2016 Form 568 Limited Liability Company Tax Booklet

1 File your 568 K-1s via CD or portable USB/Flash Drive. california Forms & Instructions 568 2016 Limited Liability Company Tax Booklet Members of the Franchise Tax Board Betty T. Yee, Chair Fiona Ma, CPA, Member Michael Cohen, Member This Booklet contains: Form 568, Limited Liability Company Return of Income FTB 3537 (LLC), Payment for Automatic Extension for LLCs FTB 3522, LLC Tax Voucher FTB 3536 (LLC), Estimated Fee for LLCs FTB 3832, Limited Liability Company Nonresident Members Consent FTB 3885L, Depreciation and Amortization Schedule D (568), Capital Gain or Loss Schedule EO (568), Pass-Through Entity Ownership Schedule K-1 (568), Member s Share of Income, Deductions, Credits, etc.

2 For more information regarding business e-file, see page 2 or go to and search for business efile. Table of Contents General Information 3 Instructions for Form 568 13 Instructions for Schedule IW, LLC Income Worksheet 14 Instructions for Schedule K (568) and Schedule K-1 (568) 18 Federal/State Line References Chart 23 Form 568 25 Schedule IW, Limited Liability Company Income Worksheet 31 Schedule K-1 (568) 33 Schedule EO (568) 37 Instructions for Schedule EO (568) 38 Schedule D (568) 39 Instructions for Schedule D (568)

3 40 FTB 3885L and Instructions 41 Member s Instructions for Schedule K-1 (568) 43 FTB 3832 and Instructions 53 FTB 3537 (LLC) and Instructions 55 FTB 3522 and Instructions 57 FTB 3536 (LLC) and Instructions 59 Codes for Principal Business Activity 61 How to Get california Tax Information 64 Business e-file Business e-file is available for the following returns: Form 568, Limited Liability Company Return of Income Form 565, Partnership Return of Income Form 100, california corporation Franchise or Income Tax Return, including combined reports Form 100W, california corporation Franchise or Income Tax Return Water s-Edge Filers, including combined reports Form 100s , california S corporation Franchise or Income Tax Return Form 100X, Amended corporation Franchise or Income Tax Return Form 199.

4 california Exempt Organization Annual Information Return For more information, go to and search for business efile. The federal Small Business Health Care Tax Credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees. For more information on this federal tax credit, go to and search for affordable care act tax provisions.. Page 2 Form 568 Booklet 2016 2016 Instructions for Form 568, Limited Liability Company Return of Income References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015 , and to the california Revenue and Taxation Code (R&TC).

5 In general, for taxable years beginning on or after January 1, 2015 , california law conforms to the Internal Revenue Code (IRC) as of January 1, 2015 . However, there are continuing differences between california and federal law. When california conforms to federal tax law changes, we do not always adopt all of the changes made at the federal level. For more information, go to and search for conformity. Additional information can be found in FTB Pub. 1001, Supplemental Guidelines to california Adjustments, the instructions for california Schedule CA (540 or 540NR), and the Business Entity tax booklets.

6 The instructions provided with california tax forms are a summary of california tax law and are only intended to aid taxpayers in preparing their state income tax returns. We include information that is most useful to the greatest number of taxpayers in the Limited space available. It is not possible to include all requirements of the california Revenue and Taxation Code (R&TC) in the instructions. Taxpayers should not consider the instructions as authoritative law. What s New Return Due Date Change For taxable years beginning on or after January 1, 2016, the due date for a Limited Liability Company (LLC) classified as a partnership to file its tax return has changed to the 15th day of the 3rd month following the close of the taxable year.

7 For the return due date for a single member LLC (SMLLC), see General Information E, When and Where to File. Information Return Due Date Change Beginning on or after January 1, 2016, for withholding on foreign ( ) partners or members, the due date to file Form 592-F, Foreign Partner or Member Annual Return, has changed to the 15th day of the 3rd month following the close of the partnership s or LLC s taxable year. The due date to provide Form 592-B, Resident and Nonresident Withholding Tax Statement, to each foreign ( ) partner or member has changed to the 15th day of the 3rd month following the close of the partnership s or LLC s taxable year.

8 Get Form 592-F and Form 592-B for more information. New california Motion Picture and Television Production Credit For taxable years beginning on or after January 1, 2016, a new california motion picture and television production credit will be allowed to a qualified taxpayer. The credit is allocated and certified by the california Film Commission (CFC). The qualified taxpayer can: Offset the credit against income tax Liability . Sell the credit to an unrelated party (independent films only). Assign the credit to an affiliated corporation .

9 Apply the credit against qualified sales and use taxes. For more information, get form FTB 3541, california Motion Picture and Television Production Credit, form FTB 3551, Sale of Credit Attributable to an Independent Film, go to and search for motion picture, or go to the CFC website at and search for incentives. Low-Income Housing Credit Allocations to Partners For partnerships owning projects that receive a preliminary reservation of the Low-Income Housing Credit (LIHC) before January 1, 2020, the prior law exception that requires a partnership to allocate the credit among partners based upon the partnership agreement is re-enacted.

10 Sale of Credit For projects that receive a preliminary reservation of the LIHC beginning on or after January 1, 2016, and before January 1, 2020, a taxpayer may make an irrevocable election in its application to the california Tax Credit Allocation Committee to sell all or any portion of the LIHC allowed to one or more unrelated parties for each taxable year in which the credit is allowed. An original purchaser is allowed a one-time resale of that credit to one or more unrelated parties. For more information, get form FTB 3521, Low-Income Housing Credit, or go to the california Tax Credit Allocation Committee website at General Information A Important Information Limited Liability companies (LLCs) classified as partnerships file Form 568 LLCs may be classified for tax purposes as a partnership, a corporation , or a disregarded entity.