Instructions for Form 100W - FormSend

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