Instructions for Form 100W - FormSend

Instructions for Form 100WCalifornia Corporation Franchise or Income Tax Return — Water’s-Edge FilersReferences in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2001, and to the California Revenue and Taxation Code (R&TC).IntroductionCorporations may elect to compute incomeattributable to California sources on the basisof a water’s-edge combined report. In general,under a water’s-edge election, affiliated foreigncorporations are excluded from the combinedreport.Note: For purposes of these instructions, theword “taxpayer” means a corporation in thecombined group that has a California filingrequirement.The statute allowing the corporation to file on awater’s-edge basis does not supersede theconcept of unity; it merely limits the unitaryentities included in the combined report. For adiscussion of the concepts of the unitarymethod of taxation and its application by thestate of California, get FTB Pub. 1061,Guidelines for Corporations Filing a CombinedReport. Once the corporation has computed itsincome attributable to California sources onthe water’s-edge combined report basis, thecorporation may either file a separate return ormay elect to file a single return with the othercorporations in the water’s-edge group. SeeSchedule R-7, Election to File a UnitaryTaxpayers’ Group Return and List of AffiliatedCorporations, which is included in Schedule R,Apportionment and Allocation of Income.Note: S corporations normally may not beincluded in a combined report. ForS corporations filing on a water’s-edge basis,this booklet should be used in conjunctionwith Form 100S, California S CorporationFranchise or Income Tax Return.For more information, see General InformationR, Apportionment of Income; S, CombinedReport; and T, Water's-Edge Reporting.What’s NewIn general, California law conforms to theInternal Revenue Code (IRC) as of January2001. However, there are continuing differencesbetween California and federal law.When California conforms to federal tax lawchanges, we do not always adopt all of thechanges made at the federal level. For moreinformation regarding California and federallaw, please visit our Website atwww.ftb.ca.gov and select “Law and Legislation.”Additional information can be found inFTB Pub. 1001, Supplemental Guidelines toCalifornia Adjustments, the instructions forCalifornia Schedule CA (540 or 540NR), andthe Business Entity tax booklets.Note, the instructions provided with Californiatax forms are a summary of California tax lawand are only intended to aid taxpayers inpreparing their state income tax returns. Weinclude information that is most useful to thegreatest number of taxpayers in the limitedspace available. It is not possible to include allrequirements of the California Revenue andTaxation Code (R&TC) in the tax booklets.Taxpayers should not consider the tax bookletsas authoritative law.Tax Amnesty – Recent legislation authorizesthe Franchise Tax Board (FTB) and the Boardof Equalization to administer a Tax AmnestyProgram. Tax amnesty is a limited-timechance for individuals and businesses to paypast-due income, franchise, sales, or usetaxes and the related interest penalty-free andwithout the fear of criminal prosecution.Amnesty runs from February 1, 2005,through March 31, 2005. Taxpayers eligibleto participate in amnesty, but choose not todo so, will be subject to additional penalties.For more details, visit our Website atwww.ftb.ca.gov or call (800) 852-5711.Charitable Contributions for 2004 TsunamiDisaster – California conforms to the federallaw which allows a 2004 charitable contributiondeduction for cash contributions made duringJanuary, 2005 toward the relief of the TsunamiDisaster victims in the Indian Ocean. Corporationsmay claim the deduction in either the 2004or 2005 tax year.Abusive Tax Shelter – If the corporation wasinvolved in a potentially abusive tax shelter, thecorporation may have a disclosure, registrationand list maintenance requirement. FTB mayimpose several new and enhanced penalties ifthe corporation fails to file federal Forms 8886,8264, 8271 or any required information. Formore information, see Registration andReporting Requirements under Abusive TaxShelters on our Website at www.ftb.ca.gov.Federal Schedule M-3 (Form 1120) – Fortaxable years beginning on or after January 1,2004, the Internal Revenue Service (IRS)requires any domestic corporation or U.S.consolidated tax group with total assets of $10million or more on the last day of the tax year tocomplete Schedule M-3 (Form 1120), NetIncome (Loss) Reconciliation for CorporationsWith Total Assets of $10 Million or More,instead of Schedule M-1, Reconciliation ofIncome (Loss) per Books With Income perReturn.For California purposes, the corporation muststill complete the California Schedule M-1,and:• Attach a copy of the Schedule M-3(Form 1120) to the California Franchise orIncome Tax Return; or• Attach a complete copy of the federalreturn; or• FTB will accept the Schedule M-3(Form 1120) in a spreadsheet format ifmore convenient.Net Operating Loss (NOL) – For taxable yearsbeginning on or after January 1, 2004,California has reinstated the NOL carryoverdeductions. The carryover periods for an NOLincurred in years:• beginning before January 1, 2002, havebeen extended for two years.• beginning on or after January 1, 2002, andbefore January 1, 2003, have beenextended for one year.For taxable years beginning on or after January1, 2004, 100% of the NOL may be carriedforward. For more information, see form FTB3805Q, Net Operating Loss (NOL) Computationand NOL and Disaster Loss Limitations –Corporations.Dividends Received Deduction – R&TCSection 24410 was repealed and re-enacted toallow a “Dividends Received Deduction"”ofqualified dividends received from an insurersubsidiary. The deduction is allowed whether ornot the insurer is engaged in business inCalifornia, if at the time of each payment atleast 80% of each class of stock of the insurerwas owned by the corporation receiving thedividend. For taxable years beginning on orafter January 1, 2004, and ending on or beforeJanuary 1, 2008, an 80% deduction is allowedfor qualified dividends. For taxable yearsbeginning on or after January 1, 2008, thededuction is increased to 85%. A portion ofthe dividends may not qualify if the insurersubsidiary paying the dividend is overcapitalizedfor the purpose of the dividend receiveddeduction. See the Schedule H (100W)instructions for additional information.Natural Heritage Preservation Credit –Currently there is no funding to award NaturalHeritage Preservation Credits; therefore nonew credits may be claimed for 2004.However, carryover is not affected forpreviously awarded credits. Contact theWildlife Conservation Board (WCB) todetermine if funding has been restored, if theyare accepting qualified contributions ofproperty, and to see if they are awarding newNatural Heritage Preservation Credits.Complete FTB 3503 to claim the credit only ifthe WCB has resumed awarding the credits.To get updated information regarding currentfunding, qualified contributions of property, orthe awarding of credits, contact the WildlifeConservation Board at (916) 445-8448. Or goto their Website at www.wcb.ca.gov.Contribution for Computer Technology – Fortaxable years beginning on or after January I,2004, California no longer allows a deductionfor an enhanced charitable contribution forcomputer technology or equipment.Punitive Damage Awards – For court actionsfiled after August 16, 2004, and finallyadjudicated by June 30, 2006, 75% of punitivedamage awards must be paid to the Director ofthe Department of Finance. The corporationmay exclude from income the portion of apunitive damage award that is paid to theDepartment of Finance. In addition, during thisperiod, the corporation may claim a deductionfor attorney's fees incurred in connection witha punitive damage award.Important Information• In Farmer Bros. Co. v. Franchise Tax Board(2003) 108 Cal App 4th, 134 Cal Rptr. 2nd390, the California Court of Appeal foundthat the R&TC Section 24402 deductibledividend provision discriminated againstinterstate commerce in violation of theCommerce Clause of the United StatesConstitution. R&TC Section 24402provided for a deduction to the extent thatthe dividend payer was taxable in California.A statute that is held to be unconstitutionalForm 100W Booklet 2004 (REV 05-05) Page 3

CaliforniaForms & Instructions100WPLACE ADDRESSLABEL HERE2004Corporation Tax BookletWater’s-Edge FilersMembers of the Franchise Tax BoardSteve Westly, ChairCarole Migden, MemberTom Campbell, MemberThis booklet contains:Form 100W, California CorporationFranchise or Income Tax Return —Water’s-Edge FilersSchedule H (100W), Dividend IncomeDeduction — Water’s-Edge FilersSchedule P (100W), Alternative MinimumTax and Credit Limitations —Water’s-Edge FilersForm 100-WE, Water’s-Edge ElectionFTB 2416, Schedule of IncludedControlled Foreign CorporationsFTB 2424, Water’s-Edge ForeignInvestment Interest OffsetFTB 3539, Payment Voucher forAutomatic Extension for Corporations andExempt OrganizationsFTB 3805Q, Net Operating Loss (NOL)Computation and NOL and Disaster LossLimitations — CorporationsFTB 3885, Corporation Depreciation andAmortizationSTATE OF CALIFORNIAFRANCHISE TAX BOARD

Table of ContentsForm 100W, California Corporation Franchise or Income Tax Return — Water’s-Edge Filers . . . . . . . . . . . . . 19Instructions for Form 100W . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Schedule H (100W), Dividend Income Deduction — Water’s-Edge Filers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Instructions for Schedule H (100W) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Schedule P (100W), Alternative Minimum Tax and Credit Limitations — Water’s-Edge Filers . . . . . . . . . . . . 25Instructions for Schedule P (100W) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Form 100-WE, Water’s-Edge Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Instructions for Form 100-WE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33FTB 2416, Schedule of Included Controlled Foreign Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Instructions for form FTB 2416 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34FTB 2424, Water’s-Edge Foreign Investment Interest Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Instructions for form FTB 2424 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38FTB 3539, Payment Voucher for Automatic Extension for Corporations and Exempt Organizations . . . . . . . . 39Instructions for form FTB 3539 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39FTB 3805Q, Net Operating Loss (NOL) Computation and NOL andDisaster Loss Limitations — Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Instructions for form FTB 3805Q . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42FTB 3885, Corporation Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45Instructions for form FTB 3885 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45Page 2 Form 100W Booklet 2004

Instructions for Form 100WCalifornia Corporation Franchise or Income Tax Return — Water’s-Edge FilersReferences in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2001, and to the California Revenue and Taxation Code (R&TC).IntroductionCorporations may elect to compute incomeattributable to California sources on the basisof a water’s-edge combined report. In general,under a water’s-edge election, affiliated foreigncorporations are excluded from the combinedreport.Note: For purposes of these instructions, theword “taxpayer” means a corporation in thecombined group that has a California filingrequirement.The statute allowing the corporation to file on awater’s-edge basis does not supersede theconcept of unity; it merely limits the unitaryentities included in the combined report. For adiscussion of the concepts of the unitarymethod of taxation and its application by thestate of California, get FTB Pub. 1061,Guidelines for Corporations Filing a CombinedReport. Once the corporation has computed itsincome attributable to California sources onthe water’s-edge combined report basis, thecorporation may either file a separate return ormay elect to file a single return with the othercorporations in the water’s-edge group. SeeSchedule R-7, Election to File a UnitaryTaxpayers’ Group Return and List of AffiliatedCorporations, which is included in Schedule R,Apportionment and Allocation of Income.Note: S corporations normally may not beincluded in a combined report. ForS corporations filing on a water’s-edge basis,this booklet should be used in conjunctionwith Form 100S, California S CorporationFranchise or Income Tax Return.For more information, see General InformationR, Apportionment of Income; S, CombinedReport; and T, Water's-Edge Reporting.What’s NewIn general, California law conforms to theInternal Revenue Code (IRC) as of January2001. However, there are continuing differencesbetween California and federal law.When California conforms to federal tax lawchanges, we do not always adopt all of thechanges made at the federal level. For moreinformation regarding California and federallaw, please visit our Website atwww.ftb.ca.gov and select “Law and Legislation.”Additional information can be found inFTB Pub. 1001, Supplemental Guidelines toCalifornia Adjustments, the instructions forCalifornia Schedule CA (540 or 540NR), andthe Business Entity tax booklets.Note, the instructions provided with Californiatax forms are a summary of California tax lawand are only intended to aid taxpayers inpreparing their state income tax returns. Weinclude information that is most useful to thegreatest number of taxpayers in the limitedspace available. It is not possible to include allrequirements of the California Revenue andTaxation Code (R&TC) in the tax booklets.Taxpayers should not consider the tax bookletsas authoritative law.Tax Amnesty – Recent legislation authorizesthe Franchise Tax Board (FTB) and theBoard of Equalization to administer a TaxAmnesty Program. Tax amnesty is alimited-time chance for individuals andbusinesses to pay past-due income,franchise, sales, or use taxes and therelated interest penalty-free and without thefear of criminal prosecution. Amnesty runsfrom February 1, 2005, through March 31,2005. Taxpayers eligible to participate inamnesty, but choose not to do so, will besubject to additional penalties. For moredetails, visit our Website at www.ftb.ca.govor call (800) 852-5711.Abusive Tax Shelter – If the corporation wasinvolved in a potentially abusive tax shelter, thecorporation may have a disclosure, registrationand list maintenance requirement. FTB mayimpose several new and enhanced penalties ifthe corporation fails to file federal Forms 8886,8264, 8271 or any required information. Formore information, see Registration andReporting Requirements under Abusive TaxShelters on our Website at www.ftb.ca.gov.Federal Schedule M-3 (Form 1120) – Fortaxable years beginning on or after January 1,2004, the Internal Revenue Service (IRS)requires any domestic corporation or U.S.consolidated tax group with total assets of $10million or more on the last day of the tax yearto complete Schedule M-3 (Form 1120), NetIncome (Loss) Reconciliation for CorporationsWith Total Assets of $10 Million or More,instead of Schedule M-1, Reconciliation ofIncome (Loss) per Books With Income perReturn.For California purposes, the corporation muststill complete the California Schedule M-1,and:• Attach a copy of the Schedule M-3(Form 1120) to the California Franchise orIncome Tax Return; or• Attach a complete copy of the federalreturn; or• FTB will accept the Schedule M-3(Form 1120) in a spreadsheet format ifmore convenient.Net Operating Loss (NOL) – For taxable yearsbeginning on or after January 1, 2004,California has reinstated the NOL carryoverdeductions. The carryover periods for an NOLincurred in years:• beginning before January 1, 2002, havebeen extended for two years.• beginning on or after January 1, 2002, andbefore January 1, 2003, have beenextended for one year.For taxable years beginning on or after January1, 2004, 100% of the NOL may be carriedforward. For more information, see form FTB3805Q, Net Operating Loss (NOL) Computationand NOL and Disaster Loss Limitations –Corporations.Dividends Received Deduction – R&TCSection 24410 was repealed and re-enacted toallow a “Dividends Received Deduction"”ofqualified dividends received from an insurersubsidiary. The deduction is allowed whetheror not the insurer is engaged in business inCalifornia, if at the time of each payment atleast 80% of each class of stock of the insurerwas owned by the corporation receiving thedividend. For taxable years beginning on orafter January 1, 2004, and ending on or beforeJanuary 1, 2008, an 80% deduction is allowedfor qualified dividends. For taxable yearsbeginning on or after January 1, 2008, thededuction is increased to 85%. A portion ofthe dividends may not qualify if the insurersubsidiary paying the dividend is overcapitalizedfor the purpose of the dividend receiveddeduction. See the Schedule H (100W)instructions for additional information.Natural Heritage Preservation Credit –Currently there is no funding to award NaturalHeritage Preservation Credits; therefore nonew credits may be claimed for 2004.However, carryover is not affected forpreviously awarded credits. Contact theWildlife Conservation Board (WCB) todetermine if funding has been restored, if theyare accepting qualified contributions ofproperty, and to see if they are awarding newNatural Heritage Preservation Credits.Complete FTB 3503 to claim the credit only ifthe WCB has resumed awarding the credits.To get updated information regarding currentfunding, qualified contributions of property, orthe awarding of credits, contact the WildlifeConservation Board at (916) 445-8448. Or goto their Website at www.wcb.ca.gov.Contribution for Computer Technology – Fortaxable years beginning on or after January I,2004, California no longer allows a deductionfor an enhanced charitable contribution forcomputer technology or equipment.Punitive Damage Awards – For court actionsfiled after August 16, 2004, and finallyadjudicated by June 30, 2006, 75% of punitivedamage awards must be paid to the Director ofthe Department of Finance. The corporationmay exclude from income the portion of apunitive damage award that is paid to theDepartment of Finance. In addition, during thisperiod, the corporation may claim a deductionfor attorney's fees incurred in connection witha punitive damage award.Important Information• In Farmer Bros. Co. v. Franchise Tax Board(2003) 108 Cal App 4th, 134 Cal Rptr. 2nd390, the California Court of Appeal foundthat the R&TC Section 24402 deductibledividend provision discriminated againstinterstate commerce in violation of theCommerce Clause of the United StatesConstitution. R&TC Section 24402provided for a deduction to the extent thatthe dividend payer was taxable in California.A statute that is held to be unconstitutionalis invalid and unenforceable. Therefore, thededuction is not available.• For taxable years beginning on or afterJanuary 1, 2003, the provisions for makinga water's-edge election have substantiallychanged. The new procedures replace thecontract with a statutory election, whichcontinues in effect for a minimum of sevenyears; see R&TC Section 25113.Form 100W Booklet 2004 Page 3

As a result of the new procedures:• Form FTB 1115, Request for Consent for aWater's-Edge Re-Election, is a new form.• Form FTB 1116, Notice of Nonrenewal ofWater's-Edge Contract, is obsolete.• Form FTB 1117, Request to TerminateWater's-Edge Contract, is renamed Requestto Terminate Water's-Edge Election. It is nolonger available within the Water's-EdgeBooklet.To make a water's-edge election under the newrules, a corporation must:• Compute the corporation's income on awater's-edge basis,• Use Form 100W, California CorporationFranchise or Income Tax Return —Water's-Edge Filers, and• Attach the Form 100-WE, Water's-EdgeElection, to the timely filed original returnfor the year of the election.Corporations that have a valid election fortaxable years beginning before January 1,2003 will continue to file on a water's-edgebasis and will be deemed to have elected underthe new rules (R&TC Section 25113) fortaxable years beginning on or after January 1,2003. However, the election start date underthe new rules (R&TC Section 25113) willcontinue to be the start date, as originallyelected under the old rules (R&TCSection 25111.)• For taxable years beginning on or afterJanuary 1, 2003, corporate shareholders ofa Regulated Investment Company (RIC) areexplicitly denied a dividend deduction forearnings from the RIC that are not fromstock dividends.R&TC Sections 17024.5 and 23051.5 havebeen amended to clarify that, unlessotherwise expressly allowed, federalelections made before a taxpayer becomesa California taxpayer are binding forCalifornia tax purposes.• R&TC Section 18662 requires buyers towithhold income taxes when purchasingCalifornia real property from corporatesellers with no permanent place of businessin California immediately after the transfer.For more information, get FTB Pub. 1016.Sellers of California real estate must attachcopy B of Form 593-B, Real EstateWithholding Tax Statement, to their taxreturn as proof of withholding.If the corporation needs to verify withholdingpayments, the corporation may call theWithholding Services and ComplianceSection at (888) 792-4900 (toll-free) or(916) 845-4900.• For the purposes of determining the correctamount of tax for water’s-edge electors, apresumption of correctness attaches to allfederal determinations, including determinationsmade at the audit, appeals, and/orcompetent authority levels.California conforms to federal law for:• Large banks' bad-debt losses deduction,which is limited to the actual losses ratherthan contributions to a reserve for baddebts.• Alternative Minimum Tax (AMT) treatmentof contributions of appreciated property.• Disallowing the deduction for clubmembership fees and lobbying expenses.Page 4 Form 100W Booklet 2004• Disallowing the deduction for employeeremuneration in excess of $1 million.• Expensing of Environmental RemediationCosts. Certain environmental remediationexpenditures that would otherwise bechargeable to capital accounts may beexpensed and taken as a deduction in theyear the expense was paid or incurred. Anelection to expense environmentalremediation costs for federal purposes isconsidered an election for state purposesand a separate election is not allowed.• Shrinkage Estimates for InventoryAccounting. For purposes of inventoryaccounting, an adjustment for shrinkage,based on an estimate, may be made.Taxpayers can voluntarily change theirmethod of accounting if the methodcurrently being used does not utilizeestimates of inventory shrinkage and thetaxpayer now wishes to use that method.• Required recognition of gain on certainappreciated financial positions in personalproperty.• Election of mark-to-market for securitiesand commodities traders. Allows securitiestraders and commodities traders anddealers to elect to use mark-to-marketaccounting similar to what is currentlyrequired for securities dealers. Commoditieswould include only commodities of akind that are dealt with in the organizedcommodities exchange. An election to usethe mark-to-market method for federalpurposes is considered an election for statepurposes and a separate election is notallowed.• Limitation on exception for investmentcompanies under IRC Section 351.• Expansion of deduction for certain interestand premiums paid for company-owned lifeinsurance.• Modification of holding period applicable todividends received deduction.• Repeal of special installment sales rule formanufacturers of tangible personalproperty.• Required registration for abusive taxshelters.• Payment of estimated tax for closely heldreal estate investment trusts (REIT) andincome and services provided by REITsubsidiaries.California law does not conform to federallaw for:• The additional 30% or 50% first-yeardepreciation allowance for qualifiedproperty.• The election to deduct up to $102,000under IRC Section 179.• The first-year depreciation deductionallowed for luxury autos or certainpassenger automobiles.• Decreased capital gains tax rate.• Exemption from AMT for small corporations.• Accelerated depreciation for property onIndian Reservations.• The treatment of Subpart F and Section 936income.• The IRC passive activity loss rules for realestate activities.• The temporary suspension of incomelimitations on percentage depletion forproduction from marginal wells. Thepercentage depletion deduction, which maynot exceed 65% of the taxpayer's taxableincome, is restricted to 100% of the netincome derived from the oil and gasproperty.Note: The above lists are not intended to beall-inclusive of the federal and state conformitiesand differences. For additional information,please refer to the California R&TC.California Taxpayers that are 25% Foreign-Owned U.S. Corporations and ForeignCorporationsCorporations that are required to file federalForm(s) 5472, Information Return of a 25%Foreign-Owned U.S. Corporation or a ForeignCorporation Engaged in a U.S. Trade orBusiness, with the federal return must attach acopy(ies) to the California return. The penaltyfor failing to include Form(s) 5472 as requiredis $10,000 per form. See General InformationM, Penalties, for more information.Information Return for U.S. Taxpayers WhoHave Ownership (Directly or Indirectly) in aForeign CorporationFor taxable years beginning on or after January1, 1997, U.S. taxpayers who have an ownershipinterest (directly or indirectly) in a foreigncorporation and are required to file federalForm(s) 5471, Information Return of U.S.Persons With Respect to Certain ForeignCorporations, with the federal return, mustattach a copy(ies) to the California return. Thepenalty for failing to include a copy of federalForm(s) 5471 as required is $1,000 per form.See General Information M, Penalties, for moreinformation.Records Maintenance RequirementsAny taxpayer filing on a water’s-edge basis isrequired to keep and maintain records andmake the following available upon request:• Any records needed to determine thecorrect treatment of items reported on thewater’s-edge combined report for purposesof determining the income attributable toCalifornia;• Any records needed to determine thetreatment of items as nonbusiness orbusiness income;• Any records needed to determine theapportionment factors; and• Documents and information needed todetermine the proper attribution of incometo the U.S. or foreign jurisdictions underIRC Subpart F, IRC Section 882, or othersimilar provisions of the IRC.See R&TC Section 19141.6 and the relatedregulations for more information. A corporationmay be required to authorize an agent,through a Power of Attorney, to act on itsbehalf in response to requests for informationor records pursuant to R&TC Section 19504.Note: For information about the Power ofAttorney, go to our Website atwww.ftb.ca.gov.The penalty for not maintaining the aboverequired records is $10,000 for each taxableyear for which the failure applies. In addition, ifthe failure continues for more than 90 daysafter the FTB notifies the corporation of thefailure, a penalty of $10,000 may be assessedfor each additional 30-day period of continuedfailure. For taxable years beginning on or afterJanuary 1, 1996, there is no maximum amountof penalty that may be assessed. See GeneralInformation M, Penalties, for moreinformation.

Small Business StockFor taxable years beginning on or afterJanuary 1, 1996, corporations that issue stockintended to be qualified small business stockpursuant to R&TC Section 18152.5 arerequired to attach form FTB 3565, SmallBusiness Stock Questionnaire, to Form 100W.Classification of Certain Business Trusts andCertain Foreign Single Member LimitedLiability Companies (LLCs)Normally, the classification of a business entityshould be the same for California purposes asit is for federal purposes. However, anexception may apply for certain eligiblebusiness entities (business trusts and singlemember LLCs) existing prior to January 1,1997, that were taxed as corporations forCalifornia purposes under former R&TCSection 23038. For taxable years beginning onor after January 1, 1997, a business trust or apreviously existing foreign single member LLCmay make an irrevocable election to beclassified the same as federal for Californiapurposes. To make the election the businesstrust or the single member LLC must havebeen classified as a corporation underCalifornia law, but classified as a partnership(for a business trust) or elected to be treatedas a disregarded entity (for single memberLLC) for federal tax purposes for taxable yearsbeginning before January 1, 1997. If thiselection is not made, the existing eligiblebusiness entity will continue to be classifiedand taxed as a corporation for Californiapurposes. Get form FTB 3574, Special Electionfor Business Trusts and Certain Foreign SingleMember LLCs, for more information.General InformationA Franchise or Income TaxCorporation franchise taxEntities subject to the corporation minimumfranchise tax include all corporations (e.g.LLCs electing to be taxed as corporations) thatare:• Incorporated or organized in California;• Qualified or registered to do business inCalifornia; or• Doing business in California, whether ornot incorporated, organized, qualified, orregistered under California law.The measured franchise tax is imposed oncorporations doing business in California andis measured by the income of the currenttaxable year for the privilege of doing businessin that taxable year.The term “doing business” means activelyengaging in any transaction for the purpose offinancial gain or profit.The minimum franchise tax must be paidwhether the corporation is active, inactive, notdoing business in California, or operates at aloss.Note: A corporation incorporated in California,but not doing business in this state, is notsubject to the measured franchise tax. In thecase of a corporation incorporated in Californiaor qualified with the California Secretary ofState (SOS), but not doing business in thisstate, careful attention should be given to theterm “doing business.” It is not necessary thatthe corporation conducts business or engagesin transactions within the state on a regularbasis. Even an isolated transaction during theyear may be enough to cause the corporationto be “doing business.”Also, when a corporation is either a generalpartner of a partnership or a member of anLLC that is "doing business" in California, thecorporation is considered to be "doingbusiness" in California.Corporation income taxThe corporation income tax is imposed on allcorporations that derive income from sourceswithin California but are not doing business inCalifornia.For purposes of the corporation income tax,the term “corporation” generally includes:• Associations;• Massachusetts or business trusts;• REITs;• LLCs electing to be taxed as corporationsother than those subject to the corporatefranchise tax; and• Other business entities, including partnerships,electing to be taxed as corporations.Get FTB Pub. 1063, California Corporation TaxLaw — A Guide for Corporations, for moreinformation.B Tax RatesThe tax rates below apply to corporationssubject to either the corporation franchise taxor the corporation income tax.• Corporations other than banks and financialcorporations . . . . . . . . . . . . . . . . . . 8.84%• Banks and financial corporations . 10.84%C Minimum Franchise TaxAll corporations subject to the franchise tax,including banks, financial corporations,corporate general partners of partnerships, andcorporate members of LLCs doing business inCalifornia, must file Form 100 or Form 100Wand pay at least the minimum franchise tax asrequired by law. The minimum franchise tax,as indicated below, must be paid whether thecorporation is active, inactive, operates at aloss, or files a return for a short period of lessthan 12 months.• Domestic qualified inactive gold orquicksilver mining corporations . . . . . . $25• All other corporations subject tofranchise tax (see GeneralInformation A, Franchise orIncome Tax, for definitions) . . . . . . . . $800A combined group filing a single return mustpay at least the minimum franchise tax foreach corporation in the group that is subject tofranchise tax.Note: For corporations that incorporate orqualify through the California SOS to dobusiness in California on or after January 1,2000, the prepayment of the minimumfranchise tax to the California SOS is no longerrequired. For the first taxable year thecorporation will compute its tax liability bymultiplying its state net income by theappropriate tax rate and will not be subject tothe minimum franchise tax. The corporationwill become subject to minimum franchise taxbeginning in its second taxable year. This doesnot apply to corporations that are not qualifiedby the California SOS, or reorganize solely toavoid payment of their minimum franchise tax.There is no minimum franchise tax for:• Credit unions;• Corporations that derive income fromsources within California but are subject toincome tax only because they are not“doing business” in California, and are notincorporated or qualified under the laws ofCalifornia. For more information regarding“doing business,” get FTB Pub. 1050,Application and Interpretation of PublicLaw 86-272; FTB Pub. 1060, Guide forCorporations Starting Business in California;or FTB Pub 1063, California CorporationTax Law — A Guide for Corporations;• Corporations that are not incorporatedunder the laws of California; whose soleactivities in this state are engaging inconvention and trade show activities forseven or fewer days during the taxableyear; and that do not derive more than$10,000 of gross income reportable toCalifornia during the taxable year. Thesecorporations are not “doing business” inCalifornia. For more information, get FTBPub. 1060, Guide for Corporations StartingBusiness in California; or FTB Pub 1063,California Corporation Tax Law — A Guidefor Corporations; and• Newly formed or qualified corporationsfiling an initial return for taxable yearsbeginning on or after January 1, 2000.D Accounting Period/MethodThe taxable year of a corporation must not bedifferent from the taxable year used for federalpurposes, unless initiated or approved by theFTB (R&TC Section 24632).A change in accounting method requiresconsent from the FTB. However, a corporationthat obtains federal approval to change itsaccounting method, or that is permitted orrequired by federal law to change itsaccounting method without prior approval anddoes so, is deemed to have the FTB’s approvalif: (1) the corporation files a timely Form 100Wconsistent with the change for the first year thechange becomes effective for federal purposes;and (2) the change is consistent with Californialaw. A copy of federal Form 3115, Applicationfor Change in Accounting Method, and a copyof the federal consent to the change must beattached to Form 100W for the first year thechange becomes effective. Get FTB Notice2000-8 for more information. The FTB maymodify a requested change if the change woulddistort income for California purposes.Note: California is not following the automaticconsent procedure for a change of accountingmethod involving previously unclaimedallowable depreciation or amortization prescribedby Federal Revenue Procedure 96-31.Get FTB Notice 6-3 for more information.E When to FileFile Form 100W on or before the 15th day ofthe 3rd month after the close of the taxableyear unless the return is for a short-period asrequired under R&TC Section 24634.Generally, the due date of a short-period returnis the same as the due date of the federalshort-period return. See R&TCSection 18601(c) for the due date of ashort-period return. See GeneralInformation O, Dissolution/Withdrawal, and P,Ceasing Business, for information on finalreturns.A corporation that converts to another type ofentity, such as a limited liability company orForm 100W Booklet 2004 Page 5

limited partnership, must file two Californiareturns. The converted entity is required to filea short-period return for the taxable yearending on the date of cancellation. The newentity would then be subject to all of the filingrequirements and tax obligations for that newentity from the date of conversion.F Extension of Time to FileIf the corporation cannot file its Californiareturn by the 15th day of the 3rd month afterthe close of the taxable year, it may file on orbefore the 15th day of the 10th month withoutfiling a written request for an extension unlessthe corporation is suspended on the originaldue date. This does not extend the time forpayment of tax; the full amount of tax must bepaid by the original due date of Form 100W. Ifthere is an unpaid tax liability, complete formFTB 3539, Payment Voucher for AutomaticExtension for Corporations and ExemptOrganizations, included in this booklet, andsend it with the payment by the original duedate of the Form 100W.Note: If the corporation must pay its taxliability using electronic funds transfer (EFT),all payments must be remitted by EFT to avoidthe EFT penalty. Do not send form FTB 3539.G Electronic Funds Transfer(EFT)Corporations that meet certain requirementsmust remit all of their payments through EFTrather than by paper checks to avoid the 10%non-compliance EFT penalty. Corporations thatremit an estimated tax payment or extensionpayment in excess of $20,000 or that have atotal tax liability in excess of $80,000 mustremit all of their payments through EFT. TheFTB will notify corporations that are subject tothis requirement. Those that do not meet theserequirements and wish to participate on avoluntary basis may do so. If you are an EFTtaxpayer, complete the form FTB 3539worksheet for your records. DO NOT SENDTHE PAYMENT VOUCHER. For more information,go to our Website at www.ftb.ca.gov, call(916) 845-4025, or get FTB Pub. 3817, ElectronicFunds Transfer Program InformationGuide.H Where to FileIf a tax is due, and the corporation is notrequired to use EFT, make the check or moneyorder payable to the Franchise Tax Board.Write the California corporation numberand “2004 Form 100W” on the check ormoney order. Mail the return and payment to:FRANCHISE TAX BOARDPO BOX 942857SACRAMENTO CA 94257-0501Mail all other returns, including those withpayment by EFT, to:FRANCHISE TAX BOARDPO BOX 942857SACRAMENTO CA 94257-0500Private Delivery ServicesCalifornia law conforms to federal lawregarding the use of certain designated privatedelivery services to meet the “timely mailing astimely filing/paying” rule for tax returns andpayments. See federal Form 1120, U.S.Corporation Income Tax Return, for a list ofdesignated delivery services. If a privatedelivery service is used, address the return to:Page 6 Form 100W Booklet 2004FRANCHISE TAX BOARDSACRAMENTO CA 95827Caution: Private delivery services cannotdeliver items to PO boxes. If using one ofthese services to mail any item to the FTB,DO NOT use an FTB PO box.Private Mailbox (PMB) NumberIf the corporation leases a PMB from a privatebusiness rather than a PO box from the UnitedStates Postal Service, include the box numberin the field labeled “PMB no.’’ in the addressarea.I Net Income ComputationThe computation of net income from trade orbusiness activities generally follows thedetermination of taxable income as provided inthe IRC. However, there are differences thatmust be taken into account when completingForm 100W. There are two ways to completeForm 100W, the federal reconciliation methodor the California computation method:1. Federal reconciliation methoda. Attach a copy of federal Form 1120 orForm 1120A, Page 1, U.S. CorporationIncome Tax Return, and all pertinentsupporting schedules, or transfer theinformation from federal Form 1120 orForm 1120A, Page 1, to Schedule F andattach all pertinent schedules;b. Enter the amount of federal ordinaryincome (loss) from trade or businessactivities before any NOL onForm 100W, Side 1, line 1; andc. Enter state adjustments on line 2through line 17 to arrive at net incomeafter state adjustments, Side 1, line 18.2. Schedule F – California computationmethodIf the corporation has no federal filingrequirement or if the corporation maintainsseparate records for state purposes,complete Form 100W, Side 3, Schedule F,to determine state ordinary income. Ifordinary income is computed underCalifornia laws, generally no state adjustmentsare necessary. Transfer the amountfrom Schedule F, line 29, to Side 1, line 1.Complete Form 100W, Side 1, line 2through line 17, only if applicable.For more information, see the specific lineinstructions.Note: Regardless of the net income computationmethod used, the corporation must attachany form, schedule, or supporting documentreferred to on the return, schedules, or formsfiled with the FTB.J Alternative Minimum Tax(AMT)Corporations that claim certain types ofdeductions, exclusions, and credits may besubject to California AMT. Generally, corporationsthat complete federal Form 4626,Alternative Minimum Tax — Corporations, alsomust complete California Schedule P (100W),Alternative Minimum Tax and Credit Limitations— Water’s-Edge Filers. See Schedule P(100W), included in this booklet, for moreinformation.K Estimated TaxEvery corporation must pay estimated taxusing Form 100-ES, Corporation EstimatedTax. Estimated tax is generally due and payablein four installments:• The 1st payment is due by the 15th day ofthe 4th month of the taxable year (note thatthis payment may not be less than theminimum franchise tax, if applicable); and• The 2nd, 3rd, and 4th installments are dueand payable by the 15th day of the 6th, 9th,and 12th months respectively, of thetaxable year.Caution: If no amount is due, DO NOT mailForm 100-ES.California law has conformed to the federalexpanded annualization periods for thecomputation of estimate payments. For taxableyears beginning on or after January 1, 1998,the applicable percentage for estimate basis is100%.Get the instructions for Form 100-ES for moreinformation.Note: If the corporation must pay its taxliability using EFT, ALL estimate payments duemust be remitted by EFT to avoid the EFTpenalty.L Commencing CorporationsFor taxable years beginning on or after January1, 2000, no prepayment to the California SOSis required and no minimum tax is required forthe first taxable year if the corporationincorporated or registered through theCalifornia SOS. For more information seeGeneral Information C, Minimum FranchiseTax, or get FTB Pub. 1060, Guide for CorporationsStarting Business in California.M PenaltiesFailure to file a timely returnAny corporation that fails to file Form 100W onor before the extended due date is assessed apenalty. The penalty is 5% of the unpaid tax foreach month, or part of the month, the returnremains unfiled from the due date of the returnuntil filed. The penalty may not exceed 25% ofthe unpaid tax. If a corporation does not file itsreturn by the extended due date, the automaticextension will not apply and the late filingpenalty will be assessed from the original duedate of the return. See R&TC Sections 19131and 23772 for more information.Failure to pay total tax by the due dateAny corporation that fails to pay the total taxshown on Form 100W by the original due dateis assessed a penalty. The penalty is 5% of theunpaid tax, plus 0.5% for each month, or partof the month (not to exceed 40 months), thetax remains unpaid. This penalty may notexceed 25% of the unpaid tax. See R&TCSection 19132 for more information.Note: If a corporation is subject to both thepenalty for failure to file a timely return and thepenalty for failure to pay the total tax by thedue date, a combination of the two penaltiesmay be assessed, but the total penalty may notexceed 25% of the unpaid tax.Underpayment of estimated taxAny corporation that fails to pay, pays late, orunderpays an installment of estimated tax isassessed a penalty. The penalty is a percentageof the underpayment for the underpaymentperiod. Get form FTB 5806, Underpayment ofEstimated Tax by Corporations, to determineboth the amount of underpayment and theamount of penalty.

See R&TC Sections 19142, 19144,19145,19147, 19148, 19149, 19150, 19151, and19161 for more information.Note: If the corporation uses Exception B orException C to compute or eliminate any of thefour installments, form FTB 5806 must beattached to the front of Form 100W and thebox on Side 1, line 41b; should be checked.EFT PenaltyIf the corporation must pay its tax liabilityusing EFT, ALL payments must be remitted byEFT to avoid the EFT penalty. The EFT penaltyis 10% of the amount not paid by EFT. SeeR&TC Section 19011 and GeneralInformation G, Electronic Funds Transfer (EFT)for more information.Information reporting penaltiesFor taxable years beginning on or after January1, 1997, U.S. corporations that have anownership interest (directly or indirectly) in aforeign corporation and were required to filefederal Form(s) 5471, Information Return ofU.S. Persons With Respect to Certain ForeignCorporations, with the federal return, mustattach a copy(ies) to the California return. Thepenalty for failure to include a copy of federalForm(s) 5471, as required, is $1,000 perrequired form for each year the failure occurs.The penalty applies for taxable years beginningon or after January 1, 1998. The penalty willnot be assessed if the taxpayer provides a copyof the form(s) within 90 days of request fromthe FTB and the taxpayer agrees to attach acopy(ies) of federal Form 5471 to all returnsfiled for subsequent years.Certain domestic corporations that are 25% ormore foreign-owned and foreign corporationsengaged in a U.S. trade or business mustattach federal Form(s) 5472, InformationReturn of a 25% Foreign-Owned U.S.Corporation or a Foreign Corporation Engagedin a U.S. Trade or Business, to Form 100W.The penalty for failing to include federalForm(s) 5472, as required, is $10,000 perrequired form for each year the failure occurs.See R&TC Section 19141.5 for moreinformation.If the corporation does not file its Form 100Wby the due date or extended due date,whichever is later, copies of federalForm(s) 5472 must still be filed on time or thepenalty will be imposed. Attach a cover letterto the copies indicating the taxpayer’s name,California corporation number, and taxableyear. Mail to the same address used for returnswithout payments. See General Information H,Where to File. When the corporation files Form100W, also attach copies of the federalForm(s) 5472.Record maintenance penaltyThe penalty for failure to maintain certainrecords is $10,000 for each taxable year forwhich the failure applies. In addition, if thefailure continues for more than 90 days afterthe FTB notifies the corporation of the failure,in general, a penalty of $10,000 may beassessed for each additional 30-day period ofcontinued failure. For taxable years beginningon or after January 1, 1996, there is nomaximum amount of penalty that may beassessed.See “Important Information” starting onpage 3 for a discussion of the records requiredto be maintained. See R&TC Section 19141.6and the regulations thereunder for moreinformation.Accuracy and fraud related penaltiesCalifornia conforms to IRC Sections 6662through 6665 that authorize the imposition ofan accuracy-related penalty equal to 20% ofthe related underpayment, and the impositionof a fraud penalty equal to 75% of the relatedunderpayment. See R&TC Section 19164 formore information.California Secretary of State (SOS) penaltyThe California Corporations Code requires theFTB to assess a penalty for failure to file anannual Statement of Information with theCalifornia SOS. For more information, seeR&TC Section 19141 or contact:STATEMENT OF INFORMATION UNITATTENTION: PENALTYCALIFORNIA SECRETARY OF STATEPO BOX 944230SACRAMENTO CA 94244-2300Telephone: (916) 657-3537Other penaltiesOther penalties may be imposed for a checkreturned for insufficient funds, non-U.S.foreign corporations operating while forfeitedor without qualifying to do business inCalifornia, and domestic corporationsoperating while suspended in California. SeeR&TC Sections 19134 and 19135 for moreinformation.N InterestInterest is due and payable on any tax due ifnot paid by the original due date ofForm 100W. Interest is also due on somepenalties. The automatic extension of time tofile Form 100W does not stop interest fromaccruing. California follows federal rules forthe calculation of interest. Get FTB Pub. 1138,Business Entity Refund/Billing Information, formore information.O Dissolution/WithdrawalThe corporation must fill in the applicable boxon Form 100W, Side 1, question A, if dissolving,merging or withdrawing. The date shouldbe the date the corporation filed with theCalifornia SOS.The franchise tax for the period in which thecorporation formally dissolves or withdraws ismeasured by the income of the year in which itceased doing business in California, unlesssuch income has already been taxed at the rateprescribed for the taxable year of dissolutionor withdrawal.A corporation that commenced doing businessin California before January 1, 1972, is alloweda credit that may be refunded in the year ofdissolution or withdrawal. The amount of therefundable credit is the difference between theminimum franchise tax for the corporation’sfirst full 12 months of doing business and thetotal tax paid for the same period.To claim this credit, add this amount to thevalue on line 35. Make a notation to the rightof Side 1, line 35: “Dissolving/Withdrawing.”The return for the final taxable period is due onor before the 15th day of the 3rd full monthafter the month during which the corporationformally dissolved or withdrew.To get samples and/or forms for filing adissolution, surrender, or merger agreementaddress your request to:LEGAL REVIEWCALIFORNIA SECRETARY OF STATE1500 11TH ST 3RD FLOORSACRAMENTO CA 95814-5701Telephone: (916) 657-5448P Ceasing BusinessFor taxable years beginning on or after January1, 2000 (other than the first taxable yearbeginning on or after that date), the tax for thefinal year in which the corporation doesbusiness in California is determined accordingto or measured by its net income for thetaxable year during which the corporationceased doing business.In any event, the tax for any taxable year shallnot be less than the minimum franchise tax.For more information, see R&TCSection 23151.1.The unreported income on installmentobligations, the distribution of notes, and thedistribution of corporate assets (land,buildings) at a gain must be included inincome in the year of cessation. There is nofederal law counterpart regarding this issue.For more information, see R&TCSections 24672 and 24451.Note: A domestic or qualified corporation willremain subject to the minimum franchise taxfor each year it is in existence until a certificateof dissolution (and certificate of winding up, ifnecessary), or certificate of withdrawal is filedwith the California SOS. See GeneralInformation O, Dissolution/Withdrawal, andR&TC Sections 23331 through 23335 for moreinformation.Q Suspension/ForfeitureIf a corporation does not file a Form 100Wand/or does not pay any tax, penalty, orinterest due, its powers, rights, and privilegesmay be suspended (in the case of a domesticcorporation) or forfeited (in the case of aforeign corporation).Corporations that operate while suspended orforfeited are subject to a $2,000 penalty, whichis in addition to any tax, penalties, and interestalready accrued. Also, any contracts enteredinto during suspension or forfeiture arevoidable at the request of any party to thecontract other than the suspended or forfeitedcorporation.Such contracts will remain voidable andunenforceable unless the corporation appliesfor relief from contract voidability and the FTBgrants relief.See R&TC Sections 19135, 19719, 23301,23305.1, and 23305.2 for more information.R Apportionment of IncomeCorporations with business income attributableto sources both within and outside ofCalifornia are required to apportion suchincome. To calculate the apportionmentpercentage, use Schedule R, Apportionmentand Allocation of Income. Be sure to answerQuestion M on Form 100W, Side 2.For more information, see R&TCSections 25120 through 25136.Form 100W Booklet 2004 Page 7

(R&TC Section 25113) will continue to bethe start date as originally elected under theold rules (R&TC Section 25111.)To make a water's-edge election under the newrules, a corporation must:• Compute the corporation’s income on awater's-edge basis,• Use Form 100W, California CorporationFranchise or Income Tax Return —Water's-Edge Filers, and• Attach the Form 100-WE, Water's-EdgeElection, to the timely filed original returnfor the year of the election.To file on a water’s-edge basis, the corporationmust:• File on a water’s-edge basis for a period of84 months;• Agree to business income treatment ofdividends received from: (1) over 50%owned entities engaged in the same generalline of business as the members of thewater’s-edge group, or (2) entities that area significant source of supply to, or asignificant purchaser of, the output of themembers of the water’s-edge group.Significant means an amount equal to 15%or more; and• Consent to the taking of depositions fromkey employees or officers of the membersof the water’s-edge group and to theacceptance of subpoenas duces tecumrequiring the reasonable production ofdocuments.For more information, see R&TCSections 25110(b), 25111, 25113, and theregulations thereunder.Taxpayers Covered by an ElectionFor an election to be effective, all affiliatedtaxpayers engaged in a single unitary businessmust file on a water’s-edge basis. A taxpayer oran affiliated group of taxpayers that is engagedin more than one unitary business may make awater’s-edge election with respect to any oneor more of its businesses, but need not electfor all of its businesses. For example, ataxpayer engaged in two unitary businessesmay elect water’s-edge for one of the businessesand may remain subject to worldwidecombined reporting treatment for the otherbusiness.The common parent of a controlled group thatfiles a consolidated federal return, or thecommon parent wherever domiciled ororganized, may file an election on behalf of allmembers of the controlled group that are partof the water’s-edge combined report group.The common parent need not be a Californiataxpayer. An election made on a group returnof a self-assessed combined reporting groupshall constitute an election by each taxpayermember included in that group return. Anelection by a common parent supersedes anyinconsistent position taken by a member of thecombined reporting group.In cases where the water’s-edge election is notentered into by a common parent, eachtaxpayer included in the combined report mustenter into a separate election.Time of Making the ElectionThe election must be made by all unitarytaxpayers, included in the combined report, ona timely filed original return for the year of theelection. Use Form 100-WE, Water's-EdgeElection, to make the election. The completedForm 100-WE should be attached to the timelyfiled original return Form 100W. A copy of theoriginal election must be attached to allsubsequent returns filed during the electionperiod.Taxpayers that have a valid election for taxableyears beginning before January 1, 2003 willcontinue to file on a water's-edge basis andwill be deemed to have elected under the newrules (R&TC Section 25113) for taxable yearsbeginning on or after January 1, 2003.However, the election start date under the newrules (R&TC Section 25113) will continue tobe the start date as originally elected under theold rules (R&TC Section 25111.)CAUTION: The election must be made on atimely filed original return. See R&TCSection 25113.Taxpayers with Different Fiscal Year EndsTaxpayers engaged in a unitary business withdifferent fiscal year ends will make the electionon each individual return. For each member ofthe group, the election period will begin on thefirst day of the taxable year of the last memberof the water’s-edge group to file its return andmake the election. Each taxpayer that has ataxable year beginning earlier than the lastmember of the group will compute its taxliability on its initial return using a hybridworldwide/water’s-edge combination method.Effect of Changes in AffiliationIf a corporation that is subject to California taxbecomes a member of a water’s-edge group,or if a unitary affiliate of an electing water’sedgegroup becomes subject to California taxafter the election, it is deemed to have electedto and is bound by the original election. Whena taxpayer ceases to be a member of thewater’s-edge group, the taxpayer mustcontinue to file on a water’s-edge basis.If an electing taxpayer is acquired by anonelecting taxpayer and becomes a memberof a new affiliated group, then the filingmethod, worldwide or water's-edge, would bedetermined by reference to the larger taxpayergroup. The larger taxpayer group is determinedby comparing the value of the total businessassets of the electing taxpayer and itscomponent unitary group to the value of thetotal business assets of the nonelectingtaxpayer and its component unitary group.If a water’s-edge taxpayer meets certaincriteria, it may automatically obtain terminationof the water's-edge election or it may requesttermination of its water’s-edge election. See“Termination of Election” below.A non-electing corporation that is subsequentlyproven to be unitary with a water’sedgegroup pursuant to an audit determinationof the FTB is deemed to have made awater’s-edge election.When an affiliation change occurs, a statementshould be attached to the return identifyingwhich affiliates were included in the originalgroup, the appropriate California Corporationnumbers, and what changes have occurred.For more information, see R&TCSection 25113.Termination of ElectionOnce a valid water's-edge election is made, theelection remains in place until it is terminated.Termination After Expiration of the InitialSeven-Year (84-Month) PeriodThe taxpayer has the option to terminate itswater's-edge election after the initial sevenyear(84-month) period. This termination doesnot require FTB consent. The termination mustbe made on an original, timely filed return forthe first year in which the water's-edge electionis to be terminated.To terminate your water's-edge election afterthe seven-year (84-month) period:• Compute your income on a worldwidebasis,• Use Form 100, California CorporationFranchise or Income Tax Return, and• Attach a statement to the Form 100,explaining that the corporation is terminatingits water's-edge election. Provide thename of any taxpayer that was bound bythe water's-edge election.If a taxpayer terminates its election and returnsto filing on a worldwide basis, then thetaxpayer must file on a worldwide basis for atleast seven taxable years (84 months) beforemaking another water's-edge election.However, the FTB may waive application of thisrule for good cause. Good cause for thesepurposes has the same meaning as describedin Treas. Reg. Section 1.1502-75(c).Termination Before Expiration of the InitialSeven-Year (84-Month) PeriodTermination Caused by Affiliation Change – Inthe case of an affiliation change, as discussedabove in "Effect of Changes in Affiliation," if anelecting water's-edge taxpayer becomes amember of a larger, nonelecting taxpayergroup, then the taxpayer's water's-edgeelection is automatically terminated. Thetermination is effective at the time the electingtaxpayer becomes part of the combined reportof the larger, nonelecting taxpayer group. It isnot necessary to file a form FTB 1117, Requestto Terminate Water's-Edge Election.Termination by FTB Consent – An electingtaxpayer may request FTB’s consent toterminate the water's-edge election for goodcause or to permit the state to contract with anexpatriate corporation, or its subsidiarypursuant to Public Contract Code Section10286(b)(2) prior to the expiration of theseven-year (84-month) period. Good cause forthese purposes has the same meaning asdescribed in Treas. Reg. Section 1.1502-75(c).If a taxpayer is granted termination and returnsto filing on a worldwide basis, then thetaxpayer must file on a worldwide basis for atleast seven taxable years (84 months) beforemaking another water's-edge election.However, the FTB may waive the application ofthis rule for good cause.To request termination of your water's-edgeelection, you must timely file form FTB 1117separately from any other form. Mail formFTB 1117 to:FRANCHISE TAX BOARDPO BOX 1779RANCHO CORDOVA CA 95741-1779For more information, see R&TCSection 25113.Request for Consent for a Water's-EdgeRe-ElectionForm FTB 1115 is used to request the FTB'sconsent to re-elect water's-edge prior to theexpiration of the seven-year (84 month) periodfollowing the last day of the terminatedelection, for good cause as provided in R&TCForm 100W Booklet 2004 Page 9

Section 25113 (c) (11). See form FTB 1115instructions for additional information.U Amended ReturnTo correct or change a previously filedForm 100W, file the most current Form 100X,Amended Corporation Franchise or Income TaxReturn. Using the incorrect form may delayprocessing of the amended return. File Form100X within six months after the corporationfiled an amended federal return or after a finalfederal determination, if the IRS examined andchanged the corporation’s federal return.V Information ReturnsEvery corporation engaged in a trade orbusiness and making or receiving certainpayments in the course of the trade orbusiness is required to file information returnsto report the amount of such payments.Payments that must be reported include, butare not limited to:• Payments exceeding $600 annually forcompensation for services not subject towithholding, commissions, fees, prizes andawards, payments to independent contractors,rents, royalties, legal services whetheror not the payee is incorporated, interest(such as interest charged for late payment),and pensions;• Payments exceeding $10 annually forinterest earned and dividends;• All payment amounts made by a broker orbarter exchange;• All payment amounts for gross proceedspaid to an attorney whether or not theservices are performed for the payer; and• Cash payments over $10,000 received in atrade or business.See instructions for federal Forms 1099(series), 1098, 5498, and W2-G; federalPublication 1220, Specifications for FilingForms 1098, 1099, 5498 and W-2G Electronicallyor Magnetically; form FTB 4227A, Guideto Information Returns Filed With California;and form FTB 8305, Reporting Requirementsfor Forms 1098, 1099, 5498, and W-2G.Report payments to FTB and IRS using theappropriate federal form. Reports must bemade for the calendar year. FederalForms 1099 (series), 1098, and W-2G's aredue no later than February 28th and federalForm 5498 is due by May 30th of the yearfollowing payment. However, if the due datefalls on a holiday or weekend, it is extended tothe next business day. Federal Form 8300,Report of Cash Payments Over $10,000Received in a Trade or Business, is due within15 days after the date of the transaction.California requires corporations to report toFTB interest paid on municipal bonds held byCalifornia taxpayers and issued by a state otherthan California, or a municipality other than aCalifornia municipality. Entities paying interestto California residents on these types of bondsare required to report interest paymentsaggregating $10 or more and paid afterJanuary 1, 2004. These information returnswill be due June 1, 2005. For more information,get form FTB 4800, Federally Tax ExemptNon-California Bond Interest and Interest-Dividend Payment Information.California conforms to the informationreporting requirements imposed under IRCSections 6038 through 6038C. Any federalPage 10 Form 100W Booklet 2004Forms 5471, 5472, or 926 required to be filedfor federal purposes under these IRC sectionsare also required to be filed for Californiapurposes. These federal information returnsshould be attached to the Form 100W whenfiled. If these information returns are notprovided, penalties may be imposed underR&TC Sections 19141.2 and 19141.5.W Net Operating Loss (NOL)For taxable years beginning on or after January1, 2004, California has reinstated the NetOperating Loss (NOL) carryover deductions.The carryover periods for an NOL incurred inyears:• beginning before January 1, 2002, havebeen extended for two years.• beginning on or after January 1, 2002, andbefore January 1, 2003, have beenextended for one year.For taxable years beginning on or after January1, 2004, 100% of the NOL may be carriedforward. For more information, see form FTB3805Q, Net Operating Loss (NOL) Computationand NOL and Disaster Loss Limitations –Corporations.Carryover periods varying from 5 to 15 yearsand carryover deductions varying from 50% to100% are allowed for NOLs sustained bycorporations.NOL carryovers incurred prior to the water’sedgeelection are limited to the amount of NOLcarryover that the taxpayer would haveincurred if a water’s-edge election had been ineffect in the loss year.R&TC Sections 24416 through 24416.7 andR&TC Section 25108 provide for NOLcarryovers incurred in the conduct of a tradeor business.R&TC Section 24347.5 provides specialtreatment for the carryover of disaster lossesincurred in an area designated by the Presidentof the United States or the Governor ofCalifornia as a disaster area. Losses taken intoaccount under the disaster provisions may notbe included in computing regular NOLdeductions.For more information, see form FTB 3805Q,Net Operating Loss (NOL) Computation andNOL and Disaster Loss Limitations —Corporations, included in this booklet, or getform FTB 3805D, Net Operating Loss (NOL)Carryover Computation and Limitation –Pierce’s Disease; form FTB 3805Z, EnterpriseZone Business Booklet; form FTB 3806, LosAngeles Revitalization Zone Business Booklet;form FTB 3807, Local Agency Military BaseRecovery Area Business Booklet; or formFTB 3809, Targeted Tax Area Business Booklet.X Preparer Tax IdentificationNumberTax preparers have the option of providingtheir individual Social Security Number (SSN)or Preparer Tax Identification Number (PTIN)on returns they prepare. Preparers who want aPTIN must complete and submit federalForm W-7P, Application for Preparer TaxIdentification Number, to the IRS.Y New CorporationsNew corporations, which begin business on orafter January 1, 2000, are no longer requiredto prepay minimum tax to the California SOS.For taxable years beginning on or after January1, 2000, no minimum franchise tax will be duewith the initial tax return. However, thecorporation will compute its tax liability bymultiplying its state net income by theappropriate tax rates.Specific Line InstructionsTaxpayers that are not filing on water’s-edgebasis should not use Form 100W, useForm 100, California Corporation Franchise orIncome Tax Return. However, a taxpayer that isfiling on a water’s-edge basis for one or morelines of business should use Form 100W eventhough that taxpayer may also have one ormore lines of business that are not on awater’s-edge basis.Filing Form 100W without errors will expediteprocessing. Before mailing Form 100W, makesure entries have been made for the:• California corporation number (sevendigits);• Federal employer identification number(FEIN) (nine digits); and• Corporation name and address (includePMB no., if applicable).File the 2004 Form 100W for calendar year2004 and fiscal years that begin in 2004. Entertaxable year beginning and ending dates only ifthe return is for a short year or a fiscal year. Ifthe corporation reports its income using acalendar year, leave the date area blank. If thereturn is being filed for a short period (lessthan 12 months), write “short year” in red inthe top margin. Convert all foreign monetaryamounts to U.S. dollars.Note: The 2004 Form 100W may also be usedif:• The corporation has a taxable year of lessthan 12 months that begins and ends in2005; and• The 2005 Form 100W is not available at thetime the corporation is required to file itsreturn. The corporation must show its 2005taxable year on the 2004 Form 100W andincorporate any tax law changes that areeffective for taxable years beginning afterDecember 31, 2004.Questions A through ZAnswer all applicable questions and attachadditional sheets, if necessary. Be sure toanswer Questions E through Z on Form 100W,Side 2. Note the following instructions whenanswering:Question E — Principal business activity(PBA) codeAll corporations must answer Question E.Include the six digit PBA code from the chartfound on page 16 through page 18 of thisbooklet. The code should be the number forthe specific industry group from which thegreatest percentage of California “totalreceipts” is derived. “Total receipts” meansgross receipts plus all other income. TheCalifornia PBA code number may be differentfrom the federal PBA code number.If, as its principal business activity, thecorporation: (1) Purchases raw material;(2) Subcontracts out for labor to make afinished product from the raw materials; and(3) Retains title to the goods, the corporationis considered to be a manufacturer and mustenter one of the codes under “Manufacturing.”

Also, write in the business activity and theprincipal product or service on the linesprovided.Question J — Transfer or acquisition ofvoting stockAll corporations must answer Question J. If theanswer is “Yes,” a Statement of Change inControl and Ownership of Legal Entities(BOE-100-B), must be filed with the CaliforniaState Board of Equalization (BOE), or substantialpenalties may result. Forms and informationmay be obtained from the BOE Website atwww.boe.ca.gov or by calling(916) 323-5685.Answer “Yes” if:• The percentage of outstanding votingshares of this corporation or itssubsidiary(ies) owned by one person orone entity cumulatively exceeded 50%during this year; or• The total of voting shares transferred toone irrevocable trust cumulatively exceeded50% during this year; or• One or more irrevocable proxies transferredvoting rights to more than 50% of theoutstanding shares to one person or oneentity during this year; or• This corporation’s cumulative ownership orcontrol of the stock or other ownershipinterest in any legal entity exceeded 50%during this year; or• Cumulatively more than 50% of the totaloutstanding shares of this corporation havetransferred, changed ownership or controlduring this year.R&TC Section 64(e) requires this informationfor use by the California State BOE.Question L – Reportable Transaction, ListedTransaction or Registered Tax ShelterA Reportable Transaction is any transaction asdefined in R&TC Section 18407 and Trea. Reg.Section 1.6011-4 and includes, but is notlimited to:• A Listed Transaction, or a transaction thatis substantially similar to a Listed Transaction,which has been identified by the IRSor the FTB to be a tax avoidancetransaction.• A Confidential Transaction which is offeredto a taxpayer under conditions of confidentialityand for which the taxpayer has paid aminimum fee.• A transaction with contractual protectionswhich provides the taxpayer with the rightto a full or partial refund of fees if all or partof the intended tax consequences from thetransaction are not sustained.• A loss transaction under IRC Section 165which is at least $10 million in any one yearor $20 million in any combination of taxyears. (Those numbers would be reducedto $2 million and $4 million on theForm 100S.)• A transaction with a significant book-taxdifference.• A transaction where the taxpayer isclaiming a tax credit of greater than$250,000 and held the asset for less than45 days.A Listed Transaction is a specific transaction,or one that is substantially similar, which hasbeen identified by the Internal Revenue Serviceor the Franchise Tax Board to be a taxavoidance transaction.A Registered Tax Shelter is any investmentwhich is required to be registered with theInternal Revenue Service under IRCSection 6111.Question S — Regulated InvestmentCompany (RIC)California conforms to federal law for taxableyears beginning on or after January 1, 1998,for the provisions related to the repeal ofthe 30% gross income test for RICs.Question T — Real Estate MortgageInvestment Conduit (REMIC)If a corporation is a REMIC for federalpurposes, it is deemed to be a REMIC forCalifornia purposes. A REMIC is subject to theminimum franchise tax but is not subject tothe income or franchise tax. The income of aREMIC is taxable to the holders of the REMICinterests. In order to qualify, substantially all ofthe assets of the entity must consist of“qualified mortgages” and “permittedinvestments.” See the instructions for federalForm 1066, U.S. Real Estate MortgageInvestment Conduit Income Tax Return, todetermine if the corporation qualifies.California law is the same as federal law,except California does not impose a tax onprohibited transactions, as defined in IRCSection 860F. The income or gain from suchprohibited transactions remains includible inthe California tax base. If the corporation is aREMIC for federal purposes, answer “Yes” toQuestion T, complete Form 100W and attach acopy of federal Form 1066.Question U — Real Estate Investment Trust(REIT)California conforms to the federal law relatingto REITs, except for the provisions relating toretaining capital gain tax credit added bySection 1254 of the Taxpayer Relief Actof 1997, and various alternative taxes imposedon certain income and activities of REITs(although such income amounts remainincludible in the California tax base). Additionally,a federal election to treat property asforeclosure property under IRCSection 856(e)(5) is considered to be anelection for California as well. No separateelections are allowed.Question V — Limited Liability Company(LLC) or Limited PartnershipAnswer “Yes” only if the business entity forwhich the Form 100W is being filed isorganized as an LLC or limited partnership butis classified as a corporation for federal taxpurposes. An LLC classified as a partnershipfor federal purposes should generally fileForm 568. A limited partnership should fileForm 565.Question Z — Corporations That Own 80% ofan Insurance CompanyOne of the provisions of AB 263 (Stats.2004ch.868) includes a reporting requirement tothe Legislature. To meet this requirement, FTBmay contact any corporation who answers“yes” for additional information.Line 1 through Line 42Line 1 – Net income (loss) before stateadjustmentsCorporations using the federal reconciliationmethod to figure net income (see GeneralInformation I, Net Income Computation) must:• Transfer the amount from federalForm 1120, line 28; or federal Form 1120A,line 24, to Form 100W, Side 1, line 1; andattach a copy of the federal return and allpertinent supporting schedules; or copy theinformation from federal Form 1120 orForm 1120A, Page 1, onto Schedule F andtransfer the amount from Schedule F,line 29, to Form 100W, Side 1, line 1.• Then, complete Form 100W, Side 1, line 2through line 17, State Adjustments.Corporations using the California computationmethod to figure net income (see GeneralInformation I) must transfer the amount fromSide 3, Schedule F, line 29; to Side 1, line 1.Complete Form 100W, Side 1, line 2 throughline 17, only if applicable.Line 2 through Line 17 – State adjustmentsTo figure net income for California purposes,corporations using the federal reconciliationmethod must enter California adjustments tothe federal net income on line 2 throughline 17. If a specific line for the adjustment isnot on Form 100W, corporations must enterthe adjustment on line 8, Other additions, orline 16, Other deductions, and attach aschedule that explains the adjustment.Line 2 and Line 3 – Taxes not deductibleCalifornia does not permit a deduction ofCalifornia corporation franchise or incometaxes or any other taxes on, according to, ormeasured by net income or profits. Such taxesthat are shown on Form 100W, Schedule A,must be added to income by entering theamount on Side 1, line 2 or line 3 (seeSchedule A, column (d) for the amount to beadded to income). California does not permit adeduction for environmental taxes imposed byIRC Section 59A.The LLC fee is not a tax, R&TC Section 17942;therefore, it is deductible. Do not include anypart of an LLC fee on line 2 or line 3.Line 4 – Interest on government obligationsCorporations subject to California franchise taxmust report all interest received on governmentobligations (such as federal, state, ormunicipal bonds). On line 4, enter all intereston government obligations that is not includedin the federal ordinary income (loss).Corporations subject to California corporationincome tax, see instructions for line 16.Line 5 – Net California capital gainComplete Schedule D on Side 2 of Form 100W,and enter the California net capital gain fromSchedule D, line 11.Get FTB Pub. 1061 for instructions ondetermining the net capital gain when acombined report is filed.Line 6 and Line 12 – Depreciation andamortizationCalifornia law is substantially different fromfederal law for corporations.Complete form FTB 3885, CorporationDepreciation and Amortization, included in thisbooklet, to determine the amounts to enter online 6 or line 12.Line 7a – Net income from IncludedControlled Foreign Corporations (CFCs)R&TC Section 25110(a)(6) provides that aportion of the income and apportionmentfactors of any CFC (defined in IRCSection 957) that has Subpart F income, asdefined in IRC Section 952, must be includedin the combined report of a taxpayer making awater’s-edge election. Complete and attachform FTB 2416, Schedule of IncludedForm 100W Booklet 2004 Page 11

Controlled Foreign Corporations, included inthis booklet, to compute the amount to enteron line 7a.Line 7b – Income not included in federalconsolidated returnUse this line to report the net income fromcorporations included in the combined reportbut not included in the federal consolidatedreturn.Line 8 – Other additionsR&TC Section 24425 disallows expensesallocable to income, which is not included inthe measure of the Franchise Tax or IncomeTax. Add back such deductions on this line.Also, any miscellaneous items that must beadded to arrive at net income after stateadjustments (line 18) should be shown on thisline. Attach a schedule to itemize amounts. Ifany federal contribution deduction reduced theamount entered on Form 100W, Side 1, line 1,enter that amount on this line.California ordinary net gain or loss. Enter anyCalifornia ordinary net gain or loss fromSchedule D-1, Sales of Business Property.Attach Schedule D-1.Line 10 and Line 11 – DividendsComplete Schedule H (100W), DividendIncome Deduction, included in this booklet.Foreign Investment Interest OffsetR&TC Section 24344(c) provides that interestexpense incurred for purposes of foreigninvestment is offset against the water’s-edgedividends deductible under R&TCSection 24411. The offset cannot be greaterthan the deduction allowed pursuant to R&TCSection 24411. Complete and attach formFTB 2424, Water’s-Edge Foreign InvestmentInterest Offset, to the return. For moreinformation, see R&TC Section 24344(c) andthe instructions for form FTB 2424.Line 13 – Federal capital gain net incomeEnter the federal capital gain net income fromfederal Form 1120 or Form 1120A, line 8. TheCalifornia net capital gain should have beenadded to income on line 5.Line 14 – ContributionsThe contribution deduction for a Californiacorporation is limited to the adjusted basis ofthe assets being contributed.For taxable years beginning on or afterJanuary 1, 1996, the contribution deduction islimited to 10% of California net income.Carryover provisions per IRCSection 170(d)(2) apply for excess contributionsmade during taxable years beginning onor after January 1, 1996.On a separate worksheet, using theForm 100W format, complete Form 100W,Side 1, line 1 through line 18 without regard toline 14, Contributions. If any federal contributiondeduction was taken in arriving at theamount entered on Side 1, line 1, enter thatamount as a positive number on line 8. Enterthe adjusted basis of the assets contributed online 5 of the worksheet. Then complete theworksheet that follows to determine thecontributions to enter on line 14.1. Net income after state adjustmentsfrom Side 1, line 18 . . . . . . . . . . . _____2. Deduction for dividendsreceived . . . . . . . . . . . . . . . . . . . . _____Page 12 Form 100W Booklet 20043. Net income for contributioncalculation purposes. Addline 1 and line 2 . . . . . . . . . . . . . . _____4. Contributions. Multiply line 3by 10% (.10) . . . . . . . . . . . . . . . . _____5. Enter the amount actuallycontributed . . . . . . . . . . . . . . . . . . _____6. Enter the smaller of line 4 orline 5 here and on Side 1, line 14 _____Get Schedule R to figure the contributioncomputation for apportioning corporations.Line 15 – EZ, TTA, or LAMBRA businessexpense and/or EZ net interest deductionBusinesses conducting a trade or businesswithin an Enterprise Zone (EZ), Targeted TaxArea (TTA), or Local Agency Military BaseRecovery Area (LAMBRA) may elect to treat aportion of the cost of qualified property as abusiness expense rather than a capitalexpense. For the year the property is placed inservice, the business may deduct a percentageof the cost in that year rather than depreciate itover the life of the asset. For more information,get form FTB 3805Z; form FTB 3809; or formFTB 3807.Also, a deduction may be claimed on this linefor the amount of net interest on loans made toan individual or company doing businesswithin an EZ. For more information, get formFTB 3805Z.Be sure to attach form FTB 3805Z; formFTB 3809; or form FTB 3807 if any of thesebenefits are claimed. If the proper form is notattached, these tax benefits may be disallowed.Line 16 – Other deductionsInclude on this line deductions not claimed onany other line. Attach a schedule that clearlyshows how each deduction was computed andexplain the basis for the deduction.For corporations subject to income tax (insteadof the franchise tax), interest received onobligations of the federal government and onobligations of the State of California and itspolitical subdivisions is exempt from incometax. If such interest is reported on line 4, itmust be deducted on line 16.Federal ordinary net gain or loss. Enter anyfederal ordinary net gain or loss from federalForm 4797, Sales of Business Property.Line 19 – Net income (loss) for statepurposesIf all corporate income is derived fromCalifornia sources, transfer the amount online 18 directly to line 19.If only a portion of income is derived fromCalifornia sources, complete Schedule Rbefore entering any amount on line 19.Transfer the amount from Schedule R, line 35,to Form 100W, line 19. Be sure to answer“Yes’’ to Question M on Form 100W, Side 2.If this line is a net loss, complete and attachthe 2003 form FTB 3805Q to Form 100W.Line 20, Line 21, and Line 22Note: The order in which line 20, line 21, andline 22 appear is not meant to imply the orderin which any NOL carryover deduction ordisaster loss deduction is to be taken if morethan one type of deduction is available.Line 20 – Net operating loss (NOL) carryoverdeductionThe NOL carryover deduction is the amount ofthe NOL carryover from prior years that maybe deducted from income in the currenttaxable year.If line 19 is a positive amount, enter the NOLcarryover from the 2004 form FTB 3805Q,Part III, line 3 on Form 100W, line 20. The lossmay not reduce current year income belowzero. Any excess loss must be carried forward.Attach a copy of the 2004 form FTB 3805Q toForm 100W.If the full amount of the NOL carryover maynot be deducted this year, complete and attacha 2004 form FTB 3805Q showing the computationof the NOL carryover to future years.If line 19 is a negative amount, corporationsmay not claim an NOL carryover deduction.Enter -0- on line 20. See the 2004 formFTB 3805Q instructions to compute the NOLcarryover to future years.If the corporation terminates its election to betaxed as an S corporation, thus becoming aC corporation, then only that portion of theprior NOL carryover incurred while it hadC corporation status may be used to the extentit has not expired.Line 21 – Pierce’s disease, EZ, LARZ, TTA,or LAMBRA NOL carryover deductionAn NOL generated by a farming business dueto Pierce's Disease or a business that operates(operated) or invests (invested) within an EZ,the former LARZ, the TTA, or a LAMBRAreceives special tax treatment. The loss maynot reduce the corporation's current yearincome below zero. Any excess loss must becarried forward. Compute the corporation'sPierce's Disease, EZ, TTA, or LAMBRA NOLusing form FTB 3805D; form FTB 3805Z; formFTB 3809; or form FTB 3807.Enter the Pierce's Disease, EZ, TTA, LARZ, orLAMBRA NOL carryover deduction from thecorporation's form FTB 3805D; formFTB 3805Z; form FTB 3809; form FTB 3807; orform FTB 3806, on Form 100W, line 21. Attacha copy of form FTB 3805D; form FTB 3805Z;form FTB 3809; form FTB 3807; or formFTB 3806 to the Form 100W.Line 22 – Disaster loss carryover deductionIf you have a disaster loss carryover deduction,enter the total amount from the 2004 form FTB3805Q, Part III, line 1, only if you have incomein the current year. The loss may not reducecurrent year income below zero. Any excessloss must be carried forward.Line 24 – TaxUse rates listed in General Information B, TaxRates, and C, Minimum Franchise Tax.Line 25 through Line 27 – Tax creditsA variety of tax credits are available toCalifornia corporations to reduce tax. However,corporations may not reduce the tax (line 24)below the minimum franchise tax, if applicable.Also, the amount of the credit that a corporationis allowed to claim may be limited.Generally, if the corporation completed federalForm 4626, Alternative Minimum Tax —Corporations, the corporation may have limitedcredits. Complete Schedule P (100W),included in this booklet, to compute thislimitation.Corporations claiming the following credits arenot subject to the TMT limitation:• Enterprise zone hiring & sales or use taxcredit;• LARZ construction hiring & sales or use taxcredit carryover;

• Solar energy credit carryover code 180;• Commercial solar energy credit carryover;• Commercial solar electric system credit;• Research credit;• Orphan drug credit carryover;• Low-income housing credit;• Manufacturers’ investment credit carryover;• Targeted tax area hiring and sales or usetax credit;• Natural heritage preservation tax credit; and• Clinical testing expense credit carryover.Each credit is identified by a code number. Seethe credit code chart on page 15. To claim oneor two credits, enter the credit name, codenumber, and the amount of the credit online 25 and line 26. To claim more than twocredits, use Schedule P (100W). List two ofthe credits on line 25 and line 26. Enter thetotal of any remaining credits from Schedule P(100W) on line 27. Do not make an entry online 27 unless line 25 and line 26 are complete.To figure tax credits, use the appropriate formor schedule. If the corporation claims a creditcarryover for an expired credit, use formFTB 3540, Credit Carryover Summary, to figurethe amount of credit, unless the corporation isrequired to complete Schedule P (100W). Inthat case, enter the amount of the credit onSchedule P (100W) and complete Schedule P(100W). Do not attach form FTB 3540.Attach the credit form or schedule andSchedule P (100W), if applicable, toForm 100W.Line 29 – BalanceSubtract line 28 from line 24. Enter the result orthe applicable minimum franchise tax, whicheveris more. See General Information C, MinimumFranchise Tax.Line 30 – Alternative minimum tax (AMT)Enter on this line the AMT fromSchedule P (100W), Part I, line 19, or Part II,line 18, whichever is applicable.Line 33 – 2004 estimated tax paymentsEnter the total amount of estimated taxpayments made during the 2004 taxable yearon this line.Line 34 – 2004 Nonresident or real estatewithholdingEnter the 2004 nonresident or real estatewithholding credit from Form(s) 592-B, 593-B,or 594. Attach a copy of the form(s) to thelower front of Form 100W, Side 1.Line 37 and Line 38 – Tax due oroverpaymentRevise the amount of tax due or overpayment, ifapplicable, by the amount on Side 2, Schedule J,line 6. See instructions for Schedule J.Line 39 – Amount to be credited to 2005estimated taxIf the corporation chooses to have theoverpayment credited to next year’s estimatedtax payment, the corporation cannot laterrequest that the overpayment be applied to theprior year to offset any tax due.Line 40 – RefundDirect Deposit of Refund (DDR)Direct deposit is fast, safe, and convenient. Tohave the refund directly deposited into thecorporation’s bank account, enter the accountinformation on Form 100W, Side 1, line 40a,40b, and 40c. Please be sure to fill in all theinformation. Do not attach a voided check ordeposit slip.To cancel the DDR, call FTB at (916) 845-0353.FTB is not responsible when a financialinstitution rejects a direct deposit. If FTB, thebank, or financial institution rejects the directdeposit due to an error in the routing numberor account number, FTB will issue a papercheck.Line 41 – Penalties and interestEnter on line 41a the amount of any penaltiesand interest due. Complete and attach formFTB 5806, Underpayment of Estimated Tax byCorporations, to the front of Form 100W, onlyif Exception B or Exception C is used incomputing or eliminating the penalty. Be sureto check the box on line 41b.SchedulesSchedule A — Taxes DeductedEnter the nature of the tax, the taxing authority,the total tax, and the amount of the tax that isnot deductible for California purposes on Form100W, Side 3, Schedule A.Schedule D — Capital Gain orLossCalifornia law does not conform to the federalreduced capital gains tax rates. California taxescapital gains at the same rate as other types ofincome. California does not allow a three-yearcarryback of capital losses.Enter any unused capital loss carryover from2003 on Schedule D, line 3.For information regarding the application ofthe capital loss limitation and the capital losscarryover in a combined report, see Cal. CodeRegs., tit. 18 section 25106.5-2 and FTB Pub.1061, Guidelines for Corporations Filing aCombined Report.Schedule F — Computation ofNet IncomeSee General Information I, Net IncomeComputation, for information on net incomecomputation methods.Line 13 – Salaries and WagesGain from the exercise of California QualifiedStock Options (CQSOs) issued and exercisedon or after January 1, 1997, and beforeJanuary 1, 2002, can be excluded from grossincome if the individual’s earned income is$40,000 or less. The exclusion from grossincome is subject to AMT and the corporationis not allowed a deduction for the compensationexcluded from the employee’s grossincome. For more information, see R&TCSection 24602.Schedule G — Bad DebtsReserve MethodFor taxable years beginning on or after January1, 2002, only banks that are not a large bank,as defined in the IRC Section 585(c)(2), mayuse the bad debt reserve method.For the purpose of the bad debt reservemethod, banks include savings and loanassociations, and other financial institutions.For more information, see IRC Sections 581and 585. Complete Schedule G on this pageand attach it to Form 100W.Schedule J — Add-On Taxesand Recapture of Tax CreditsComplete Schedule J on Form 100W, Side 2, ifthe corporation has credit amounts torecapture or is required to include installmentpayments of “add-on” taxes from:• Last-in, first-out (LIFO) recapture resultingfrom an S corporation election;• Interest computed under the look-backmethod for completed long-term contracts;• Interest on tax attributable to installmentsales of certain property or use of theinstallment method for non-dealerinstallment obligations; or• IRC Section 197(f)(9)(B)(ii) election torecognize gain on the disposition of an IRCSection 197 intangible.Revise the amount of tax due or overpaymenton Form 100W, line 37 or line 38, as applicableby the amount from Schedule J, line 6.Schedule G Bad Debts — Reserve Method, see instructionsAmount added to reserve(a)Taxable year199920002001200220032004(b)Accounts outstanding at the end of the year(c)Current year’sprovision(d)Recoveries(e)Amount chargedagainst reserve(f)Reserve for bad debtsat end of yearForm 100W Booklet 2004 Page 13

Installment payment of tax attributable tolast-in, first-out (LIFO) recapture forcorporations making an S corporationelection. A corporation that uses the LIFOinventory pricing method and makes anS corporation election must include a “LIFOrecapture amount” in income for its last yearas a C corporation. The corporation’s LIFOrecapture amount is equal to the excess of theinventory amount using the first-in, first-out(FIFO) method, over the inventory amountusing the LIFO method, at the close of thecorporation’s last taxable year as aC corporation.The additional tax resulting from inclusion ofthe LIFO recapture in income is payable in fourequal installments. The first installment is dueon the original due date of Form 100W of theelecting corporation’s last year as aC corporation.To determine the additional tax due to LIFOrecapture, the corporation must completeForm 100W, Side 1, line 19 through line 31,based on income that does not include theLIFO recapture amount.On a separate worksheet using the Form 100Wformat, the corporation must complete theequivalent of Form 100W, Side 1, line 19through line 31, based on taxable incomeincluding the LIFO recapture amount.Form 100W, Side 1, line 31, must then becompared to line 31 of the worksheet. Thedifference is the additional tax due to LIFOrecapture.Since Form 100W, Side 1, line 31, does notinclude the additional tax due to LIFOrecapture, the corporations must include 1/4 ofthe additional tax on Schedule J, line 1, andadjust line 37 or line 38 accordingly. Attach theworksheet showing the computation.Note: The electing S corporations must pay theremaining three installments of deferred taxwith Form 100S.Long-term contracts. If the corporation mustcompute interest under the look-back methodfor completed long-term contracts, completeand attach form FTB 3834, Interest ComputationUnder the Look-Back Method forCompleted Long-Term Contracts. Include theamount of interest the corporation owes or theamount of interest to be credited or refundedto the corporation on Schedule J, line 2. Ifinterest is to be credited or refunded, enter asa negative amount. Attach form FTB 3834 toForm 100W.Interest on tax attributable to paymentsreceived on installment sales of certaintimeshares and residential lots. If thecorporation elected to pay interest on theamount of tax attributable to paymentsreceived on installment obligations arisingfrom the disposition of certain timeshares andresidential lots under IRC Section 453(l)(3), itmust include the interest due on Schedule J,line 3a. For the applicable interest rates, getFTB Pub. 1138, Business Entity Refund/BillingInformation. Attach a schedule showing thecomputation.Interest on tax deferred under the installmentmethod for certain nondealer installmentobligations. If an obligation arising from thedisposition of property to which IRC Section453A(c) applies is outstanding at the close ofthe year, the corporation must include theinterest due under IRC Section 453A onSchedule J, line 3b. For the applicable interestrates, get FTB Pub. 1138.IRC Section 197(f)(9)(B)(ii) election.Complete Schedule J, line 4 if the corporationelected to pay tax on the gain from the sale ofan intangible under the related personexception to the anti-churning rules.Credit recapture.Complete Schedule J, line 5, if the corporationcompleted the credit recapture portion of form:• FTB 3501, Employer Child Care Program/Contribution Credit;• FTB 3805Z, Enterprise Zone Deduction andCredit Summary;• FTB 3807, Local Agency Military BaseRecovery Area Deduction and Credit;• FTB 3808, Manufacturing EnhancementArea Credit Summary;• FTB 3809, Targeted Tax Area Deduction andCredit Summary;• FTB 3535, Manufacturers’ InvestmentCredit;• FTB 3534, Joint Strike Fighter Credits; or• FTB 3508, Solar or Wind Energy SystemCredit.Also complete Schedule J, line 5, if thecorporation is subject to recapture of:• The Farmworker Housing Credits; or• The Community Development FinancialInstitution Deposits Credit.Schedule M-1— Reconciliationof income (loss) per books withincome (loss) per return.Schedule M-1 is used to reconcile thedifference between book and tax accountingfor an income or expense item. The federal andstate Schedule M-1 may be the same when youuse the federal reconciliation method for netincome computation. See General InformationI, Net Income Computation, for more information.The Schedule M-1 will be different fromthe federal Form 1120, Schedule M-1 if usingthe California computation method for netincome. The California computation method isgenerally used when the corporation has nofederal filing requirement, or if the corporationmaintains separate records for state purposes.Reporting requirements. If the corporation'stotal receipts (see top of page 16 for definitionof total receipts) for the taxable year and totalassets at the end of the taxable year are lessthan $250,000, the corporation is not requiredto complete Side 4 of Form 100W, Schedule L,Schedule M-1, and Schedule M-2. However,this information must be available in the futureupon request.Corporations with total assets of $10 millionor more. For taxable years beginning on orafter January 1, 2004, the IRS requires anydomestic corporation or U.S. consolidated taxgroup with total assets of $10 million or moreon the last day of the tax year to completeSchedule M-3 (Form 1120), Net Income (Loss)Reconciliation for Corporations With TotalAssets of $10 Million or More, instead ofSchedule M-1, Reconciliation of Income (Loss)per Books With Income per Return.For California purposes, the corporation muststill complete the California Schedule M-1,and:• Attach a copy of the Schedule M-3(Form 1120) to the California Franchise orIncome Tax Return; or• Attach a complete copy of the federalreturn; or• FTB will accept the Schedule M-3(Form 1120) in a spreadsheet format ifmore convenient.Page 14 Form 100W Booklet 2004

CREDIT NAME CODE DESCRIPTIONCurrent CreditsCommunity Development Financial Institution 209 20% of qualified investments made into a community development financial institutionDeposits – Obtain certification from:CALIFORNIA ORGANIZED INVESTMENTNETWORK (COIN)DEPARTMENT OF INSURANCE300 CAPITOL MALL, SUITE 1600SACRAMENTO CA 95814www.insurance.ca.govDisabled Access for Eligible Small Businesses – 205 Similar to the federal credit, but limited to $125 per eligible small business, and basedFTB 3548 on 50% of qualified expenditures that do not exceed $250Donated Agricultural Products Transportation – 204 50% of the costs paid or incurred for the transportation of agricultural productsFTB 3547donated to nonprofit charitable organizationsEmployer Child Care Contribution – FTB 3501 190 Employer: 30% of contributions to a qualified planEmployer Child Care Program – FTB 3501 189 Employer: 30% of the cost of establishing a child care program or constructing a child care facilityEnhanced Oil Recovery – FTB 3546 203 1/3 of the similar federal credit but limited to qualified enhanced oil recovery projectslocated within CaliforniaEnterprise Zone Hiring & Sales or Use Tax – 176 Business incentives for trade or business activities conducted within an enterprise zone.FTB 3805ZFarmworker Housing – Construction 207 50% of qualified costs paid or incurred to construct or rehabilitate qualified farmworkersFarmworker Housing – LoanhousingObtain certification from: 208 Banks and financial corporations: 50% of foregone interest income on qualifiedFARMWORKER HOUSING ASSISTANCEfarmworker housing loansPROGRAM, CALIFORNIA TAX CREDITALLOCATION COMMITTEE915 CAPITOL MALL, ROOM 485SACRAMENTO CA 95814www.treasurer.ca.govJoint Strike Fighter Wage – FTB 3534 215 A percentage of qualified wages paid or incurred in California in connection with the constructionof a joint strike fighter.Joint Strike Fighter Property – FTB 3534 216 10% of the cost of property placed in service in California for ultimate use in a joint strike fighterLocal Agency Military Base Recovery Area 198 Business incentives for trade or business activities conducted within a local agency military baseHiring & Sales or Use Tax – FTB 3807recovery area.Low-Income Housing – FTB 3521 172 Similar to the federal credit but limited to low-income housing in CaliforniaManufacturing Enhancement Area – FTB 3808 211 Hiring Credit for Manufacturing Enhancement AreaNatural Heritage Preservation – FTB 3503 213 55% of the fair market value of the qualified contribution of property donated to the state, any localgovernment, or any nonprofit organization designated by a local government.Prior Year Alternative Minimum Tax – FTB 3510 188 Must have paid alternative minimum tax in a prior year and have no alternative minimumtax liability in the current yearPrison Inmate Labor – FTB 3507 162 10% of wages paid to prison inmatesResearch – FTB 3523 183 Similar to the federal credit but limited to costs for research activities in CaliforniaRice Straw 206 $15 per ton of rice straw grown in CaliforniaObtain certification from:DEPARTMENT OF FOOD AND AGRICULTURE1220 N STREET, ROOM 244SACRAMENTO CA 95814www.cdfa.ca.govSolar or Wind Energy System – FTB 3508 217 A credit equal to the lesser of 7.5% of the net cost paid to purchase and install a solar or windenergy system for the production of electricity, or the $4.50 per rated watt of generating capacity ofthat system.Targeted Tax Area Hiring & Sales or Use 210 Business incentives for trade or business activities conducted within a targeted tax area.Tax – FTB 3809Repealed Credits with Carryover Provisions: The expiration dates for these credits have passed. However, these credits had carryover provisions. You may claimthese credits if there is a carryover available from prior years. If you are not required to complete Schedule P (100 or100W), get form FTB 3540, Credit Carryover Summary, to figure your credit carryover to future years.Agricultural Products 175Commercial Solar Electric System 196Commercial Solar Energy 181Contribution of computer software 202Employee Ridesharing – Large employer 191Employer Ridesharing – Small employer 192Employer Rideshare – Transit 193Energy Conservation 182Los Angeles Revitalization Zone Hiring& Sales or Use Tax 159Low-Emission Vehicles 160Manufacturers’ Investment 199Orphan Drug 185Recycling Equipment 174Ridesharing 171Salmon & Steelhead Trout Habitat Restoration 200Solar Energy 180Solar Pump 179Technology Property Contributions 201Form 100W Booklet 2004 Page 15

Principal Business Activity CodesThis list of principal business activities and their associated codes is designed toclassify a business by the type of activity in which it is engaged to facilitate theadministration of the California Revenue and Taxation Code. For taxable yearsbeginning on or after January 1, 1998, these principal business activity codes arebased on the North American Industry Classification System.Using the list of activities and codes below, determine from which activity thecompany derives the largest percentage of its ‘’total receipts.’’ Total receipts isdefined as the sum of gross receipts or sales (Side 3, Schedule F, line 1a) plus allother income (Side 3, Schedule F, lines 4 through 10). If the company purchasesraw materials and supplies them to a subcontractor to produce the finished product,but retains title to the product, the company is considered a manufacturer and mustuse one of the manufacturing codes (311110-339900).Once the principal business activity is determined, entries must be made onForm 100W, Question E. For the business activity code number, enter the six-digitcode selected from the list below. On the next line enter a brief description of thecompany’s business activity. Finally, enter a description of the principal product orservice of the company on the next line.Agriculture, Forestry,Fishing, and HuntingCodeCrop Production111100 Oilseed & Grain Farming111210 Vegetable & Melon Farming(including potatoes & yams)111300 Fruit & Tree Nut Farming111400 Greenhouse, Nursery, &Floriculture Production111900 Other Crop Farming (includingtobacco, cotton, sugarcane,hay, peanut, sugar beet, & allother crop farming)Animal Production112111 Beef Cattle Ranching &Farming112112 Cattle Feedlots112120 Dairy Cattle & Milk Production112210 Hog & Pig Farming112300 Poultry & Egg Production112400 Sheep & Goat Farming112510 Animal Aquaculture (includingshellfish & finfish farms &hatcheries)112900 Other Animal ProductionForestry and Logging113110 Timber Tract Operations113210 Forest Nurseries & Gatheringof Forest Products113310 LoggingFishing, Hunting and Trapping114110 Fishing114210 Hunting & TrappingSupport Activities for Agriculture andForestry115110 Support Activities for CropProduction (including cottonginning, soil preparation,planting, & cultivating)115210 Support Activities for AnimalProduction115310 Support Activities for ForestryMining211110 Oil & Gas Extraction212110 Coal Mining212200 Metal Ore Mining212310 Stone Mining & Quarrying212320 Sand, Gravel, Clay, & Ceramic& RefractoryMinerals Mining & Quarrying212390 Other Nonmetallic MineralMining & Quarrying213110 Support Activities for MiningUtilities221100 Electric Power Generation,Transmission & Distribution221210 Natural Gas Distribution221300 Water, Sewage, & OtherSystemsPage 16 Form 100W Booklet 2004ConstructionCodeConstruction of Buildings236110 Residential BuildingConstruction236200 Nonresidential BuildingConstructionHeavy and Civil EngineeringConstruction237100 Utility System Construction237210 Land Subdivision237310 Highway, Street, & BridgeConstruction237990 Other Heavy & Civil EngineeringConstructionSpecialty Trade Contractors238100 Foundation, Structure, &Building Exterior Contractors(including framing carpentry,masonry, glass, roofing, &siding)238210 Electrical Contractors238220 Plumbing, Heating, & Air-Conditioning Contractors238290 Other Building EquipmentContractors238300 Building Finishing Contractors(including drywall, insulation,painting, wallcovering, flooring,tile, & finish carpentry)238900 Other Specialty TradeContractors (including sitepreparation)ManufacturingFood Manufacturing311110 Animal Food Mfg311200 Grain & Oilseed Milling311300 Sugar & Confectionery ProductMfg311400 Fruit & Vegetable Preserving &Specialty Food Mfg311500 Dairy Product Mfg311610 Animal Slaughtering andProcessing311710 Seafood Product Preparation& Packaging311800 Bakeries & Tortilla Mfg311900 Other Food Mfg (includingcoffee, tea, flavorings, &seasonings)Beverage and Tobacco ProductManufacturing312110 Soft Drink & Ice Mfg312120 Breweries312130 Wineries312140 Distilleries312200 Tobacco ManufacturingTextile Mills and Textile Product Mills313000 Textile Mills314000 Textile Product MillsApparel Manufacturing315100 Apparel Knitting MillsCode315210 Cut & Sew ApparelContractors315220 Men’s & Boys’ Cut & SewApparel Mfg315230 Women’s & Girls’ Cut & SewApparel Mfg315290 Other Cut & Sew Apparel Mfg315990 Apparel Accessories & OtherApparel MfgLeather and Allied ProductManufacturing316110 Leather & Hide Tanning &Finishing316210 Footwear Mfg (including rubber& plastics)316990 Other Leather & Allied ProductMfgWood Product Manufacturing321110 Sawmills & Wood Preservation321210 Veneer, Plywood, & EngineeredWood Product Mfg321900 Other Wood Product MfgPaper Manufacturing322100 Pulp, Paper, & PaperboardMills322200 Converted Paper Product MfgPrinting and Related SupportActivities323100 Printing & Related SupportActivitiesPetroleum and Coal ProductsManufacturing324110 Petroleum Refineries(including integrated)324120 Asphalt Paving, Roofing, &Saturated Materials Mfg324190 Other Petroleum & CoalProducts MfgChemical Manufacturing325100 Basic Chemical Mfg325200 Resin, Synthetic Rubber, &Artificial & Synthetic Fibers &Filaments Mfg325300 Pesticide, Fertilizer, & OtherAgricultural Chemical Mfg325410 Pharmaceutical & MedicineMfg325500 Paint, Coating, & Adhesive Mfg325600 Soap, Cleaning Compound, &Toilet Preparation Mfg325900 Other Chemical Product &Preparation MfgPlastics and Rubber ProductsManufacturing326100 Plastics Product Mfg326200 Rubber Product MfgNonmetallic Mineral ProductManufacturing327100 Clay Product & Refractory Mfg327210 Glass & Glass Product Mfg327300 Cement & Concrete ProductMfg327400 Lime & Gypsum Product Mfg327900 Other Nonmetallic MineralProduct MfgPrimary Metal Manufacturing331110 Iron & Steel Mills & FerroalloyMfg331200 Steel Product Mfg fromPurchased Steel331310 Alumina & AluminumProduction & Processing331400 Nonferrous Metal (exceptAluminum) Production &Processing331500 FoundriesFabricated Metal ProductManufacturing332110 Forging & Stamping332210 Cutlery & Handtool Mfg332300 Architectural & StructuralMetals Mfg332400 Boiler, Tank, & ShippingContainer Mfg332510 Hardware Mfg332610 Spring & Wire Product Mfg332700 Machine Shops, TurnedProduct, & Screw, Nut, & BoltMfgCode332810 Coating, Engraving, HeatTreating, & Allied Activities332900 Other Fabricated MetalProduct MfgMachinery Manufacturing333100 Agriculture, Construction, &Mining Machinery Mfg333200 Industrial Machinery Mfg333310 Commercial & Service IndustryMachinery Mfg333410 Ventilation, Heating, Air-Conditioning, & CommercialRefrigeration Equipment Mfg333510 Metalworking Machinery Mfg333610 Engine, Turbine, & PowerTransmission Equipment Mfg333900 Other General PurposeMachinery MfgComputer and Electronic ProductManufacturing334110 Computer & PeripheralEquipment Mfg334200 Communications EquipmentMfg334310 Audio & Video Equipment Mfg334410 Semiconductor & OtherElectronic Component Mfg334500 Navigational, Measuring,Electromedical, & ControlInstruments Mfg334610 Manufacturing & ReproducingMagnetic & Optical MediaElectrical Equipment, Appliance, andComponent Manufacturing335100 Electric Lighting EquipmentMfg335200 Household Appliance Mfg335310 Electrical Equipment Mfg335900 Other Electrical Equipment &Component MfgTransportation EquipmentManufacturing336100 Motor Vehicle Mfg336210 Motor Vehicle Body & TrailerMfg336300 Motor Vehicle Parts Mfg336410 Aerospace Product & PartsMfg336510 Railroad Rolling Stock Mfg336610 Ship & Boat Building336990 Other TransportationEquipment MfgFurniture and Related ProductManufacturing337000 Furniture & Related ProductManufacturingMiscellaneous Manufacturing339110 Medical Equipment & SuppliesMfg339900 Other MiscellaneousManufacturingWholesale TradeMerchant Wholesalers, DurableGoods423100 Motor Vehicle & Motor VehicleParts & Supplies423200 Furniture & Home Furnishings423300 Lumber & Other ConstructionMaterials423400 Professional & CommercialEquipment & Supplies423500 Metal & Mineral (exceptPetroleum)423600 Electrical & Electronic Goods423700 Hardware, & Plumbing &Heating Equipment & Supplies423800 Machinery, Equipment, &Supplies423910 Sporting & RecreationalGoods & Supplies423920 Toy & Hobby Goods &Supplies423930 Recyclable Materials423940 Jewelry, Watch, PreciousStone, & Precious Metals423990 Other Miscellaneous DurableGoods

CodeMerchant Wholesalers, NondurableGoods424100 Paper & Paper Products424210 Drugs & Druggists' Sundries424300 Apparel, Piece Goods, &Notions424400 Grocery & Related Products424500 Farm Product Raw Materials424600 Chemical & Allied Products424700 Petroleum & PetroleumProducts424800 Beer, Wine, & DistilledAlcoholic Beverages424910 Farm Supplies424920 Book, Periodical, &Newspapers424930 Flower, Nursery Stock, &Florists' Supplies424940 Tobacco & Tobacco Products424950 Paint, Varnish, & Supplies424990 Other MiscellaneousNondurable GoodsWholesale Electronic Markets andAgents and Brokers425110 Business to BusinessElectronic Markets425120 Wholesale Trade Agents &BrokersRetail TradeMotor Vehicle and Parts Dealers441110 New Car Dealers441120 Used Car Dealers441210 Recreational Vehicle Dealers441221 Motorcycle Dealers441222 Boat Dealers441229 All Other Motor VehicleDealers441300 Automotive Parts, Accessories,& Tire StoresFurniture and Home FurnishingsStores442110 Furniture Stores442210 Floor Covering Stores442291 Window Treatment Stores442299 All Other Home FurnishingsStoresElectronics and Appliance Stores443111 Household Appliance Stores443112 Radio, Television, & OtherElectronics Stores443120 Computer & Software Stores443130 Camera & PhotographicSupplies StoresBuilding Material and GardenEquipment and Supplies Dealers444110 Home Centers444120 Paint & Wallpaper Stores444130 Hardware Stores444190 Other Building MaterialDealers444200 Lawn & Garden Equipment &Supplies StoresFood and Beverage Stores445110 Supermarkets and OtherGrocery (except Convenience)Stores445120 Convenience Stores445210 Meat Markets445220 Fish & Seafood Markets445230 Fruit & Vegetable Markets445291 Baked Goods Stores445292 Confectionery & Nut Stores445299 All Other Specialty FoodStores445310 Beer, Wine, & Liquor StoresHealth and Personal Care Stores446110 Pharmacies & Drug Stores446120 Cosmetics, Beauty Supplies, &Perfume Stores446130 Optical Goods Stores446190 Other Health & Personal CareStoresGasoline Stations447100 Gasoline Stations (includingconvenience stores with gas)CodeClothing and Clothing AccessoriesStores448110 Men’s Clothing Stores448120 Women’s Clothing Stores448130 Children’s & Infants’ ClothingStores448140 Family Clothing Stores448150 Clothing Accessories Stores448190 Other Clothing Stores448210 Shoe Stores448310 Jewelry Stores448320 Luggage & Leather GoodsStoresSporting Goods, Hobby, Book, andMusic Stores451110 Sporting Goods Stores451120 Hobby, Toy, & Game Stores451130 Sewing, Needlework, & PieceGoods Stores451140 Musical Instrument & SuppliesStores451211 Book Stores451212 News Dealers & Newsstands451220 Prerecorded Tape, CompactDisc, & Record StoresGeneral Merchandise Stores452110 Department stores452900 Other General MerchandiseStoresMiscellaneous Store Retailers453110 Florists453210 Office Supplies & StationeryStores453220 Gift, Novelty, & SouvenirStores453310 Used Merchandise Stores453910 Pet & Pet Supplies Stores453920 Art Dealers453930 Manufactured (Mobile) HomeDealers453990 All Other Miscellaneous StoreRetailers (including tobacco,candle, & trophy shops)Nonstore Retailers454110 Electronic Shopping & Mail-Order Houses454210 Vending Machine Operators454311 Heating Oil Dealers454312 Liquefied Petroleum Gas(Bottled Gas) Dealers454319 Other Fuel Dealers454390 Other Direct Selling Establishments(including door-to-doorretailing, frozen food planproviders, party planmerchandisers, & coffee-breakservice providers)Transportation andWarehousingAir, Rail, and Water Transportation481000 Air Transportation482110 Rail Transportation483000 Water TransportationTruck Transportation484110 General Freight Trucking, Local484120 General Freight Trucking,Long-distance484200 Specialized Freight TruckingTransit and Ground PassengerTransportation485110 Urban Transit Systems485210 Interurban & Rural BusTransportation485310 Taxi Service485320 Limousine Service485410 School & Employee BusTransportation485510 Charter Bus Industry485990 Other Transit & GroundPassenger TransportationPipeline Transportation486000 Pipeline TransportationScenic & Sightseeing Transportation487000 Scenic & SightseeingTransportationCodeSupport Activities for Transportation488100 Support Activities for AirTransportation488210 Support Activities for RailTransportation488300 Support Activities for WaterTransportation488410 Motor Vehicle Towing488490 Other Support Activities forRoad Transportation488510 Freight TransportationArrangement488990 Other Support Activities forTransportationCouriers and Messengers492110 Couriers492210 Local Messengers & LocalDeliveryWarehousing and Storage493100 Warehousing & Storage(except lessors ofminiwarehouses & selfstorageunits)InformationPublishing Industries (except Internet)511110 Newspaper Publishers511120 Periodical Publishers511130 Book Publishers511140 Directory & Mailing ListPublishers511190 Other Publishers511210 Software PublishersMotion Picture and Sound RecordingIndustries512100 Motion Picture & VideoIndustries (except video rental)512200 Sound Recording IndustriesBroadcasting (except Internet)515100 Radio & TelevisionBroadcasting515210 Cable & Other SubscriptionProgrammingInternet Publishing and Broadcasting516110 Internet Publishing &BroadcastingTelecommunications517000 Telecommunications (includingpaging, cellular, satellite, cable& other program distribution,resellers, & othertelecommunications)Internet Service Providers, WebSearch Portals, and Data ProcessingServices518111 Internet Service Providers518112 Web Search Portals518210 Data Processing, Hosting, &Related ServicesOther Information Services519100 Other Information Services(including news syndicates &libraries)Finance and InsuranceDepository Credit Intermediation522110 Commercial Banking522120 Savings Institutions522130 Credit Unions522190 Other Depository CreditIntermediationNondepository Credit Intermediation522210 Credit Card Issuing522220 Sales Financing522291 Consumer Lending522292 Real Estate Credit (includingmortgage bankers &originators)522293 International Trade Financing522294 Secondary Market Financing522298 All Other Nondepository CreditIntermediationActivities Related to CreditIntermediation522300 Activities Related to CreditIntermediation (including loanbrokers, check clearing, &money transmitting)CodeSecurities, Commodity Contracts, andOther Financial Investments andRelated Activities523110 Investment Banking &Securities Dealing523120 Securities Brokerage523130 Commodity Contracts Dealing523140 Commodity ContractsBrokerage523210 Securities & CommodityExchanges523900 Other Financial InvestmentActivities (including portfoliomanagement & investmentadvice)Insurance Carriers and RelatedActivities524140 Direct Life, Health, & MedicalInsurance & ReinsuranceCarriers524150 Direct Insurance & Reinsurance(except Life, Health, &Medical) Carriers524210 Insurance Agencies &Brokerages524290 Other Insurance RelatedActivities (including third-partyadministration of insuranceand pension funds)Funds, Trusts, and Other FinancialVehicles525100 Insurance & Employee BenefitFunds525910 Open-End Investment Funds(Form 1120-RIC)525920 Trusts, Estates, & AgencyAccounts525930 Real Estate Investment Trusts(Form 1120-REIT)525990 Other Financial Vehicles(including closed-endinvestment funds)“Offices of Bank Holding Companies” and“Offices of Other Holding Companies” arelocated under Management ofCompanies (Holding Companies) onnext page.Real Estate and Rental andLeasingReal Estate531110 Lessors of ResidentialBuildings & Dwellings531114 Cooperative Housing531120 Lessors of NonresidentialBuildings (exceptMiniwarehouses)531130 Lessors of Miniwarehouses &Self-Storage Units531190 Lessors of Other Real EstateProperty531210 Offices of Real Estate Agents& Brokers531310 Real Estate Property Managers531320 Offices of Real EstateAppraisers531390 Other Activities Related toReal EstateRental and Leasing Services532100 Automotive Equipment Rental& Leasing532210 Consumer Electronics &Appliances Rental532220 Formal Wear & Costume Rental532230 Video Tape & Disc Rental532290 Other Consumer Goods Rental532310 General Rental Centers532400 Commercial & IndustrialMachinery & Equipment Rental& LeasingLessors of Nonfinancial IntangibleAssets (except copyrighted works)533110 Lessors of NonfinancialIntangible Assets (exceptcopyrighted works)Professional, Scientific, andTechnical ServicesLegal Services541110 Offices of Lawyers541190 Other Legal ServicesForm 100W Booklet 2004 Page 17

CodeAccounting, Tax Preparation,Bookkeeping, and Payroll Services541211 Offices of Certified PublicAccountants541213 Tax Preparation Services541214 Payroll Services541219 Other Accounting ServicesArchitectural, Engineering, andRelated Services541310 Architectural Services541320 Landscape ArchitectureServices541330 Engineering Services541340 Drafting Services541350 Building Inspection Services541360 Geophysical Surveying &Mapping Services541370 Surveying & Mapping (exceptGeophysical) Services541380 Testing LaboratoriesSpecialized Design Services541400 Specialized Design Services(including interior, industrial,graphic, & fashion design)Computer Systems Design andRelated Services541511 Custom Computer ProgrammingServices541512 Computer Systems DesignServices541513 Computer Facilities ManagementServices541519 Other Computer RelatedServicesOther Professional, Scientific, andTechnical Services541600 Management, Scientific, &Technical Consulting Services541700 Scientific Research &Development Services541800 Advertising & RelatedServices541910 Marketing Research & PublicOpinion Polling541920 Photographic Services541930 Translation & InterpretationServices541940 Veterinary Services541990 All Other Professional,Scientific, & TechnicalServicesManagement of Companies(Holding Companies)551111 Offices of Bank HoldingCompanies551112 Offices of Other HoldingCompaniesAdministrative and Supportand Waste Management andRemediation ServicesAdministrative and Support Services561110 Office Administrative Services561210 Facilities Support Services561300 Employment Services561410 Document PreparationServices561420 Telephone Call Centers561430 Business Service Centers(including private mail centers& copy shops)561440 Collection Agencies561450 Credit Bureaus561490 Other Business SupportServices (including repossessionservices, court reporting,& stenotype services)Code561500 Travel Arrangement &Reservation Services561600 Investigation & SecurityServices561710 Exterminating & Pest ControlServices561720 Janitorial Services561730 Landscaping Services561740 Carpet & Upholstery CleaningServices561790 Other Services to Buildings &Dwellings561900 Other Support Services(including packaging & labelingservices, & convention & tradeshow organizers)Waste Management and RemediationServices562000 Waste Management &Remediation ServicesEducational Services611000 Educational Services(including schools, colleges, &universities)Health Care and SocialAssistanceOffices of Physicians and Dentists621111 Offices of Physicians (exceptmental health specialists)621112 Offices of Physicians, MentalHealth Specialists621210 Offices of DentistsOffices of Other Health Practitioners621310 Offices of Chiropractors621320 Offices of Optometrists621330 Offices of Mental HealthPractitioners (exceptPhysicians)621340 Offices of Physical, Occupational& Speech Therapists, &Audiologists621391 Offices of Podiatrists621399 Offices of All Other MiscellaneousHealth PractitionersOutpatient Care Centers621410 Family Planning Centers621420 Outpatient Mental Health &Substance Abuse Centers621491 HMO Medical Centers621492 Kidney Dialysis Centers621493 Freestanding AmbulatorySurgical & Emergency Centers621498 All Other Outpatient CareCentersMedical and Diagnostic Laboratories621510 Medical & DiagnosticLaboratoriesHome Health Care Services621610 Home Health Care ServicesCodeOther Ambulatory Health CareServices621900 Other Ambulatory Health CareServices (including ambulanceservices & blood & organbanks)Hospitals622000 HospitalsNursing and Residential CareFacilities623000 Nursing & Residential CareFacilitiesSocial Assistance624100 Individual & Family Services624200 Community Food & Housing, &Emergency & Other ReliefServices624310 Vocational RehabilitationServices624410 Child Day Care ServicesArts, Entertainment, andRecreationPerforming Arts, Spectator Sports,and Related Industries711100 Performing Arts Companies711210 Spectator Sports (includingsports clubs & racetracks)711300 Promoters of Performing Arts,Sports, & Similar Events711410 Agents & Managers for Artists,Athletes, Entertainers, & OtherPublic Figures711510 Independent Artists, Writers, &PerformersMuseums, Historical Sites, andSimilar Institutions712100 Museums, Historical Sites, &Similar InstitutionsAmusement, Gambling, andRecreation Industries713100 Amusement Parks & Arcades713200 Gambling Industries713900 Other Amusement &Recreation Industries(including golf courses, skiingfacilities, marinas, fitnesscenters, & bowling centers)Accommodation and FoodServicesAccommodation721110 Hotels (except Casino Hotels)& Motels721120 Casino Hotels721191 Bed & Breakfast Inns721199 All Other TravelerAccommodation721210 RV (Recreational Vehicle)Parks & Recreational Camps721310 Rooming & Boarding HousesCodeFood Services and Drinking Places722110 Full-Service Restaurants722210 Limited-Service Eating Places722300 Special Food Services(including food servicecontractors & caterers)722410 Drinking Places (AlcoholicBeverages)Other ServicesRepair and Maintenance811110 Automotive Mechanical &Electrical Repair & Maintenance811120 Automotive Body, Paint,Interior, & Glass Repair811190 Other Automotive Repair &Maintenance (including oilchange & lubrication shops &car washes)811210 Electronic & PrecisionEquipment Repair &Maintenance811310 Commercial & IndustrialMachinery & Equipment(except Automotive &Electronic) Repair &Maintenance811410 Home & Garden Equipment &Appliance Repair &Maintenance811420 Reupholstery & FurnitureRepair811430 Footwear & Leather GoodsRepair811490 Other Personal & HouseholdGoods Repair & MaintenancePersonal and Laundry Services812111 Barber Shops812112 Beauty Salons812113 Nail Salons812190 Other Personal Care Services(including diet & weightreducing centers)812210 Funeral Homes & FuneralServices812220 Cemeteries & Crematories812310 Coin-Operated Laundries &Drycleaners812320 Drycleaning & LaundryServices (except Coin-Operated)812330 Linen & Uniform Supply812910 Pet Care (except Veterinary)Services812920 Photofinishing812930 Parking Lots & Garages812990 All Other Personal ServicesReligious, Grantmaking, Civic,Professional, and SimilarOrganizations813000 Religious, Grantmaking, Civic,Professional, & SimiliarOrganizations (includingcondominium andhomeowners associations)Page 18 Form 100W Booklet 2004

How To Get California Tax InformationWhere To Get Tax Forms and PublicationsBy Internet – You can view, download, and print California tax forms,instructions, publications, FTB Notices, and Legal Rulings from ourWebsite at www.ftb.ca.gov.By phone – To order current year California tax forms:• Refer to the list in the right column and find the code number for theform you want to order.• Call (800) 338-0505.• Select “Business Entity Information.”• Select “Order Forms and Publications.”• Enter the three-digit code shown to the left of the form title wheninstructed.Please allow two weeks to receive your order. If you live outsideCalifornia, please allow three weeks to receive your order.In person – Many libraries and some quick print businesses have formsand schedules for you to photocopy (a nominal fee may apply).Note: Employees at libraries and quick print businesses cannot providetax information or assistance.By mail – Write to:TAX FORMS REQUEST UNITFRANCHISE TAX BOARDPO BOX 307RANCHO CORDOVA CA 95741-0307LettersIf you write to us, be sure to include your California corporationnumber or federal employer identification number, your daytime andevening telephone numbers, and a copy of the notice with your letter.Send your letter to:FRANCHISE TAX BOARDPO BOX 942857SACRAMENTO CA 94257-0540We will respond to your letter within ten weeks. In some cases, we mayneed to call you for additional information. Do not attach correspondenceto your tax return unless the correspondence relates to an itemon the return.General Toll-Free Phone ServiceTelephone assistance is available year-round from 7 a.m. until 7 p.m.Monday through Friday, except state holidays. We may modify thesehours without notice to meet operational needs.From within the United States . . . . . . . . . . . . . . . . . . . (800) 852-5711From outside the United States (not toll-free) . . . . . . . (916) 845-6500For federal tax questions, call the IRS at . . . . . . . . . . . (800) 829-1040Assistance for persons with disabilitiesWe comply with the Americans with Disabilities Act. Persons withhearing or speech impairment, please call:TTY/TDD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800) 822-6268Asistencia bilingüe en español:Asistencia telefónica esta disponible todo el año durante las 7 a.m. y las7 p.m. lunes a viernes, excepto días festivos estatales. Sin embargo,podríamos modificar este horario sin aviso previo para cumplirnecesidades de operación.Dentro de los Estados Unidos, llame al . . . . . . . . . . . . (800) 852-5711Fuera de los Estados Unidos, llame al(cargos aplican) . . . . . . . . . . . . . . . . . . . . . . . . . . . . (916) 845-6500Para preguntas sobre impuestos federales,llame el IRS al . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800) 829-1040California Tax Forms and Publications817 California Corporation Tax Forms and Instructions.This booklet contains:Form 100, California Corporation Franchise or Income TaxReturn;Schedule H (100), Dividend Income DeductionsSchedule P (100), Alternative Minimum Tax and CreditLimitations — CorporationsFTB 3539, Payment Voucher for Automatic Extension forCorporations and Exempt OrganizationsFTB 3565, Small Business Stock QuestionnaireFTB 3805Q, Net Operating Loss (NOL) Computationand NOL and Disaster Loss Limitations — CorporationsFTB 3885, Corporation Depreciation and Amortization816 California S Corporation Tax Forms and Instructions.This booklet contains:Form 100S, California S Corporation Franchise or IncomeTax Return;Schedule B (100S), S Corporation Depreciation andAmortizationSchedule C (100S), S Corporation Tax CreditsSchedule D (100S), S Corporation Capital Gains andLosses and Built-In GainsSchedule H (100S), Dividend Income DeductionSchedule K-1 (100S), Shareholder’s Share of Income,Deductions, Credits, etc.Schedule QS, Qualified Subchapter S Subsidiary (QSub)Information WorksheetFTB 3539, Payment Voucher for Automatic Extension forCorporations and Exempt OrganizationsFTB 3805Q, Net Operating Loss (NOL) Computation andNOL Disaster Loss – Corporations814 Form 109 Booklet, California Exempt Organization BusinessIncome Tax Return818 Form 100-ES, Corporation Estimated Tax815 Form 199, California Exempt Organization Annual InformationReturn and instructions820 FTB Pub. 1068, Exempt Organizations — Requirements for FilingReturns and Paying Filing Fees802 FTB 3500, Exemption Application803 FTB 3555, Request for Tax Clearance Certificate — Corporations831 FTB 3534, Joint Strike Fighter Credits835 FTB 3805D, Net Operating Loss (NOL) Carryover Computationand Limitation – Pierce’s DiseaseYour Rights As A TaxpayerOur goal at the FTB is to make certain that your rights are protected sothat you will have the highest confidence in the integrity, efficiency, andfairness of our state tax system. FTB Pub. 4058, California Taxpayers’Bill of Rights, includes information on your rights as a Californiataxpayer, the Taxpayers’ Rights Advocate Program, and how you canrequest written advice from the FTB on whether a particular transactionis taxable.See “Where to Get Tax Forms and Publications” on this page.Form 100W Booklet 2004 Page 47

Automated Toll-Free Phone ServiceOur automated toll-free phone service is available 24 hours a day,7 days a week, in English and Spanish to callers with touch-tonetelephones. To order Business Entity forms, the automated service isavailable from 6 a.m. to 8 p.m. Monday through Friday, except stateholidays. You can:• Order current year California income tax forms, and• Hear recorded answers to many of your questions about Californiataxes.Have paper and pencil ready to take notes.Call from within the United States . . . . . . . . . . . . . . . . (800) 338-0505Call from outside the United States (not toll-free) . . . . (916) 845-6600To Order FormsSee “Where to Get Tax Forms and Publications” on the previous page.To Get InformationIf you need an answer to any of the following questions, call(800) 338-0505, select “Business Entity Information,” then “GeneralTax Information,” follow the recorded instructions, and enter the threedigitcode when instructed.Code Filing Assistance715 If my actual tax is less than the minimum franchise tax,what figure do I put on line 23 of Form 100 or Form 100W?717 What are the tax rates for corporations?718 How do I get an extension of time to file?722 When does my corporation have to file a short-period return?734 Is my corporation subject to franchise tax or income tax?S Corporations704 Is an S corporation subject to the minimum franchise tax?705 Are S corporations required to file estimated payments?706 What forms do S corporations file?707 The tax for my S corporation is less than the minimumfranchise tax. What figure do I put on line 22 of Form 100S?Exempt Organizations709 How do I get tax-exempt status?710 Does an exempt organization have to file Form 199?736 I have exempt status. Do I need to file Form 100 or Form 109in addition to Form 199?(Keep This Booklet For Future Use)Minimum Tax and Estimate Tax712 What is the minimum franchise tax?714 My corporation is not doing business; does it have to pay theminimum franchise tax?Billings and Miscellaneous Notices503 How do I file a protest against a Notice of Proposed Assessment?723 I received a bill for $250. What is this for?Tax Clearance724 How do I dissolve my corporation?725 What do I have to do to get a tax clearance?Limited Liability Companies (LLC)750 How do I organize or register an LLC?752 What tax forms do I use to file as an LLC?753 When is the annual tax payment due?Miscellaneous700 Who do I need to contact to start a business?701 I need a state Employer ID number for my business. Who do Icontact?703 How do I incorporate?721 How does my corporation change its accounting period?737 Where do I send my payment?Page 48 Form 100W Booklet 2004RecycledRecyclable