and non-California income, as the apportionment process considers the total income from all sources.
The apportionment percentage can vary based on various factors, including the business activities and the location of sales, property, and payroll.
Corporations can amend their Schedule R if they discover errors or need to make adjustments. However, it’s essential to follow the proper procedures for amendments.
Key takeaways
Understand the Purpose: The California Schedule R form is essential for corporations to report their apportionment and allocation of income. It helps determine how much income is taxable in California versus other states.
Complete All Sections: Ensure that both sides of Schedule R are filled out completely. This includes reporting net income, nonbusiness income, and any applicable schedules (R-1 through R-7) that provide further details.
Follow Instructions Carefully: Pay close attention to the instructions provided in the General Information section. Each line has specific requirements, and missing information can lead to delays or errors in processing your tax return.
Attach Necessary Forms: If your corporation includes controlled foreign corporations in its combined report, remember to attach form FTB 2416. Additionally, any schedules related to nonbusiness income or specific deductions should also be included.