2008 3805z Booklet -- Enterprise Zone Business Booklet

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					  California
      Forms & Instructions
                                     This booklet contains:
                                     Form FTB 3805Z, Enterprise Zone Deduction and Credit Summary


      3805Z

                       2008
  Enterprise Zone Business Booklet




Members of the Franchise Tax Board
                John Chiang, Chair
         Judy Chu, Ph.D., Member
        Michael C. Genest, Member




                                                                          STATE OF CALIFORNIA
                                                                          FRANCHISE TAX BOARD
Instructions for Form FTB 3805Z
Enterprise Zone Businesses
References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2005, and to the California Revenue and Taxation Code (R&TC).

Contents                                                                                        Schedule Z, Computation of Credit                                                          Net Operating Loss (NOL) Computation
                                                                                                  Limitations  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 30   and NOL and Disaster Loss Limitations –
What’s New  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 2      How to Get California Tax Information  .  .  .  .  . 31                                    Individuals .
General Information  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 3
How to Claim Deductions and Credits .  .  .  .  .  . 5                                                                                                                                     Business Tax Credit Limitation – For taxable
Credits and Recapture .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5                    What’s New                                                                                 years beginning on or after January 1, 2008,
Hiring Credit  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5      Net Operating Loss – For taxable years                                                     and before January 1, 2010, business tax
Hiring Credit Recapture .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 6                     beginning in 2008 and 2009, California has                                                 credits can only offset 50% of the net tax, if a
Worksheet I, Hiring Credit and Recapture  .  .  . 7                                             suspended the net operating loss (NOL)                                                     corporation’s taxable income is $500,000 or
Worksheet II, Sales or Use Tax Credit  .  .  .  .  .  . 9                                       carryover deduction . Taxpayers may continue                                               more, or if an individual’s net business income
Business Expense Deduction and                                                                  to compute and carryover an NOL during the                                                 is $500,000 or more .
   Recapture  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 9       suspension period . However, taxpayers with                                                Business tax credits disallowed due to the 50%
Worksheet III, Business Expense                                                                 taxable income (corporations), net business                                                limitation may be carried over . The carryover
   Deduction and Recapture  .  .  .  .  .  .  .  .  .  .  .  .  . 10                            income (individuals) of less than $500,000, or                                             period for disallowed credits is extended by the
Worksheet IV, Net Interest Deduction for                                                        with disaster loss carryovers are not affected                                             number of taxable years the credits were not
   Lenders .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 12   by the NOL suspension rules .                                                              allowed .
Portion of Business Attributable to the                                                         The carryover period for suspended losses is                                               Assigned Credits to Affiliated Corporations –
   Enterprise Zone .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 12             extended by:                                                                               For taxable years beginning on or after July 1,
Worksheet V, Income or Loss                                                                                                                                                                2008, credit earned by members of a combined
   Apportionment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 15              • Two years for losses incurred in taxable
                                                                                                    years beginning before January 1, 2008 .                                               reporting group may be assigned to an
Net Operating Loss (NOL) Carryover and                                                                                                                                                     affiliated corporation . A credit assigned may
   Deduction  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 16      • One year for losses incurred in taxable
                                                                                                    years beginning on or after January 1,                                                 only be applied by the affiliated corporation
Worksheet VI, Net Operating Loss (NOL)                                                                                                                                                     against their tax in a taxable year beginning on
   Computation and Loss Limitations  .  .  .  .  .  . 18                                            2008, and before January 1, 2009 .
                                                                                                                                                                                           or after January 1, 2010 .
Computation of Credit Limitations  .  .  .  .  .  .  .  . 21                                    Also, NOL carrybacks, NOL carryovers, and the
Standard Industrial Classification Manual                                                       number of taxable years to which the loss may                                              Minimum Wage Increase
   1987 Edition (Partial Listing)  .  .  .  .  .  .  .  .  .  . 24                              be carried, are modified . For more information,                                           Beginning January 1, 2008, the California
Principal Business Activity Codes  .  .  .  .  .  .  .  .  . 25                                 see form FTB 3805Q, Net Operating Loss                                                     minimum wage increased to $8 per hour .
Form FTB 3805Z, Enterprise Zone                                                                 (NOL) Computation and NOL and Disaster Loss
   Deduction and Credit Summary  .  .  .  .  .  .  .  . 29                                      Limitations – Corporations or form FTB 3805V,


Conditionally Designated Zones
 Region and Zone Name                                                                                        Zone Jurisdictions                                                                      Incentive start on   Expiration date
 Central Valley
 Arvin                  City of Arvin*
 Delano                 City of Delano                                                                                                                                                                  12/17/2006          12/16/2021
 Kings County           Cities Hanford*, Lemore*, Corcoran*, Avenal*, Kings County Economic Development Corporation*
 Merced                 Cities of Los Banos, Atwater, Dos Palos, Gustine, Livingston, Merced, County of Merced                                                                                          12/17/2006          12/16/2021
 San Joaquin            County of San Joaquin*, Cities of Stockton*, Lodi*, Manteca*, Tracy*, Lathrop*
 Greater Sacramento/Stockton
 Northern Sacramento City and County of Sacramento                                                                                                                                                      10/15/2006          10/14/2021
 West Sacramento        City of West Sacramento*
 Yuba Sutter            Cities of Marysville, Yuba City, Wheatland, Live Oak, Counties of Yuba and Sutter                                                                                               10/15/2006          10/14/2021
 Inland Empire/Imperial Valley
 San Bernardino         Cities of San Bernardino and Colton, County of San Bernardino                                                                                                                   10/15/2006          10/14/2021
                        Inland*, Valley Development Agency*
 Los Angeles Region
 Los Angeles/East       East LA*, Los Angeles County*
 San Diego
 San Diego              Cities of San Diego*, Chula Vista*, National City*
 Santa Ana              Santa Ana*
 Bay Area
 Oakland                Oakland*
 Richmond               City of Richmond                                                                                                                                                                03/02/2007          03/01/2022
 Salinas Valley         Cities of Salinas*, Gonzales*, Greenfield*, King City*, County of Monterey*
 San Francisco          City and County of San Francisco                                                                                                                                                05/28/2007          05/27/2022
 Northern California
 Siskiyou County        County of Siskiyou*, Cities of Dorris*, Dunsmuir*, Etna*, Fort Jones*, Montague*, Mt . Shasta*,
 (formerly Siskiyou     Tulelake*, Weed*, Yreka*
 County/Shasta Valley)
 * Dates to be determined



Page                FTB 3805Z Booklet 2008
New Enterprise Zone Designation                   Taxpayers should not consider the tax booklets         carryover can continue to be utilized to the
The following Enterprise Zones (EZs) received     as authoritative law.                                  extent of tax on business income or business
final designation in 2008:                        Pass-Through Entities                                  income attributable to the former EZ.
Enterprise Zone     Designated     Expiration     For purposes of this booklet, the term                 Filing of Form FTB 805Z
                       Date           Date        “pass-through entity” refers to an S corporation,      Taxpayers that operate a business located in
Calexico            10/15/2006     10/14/2021     estate, trust, partnership, and a limited liability    an expired zone and in a new zone (whether
Eureka              10/15/2006     10/14/2021     company (LLC). References to “partnerships”            conditionally designated or final designation
Fresno City         10/15/2006     10/14/2021
L.A. – Hollywood    10/15/2006     10/14/2021
                                                  include LLCs classified as partnerships.               has been received), file one form FTB 3805Z
Southgate – Lynwood 10/15/2006     10/14/2021     Registered Domestic Partners (RDP)                     for the expired zone and another form
Oroville            11/06/2006     11/05/2021     RDPs under California law must file their              FTB 3805Z for the new zone, to claim the EZ
Coachella Valley    11/11/2006     11/10/2021     California income tax returns using either the         incentives.
Shasta Metro        11/06/2006     11/05/2021     married/RDP filing jointly or married/RDP filing       The incentives from an expired zone can only
San Jose            12/31/2006     12/30/2021     separately filing status. RDPs have the same           be deducted or offset against the business
Long Beach          01/08/2007     01/07/2022
Pasadena            04/10/2007     04/10/2022
                                                  legal benefits, protections, and responsibilities      income or the tax on the business income
                                                  as married couples unless otherwise specified.         in the expired zone. The incentives from a
Expired Zones                                                                                            new zone can only be deducted or offset
The following Enterprise Zones (EZs) expired      If you entered into in a same sex legal union in
                                                  another state, other than a marriage, and that         against the business income or the tax on the
in 2008:                                                                                                 business income in the new zone. The amount
                                                  union has been determined to be substantially
Enterprise Zone      Designated    Expiration     equivalent to a California registered domestic         of EZ credit is limited by the amount of tax
                        Date          Date                                                               (line 6a of Schedule Z of form FTB 3805Z)
L.A. – East Side     01/11/1998    01/10/2008
                                                  partnership, you are required to file a California
                                                  income tax return using either the married/RDP         attributable to business income from each
Pittsburg            01/11/1988    01/10/2008                                                            EZ. The total amount of credits from all EZs
West Sacramento      01/11/1988    01/10/2008     filing jointly or married/RDP filing separately
Santa Ana            06/08/1993    06/07/2008     filing status. For more information on what            should not exceed the net tax liability (line 6b
Kings County         06/22/1993    06/21/2008     states have legal unions that are considered           of Schedule Z of form FTB 3805Z).
Siskiyou County                                   substantially equivalent, go to our website at         For an expired zone, use form FTB 3805Z to
   (Shasta Valley)   06/22/1993    06/21/2008     ftb.ca.gov and search for rdp.                         report the enterprise zone credit generated in
Stockton             06/22/1993    06/21/2008                                                            this zone and to report the carryover amounts
Oakland              09/28/1993    09/27/2008     For purposes of California income tax,
                                                  references to a spouse, a husband, or a wife           of the credit and net operating loss deductions.
New Conditionally Designated Zones                also refer to a California registered domestic         For a new zone (whether conditionally
The following zones received conditional          partner (RDP), unless otherwise specified.             designated or final designation has been
designation in 2008:                              When we use the initials RDP they refer to both        received) use form FTB 3805Z to report the
Zone Name                                         a California registered domestic “partner” and a       enterprise zone incentives generated in this
Santa Ana                                         California registered domestic “partnership,” as       zone and to report the carryover amounts from
Kings County                                      applicable. For more information on RDPs, get          this zone.
San Joaquin
Siskiyou County
                                                  FTB Pub. 737, Tax Information for Registered           Net Interest Deduction
Los Angeles – East                                Domestic Partners.                                     When the taxpayer (creditor) negotiated a
Oakland                                           Enterprise Zone Designation                            qualified loan with a debtor in an enterprise
Salinas Valley                                    The following Enterprise Zones (EZs) received          zone that is now expired, the debtor must
West Sacramento                                   final designation in 2007:                             continue to operate within a new enterprise
Before filing form FTB 3805Z, go to               Enterprise Zone         Designated    Expiration       zone that recently received a conditional
hcd.ca.gov and search for eda to find the                                    Date          Date          designation to qualify the creditor for the net
Directory of 2009 Zone Contacts for assistance    Fresno-County           06/27/2007    06/26/2022       interest deduction. For more information, see
with conditional zone dates.                      Compton                 08/01/2007    07/31/2022       Part III, Net Interest Deduction for Lenders, on
                                                  Santa Clarita           07/01/2007    06/30/2022       page 11 of this booklet.
General Information                               Conditional Designation
In general, California law conforms to the
                                                  Beginning in 2006, legislation was enacted             Introduction
                                                  to allow zones, who received a conditional
Internal Revenue Code (IRC) as of January 2005.
However, there are continuing differences
                                                  designation from the California Department of          Economic Development Area
between California and federal law. When
                                                  Housing and Community Development (HCD),               (EDA) Tax Incentives
                                                  to offer tax incentives during a redesignation
California conforms to federal tax law changes,                                                          California has established four types of
                                                  period. This is the gap between the expiration
we do not always adopt all of the changes made                                                           EDAs that have related tax incentives. These
                                                  date of the old zone and the final designation
at the federal level. For more information, go                                                           incentives have been established to stimulate
                                                  of the new zone. Before filing form FTB 3805Z,
to our website at ftb.ca.gov and search for                                                              growth and development in selected areas that
                                                  go to hcd.ca.gov and search for eda to find the
conformity. Additional information can be found                                                          are economically depressed. EDA tax incentives
                                                  Directory of 2009 Zone Contacts for assistance
in FTB Pub. 1001, Supplemental Guidelines                                                                apply only to certain business transactions that
                                                  with conditional zone dates.
to California Adjustments, the instructions for                                                          are undertaken after an EDA has received final
California Schedule CA (540 or 540NR), and the    Expired Zones                                          designation from the HCD. Final designation
Business Entity tax booklets.                     The following EZs expired in 2007:                     is when the HCD designated an area to be an
The instructions provided with California tax     Enterprise Zone          Designated    Expiration      EDA. Tax incentives are available to individuals
                                                                              Date          Date         and businesses operating or investing within
forms are a summary of California tax law
                                                  Altadena/Pasadena         04/10/92     04/09/2007      the geographic boundaries of the following
and are only intended to aid taxpayers in         Long Beach                01/08/92     01/07/2007
preparing their state income tax returns. We                                                             EDAs:
                                                  Richmond                  03/02/92     03/01/2007
include information that is most useful to the    San Diego – South Bay     01/28/92     01/27/2007      • Enterprise Zones (EZ)
greatest number of taxpayers in the limited       San Francisco             05/28/92     05/27/2007      • Local Agency Military Base Recovery Areas
space available. It is not possible to include                                                               (LAMBRAs)
                                                  Generally, no further EZ incentives can be             • Manufacturing Enhancement Areas (MEAs)
all requirements of the California Revenue        generated after the expiration date. Any EZ
and Taxation Code (R&TC) in the tax booklets.                                                            • The Targeted Tax Area (TTA)
                                                  credit carryover or EZ net operating loss

                                                                                                     FTB 3805Z Booklet 2008 (REV 03-09) Page 
Reporting Requirement                               Compton
                                                    Delano
                                                                                   08/01/07
                                                                                   12/17/91
                                                                                               07/31/2022
                                                                                               12/16/2006
                                                                                                            Important Considerations
California statutes require the Franchise Tax       Eureka                         10/15/06    10/14/2021   In general, EZ tax incentives apply only to
Board (FTB) to provide information to the           Fresno – City                  10/15/06    10/14/2021   investments and business activities undertaken
California Legislature regarding the number         Fresno – County                06/27/07    06/26/2022   within the EZ after the zone receives final
of businesses using the EDA tax incentives,         Imperial Valley                03/01/06    02/28/2021   designation and before the designation
types of EDA tax incentives being used, and in      Kings County                   06/22/93    06/21/2008   expires . The taxpayer can also claim the
                                                    Lindsay                        10/06/95    10/05/2010
which EDAs the businesses are claiming the                                                                  incentives when the zone receives conditional
                                                    Long Beach                     01/08/07    01/07/2022
tax incentives .                                    Los Angeles – Central City     10/15/86    10/14/2006   designation . See Conditional Designation
Complete items A through J on form FTB 3805Z,       Los Angeles – East Side        01/11/98    01/10/2008   section on page 3 for more information .
Side 1, Enterprise Zone Deduction and Credit
Summary, as applicable . This information will
                                                    Los Angeles – Harbor Area
                                                    Los Angeles – Hollywood
                                                                                   03/04/89
                                                                                  10/15/2006
                                                                                               03/03/2009
                                                                                               10/14/2021   Expansion
be used to meet the FTB’s statutory reporting       Los Angeles – Mid‑Alameda      10/15/86    10/14/2006   This requirement also applies to any expansion
requirement . See form FTB 3805Z, Side 1 .                         Corridor                                 of the existing EZ boundaries . Thus, a business
                                                    (Note: The city of Lynwood expired on 10/14/01)         in the expanded area is eligible for the tax
Additional information on other EDAs can be         Los Angeles – Northeast     10/15/86 10/14/2006         incentives only after the expansion receives
found in the following FTB tax booklets:                           Valley
                                                                                                            final designation .
• The LAMBRA tax incentives, FTB 3807,              Madera                         03/04/89    03/03/2009
    Local Agency Military Base Recovery Area        Merced/Atwater                 12/17/91    12/16/2006   Who Can Claim the EZ Tax
                                                    Oakland                        09/28/93    09/27/2008
    Business Booklet .
• The MEA hiring credit, FTB 3808,                  Oroville                       11/06/06    11/05/2021   Incentives?
                                                    Pasadena                       04/10/07    04/10/2022   The EZ credits and deductions are available
    Manufacturing Enhancement Area Business         Pittsburg                      01/11/88    01/10/2008
    Booklet .                                                                                               to individuals, sole proprietors, corporations,
                                                    Porterville                    10/15/86    10/14/2006
• The TTA tax incentives, FTB 3809, Targeted                                                                estates, trusts, and partnerships operating or
                                                    Redding/Anderson               11/06/91    11/05/2006
    Tax Area Business Booklet .                      (Shasta Metro)                                         investing in a trade or business located within
                                                    Richmond                       03/02/92    03/01/2007   a designated EZ .
If you are an employee in an EZ, get form
                                                    Sacramento – Army Depot        10/04/94    10/03/2009   To take advantage of the hiring credit, get a
FTB 3553, Enterprise Zone Employee Credit .
                                                    Sacramento – Florin/Perkins    04/05/89    04/04/2009   completed Form VoucherCert 10‑07, which can
Purpose                                             Sacramento – Northgate
                                                    San Bernardino/Riverside
                                                                                   10/15/86
                                                                                   10/15/86
                                                                                               10/14/2006
                                                                                               10/14/2006
                                                                                                            be obtained from the local agency responsible
This booklet provides specific information                                                                  for verifying employee eligibility . Do not file
                                                     (Agua Mansa)
on the available EZ tax incentives . Taxpayers      San Diego – South Bay          01/28/92    01/27/2007   Form VoucherCert 10‑07 with your return .
operating or investing in a trade or business       San Diego – Metro              10/15/86    10/14/2006   Keep Form VoucherCert 10‑07 for your
located within a designated EZ may be eligible      San Francisco                  05/28/92    05/27/2007   records .
                                                    San Jose                       12/31/06    12/30/2021
for the following credits and deductions:
• Hiring Credit                                     Santa Ana                      06/08/93    06/07/2008   Forms Table
                                                    Santa Clarita                  07/01/07    06/30/2022   The titles of forms referred to in this booklet are:
• Sales or Use Tax Credit
                                                    Shafter                        10/04/95    10/03/2010
• Business Expense Deduction                        Shasta Metro                   11/06/06    11/05/2021   Form 100         California Corporation Franchise
• Net Interest Deduction                            Siskiyou County                                                          or Income Tax Return
• NOL Carryover Deduction                            (Shasta Valley)               06/22/93    06/21/2008   Form 100S        California S Corporation
Use this booklet to determine the correct           Southgate‑Lynwood              10/15/06    10/14/2021                    Franchise or Income Tax Return
amount of deductions and credits that a             Stanislaus                                              Form 100W California Corporation Franchise
                                                     (including Ceres,                                                       or Income Tax Return —
taxpayer may claim for operating or investing
                                                     Modesto, Turlock and                                                    Water’s‑Edge Filers
in a trade or business located within a              Stanislaus County)            11/16/05    11/15/2020
designated EZ . Complete the worksheets in this                                                             Form 109         California Exempt Organization
                                                    Stockton                       06/22/93    06/21/2008
booklet for each deduction or credit for which                                                                               Business Income Tax Return
                                                    Watsonville                    05/01/97    04/30/2012
the business is eligible . Then enter the total     West Sacramento                01/11/88    01/10/2008   Form 540         California Resident Income
deductions on form FTB 3805Z .                      Yuba/Sutter                    10/15/86    10/14/2006                    Tax Return
                                                                                                            Long Form        California Nonresident or
Enterprise Zone Designation                         For business eligibility or zone related
                                                    information, including questions regarding EZ
                                                                                                            540NR            Part‑Year Resident Income Tax
EZs were established in California to provide tax                                                                            Return
                                                    geographic boundaries, contact the local zone           Form 541         California Fiduciary Income
incentives to businesses and allow private sector   program manager in which the business is
market forces to revive the local economy . The                                                                              Tax Return
                                                    located . For a list of program managers, go to         Form 565         Partnership Return of Income
program offers special tax incentives to entities   www.hcd.ca.gov and search for eda .
and individuals located in selected EZ areas                                                                Form 568         Limited Liability Company
and engaged in trades or businesses within the      For information that is not tax‑specific or zone‑                        Return of Income
selected Standard Industrial Codes listed on        specific, you may contact the Department of             Schedule CA California Adjustments —
page 24 of this booklet .                           Housing and Community Development at:                   (540)            Residents
                                                        DEPARTMENT OF HOUSING &                             Schedule CA California Adjustments —
Portions of the following areas were officially                                                             (540NR)          Nonresidents or
designated as EZs on the dates shown below .            COMMUNITY DEVELOPMENT
                                                        FINANCIAL ASSISTANCE DIVISION                                        Part‑Year Residents
EZ designations are valid for 15 years (or up to                                                            Schedule P       Alternative Minimum Tax and
20 years with an extension) .                           STATE ENTERPRISE AND ECONOMIC
                                                        DEVELOPMENT SECTION                                 (540)            Credit Limitations – Residents
Enterprise Zone          Designated Expiration          ENTERPRISE ZONE PROGRAMS                            Schedule P       Alternative Minimum Tax
                            Date      Date                                                                  (540NR)          and Credit Limitations –
Altadena/Pasadena         04/10/92 04/09/2007
                                                        1800 THIRD STREET, SUITE 390‑1
                                                        SACRAMENTO CA 95811                                                  Nonresidents and Part‑Year
Antelope Valley           02/01/97 01/31/2012
Bakersfield/Kern          10/15/86 10/14/2006                                                                                Residents
                                                        Telephone: 916 .322 .1554
 (SE Bakersfield)                                                                                           Schedule R       Apportionment and Allocation
                                                        FAX: 916 .322 .2904
Barstow                   02/01/06    01/31/2021                                                                             of Income
                                                        Website: www.hcd.ca.gov
Calexico                  10/15/06    10/14/2021                                                            FTB Pub .        Guidelines for Corporations
Coachella Valley          11/11/06    11/10/2021                                                            1061             Filing a Combined Report

Page      FTB 3805Z Booklet 2008
Schedule C     S Corporation Tax Credits           Keep all completed worksheets and supporting                 1 . A person receiving or eligible to
(100S)                                             documents for your records .                                     receive subsidized employment,
Schedule K‑1   Shareholder’s Share of Income,                                                                       training, or services funded by the
(100S)         Deductions, Credits, etc .          Form FTB 3805Z – Instructions                                    federal Job Training Partnership Act
Schedule K‑1   Beneficiary’s Share of Income,                                                                       (JTPA) or its successor .
(541)          Deductions, Credits, etc .          for Items A through J                                        2 . A person eligible to be a voluntary
Schedule K‑1   Partner’s Share of Income,          For corporations, estates, trusts, exempt                        or mandatory registrant under the
(565)          Deductions, Credits, etc .          organizations, and sole proprietors, complete                    Greater Avenues for Independence Act
Schedule K‑1   Member’s Share of Income,           items A through J .                                              of 1985 (GAIN) or its successor .
(568)          Deductions, Credits, etc .          Investors of pass‑through entities, complete                 3 . A member of a targeted group
                                                                                                                    as defined in the federal Work
How to Claim Deductions and                        items A through D .
                                                                                                                    Opportunity Tax Credit .
                                                   Standard Industrial Classification (SIC) and
Credits                                            Principal Business Activity (PBA) Codes
                                                                                                                4 . An economically disadvantaged
To claim any EZ deduction or credit, attach a                                                                       individual 14 years of age or older .
                                                   FTB implemented the Principal Business                       5 . A qualified dislocated worker .
completed form FTB 3805Z to the California tax
                                                   Activity (PBA) code chart that is based on                   6 . A disabled individual eligible for,
return .
                                                   the North American Industry Classification                       enrolled in, or who completed a state
Attach a separate form FTB 3805Z for each          System (NAICS) . The list of principal business                  rehabilitation plan .
EZ business operating or investing within a        activities and their associated codes are                    7 . A service‑connected disabled veteran .
designated EZ . Also complete the following        designed to classify a business by the type                  8 . A veteran of the Vietnam era .
schedule and/or worksheets:                        of activity in which it is engaged to facilitate             9 . A veteran who recently separated from
• Corporations complete Schedule Z and all         the administration of the California R&TC .                      military service .
    the worksheets, except for Worksheet V,        The PBA codes are listed on page 25 through                10 . An ex‑offender .
    Section C .                                    page 27 . Enter the PBA code of your principal             11 . A person eligible for, or a recipient of
• Sole proprietors complete Schedule Z and         activities on form FTB 3805Z, Side 1 .                           any of the following:
    all the worksheets .                                                                                            • Federal Supplemental Security
                                                   For purposes of qualifying for the Long Beach EZ
• Trusts, estates, and partnerships, complete                                                                           Income (SSI) benefits .
                                                   hiring credit, use the SIC codes listed on page 24 .
    Worksheet I through Worksheet IV and                                                                            • Aid to Families with Dependent
                                                   For the Long Beach EZ, enter the SIC code of the
    Worksheet V, Section A .                                                                                            Children (AFDC) .
                                                   establishment that qualifies you to take this credit
•· Individual investors receiving pass‑through                                                                      • Food stamps .
                                                   on form FTB 3805Z, Side 1 . If your enterprise has
    EZ credits or the business expense                                                                              • State and local general assistance .
                                                   more than one establishment, and if more than
    deduction, complete Worksheet V,                                                                          12 . A Native American .
                                                   one of them qualifies you to take this credit, enter
    Section C and Schedule Z .                                                                                13 . A resident of a targeted employment
                                                   the SIC code that best represents your primary
• All other investors complete Worksheet V,                                                                         area (TEA) .
                                                   qualifying establishment .
    Section A and Schedule Z .
• Individual investors receiving a pass‑through                                                           For more information, refer to the federal JTPA
    loss, and having an overall NOL, complete      Part I – Credits and Recapture                         or its successor, the Workforce Investment Act
    Worksheet V, Section C and Worksheet                                                                  (WIA) .
    VI, Section A and/or C . All other investors
                                                   Line 1a – Hiring Credit                                Employers hiring qualified employees get the
    complete Worksheet V, Section B and            For employers engaged in a trade or business           Form VoucherCert 10‑07 from the local agency
    Worksheet VI, Section B and/or C .             in a former (expired) EZ, the hiring credit can        responsible for verifying employee eligibility .
                                                   be taken for qualified employees hired on              Do not file Form VoucherCert 10‑07 with your
Schedule Z is on Side 2 of form FTB 3805Z .
                                                   or before the date of expiration of the EZ for         return . Keep Form VoucherCert 10‑07 for your
To assist with the processing of the tax return,   the full five‑year period of the hiring credit .       records .
indicate that the business operates or invests     However, the hiring credit may not be taken for
within an EZ by doing the following:                                                                      The percentage of wages used to compute the
                                                   any employees hired after the date of expiration       credit depends on the number of years the
Form 50 filers: Claim EZ tax incentives           of the EZ . Hiring credit carryovers may still         employee works for the employer in the EZ .
                    on Form 540, line 14, and      be claimed to the extent of business income            The applicable percentage begins at 50% and
                    line 25 through line 27, as    apportioned to the former EZ until fully utilized .    declines 10% for each year of employment .
                    applicable .                   Employers engaged in a trade or business               After the fifth year of employment, no credit
Long Form           Claim EZ tax incentives on     within an EZ may claim the hiring credit for a         can be generated .
 50NR filers:      Long Form 540NR, line 14,      qualified employee . A qualified employee is an
                    and line 32 through line 34,                                                          Wages that qualify for the hiring credit are those
                                                   individual who meets all of the following:             wages paid to a qualified employee for the
                    as applicable .                • Was hired after the EZ received its final
Form 100 filers: Claim EZ tax incentives on                                                               consecutive 60‑month period beginning on the
                                                       designation and before the designation             first date the employee commenced employment
                    Form 100, line 15, line 21,        expires .
                    and line 25 through line 27,                                                          with the employer . For an employer that operates
                                                   • Spends at least 90% of work time for the             a business that has regularly occurring seasonal
                    as applicable .                    qualified employer on activities directly
Form 100S filers: Claim EZ tax incentives on                                                              or intermittent employment decreases and
                                                       related to the conduct of a trade or               increases, reemployment of an individual is
                    Form 100S, line 12, line 19,       business located within an EZ .
                    and line 23 through line 25,                                                          not a new hire; rather, it is a continuation of
                                                   • Performs at least 50% of the work for the            the prior employment and does not constitute
                    as applicable .                    qualified employer within the boundaries of
Form 100W filers: Claim EZ tax incentives                                                                 commencement of employment for the qualified
                                                       the EZ .                                           wages test .
                    on Form 100W, line 15,         • Qualifies for the former program area hiring
                    line 21, and line 25 through       credit or meets any of the following at the        The credit is based on the smaller of the
                    line 27, as applicable .           time of hire:                                      following:
Form 109 filers: Check the “Yes” box for                                                                  • The actual hourly rate paid or incurred by
                    question I on the top of                                                                  the employer for work performed by the
                    Form 109, Side 1 .                                                                        employee during the taxable year .


                                                                                                                   FTB 3805Z Booklet 2008          Page 5
• 150% of the minimum hourly wage                     Record Keeping                                     Instructions for Worksheet I
    established by the Industrial Welfare             Retain a copy of Form VoucherCert 10‑07
    Commission .                                      to substantiate an individual’s eligibility as a   — Hiring Credit and Recapture
Where the California minimum wage is higher           “qualified employee .” In addition, for each       Section A – Credit Computation
than the federal minimum wage, the California         qualified employee, keep a schedule for the
                                                      first 60 months of employment showing (at          Line 1, column (a) – Enter the name of
minimum wage is used for purposes of                                                                     each qualified employee . Attach additional
computing the EZ hiring credit .                      least):
                                                      • Employee’s name .                                schedule(s) if necessary .
The current minimum wage is $8 .00 per hour .         • Date the employee was hired .                    Line 1, column (b) through column (f) – Enter
For purposes of computing the EZ hiring credit,       • Number of hours the employee worked for          in the appropriate columns the qualified wages
150% of the minimum wage is $12 .00 per hour .            each month of employment .                     paid or incurred during the taxable year to each
Example:                                              • Smaller of the hourly rate of pay for each       employee listed in column (a) .
John Anderson was hired on January 1, 2008 .              month of employment or 150% (or 202%,          Example: If you are a 2008 calendar year
John’s hourly rate for the first month was the            if applicable) of the minimum wage .           taxpayer and you hired an employee on
minimum wage of $8 .00 . At the beginning of          • Location of the employee’s job site and          June 1, 2007, enter the total qualified wages
the second month, his hourly rate increased               duties performed .                             paid to the employee for the period beginning
to $9 .00 . In the third month, John’s hourly         • Records of any other federal or state            January 1, 2008, and ending May 31, 2008,
rate increased to $13 .00 . The hourly rate that          subsidies received for hiring the qualified    in column (b) . You would enter the total
qualifies for the credit is limited to 150% of            employee .                                     qualified wages paid to the employee for the
the minimum wage, or $12 .00 per hour . The           • Total qualified wages per month for each         period beginning June 1, 2008, and ending
amount of qualified wages is computed as                  month of employment .                          December 31, 2008, in column (c) .
follows:
Month(s)     Hours x     Hourly = Qualified wages     Line 1b – Hiring Credit                            (a) Employee
                                                                                                             name
                                                                                                                                (b)
                                                                                                                          1st 1 months
                                                                                                                                                             (c)
                                                                                                                                                       nd 1 months
           per month      rate      per month         Recapture                                          John Doe     Amount of qualified           Amount of qualified
                         allowed                                                                                      wages earned from             wages earned from
                                                      Recapture the amount of credit attributable                     1/1/08 to 5/31/08 .           6/1/08 through
  1           175        $ 8 .00    $1,400 .00        to an employee’s wages if the employer                                                        12/31/08 .
  2           170        $ 9 .00    $1,530 .00        terminates the employee at any time during the     The qualified wages from June 1, 2007 to
  3           170        $12 .00    $2,040 .00        longer of either of the following:                 December 31, 2007, were put in column (b) on
Long Beach Enterprise Zone                            • The first 270 days of employment (whether        the 2007 worksheet .
For taxable years beginning on or after                   or not consecutive) .
                                                      • 90 days of employment plus 270 calendar          The credit computation is based on a 12 month
January 1, 1996, the percentage of wages on                                                              period beginning with the employee’s hiring
which the hiring credit is based increased for            days .
                                                                                                         date .
taxpayers engaged in aircraft manufacturing           Employers of seasonal employees recapture
activities (described in Codes 3721, 3724,            the amount of hiring credit attributable to the    Line , column (b) through column (f) – Add
3728, and 3812 of the Standard Industrial             employee’s wages if both of these apply:           the amounts in each column .
Classification Manual, 1987 Edition, published        • The employer terminates the employee             Line 3, column (b) through column (f) –
by the United States Office of Management                 before the completion of 270 days of           Multiply the total in each column of line 2 by
and Budget) . See page 24 for a list of qualified         employment .                                   the percentage in each column .
SIC codes . Qualified wages for purposes of the       • The 270 days is during the 60‑month period       Line 5 – The following credits reduce the EZ
hiring credit for such aircraft manufacturers             beginning the day the employee commences       hiring credit in the taxable year these credits
located in the Long Beach EZ, for up to a                 employment with the employer .                 are accrued . Use the following worksheet to
maximum of 1,350 qualified employees, are             A “day of employment” means any day the            determine the amount to enter on this line .
based on the smaller of the following:                employee receives wage compensation                Credit                                                       Amount
• The actual hourly rate paid or incurred by          (including a paid sick day, holiday, or vacation
     the employer for work performed by the           day) .                                             1 LAMBRA Hiring Credit  .  .  .  .  .  .  . 1 _______
     employee during the taxable year .                                                                  2 Federal Work Opportunity Tax
                                                      The employer adds to the current year’s tax            Credit for employees hired on
• The rates (based on the time qualified
                                                      the amount of credit claimed in the year               or before December 31, 2005  .  .  _______
     wages are paid or incurred) which represent
                                                      of termination and all prior years in which        3 Total: Add line 1 and line 2 .
     202% of the minimum hourly wage .
                                                      the credit was claimed for the terminated              Enter on Worksheet I,
For purposes of computing the EZ hiring credit,       employee .                                             Section A, line 5  .  .  .  .  .  .  .  .  .  .  .  . 3 _______
202% of the minimum wage is $16 .16 per hour .
                                                      The credit recapture does not apply if the         Line 
Example:                                              termination of employment was any of the
John Anderson was hired on January 1, 2008 .          following:                                         A . For partnerships, enter the amount from
John’s hourly rate for the first month was            • Voluntary on the part of the employee .              line 6 on form FTB 3805Z, Side 1, Part I,
$9 .00 . At the beginning of the second month,        • In response to misconduct of the employee .          line 1a . Include the current year hiring
his hourly rate increased to $11 .00 . In the third   • Caused by the employee becoming disabled             amount on Forms 565 and 568, Schedule K,
month, John’s hourly rate increased to $16 .50 .          (unless the employee was able to return            line 15f and the distributive share of
The hourly rate that qualifies for the credit             to work and the employer did not offer to          the credit to partners and members on
is limited to 202% of the minimum wage,                   reemploy the individual) .                         Schedule K‑1, line 15f . In addition, add the
or $16 .16 per hour . The amount of qualified         • Carried out so that other qualified                  entire amount of the credit on Schedule K,
wages is computed as follows:                             individuals could be hired, creating a net         line 1, column (c) .
Month(s)     Hours x     Hourly = Qualified wages         increase in both the number of qualified       B . For corporations, individuals, estates, and
           per month      rate      per month             employees and the number of hours                  trusts, enter the amount from line 6 on
                         allowed                          worked .                                           Schedule Z, as follows:
  1           175        $ 9 .00   $1,575 .00         • Due to a substantial reduction in the                • Part II, line 8B, column (b) for
  2           170        $11 .00   $1,870 .00             employer’s trade or business operations .              corporations, individuals, estates, and
                                                                                                                 trusts .
  3           170        $16 .16   $2,747 .20


Page      FTB 3805Z Booklet 2008
   • Part III, line 10, column (b) for                                                            • The amount of hiring credit claimed                                                             Also, include the amount of hiring credit
       S corporations .                                                                               may not exceed the amount of tax on                                                           recapture on your California tax return or
   • Part IV, line 12, column (b) for                                                                 the EZ business income in any year . Use                                                      schedule as follows:
       corporations and S corporations subject                                                        Schedule Z to compute the credit limitation .                                                 • Form 100, Schedule J .
       to paying only the minimum franchise                                                       • In the case where the wage expense                                                              • Form 100S, Schedule J and
       tax .                                                                                          qualifies the business to take the EZ hiring                                                      Schedule K‑1 (100S), line 17d .
Credit Limitations                                                                                    credit as well as the LAMBRA, MEA, or TTA                                                     • Form 100W, Schedule J .
• Businesses reduce any deduction for                                                                 hiring credit, the business may claim only                                                    • Form 109, Schedule K .
   wages by the amount of the hiring credit .                                                         one credit .                                                                                  • Form 540, line 33 .
• S corporations are allowed only 1/3 of                                                          • The business may carry over any unused                                                          • Long Form 540NR, line 41 .
   the EZ hiring credit by operation of law .                                                         hiring credit to future years until the                                                       • Form 541, line 21b and
   S corporations reduce their wage deduction                                                         credit is exhausted . In the case of an                                                           Schedule K‑1 (541), line 14d .
   by 1/3 of the amount on Worksheet I,                                                               S corporation, 2/3 of the credit is lost and                                                  • Form 565, Schedule K, line 20c and
   Section A, line 6 . Make the wage deduction                                                        the remaining 1/3 can be carried over if it                                                       Schedule K‑1 (565), line 20c .
   adjustment on Form 100S, line 7 . In                                                               cannot be used in the current year .                                                          • Form 568, Schedule K, line 20c and
   addition, add back the entire amount of the                                                    For additional information about the treatment                                                        Schedule K‑1 (568), line 20c .
   credit on Form 100S, Schedule K, line 1,                                                       of credits for S corporations, see instructions                                                   Indicate that you included the hiring credit
   column (c) .                                                                                   for Schedule Z .                                                                                  recapture on your tax return by writing
                                                                                                                                                                                                    “FTB 3805Z” in the space provided or next to
   Example: In 2008, an S corporation
   qualified for a $3,000 EZ hiring credit .
                                                                                                  Section B – Credit Recapture                                                                      the line on the schedule or form .
   S corporations can claim only 1/3 of the                                                       Line 1, column (a) – Enter the name of                                                            Partnerships identify the recapture amounts
   credit ($3,000 x 1/3 = $1,000) . Therefore,                                                    the terminated employee . Attach additional                                                       for partners and members on Schedule K‑1
   the S corporation must reduce its wage                                                         schedule(s) if necessary .                                                                        (565 or 568) .
   deduction by $1,000 . On Form 100S,                                                            Line 1, column (b) – Enter the amount of                                                          S corporation shareholders recapture the
   Schedule K, line 1, column (c), the                                                            credit recapture for each employee listed in                                                      portion of credit that was previously claimed,
   S corporation would add $3,000 to its                                                          column (a) .                                                                                      based on the terminated employee’s wages .
   ordinary income or loss to reflect the credit                                                  Line  – Enter the amount from line 2,                                                            In addition, identify the recapture amount for
   passed through to the shareholder(s) .                                                         column (b) on form FTB 3805Z, Side 1, Part I,                                                     shareholders on Schedule K‑1 (100S) . This
                                                                                                  line 1b .                                                                                         amount will differ from the amount recaptured
                                                                                                                                                                                                    by the S corporation on Form 100S, Schedule J .



 Worksheet I Hiring Credit and Recapture — Enterprise Zones
Section A Credit Computation
                                                                                                                                       Qualified wages paid or incurred for year of employment
                                     (a)                                                                    (b)                                (c)                (d)                 (e)                                               (f)
                               Employee’s name                                                            1st year                         2nd year            3rd year             4th year                                         5th year
1




 Total . See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
3 Multiply line 2 by the percentage for each                                          .50            .40                                             .30                                              .20                  .10
  column . See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
 Add the amounts on line 3, column (b) through column (f)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
5 Enter the total amount of 2008 California and federal jobs tax credits allowed . See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5
 Subtract the amount on line 5 from the amount on line 4 and enter the result here . See instructions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Section B Credit Recapture
                                                                                 (a)                                                                                                                               (b)
                                                               Terminated employee’s name                                                                                                                Recapture amount
1




 Total amount of credit recapture . Add the amount in column (b) . See instructions for where to
  report on your California tax return  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   



                                                                                                                                                                                                            FTB 3805Z Booklet 2008 Page 
Line 1c – Sales or Use Tax Credit                     Leased Property                                      depreciable basis of the qualified property for
                                                      The sales tax paid or incurred on qualified          the shareholders are figured as follows:
For taxpayers engaged in a trade or business in       property being purchased using a financial
a former (expired) EZ, the sales or use tax credit                                                              Facts                   Depreciable basis
                                                      (conditional sales) contract qualifies for the       Qualified property
may be taken on qualified property purchased          sales or use tax credit .
and placed in service on or before the expiration                                                           (purchased by XYZ Inc .)         $20 m .
date of the EZ . However, property purchased          To determine whether the lease qualifies as a        Sales tax paid
or placed in service after the expiration date of     purchase rather than a true lease, see Revenue        ($20 m . x  .06)                +1 .2 m .
the EZ does not qualify for the sales or use tax      Ruling 55‑540 and FTB Legal Ruling 94‑2 .            Maximum qualified
credit . Sales or use tax credit carryovers may       Credit Limitations                                    costs for sales or use
still be claimed to the extent of business income     • The amount of sales or use tax credit               tax credit is 1m
apportioned to the former EZ until fully utilized .       claimed may not exceed the amount of tax         Sales or use tax credit
                                                          on the EZ business income in any year .           allowed to the shareholders
Individuals, estates, trusts, and partnerships                                                              ($1 m . x  .06)                 ( .06 m .)
may claim an annual credit equal to the               • For each item of qualified property
                                                          physically located in a portion of the EZ        Depreciable basis of
sales or use tax paid or incurred to purchase                                                               qualified property for
$1 million of qualified property .                        that overlaps with a portion of the TTA,
                                                          the taxpayer may claim only one credit            the shareholders               $21 .14 m .
Corporations may claim an annual credit                   (e .g ., the EZ sales or use tax credit or the   Total amount of credit
equal to the sales or use tax paid or                     TTA sales or use tax credit) for that item of     allowed to the shareholders       .06 m .
incurred to purchase $20 million of qualified             property .
property . Individuals who are S corporation                                                               Each shareholder is allowed a $30,000
                                                      • Any unused credit may be carried over              ( .06 m . ÷ 2 =  .03 m .) sales or use tax credit .
shareholders may claim their allocable share              and applied against the tax on EZ business
of pass‑through credit to the extent the                                                                   Depreciation Forms
                                                          income in future years until exhausted .
S corporation paid or incurred sales or use tax                                                            To compute the difference between California
to purchase $1 million of qualified property .        For more information about the treatment of          and federal depreciation, use the following
See the example on page 8 .                           credits for S corporations, see instructions for     forms and schedules:
                                                      Schedule Z .
Qualified property is machinery or machinery                                                               • Form 100 filers – FTB 3885, Corporation
parts used to:                                        Depreciation                                              Depreciation and Amortization .
• Manufacture, process, fabricate, or                 Any taxpayer that claims this credit cannot          • Form 100S filers – Schedule B (100S),
     otherwise assemble a product .                   increase the basis of the qualified property with         S Corporation Depreciation and
• Produce renewable energy resources .                respect to the sales or use tax paid or incurred          Amortization .
• Control air or water pollution .                    in connection with the purchase of qualified         • Form 100W filers – FTB 3885, Corporation
                                                      property .                                                Depreciation and Amortization .
In addition, qualified property is:
• Data processing and communications                  Example:                                             • Form 109 filers – Form 109, Schedule J,
     equipment including, but not limited to,         XYZ Inc ., an S corporation, purchases qualified          Depreciation .
     computers, computer‑automated drafting           property for $20 million ($20 m .) . The sales tax        Exempt trusts use FTB 3885F, Depreciation
     systems, copy machines, telephone                rate is 6% ( .06) and the entity‑level tax rate is        and Amortization .
     systems, and fax machines .                      1 .5% .                                              • Form 540 and Long Form 540NR filers –
• Motion picture manufacturing equipment              The credit allowed to XYZ Inc . and the                   FTB 3885A, Depreciation and Amortization
     central to production and postproduction,        depreciable basis of the qualified property for           Adjustments .
     including but not limited to, cameras, audio     XYZ Inc . are computed as follows:                   • Form 541 filers – FTB 3885F, Depreciation
     recorders, and digital image and sound                                                                     and Amortization .
                                                           Facts                  Depreciable basis        • Form 565 filers – FTB 3885P, Depreciation
     processing equipment .
                                                      Qualified property               $20 m .                  and Amortization .
The business must use the property                    Sales tax paid                                       • Form 568 filers – FTB 3885L, Depreciation
exclusively within the boundaries of the EZ .          ($20 m . x  .06)                 +1 .2 m .               and Amortization .
The business must also purchase and place             Sales or use tax credit
the qualified property in service after the EZ                                                             Record Keeping
                                                       allowed XYZ Inc .                 (1 .2 m .)        To support the sales or use tax credit claimed,
received its designation and before the EZ            Depreciable basis of
designation expires .                                                                                      keep all records that document the purchase of
                                                       qualified property for                              the qualified property, such as the sales receipt
The use tax paid or incurred on purchases of           XYZ Inc .                        $20 m .            and proof of payment . Additionally, keep all
property outside California qualifies for the         Credit allowed to offset                             records that identify or describe the following:
credit only if property of a comparable quality        the entity‑level tax
and price was not available in California at the       ($1 .2 m . x 1/3)                $0 .4 m .          • The property purchased (such as serial
time it was purchased .                                                                                         numbers, etc .) .
                                                      XYZ Inc . has two 50% shareholders . The credit      • The amount of sales or use tax paid or
                                                      passes through to the shareholders and the                incurred on its purchase .
                                                                                                           • The location where it is used .
                                                                                                           • If purchased from a manufacturer located
                                                                                                                outside California, records to substantiate
                                                                                                                that property of comparable quality and
                                                                                                                price was not timely available for purchase
                                                                                                                in California at the time the purchase was
                                                                                                                made .




Page 8     FTB 3805Z Booklet 2008
Instructions for Worksheet II                                        Line , column (b) – Add the amounts in                                     B . For corporations, individuals, estates,
                                                                     line 1, column (b) . This amount cannot exceed                                  and trusts, enter the amount from line 2,
— Sales or Use Tax Credit                                            $1 million for individuals, estates, trusts, or                                 column (c) on Schedule Z, as follows:
Line 1, column (a) – List the items of qualified                     partnerships, or $20 million for corporations                                   • Part II, line 9B, column (b) for
property purchased during the year . For each                        per taxable year . When computing the amount                                       corporations, individuals, estates, and
item, provide the location (street address and                       of credit to pass through to S corporation                                         trusts .
city) of its use . Attach additional schedule(s) if                  shareholders, use the $1 million limitation .                                   • Part III, line 11, column (b) for
necessary .                                                          Line , column (c) –                                                               S corporations .
Line 1, column (b) – Enter the cost of the                           A . For partnerships, enter the amount from                                     • Part IV, line 13, column (b) for
property listed in column (a) .                                          line 2, column (c), on form FTB 3805Z,                                         corporations and S corporations subject
Line 1, column (c) – Enter the amount of sales                           Side 1, Part 1, line 1c . Also, include the                                    to paying only the minimum franchise tax .
or use tax paid or incurred on the property                              current year sales or use tax credit amount on                          Only the sales or use tax paid on the cost
listed in column (a) .                                                   Forms 565 and 568, Schedule K, line 15f and                             of qualified property up to the limitations
                                                                         the distributive share of the credit to partners                        on column (b), may be claimed as a credit .
                                                                         and members on Schedule K‑1 line 15f .                                  (S corporations may report only 1/3 of this
                                                                                                                                                 amount .)

 Worksheet II Sales or Use Tax Credit — Enterprise Zones
                                                          (a)                                                                                         (b)                          (c)
                                           Property description and location                                                                         Cost                    Sales or use tax


1




 Total the amounts in column (b) and column (c) . See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .             


Part II – Business Expense                                           The maximum aggregate cost of the qualified                                 Claim the EZ business expense deduction by
                                                                     property against which the 40% deduction may                                making an election on the original return filed .
Deduction and Recapture                                              be claimed in any taxable year is determined by                             You cannot claim the business deduction on an
For taxpayers engaged in a trade or business                         the number of taxable years that have elapsed                               amended return . An election cannot be revoked
in a former (expired) EZ, the business expense                       since the EZ received its final designation .                               without the written consent of the FTB .
deduction can be claimed on qualified property,                      The maximum aggregate cost is:                                              A taxpayer and spouse/RDP filing separate
placed in service on or before the expiration                                                                                                    returns may each claim 50% of the allowable
of the EZ . The business expense deduction is                        Taxable year of designation .  .  .  .  .  .  .  . $100,000
                                                                     1st taxable year after designation  .  .  . $100,000                        deduction . In the case of a partnership, the
not available for assets placed in service after                                                                                                 dollar limitation applies to the partnership and
the expiration date of the EZ, regardless of the                     2nd taxable year after designation  .  .  . $75,000
                                                                     3rd taxable year after designation  .  .  .  . $75,000                      to each partner .
purchase date .
                                                                     Each remaining taxable year                                                 Depreciation
Businesses conducting a qualified trade or                              after designation  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . $50,000   If the business elects to deduct the amount
business within an EZ may elect to treat                                                                                                         computed in Worksheet III, Section A, as a
40% of the eligible cost of qualified property                       For businesses located in the expansion
                                                                     area of an EZ, the amount of the deduction                                  business expense, reduce the depreciable basis
as a business expense rather than a capital                                                                                                      of the property by the deduction .
expense . For the year the property is placed in                     is determined by using the original EZ
service, the business may deduct the eligible                        designation date .                                                          Subtract the amount claimed as a business
cost in the current year rather than depreciate                      Election                                                                    expense from the basis or cost of the property
it over several years .                                              The business must elect to treat the cost of                                and depreciate the remaining basis or cost .
The EZ business expense deduction is not                             qualified property as a business expense in                                 Normal depreciation is allowed on the cost of
allowed for estates or trusts .                                      the year the property is first placed in service .                          the property in excess of the expensed amount,
                                                                     However, the EZ business expense deduction                                  starting with the taxable year following the
Qualified property is any recovery property                          is not allowed if the property was any of the                               taxable year the property was placed in service .
that is Internal Revenue Code (IRC)                                  following:
Section 1245 property, which includes, but                                                                                                       Corporations may not claim the additional
is not limited to, tangible personal property                        • Transferred between members of an                                         first‑year depreciation allowed under
(excluding buildings) and most equipment                                 affiliated group .                                                      R&TC Section 24356 on any item of property
and furnishings acquired by purchase after                           • Acquired as a gift or inherited .                                         if any portion of it was deducted as a business
the EZ received its designation and before                           • Traded for other property .                                               expense . All other taxpayers cannot claim the
the designation expires for exclusive use                            • Received from a personal or business                                      deduction allowed under IRC Section 179 on
within an EZ . Office supplies and other small                           relation as defined in IRC Section 267 or                               any item of property if any portion of it was
nondepreciable items are not included .                                  707(b) .                                                                deducted as a business expense .
                                                                     • Described in IRC Section 168(f) .                                         To compute the difference between California
                                                                                                                                                 and federal depreciation, use the forms and
                                                                                                                                                 schedules listed on page 8 .



                                                                                                                                                          FTB 3805Z Booklet 2008          Page 9
Instructions for Worksheet III                                                                          • Form 100W, line 15 .                                                                                   Basis Adjustment: As of the first day of the
                                                                                                        • Form 109, Part II, line 24 .                                                                           taxable year in which the recapture event
— Business Expense                                                                                      • Schedule CA (540), column B, on the                                                                    occurs, the recapture amount is added back
Deduction and Recapture                                                                                   applicable line for your business activity .                                                           to the basis of the property in the year of
                                                                                                        • Schedule CA (540NR), column B, on the                                                                  recapture and then depreciated over the
Section A – Deduction                                                                                     applicable line for your business activity .                                                           remaining life of the qualified property .
Computation                                                                                             • Form 565, Schedule K, line 12 and                                                                      Line 1, column (a) – Enter a description of
                                                                                                          Schedule K‑1 (565), line 12 .                                                                          the property . Attach additional schedule(s) if
Line , column (a) – Enter a description of the
                                                                                                        • Form 568, Schedule K, line 12 and                                                                      necessary .
property and the location (street address and
                                                                                                          Schedule K‑1 (568), line 12 .
city) of its use . Attach additional schedule(s) if                                                                                                                                                              Line 1, column (b) – Enter the amount of the
necessary .                                                                                             Section B – Deduction                                                                                    business expense deduction claimed for each
                                                                                                                                                                                                                 property listed in column (a) .
Line , column (b) – Enter the cost of the
property listed in column (a) .
                                                                                                        Recapture
                                                                                                                                                                                                                 Line  – Enter the total on form FTB 3805Z,
                                                                                                        The deduction is subject to recapture (added                                                             Side 1, Part II, line 2b, and on your California
Line 5 – Enter the amount from line 5,                                                                  back to income) if, before the close of the
column (b) on form FTB 3805Z, Side 1, Part II,                                                                                                                                                                   tax return or schedule as follows:
                                                                                                        second taxable year after the property was
line 2a, and on your California tax return or                                                           placed in service, the property is sold,                                                                 • Form 100, line 15, as a negative amount .
schedule as follows:                                                                                    disposed of, or no longer used exclusively in                                                            • Form 100S, line 12, as a negative amount,
• Form 100, line 15 .                                                                                   the EZ trade or business .                                                                                   Form 100S, Schedule K, line 10b and
• Form 100S, line 12, Form 100S,                                                                                                                                                                                     Schedule K‑1 (100S), line 10b .
                                                                                                        Income Adjustment: Add to current year income                                                            • Form 100W, line 15, as a negative amount .
    Schedule K, line 11, and Schedule K‑1
                                                                                                        the amount previously deducted for the property .
    (100S), line 11 .


 Worksheet III Business Expense Deduction and Recapture — Enterprise Zones
Section A Deduction Computation
1 The maximum aggregate deduction is as follows:
  • Taxable year of designation, enter $40,000
  • 1st taxable year after designation, enter $40,000
  • 2nd taxable year after designation, enter $30,000
  • 3rd taxable year after designation, enter $30,000
  • Each remaining taxable year after designation, enter $20,000  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                      1

                                                                                                   (a)                                                                                                                                        (b)
                                                                                    Property description and location                                                                                                                        Cost






3 Total . Add the amounts in line 2, column (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                          3

 Multiply line 3 by 40% ( .40)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .      
5 Enter the smaller of line 1 or line 4 . This is the maximum amount deductible as a business expense
  for this EZ . See instructions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   5


Section B Deduction Recapture
                                                                                                         (a)                                                                                                                                 (b)
                                                                                                 Property description                                                                                                                 Recapture amount

1




 Total recapture amount . Add the amounts in column (b) . See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                   


Page 10                 FTB 3805Z Booklet 2008
• Form 109, Part I, line 12 .                        Part III – Net Interest                              Example : ABC Corp was engaged in a trade
• Schedule CA (540), column C, on the                                                                     or business in an enterprise zone that is now
     applicable line for your business activity .    Deduction for Lenders                                expired, but also operates in a new enterprise
• Schedule CA (540NR), column C, on the              For taxpayers investing in an EZ, the net            zone that recently received a conditional
     applicable line for your business activity .    interest deduction is allowed for interest           designation . During the existence of the
• Form 565, Schedule K, line 11b and                 payments received on or before the expiration        previous enterprise zone, ABC Corp obtained
     Schedule K‑1 (565), line 11b .                  date of the EZ .                                     a loan from Bank of Funds that qualified Bank
• Form 568, Schedule K, line 11b and                 A deduction from income is allowed for the           of Funds to take the net interest deduction .
     Schedule K‑1 (568), line 11b .                  amount of net interest received from loans made      As ABC Corp continues to operate a trade or
Example:                                             to a trade or business located within an EZ .        business in an enterprise zone, Bank of Funds
XYZ Inc . purchased a property on June 1, 2006,                                                           continues to qualify to take the net interest
                                                     Net interest is defined as the full amount of        deduction on this loan .
that qualified the corporation to take the EZ        interest received, less any direct expenses
business expense deduction . The property            incurred in making the loan . Examples of direct     Record Keeping
was purchased for $10,000 and had a useful           expenses include, but are not limited to the         You should maintain records for each loan
life of five years . XYZ Inc .’s taxable year ends   following:                                           showing (at least) the following:
December 31 of each year . The corporation had                                                            • The identity and location of the trade or
a business expense deduction of $4,000 for the       • Commissions paid to a loan representative .
                                                     • Costs incurred in funding the loan .                   business to which you lent the money .
taxable year ending December 31, 2006, on the                                                             • The amount of the loan, interest received,
property .                                           • Other costs of the loan .
                                                                                                              and any direct expenses associated with the
Assume the corporation disposes of the               Types of loans that qualify for this deduction           loan .
property or no longer uses the property in           include business loans, mortgages, and loans         • The use of the loan .
the EZ on August 5, 2008 The property was            from noncommercial sources . The following
                                                     requirements must be met to qualify for the
placed in service in 2006 . The first year after
                                                     deduction:                                           Instructions for Worksheet IV
the property was placed in service was the
2007 taxable year . The second year after the        • Make the loan to a trade or business               — Net Interest Deduction for
property was placed in service was the 2008              located solely within an EZ .                    Lenders
taxable year . Since the property was disposed       • Use the money lent strictly for the
                                                                                                          Line 1, column (e) – Enter the direct expenses
of or no longer used in the EZ before the end            borrower’s business activities within the EZ .
                                                                                                          incurred in making the loan . Attach additional
of the second year (December 31, 2008) after         • The lender does not have an equity or other
                                                                                                          schedule(s) if necessary .
the year the property was placed in service, the         ownership interest in the borrower’s trade
business expense deduction ($4,000) must be              or business .                                    Examples of direct expenses include the
added to income in the 2008 taxable year . If the    • Make the loan after the EZ designation and         following:
property was disposed of or no longer used in            before the EZ expires .                          • Commissions paid to a loan representative .
the EZ after December 31, 2008, there would          In addition both of the following annual             • Costs incurred in funding the loan .
have been no recapture .                             requirements apply:                                  • Other costs of the loan .
Situation 1                                          • Borrower must continue business activities         Line  – Enter the amount from line 2,
Assume on August 5, 2008, the corporation                in the EZ .                                      column (f) on form FTB 3805Z, Side 1, Part III,
sells the asset . To compute the gain or loss on     • Payment must be received before the EZ             line 3, and on your California tax return or
the sale, the basis of the asset is increased by         expires .                                        schedule as follows:
the recapture amount of $4,000 .                                                                          • Form 100, line 15 .
                                                     Example: You lend $5,000 to an EZ business
Situation                                           that meets the requirements listed above . You       • Form 100S, line 12, Form 100S,
Assume on August 5, 2008, the corporation            receive $550 in interest and incur $300 in               Schedule K, line 12f, and Schedule K‑1
discontinues using the property in the EZ,           expenses directly related to the loan . You may          (100S), line 12f .
but does not sell the asset . To compute             deduct $250 ($550 ‑ $300) of net interest from       • Form 100W, line 15 .
depreciation on the asset, the recapture             your taxable income .                                • Form 109, Part II, line 24 .
amount is added to the remaining basis of the                                                             • Schedule CA (540), column B, on the
                                                     Expired Zone: When the taxpayer (creditor)
asset, and depreciation is then computed over                                                                 applicable line for your business activity .
                                                     negotiated a qualified loan with a debtor in
the remainder of the useful life of the asset .                                                           • Schedule CA (540NR), column B, on the
                                                     an enterprise zone that is now expired, the
Assuming straight line depreciation is used,                                                                  applicable line for your business activity .
                                                     debtor must continue to operate within a
the corporation will recognize $2,833                                                                     • Form 541, line 15a .
                                                     new enterprise zone that recently received a
($8,500/3) in depreciation expense in 2008 .                                                              • Form 565, Schedule K, line 13e and
                                                     conditional designation to qualify the creditor
The $8,500 is arrived at by adding the $4,000                                                                 Schedule K‑1 (565), line 13e .
                                                     for the net interest deduction .
recapture amount to the $4,500 remaining                                                                  • Form 568, Schedule K, line 13e and
                                                     Example 1: ABC Corp was engaged in a trade               Schedule K‑1 (568), line 13e .
basis as of December 31, 2007 .
                                                     or business in an enterprise zone that is now
                                                     expired . During the existence of the previous
                                                     enterprise zone, ABC Corp obtained a loan
                                                     from Bank of Funds that qualified Bank of
                                                     Funds to take the net interest deduction . ABC
                                                     Corp no longer operates a trade or business
                                                     in an enterprise zone once the previous zone
                                                     expires . As ABC Corp no longer operates in
                                                     an enterprise zone, Bank of Funds no longer
                                                     qualifies to take the net interest deduction on
                                                     this loan .




                                                                                                                 FTB 3805Z Booklet 2008 Page 11
 Worksheet IV Net Interest Deduction for Lenders — Enterprise Zones
                                    (a)                                                                            (b)                             (c)                               (d)                           (e)                         (f)
                            Name and location of                                                                  Date                           Amount                           Interest                       Direct                 Net interest
                      business to which loan was made                                                            of loan                         of loan                          received                  expenses incurred         col . (d) – col . (e)


1




    Total . Add the amounts in column (f) . See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   


Part IV – Portion of Business                                                             disaster losses, and any business deductions                                                 The numerator is the property factor plus the
                                                                                          reported on federal Form 1040, Schedule A as                                                 payroll factor, and the denominator is two . If
Attributable to the Enterprise                                                            itemized deductions .                                                                        an employer conducts businesses in more than
Zone                                                                                      Generally, all income which arises from the                                                  one EZ, the EZ apportionment factor and credit
EZ tax credits are limited to the tax on business                                         conduct of trade or business operations of a                                                 limitations are computed separately for each EZ .
income attributable to operations within the                                              taxpayer is business income .                                                                Property Factor
EZ . EZ deductions are limited to business                                                If you elected to carry back part or all of                                                  Property is defined as the average value of all
income attributable to operations within the EZ .                                         your current year disaster loss under IRC                                                    real and tangible personal property owned or
If the business is located within and outside                                             Section 165(i)(1), do not include the amount of                                              rented by the business and used during the
an EZ, or in more than one EZ, determine the                                              the loss that was carried back in your current                                               taxable year to produce business income .
portion of total business operations that are                                             year business income from the EZ .                                                           Property owned by the business is valued at
attributable to each EZ .                                                                                                                                                              its original cost . Original cost is the basis of
                                                                                          Pass‑through entities report to their
For taxpayers operating in an expired EZ, any                                             shareholders, beneficiaries, partners, and                                                   the property for federal income tax purposes
EZ credit or net operating loss carryover can                                             members the following:                                                                       (prior to any federal adjustment) at the time
be utilized to the extent of business income                                                                                                                                           of acquisition by the business, adjusted for
                                                                                          1 . The distributive (or pro‑rata for                                                        subsequent capital additions or improvements
apportioned to the former EZ .
                                                                                              S corporations) share of the business                                                    and partial dispositions because of sale or
Business Income vs.                                                                           income apportioned to the EZ .                                                           exchange . Allowance for depreciation is not
                                                                                          2 . The distributive (or pro‑rata for
Nonbusiness Income                                                                            S corporations) share of the business
                                                                                                                                                                                       considered .
Only business income is apportioned to the EZ                                                 capital gains and losses apportioned to the                                              Rented property is valued at eight times the
to determine the incentive limitation .                                                       EZ included in item 1 .                                                                  net annual rental rate . The net annual rental
                                                                                                                                                                                       rate for any item of rented property is the total
Business income is defined as income arising                                              Report these items as other information on                                                   rent paid for the property, less total annual
from transactions and activities in the regular                                           Schedule K‑1 (100S, 541, 565 or 568 .)                                                       subrental rates paid by subtenants .
course of the trade or business . Business income                                         Form 540 and Long Form 540NR filers who
includes income from tangible and intangible                                                                                                                                           When determining income or loss
                                                                                          earn wages within the EZ, refer to Worksheet V,                                              apportionment on Worksheet V, Section A or
property if the acquisition, management, and                                              Section C to compute business income
disposition of the property constitute integral                                                                                                                                        B, the numerator of the property factor is the
                                                                                          apportioned to the EZ .                                                                      average value of the real and tangible personal
parts of the regular trade or business operations .
Nonbusiness income is all income other than                                               For business entities, including sole proprietors,                                           property owned or rented by the business
business income . See Cal . Code Regs ., tit .                                            use Worksheet V, Section A or B to compute                                                   and used within the EZ during the taxable
18 section 25120 for further references and                                               business income or loss apportioned to the EZ .                                              year to produce EZ business income . See
                                                                                                                                                                                       Worksheet V, Section A/B, column (b) .
examples of nonbusiness income .                                                          Apportionment
For an individual, business income includes                                                                                                                                            When determining income apportionment on
                                                                                          Business income is apportioned to an EZ by                                                   Worksheet V, Section A, the denominator of
but is not limited to California business income                                          multiplying the total California business income
or loss from federal Form 1040, Schedules C,                                                                                                                                           the property factor is the total average value
                                                                                          of the taxpayer by a fraction . The numerator is                                             of all the taxpayer’s real and tangible personal
D, E, F, and California Schedule D‑1 (or federal                                          the property factor plus the payroll factor, and
Form 4797, Sales of Business Property, if                                                                                                                                              property owned or rented and used during the
                                                                                          the denominator is two . Loss is apportioned to                                              taxable year within California . See Worksheet V,
California Schedule D‑1 is not needed), as well                                           an EZ by multiplying the taxpayer’s net business
as wages . Be sure to include casualty losses,                                                                                                                                         Section A, column (a) .
                                                                                          operating loss from all sources by a fraction .


Page 1           FTB 3805Z Booklet 2008
When determining loss apportionment on                When determining income apportionment                within that single EZ, enter 100% (1 .00) on
Worksheet V, Section B, the denominator of            on Worksheet V, Section A, the denominator           Section A, line 4, column (c) . Do not complete
the property factor is the total average value        of the payroll factor is the taxpayer’s total        the rest of Worksheet V . The apportioned EZ
of real and tangible personal property owned          compensation paid to employees working               business income determines the amount of the
or rented and used during the year in all             in California . See Worksheet V, Section A,          tax incentives that can be used .
business operation locations . See Worksheet V,       column (a) .                                         Only California source business income
Section B, column (a) .                               When determining loss apportionment on               is apportioned to the EZ . A taxpayer’s EZ
Payroll Factor                                        Worksheet V, Section B, the denominator              business income is its California apportioned
Payroll is defined as the total amount paid to        of the payroll factor is the taxpayer’s total        business income multiplied by the specific EZ
the business’s employees as compensation for          compensation paid to employees working               apportionment percentage .
the production of business income during the          in all business operation locations . See            The EZ property and payroll factors used in
taxable year .                                        Worksheet V, Section B, column (a) .                 the determination of apportionable business
Compensation means wages, salaries,                   Corporations Filing a Combined Report                income include only the taxpayer’s California
commissions, and any other form of                    Business income for each corporation doing           amounts in the denominator .
remuneration paid directly to employees for           business in the EZ will be its business income       The average apportionment percentage
personal services .                                   apportioned to California (see FTB Pub . 1061        shown on line 4 represents the portion of the
Payments made to independent contractors or           for more information on combined reports and         taxpayer’s total business that is attributable
any other person not properly classified as an        entity income apportionment) . The EZ property       to activities conducted within the EZ . Factors
employee are excluded .                               and payroll factors used to determine the EZ         with zero balances in the totals of column
                                                      income includes only the taxpayer’s California       (a) will not be included in the computation of
Compensation Within the Enterprise Zone               amounts in the denominator .
Compensation is considered to be within the                                                                the average apportionment percentage . For
EZ if any of the following tests are met:             Example: Computation of EZ income assigned           example, if the taxpayer does not have any
                                                      to each entity operating within the EZ               payroll within or outside the EZ, the average
1 . The employee’s services are performed             Parent corporation A has two subsidiaries,           apportionment percentage would be computed
    within the geographical boundaries of the         B and C . Corporations A and B operate within        by dividing line 3 by one instead of by two as
    EZ .                                              an EZ . The combined group operates within           normally instructed .
2 . The employee’s services are performed             and outside California and apportions its
    within and outside the EZ, but the services       income to California using Schedule R . Assume       Section B – Loss
    performed outside the EZ are incidental to
    the employee’s service within the EZ .
                                                      the combined group’s business income                 Apportionment
                                                      apportioned to California was $1,000,000 and         Use Worksheet V, Section B, Loss
    Incidental means any temporary or                 Corporation A’s and B’s share of business            Apportionment, to determine your net
    transitory service performed in connection        income assigned to California is $228,000 and        operating loss apportioned to the EZ .
    with an isolated transaction .                    $250,000 respectively . Corporation A’s and B’s
3 . If the employee’s services are performed          separate EZ and separate California property         If the business operates solely within a
    within and outside the EZ, the employee’s         and payroll factor amounts are shown as              single EZ and all its property and payroll are
    compensation is attributed to the EZ if any       follows .                                            within that single EZ, enter 100% (1 .00) on
    of the following items are met:                                                                        Section B, line 4, column (c) . Do not complete
                                                      Business income apportioned to the EZ was            the rest of Worksheet V . A taxpayer’s EZ net
    A . The employee’s base of operations is          determined as follows:                               operating loss is its net business operating
         within the EZ .                                                             A            B        loss from all sources multiplied by the specific
    B . There is no base of operations in any         Property Factor                                      EZ apportionment percentage computed in
         other part of the state in which some        EZ property                $1,000,000   $ 800,000    Worksheet V, Section B .
         part of the service is performed, and the    California property        $1,000,000   $1,200,000
         place from which the service is directed      Apportionment %             100%        66 .66%     The EZ property and payroll factors used in the
         or controlled is within the EZ .             Payroll Factor                                       determination of the apportioned business net
    C . The base of operations or the place           EZ payroll                 $ 800,000    $ 800,000    operating loss include worldwide amounts in
         from which the service is directed or        California payroll         $ 800,000    $1,000,000   the denominator .
                                                       Apportionment %             100%          80%
         controlled is not in any other part of                                                            The average apportionment percentage
         the state in which some part of the          Average
                                                      Apportionment %              100%        73 .33%     shown on line 4 represents the portion of the
         service is performed and the employee’s      (Property + Payroll Factors)                         taxpayer’s total business that is attributable
         residence is within the EZ .                              2                                       to activities conducted within the EZ . Factors
         Base of operations is the permanent          Apportioned                                          with zero balances in the totals of column (a)
                                                      Business Income            $ 228,000    $ 250,000    will not be included in the computation of
         place from which employees start work
         and customarily return in order to           EZ business income       $ 228,000      $ 183,325    the average apportionment percentage . For
         receive instruction from the taxpayer or                                                          example, if the taxpayer does not have any
         communications from their customers          Instructions for Worksheet V                         payroll within or outside the EZ, the average
                                                                                                           apportionment percentage would be computed
         or persons; to replenish stock or other
         material; to repair equipment; or to         — Income or Loss                                     by dividing line 3 by one instead of by two as
         perform any other functions necessary        Apportionment                                        normally instructed .
         in the exercise of their trade or
         profession at some other point or points .   Section A – Income                                   Section C – Income or Loss
When determining income or loss                       Apportionment                                        Form 540 and Long Form 540NR filers, use
                                                                                                           Worksheet V, Section C to determine the
apportionment on Worksheet V, Section A               Use Worksheet V, Section A, Income                   amount to enter on the following:
or B, the numerator of the payroll factor is          Apportionment, to determine the amount of
the taxpayer’s total compensation paid to             business income apportioned to the EZ .              • Worksheet VI, Section A, line 1
employees for working within the EZ during the                                                             • Worksheet VI, Section C, line 1 and line 6
                                                      If the business operates solely within a single      • Schedule Z, Part I, line 1 and line 3
taxable year . See Worksheet V,                       EZ and all its property and payroll are solely
Section A/ B, column (b) .


                                                                                                                  FTB 3805Z Booklet 2008 Page 13
Do not include disaster losses in any amounts             Income Computation                                 Line 11 and Line 1: If the gain or loss
used in the table .                                       Located Entirely Within the Enterprise Zone        reported on Schedule D or Schedule D‑1 as
Only California source business income                                                                       adjusted on Schedule CA (540 or 540NR)
                                                          Line  – Line 9: If your business operation        was attributed to an asset used in an activity
is apportioned to the EZ . A taxpayer’s EZ                reported on federal Form 1040 Schedule C,
business income is its California apportioned                                                                conducted within and outside the EZ and
                                                          C‑EZ, E, F, or other schedule is entirely within   California, get Schedule R and complete
business income computed using Schedule R,                the EZ, enter the income or loss from this
multiplied by the specific EZ apportionment                                                                  Schedule R‑1 . Multiply the gain or loss
                                                          activity in column (a), and enter 1 .00 in         reported by the percentage on Schedule R‑1,
percentage computed using Worksheet V,                    column (b) .
Section A .                                                                                                  line 5 and enter the result in column (a) . To
                                                          Line 11 and Line 1: If the gain or loss           determine the apportionment percentage in
Determine which portion of the taxpayer’s                 reported on Schedule D or Schedule D‑1 as          column (b), complete Worksheet V, Section A .
net income is “business income” and which                 adjusted on Schedule CA (540 or 540NR)             Enter the percentage from Worksheet V,
portion is “nonbusiness income .” Only                    was attributed to an asset used in an activity     Section A, line 4, column (c) on Worksheet V,
business income is apportioned to the EZ . See            conducted entirely within the EZ, enter the gain   Section C, column (b) .
Part IV, Portion of Business Attributable to the          or loss reported in column (a), and enter 1 .00
Enterprise Zone instructions, for a complete                                                                 Line 1 – If you are computing the EZ NOL
                                                          in column (b) .                                    and the result on the Worksheet V, Section C,
discussion of business and nonbusiness
income .                                                  Located Entirely Within California                 line 14, column (c) is a negative amount, enter
                                                          Line  – Line 9: If your business operation        this amount on Worksheet VI, Section A, line 1 .
Part I – Individual Income and                            reported on federal Form 1040 Schedule C,          If the amount is positive, you do not have an
Expense Items                                             C‑EZ, E, F, or other schedule is entirely within   EZ NOL .
Wages                                                     California, enter the income or loss from          If you are computing the EZ business income
Taxpayers with wages from a company located               this activity in column (a) . To determine the     and the result on the Worksheet V, Section C,
within and outside an EZ determine the EZ wage            apportionment percentage in column (b),            line 14, column (c) is a positive amount and:
income by entering the percentage of the time             complete Worksheet V, Section A . Enter the
that they worked within the EZ in column (b) .            percentage from Worksheet V, Section A,            • You have EZ NOL carryovers, enter the
The percentage of time should be for the same             line 4, column (c) on Worksheet V, Section C,          amount on Worksheet VI, Section C, line 1
period for which the wages entered on line 1              column (b) .                                           and line 6 (skip line 2 through line 5) .
were earned . Determine this percentage based                                                                • You have EZ credits or credit carryovers,
                                                          Line 11 and Line 1: If the gain or loss               enter the amount on Schedule Z, Part I,
on their record of time and events such as a              reported on Schedule D or Schedule D‑1 as
travel log or entries in a daily planner .                                                                       line 1 and line 3 (skip line 2) .
                                                          adjusted on Schedule CA (540 or 540NR)
                                                          was attributed to an asset used in an activity     If the amount is negative, you do not have any
Part II – Pass-Through Income or                                                                             business income attributed to the EZ and you
Loss                                                      conducted entirely within California, enter
                                                          the gain or loss reported in column (a) . To       cannot utilize any EZ NOL carryover, credit(s),
Multiple Pass-Through Entities                            determine the apportionment percentage in          or credit carryover(s) in the current taxable
If you are a shareholder, beneficiary, partner,           column (b), complete Worksheet V, Section A .      year .
or member of multiple pass‑through entities               Enter the percentage from Worksheet V,             Loss Computation
located in the same enterprise zone, see the              Section A, line 4, column (c) on Worksheet V,      To compute the EZ NOL for Worksheet VI,
example for computing your enterprise zone                Section C, column (b) .                            Section A, complete Worksheet V, Section C .
business income .                                                                                            The instructions below refer to Worksheet V,
                                                          Located Within and Outside the Enterprise
Example:                                                  Zone and California                                Section C .
             Trade or                                     Line  – Line 9: If your business operation        Located Entirely Within the Enterprise Zone
             business
             income                                       reported on federal Form 1040 Schedule C,          Line  – Line 9: If your business operation
             from           Entity’s        Enterprise    C‑EZ, E, F, or other schedule is within and        reported on federal Form 1040 Schedule C,
             Schedule K‑1   EZ              zone          outside the EZ and California, get California      C‑EZ, E, F, or other schedule is entirely within
Pass‑through (100S, 541,    apportionment   apportioned   Schedule R and complete line 1 through             the EZ, enter the income or loss from this
entity       565, or 568)   percentage      income
ABC, Inc .     $40,000            80%        $32,000
                                                          line 18b and line 28 through line 31 . Enter the   activity in column (a), and enter 1 .00 in
A, B, & C       30,000            10%           3,000     amount on Schedule R, line 18b and line 31         column (b) .
ABC, LLC        10,000            50%           5,000     in column (a) of this worksheet . To determine     Line 11 and Line 1: If the gain or loss
Total                                        $0,000      the apportionment percentage in column (b),        reported on Schedule D or Schedule D‑1 as
                                                          complete Worksheet V, Section A . Enter the        adjusted on Schedule CA (540 or 540NR)
Part III – Taxpayer’s Trade or                            percentage from Worksheet V, Section A,
Business                                                                                                     was attributed to an asset used in an activity
                                                          line 4, column (c) on Worksheet V, Section C,      conducted entirely in the EZ, enter the gain or
Business Income or Loss                                   column (b) .                                       loss reported in column (a) and enter 1 .00 in
Use business income or loss from federal                  When computing Schedule R, disregard any           column (b) .
Form 1040 Schedules C, C‑EZ, E, and F, plus               reference to Forms 100, 100S, 100W, 100X,
California adjustments from Schedule CA (540              565, or 568 . Also disregard any reference to
or 540NR) for each trade or business . Also               Schedules R‑3, R‑4, or R‑5 .
include business capital gains and losses from            Nonresidents that have an apportioning
Schedule D and business gains and losses                  business that operates within the EZ should
from Schedule D‑1 as adjusted on Schedule CA              have already computed Schedule R, and can
(540 or 540NR) .                                          use those amounts when that schedule is
                                                          referenced . Residents complete a Schedule R
                                                          in order to determine their California source
                                                          business income for purposes of the EZ credit
                                                          computation .




Page 1      FTB 3805Z Booklet 2008
 Worksheet V Income or Loss Apportionment – Enterprise Zones
Section A Income Apportionment
                                                                                                                                            (a)                (b)                          (c)
Use Worksheet V, Section A, if your business has net income                                                                             Total within     Total within an          Percentage within an EZ
from sources within and outside an EZ .                                                                                                  California            EZ                 column (b) ÷ column (a)
PROPERTY FACTOR
1 Average yearly value of owned real and tangible personal
   property used in the business (at original cost) . See
   instructions for more information . Exclude property not
   connected with the business and the value of construction
   in progress .
   Inventory .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Buildings  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Machinery and equipment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Furniture and fixtures  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Delivery equipment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Land  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Other tangible assets (attach schedule) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Rented property used in the business .
      See instructions for more information .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Total property values  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
PAYROLL FACTOR
 Employees’ wages, salaries, commissions, and other
   compensation related to business income included in
   the return .
   Total payroll  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
3 Total percentage – sum of the percentages in column (c)  .  .
 Average apportionment percentage – 1/2 of line 3 .
   Enter here and on form FTB 3805Z, Side 1, line 4  .  .  .  .  .  .  .  .


 Worksheet V Income or Loss Apportionment – Enterprise Zones (continued)
Section B Loss Apportionment (For the computation of current year net operating loss only)
                                                                                                                                             (a)              (b)                           (c)
Use Worksheet V, Section B, if your business has net losses                                                                           Total within and    Total within            Percentage within an EZ
from sources within and outside an EZ .                                                                                                outside an EZ         an EZ                column (b) ÷ column (a)
PROPERTY FACTOR
1 Average yearly value of owned real and tangible personal
   property used in the business (at original cost) . See
   instructions for more informaion . Exclude property not
   connected with the business and the value of construction
   in progress .
   Inventory .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Buildings  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Machinery and equipment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Furniture and fixtures  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Delivery equipment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Land  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Other tangible assets (attach schedule) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Rented property used in the business .
      See instructions for more information .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
   Total property values  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
PAYROLL FACTOR
 Employees’ wages, salaries, commissions, and other
   compensation related to business income included in
   the return .
   Total payroll  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
3 Total percentage – sum of the percentages in column (c)  .  .
 Average apportionment percentage (1/2 of line 3) .
   Enter here and on Worksheet VI, Section B, line 4  .  .  .  .  .  .  .

                                                                                                                                                                         FTB 3805Z Booklet 2008 Page 15
 Worksheet V  Income or Loss Apportionment – Enterprise Zones (continued)
Section C Income or Loss
Part I Individual Income and Expense Items. See instructions .
                                                                                                             (a)                                                      (b)                                                      (c)
                                                                                                           Amount                                         Percentage of time providing                                 Apportioned amount
                                                                                                                                                               services in the EZ                                           (a) x (b)

 1   Wages  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

    Employee business expenses  .  .  .  .  .  .  .  .

 3   Total . Add line 1, column (c) and line 2, column (c)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Part II Pass-Through Income or Loss. See instructions .
                                                                         (a)                                                                                                               (b)
                                                                     Name of entity                                                                  Distributive or pro‑rata share of business income or loss apportioned to the
                                                                                                                                                               EZ from Schedule K‑1 (100S, 541, 565, or 568) including
                                                                                                                                                                                capital gains and losses

 



 5   Total . Add line 4, column (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Part III Taxpayer’s Trade or Business. See instructions .
                                                                                                          (a)                                                           (b)                                                     (c)
                                                                                                   Business income                                          Apportionment percentage                                Apportioned income or loss
                                                                                                        or loss                                                     for the EZ                                               (a) x (b)

    Schedule C or C‑EZ  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

    Schedule E (Rentals) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

 8   Schedule F  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

 9   Other business income or loss  .  .  .  .  .  .  .

10   Total . Add line 6 through line 9, column (c)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
                                                                                                           (a)                                                          (b)                                                     (c)
                                                                                                      Business gain                                         Apportionment percentage                                 Apportioned gain or loss
                                                                                                         or loss                                                    for the EZ                                               (a) x (b)

11   Schedule D  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

1   Schedule D‑1  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

13   Total . Add line 11, column (c) and line 12, column (c)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

1   Total . Add line 3, line 10, and line 13, column (c), and line 5, column (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Part V – Net Operating Loss                                                                  The business cannot generate NOLs from                                                          To determine which type of NOL will provide
                                                                                             activities within the EZ before the first taxable                                               the greatest benefit, taxpayers that have
(NOL) Carryover and Deduction                                                                year beginning on or after the date the EZ is                                                   general or specific, EZ, LAMBRA, TTA, or that
The EZ NOL is allowed for losses attributable to                                             officially designated .                                                                         may qualify for the special NOL treatment
the taxpayer’s business activities within the EZ                                             Limitation                                                                                      should estimate future income and complete
prior to the expiration of the EZ without regard                                             An EZ NOL deduction can only offset business                                                    Worksheet VI and the following forms or
to the ending date of the taxpayer’s taxable                                                 income attributable to operations within the EZ .                                               worksheets, if applicable:
year . This loss is calculated by computing the                                                                                                                                              • FTB 3805V, Net Operating Loss (NOL)
EZ net operating loss as if the EZ had remained                                              Election
                                                                                             Taxpayers must elect and designate the                                                             Computation and NOL and Disaster Loss
in existence the entire year, then this full year                                                                                                                                               Limitations — Individuals, Estates, and
loss is pro‑rated by the number of days the                                                  carryover category (general or specific, EZ,
                                                                                             LAMBRA, TTA, or Pierce’s disease NOL) on                                                           Trusts .
taxpayer operated in an EZ for the tax year over                                                                                                                                             • FTB 3805Q, Net Operating Loss (NOL)
the total number of days in a tax year .                                                     the original return for the year of a loss and
                                                                                             file form FTB 3805Z for each year in which an                                                      Computation and NOL and Disaster Loss
An NOL generated by a business that operates                                                 NOL deduction is being taken . The election is                                                     Limitations — Corporations .
or invests within an EZ can be carried forward                                               irrevocable .                                                                                   • FTB 3807, Local Agency Military Base
for 15 years but may not be carried back . In                                                                                                                                                   Recovery Area Business Booklet,
addition, up to 100% of the NOL generated in                                                 If you elect the EZ NOL deduction, you are                                                         Worksheet V .
an EZ can be carried forward .                                                               prohibited by law from carrying over any other                                                  • FTB 3809, Targeted Tax Area Business
                                                                                             type of NOL, relating to EZ activities, from this                                                  Booklet, Worksheet V .
                                                                                             year .

Page 1            FTB 3805Z Booklet 2008
Alternative Minimum Tax                            combined reporting group, as if the water’s-       NOL during the suspension period. However,
For taxpayers claiming an EZ NOL deduction,        edge election had been in force for the year       corporations with taxable income of less
use Schedule P (100, 100W, 540, 540NR,             of the loss. R&TC Section 24416(c) serves as       than $500,000, individuals with net business
or 541) to compute the NOL for alternative         a limitation. If this section applies, the NOL     income of less than $500,000, or with disaster
minimum tax purposes.                              carryover for each corporation may only be         loss carryovers are not affected by the NOL
S Corporations                                     decreased, not increased.                          suspension rules.
EZ NOLs incurred prior to becoming                                                                    Corporations use forms FTB 100, line 19,
an S corporation cannot be used                    Instructions for Worksheet VI                      FTB 100W, line 19, or FTB 100S, line 16 (net of
against S corporation income. See IRC              — NOL Computation and Loss                         any adjustments on line 17) to determine the
                                                                                                      taxable income.
Section 1371(b).
                                                   Limitations                                        Individuals use the California Schedules CA
However, an S corporation is allowed to deduct
                                                   Individuals and exempt trusts with a               (540) or CA (540NR) line 12 and line 18; the
an EZ NOL incurred after the “S” election is
                                                   current year loss should complete Section          federal Schedule E, line 26, line 32, and line 40;
made. An S corporation may use the NOL
                                                   A. Corporations with a current year loss           and the federal Form 4797, line 9. Adjust the
as a deduction against income subject to
                                                   should complete Section B. Individuals and         amounts on the California Schedule CA by
the 1.5% entity-level tax (3.5% for financial
                                                   corporations with current year income and          Columns B (subtractions) and C (additions)
S corporations). The expenses (and income)
                                                   a prior year NOL carryover should complete         to get your net business income. On the
giving rise to the loss are also passed through
                                                   Section C.                                         Schedule CA (540NR), use the amounts from
to the shareholders in the year the loss is
incurred.                                          The EZ NOL is allowed for losses attributable to   Column E to determine your net business
                                                   the taxpayer’s business activities within the EZ   income.
NOL Carryover Amount – Businesses
                                                   prior to the expiration of the EZ without regard   The carryover period for suspended losses is
Operating Totally Within the Zone
                                                   to the ending date of the taxpayer’s taxable       extended by:
For calendar and fiscal year taxpayers with        year. This loss is computed by computing the
all payroll and property within the EZ, the                                                           • Two years for losses incurred in taxable
                                                   EZ NOL as if the EZ had remained in existence
NOL carryover is determined by computing                                                                  years beginning before January 1, 2008.
                                                   the entire year, and then this full year loss is
the business loss that results from business                                                          • One year for losses incurred in taxable
                                                   pro-rated based on the number of days the
activity in the EZ.                                                                                       years beginning on or after January 1,
                                                   taxpayer operated in the EZ for the tax year, as
                                                                                                          2008, and before January 1, 2009.
NOL Carryover Amount – Businesses                  compared to the total number of days in the
Operating Within and Outside the Zone              tax year.                                          For NOLs incurred in taxable years beginning
                                                                                                      on or after January 1, 2008, California has
If the business is located within and outside or   Section A – Computation of                         extended the NOL carryover period from 10 to
in more than one EZ, the loss amount available
for carryover is determined by apportioning        Current Year NOL — Individuals                     20 taxable years following the year of the loss.
the total business loss of the entity to the EZ    and Exempt Trusts                                  Also, California will allow NOLs incurred in
                                                                                                      taxable years beginning on or after January 1,
pursuant to the provisions of R&TC Chapter 17      Use this section to compute the EZ NOL to be
(commencing with Section 25101), with certain                                                         2011, to be carried back to each of the
                                                   carried over to future years by individuals and    preceding two taxable years. An NOL carryback
modifications to the apportioning factors. The     exempt trusts. Complete Section A only if you
apportionment factors include the property                                                            shall not be carried back to any taxable
                                                   have a current year loss.                          year beginning before January 1, 2009. The
and payroll factors, and compare EZ property
and payroll to total property and payroll. The     In addition, complete form FTB 3805V, before       allowable NOL carryback percentage varies. For
loss computation is done on Worksheet VI,          you can compute the allowable EZ loss.             an NOL incurred in a taxable year beginning on
Section A for individuals and exempt trusts,       To compute the EZ NOL, separate business           or after:
and Worksheet VI, Section B for corporations.      income and deductions from nonbusiness             • January 1, 2011, and before January 1,
The apportionment factor calculation is done       income and deductions. See Part IV for                 2012, the carryback amount to any taxable
on Worksheet V, Section B for business entities    a complete discussion of business and                  year shall not exceed 50 percent of the NOL.
and Worksheet V, Section C for individuals.        nonbusiness income.                                • January 1, 2012, and before January 1,
The loss carryover is deducted against income                                                             2013, the carryback amount to any taxable
apportioned by each business to the EZ in          Section B – Computation                                year shall not exceed 75 percent of the NOL.
subsequent years. This computation is done on      of Current Year NOL —                              • January 1, 2013, the carryback amount
Worksheet VI, Section C.                                                                                  to any taxable year shall not exceed 100
                                                   Corporations                                           percent of the NOL.
Corporations that are members of a unitary
                                                   Use this section to compute the NOL to be
group filing a combined report must separately                                                        An EZ NOL deduction can only offset business
                                                   carried over to future years for corporations.
compute loss carryover for each corporation                                                           income attributable to operations within the EZ.
                                                   Complete Section B only if the corporation has
in the group (R&TC Section 25108) using their                                                         Use this section to compute the NOL deduction
                                                   a current year loss.
individual apportionment factors.                                                                     for individuals, exempt trusts, and corporations
                                                   In addition, complete form FTB 3805Q, before       to reduce current year business income from
Unlike the NOL treatment on a federal
                                                   you can compute the allowable EZ loss.             the EZ.
consolidated return, a loss carryover for one
member included in a combined report may           Section C – Computation of                         Line 1 – See Part IV for a discussion of
not be applied to the intrastate apportioned                                                          business and nonbusiness income.
income of another member included in a             NOL Carryover and Carryover
                                                                                                      Form 540 and Form 540NR filers:
combined report.                                   Limitations — Individuals,                         Be sure to include casualty losses, disaster
For any water’s-edge taxpayer, R&TC                Exempt Trusts, and                                 losses, and any business deductions reported
Section 24416(c) imposes a limitation on
the NOL deduction if the NOL is generated
                                                   Corporations                                       on federal Schedule A as itemized deductions.
during a non-water’s edge tax year. The NOL        For taxable years beginning in 2008 and 2009,      Exception: If you elected to carry back part or
carryover is limited to the lesser of the NOL      California has suspended the net operating         all of your current year disaster loss under IRC
or the re-computed NOL. The re-computed            loss (NOL) carryover deduction. Taxpayers          Section 165(i)(1), do not include the amount of
NOL carryover is determined by computing the       may continue to compute and carryover an           loss that was carried back in your current year
income and factors of the original worldwide                                                          business income for the EZ.

                                                                                                 FTB 3805Z Booklet 2008 (REV 01-09) Page 17
Line  – In modifying your income, deduct                                                                Line 8 through Line  – Enter the amounts on                                                             Line 5 – Enter the amount of your current
your capital losses only up to your capital                                                              line 8 through line 24 as positive numbers .                                                              year NOL . For individuals and exempt trusts,
gains . Enter as a positive number any net                                                               In column (c), enter the smaller of the amount                                                            enter the amount from Section A, line 7 . For
capital losses included in line 1 .                                                                      in column (b) or the amount in column (d)                                                                 corporations, enter the amount from Section B,
Line 3 – Corporations must reduce income by                                                              from the previous line .                                                                                  line 7 .
the disaster loss deduction and the deduction                                                            In column (d), enter the result of subtracting                                                            Line  – Total the amounts in column (b)
for excess net passive income .                                                                          column (c) from the balance on the previous                                                               and column (e) . Enter the totals from line 26,
Line  – This is your modified taxable income                                                            line in column (d) .                                                                                      columns (b), and (e) on form FTB 3805Z,
(MTI) . You may reduce this amount by your                                                                                                                                                                         Side 1, line 5a and line 5c, accordingly .
                                                                                                         In column (e), enter the result of subtracting
EZ deduction . Your EZ NOL deduction may not                                                             the amount in column (c) from the amount in                                                               Your EZ NOL deduction for 2008 is the total
be larger than your MTI . If your MTI is a loss                                                          column (b), as applicable .                                                                               of column (c) . Enter this amount on your
in the current year or if it limits the amount of                                                                                                                                                                  California tax return or schedule as follows:
NOL you may use this year, carry over the NOL                                                            Example:
                                                                                                                 (b)                     (c)                    (d)                    (e)
                                                                                                                                                                                                                   • Form 100, line 21
to future years .                                                                                                                                                                                                  • Form 100S, line 19
                                                                                                               Carry‑                 Amount                  Balance               Enterprise
Line  – Enter the amount from line 6 in                                                                     over from                deducted              available to            zone NOL                       • Form 100W, line 21
column (d) . If this amount is zero or negative,                                                             prior year               this year            offset losses            carryover                      • Form 109, line 6
transfer the amounts from line 8 through                                                                                                                      $5,000                                               • Schedule CA (540), line 21(e), column B
line 24, column (b) to column (e), and go to                                                                  $     500               $     500                4,500                      $     0                  • Schedule CA (540NR), line 21(e), column B
line 25 .
CAUTION: Your NOL may be suspended . See the
explanation under Instructions for Worksheet VI,
Section C . If your NOL is suspended do not
put any amounts in column (c) . Carryover the
column (b) amount(s) to column (e) .




 Worksheet VI Net Operating Loss (NOL) Computation and Loss Limitations — Enterprise Zones
Section A Computation of Current Year Net Operating Loss — Individuals and Exempt Trusts
1 Net trade or business loss from all sources . Individuals: Enter the total from the Income or Loss Worksheet,
    line 14, column (c) as a positive number . See instructions for definition of business income .
    Exempt trusts: Enter the amount from Form 109, line 4 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                         1
 Total business capital losses included in line 1 . Enter as a positive number  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                               
3 Total business capital gains included in line 1  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                           3
 If line 2 is greater than line 3, enter the difference as a positive number; otherwise enter ‑0‑  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                                      
5 a Subtract line 4 from line 1 . If the result is zero or less, do not complete the rest of this section .
        You do not have a current year NOL from an EZ  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                   5a
If you operate a business in an EZ that has expired, do the following:
5 b Enter the number of days you operated a business in an EZ in the taxable year 2008 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                                       5b
    c Enter the number of days in the taxable year 2008  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                       5c
    d Divide line 5b by line 5c  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   5d
    e Multiply line 5a by line 5d  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .    5e
 Enter the amount from form FTB 3805V, Part 1, Section A, line 20  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                          
 If the EZ in which you operate a business did not expire this year, enter the smaller of line 5a or line 6 .
    If the enterprise in which you operate a business expired this year, enter the smaller of line 5e or line 6 .
    Also enter the amount in Section C, line 25, column (e)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                      
    This is the EZ NOL carryover to 2009 .




Page 18                 FTB 3805Z Booklet 2008
 Worksheet VI Net Operating Loss (NOL) Computation and Loss Limitations — Enterprise Zones
Section B Computation of Current Year Net Operating Loss — Corporations
                If you have an EZ NOL and a prior year general NOL, see instructions .
Check the appropriate box to describe your entity type during the year that the NOL was incurred: 
     C corporation          S corporation                             Exempt corporation
 1 Net loss for state purposes from Form 100, line 18; Form 100W, line 18; Form 100S, combined amounts of
    line 15 and line 17; or Form 109, line 1 . Enter as a positive number . Apportioning corporations, enter
    the amount from Schedule R, line 14 plus line 17  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                   1
 a 2008 disaster relief loss included in line 1 . Enter as a positive number  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                  a
    b Nonbusiness income included in line 1 . Enter as a negative number  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                 b
    c Nonbusiness losses included in line 1 . Enter as a positive number  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                           c
    d Combine line 2a through line 2c  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                d
3 Subtract line 2d from line 1 . If zero or less, do not complete the rest of this section; the corporation does
    not have a current year NOL from an EZ  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                    3
 Enter the average apportionment percentage from Worksheet V, Section B, line 4  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                              
5 a Multiply line 3 by line 4  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   5a
If you operate a business in an EZ that has expired, do the following:
5 b Enter the number of days you operated a business in an EZ in the taxable year 2008 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                                        5b
    c Enter the number of days in the taxable year 2008  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                        5c
    d Divide line 5b by line 5c  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .    5d
    e Multiply line 5a by line 5d  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .     5e
 Enter the amount from form FTB 3805Q, Part 1, line 3 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                          
 If the EZ in which you operate a business did not expire this year, enter the smaller of line 5a or line 6 .
    If the enterprise in which you operate a business expired this year, enter the smaller of line 5e or line 6 .
    Also enter the amount in Section C, line 25, column (e)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                          
    This is the EZ NOL carryover to 2009 .




                                                                                                                                                                                                                                  FTB 3805Z Booklet 2008 Page 19
 Worksheet VI  Net Operating Loss (NOL) Computation and Loss Limitations – Enterprise Zones (continued)
Section C  Computation of NOL Carryover and Carryover Limitations — Individuals, Exempt Trusts, and Corporations. See instructions.
 1 Enter the amount from Form 100, line 18; Form 100W, line 18; Form 100S, combined
   amounts of line 15 and line 17; or Form 109, line 1 or line 4. Form 540 or
   Long Form 540NR filers, enter the total from Worksheet V, Section C, line 14,
   column (c) on line 1 and line 6 (skip line 2 through line 5). See instructions.
   Corporations filing a combined report, enter the taxpayer’s business income assigned
   to California. See instructions for Part V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
 2 a Form 100, Form 100W, Form 100S, and Form 109 filers: Enter any nonbusiness
       income included in line 1 as a negative number. Form 540 and Long Form 540NR filers
       leave blank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a
   b Form 100, 100W, 100S, and 109 filers: Enter any nonbusiness loss included in line 1
       as a positive number. Form 540 and Long Form 540NR filers leave blank . . . . . . . . . . . . . 2b
   c Combine line 2a and line 2b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c
 3 Form 100 and Form 100W filers: Enter the amount from Form 100, line 22 or
   Form 100W, line 22. Form 100S filers: Enter the total of the amounts from Form 100S,
   line 17 and line 20. Form 540, Long Form 540NR, and Form 109 filers: Enter -0-.
   Enter this amount as a negative number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
 4 Combine line 1, line 2c, and line 3. If zero or less, enter -0- on line 6 . . . . . . . . . . . . . . . . . . . 4
 5 Enter the average apportionment percentage from Worksheet V, Section A, line 4 . . . . . . . . . 5
 6 Modified taxable income. Multiply line 4 by line 5. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
                           (a)                                            (b)                          (c)                             (d)                            (e)
                        Description                                 Carryover from               Amount deducted               Balance available to                   EZ
                                                                      prior year                    this year                     offset losses              NOL carryover to 2009

 7 Modified taxable income from line 6 . . . . . . . .

 8 EZ NOL carryover beginning in 1991. . . . . . . .

 9 EZ NOL carryover beginning in 1992. . . . . . . .

10 EZ NOL carryover beginning in 1993. . . . . . . .

11 EZ NOL carryover beginning in 1994. . . . . . . .

12 EZ NOL carryover beginning in 1995. . . . . . . .

13 EZ NOL carryover beginning in 1996. . . . . . . .

14 EZ NOL carryover beginning in 1997. . . . . . . .

15 EZ NOL carryover beginning in 1998. . . . . . . .

16 EZ NOL carryover beginning in 1999. . . . . . . .

17 EZ NOL carryover beginning in 2000. . . . . . . .
18 EZ NOL carryover beginning in 2001. . . . . . . .

19 EZ NOL carryover beginning in 2002. . . . . . . .

20 EZ NOL carryover beginning in 2003. . . . . . . .

21 EZ NOL carryover beginning in 2004. . . . . . . .

22 EZ NOL carryover beginning in 2005. . . . . . . .

23 EZ NOL carryover beginning in 2006. . . . . . . .

24 EZ NOL carryover beginning in 2007. . . . . . . .

25 EZ NOL carryover beginning in 2008. . . . . . . .
26 Total the amounts in column (b), (c) and
   column (e). See instructions . . . . . . . . . . . . . .




Page 20       FTB 3805Z Booklet 2008 (REV 01-09)
Schedule Z – Computation of                           Additionally, the credit cannot be transferred to    Line  – If your business is located entirely
                                                      another taxpayer (absent a qualifying merger) .      within the EZ, enter 1 .
Credit Limitations                                    For S corporations, the amount of the 1/3            This percentage is the apportionment
Credit Limitations                                    credit that is in excess of the 1 .5% entity‑level   percentage computed by the entity using
The amount of EZ credits you can claim on             tax (3 .5% for financial S corporations) in the      Worksheet V, Section A, and represents the
your California tax return is limited by the          current year may also be carried forward and         percentage of the entity’s business income
amount of tax attributable to EZ business             used in future years to offset the S corporation     attributable to the EZ .
income . Use Schedule Z to compute this               entity‑level tax . See the instructions for          Line a – Compute the tax as if the EZ taxable
limitation .                                          Schedule Z, Part III for more information .          income represented all of your taxable income .
If a taxpayer owns an interest in a disregarded       Credit Code Number                                   Individuals
business entity, the amount of the credit that        Use credit code number 1 to claim the EZ           Use the tax table or tax rate schedule in your
can be utilized is limited to the difference          hiring and sales or use tax credits on your tax      tax booklet for your filing status .
between the taxpayer’s regular tax computed           return . Using an incorrect code number may
with the income of the disregarded entity, and        cause a delay in allowing the credit(s) .            Exempt organizations
the taxpayer’s regular tax computed without                                                                Use the applicable tax rate in your tax booklet .
the income of the disregarded entity .                Instructions for Schedule Z —                        Corporations and S Corporations
                                                                                                           Use the applicable tax rate .
Partnerships allocate the credit among the
partners according to the partner’s distributive
                                                      Computation of Credit                                Example: (Determination of EZ Income for
share as determined in a written partnership          Limitations                                          Shareholders, Partners, or Members of Pass-
agreement . See R&TC Section 17039(e)(2) .            Reporting Requirements of S Corporations,            Through Entities)
Credits you are otherwise eligible to claim           Estates, Trusts, and Partnerships                    John Anderson is vice president of ABC, Inc .,
may be limited . Do not apply credits against                                                              an S corporation that has two locations: one
                                                      • Partnerships do not complete Schedule Z .
the minimum franchise tax (corporations, and                                                               in an EZ and one outside an EZ . Eighty percent
                                                          The partners and members of these types
S corporations), the annual tax (partnerships                                                              (80%) of the S corporation’s business is
                                                          of entities should complete Schedule Z in
and QSub), the alternative minimum tax                                                                     attributable to the EZ .
                                                          order to determine the amount of EZ credits
(corporations, exempt organizations,                      that they may claim on their California tax      This percentage was determined by ABC, Inc .
individuals, and fiduciaries), the built‑in gains         return .                                         using form FTB 3805Z, Worksheet V, Section A,
tax (S corporations) or the excess net passive        • S corporations and their shareholders              when ABC’s S corporation return (Form 100S)
income tax (S corporations) .                             complete Schedule Z .                            was prepared . John divides his time equally
Refer to the credit instructions in your tax          • Report to shareholders, beneficiaries,             (50/50) between the two offices of ABC, Inc .
booklet for more information .                            partners, and members, the distributive or       Jackie Anderson (John’s spouse/RDP) works
                                                          pro‑rata share of business income, loss,         for ABC, Inc . at its office located in the EZ .
S Corporations and the Application of
                                                          and deductions apportioned to the zone .         John and Jackie Anderson have the following
Enterprise Zone Credits
                                                      • Separately state any distributive or pro‑rata      2008 items of California income and expense:
The credits earned by an S corporation may
                                                          share of business capital gains and losses
be used to reduce EZ tax at both the corporate                                                             John’s salary from ABC, Inc . .  .  .  .  .  .  .$100,000
                                                          apportioned to the zone included in the
and the shareholder levels .                                                                               Jackie’s salary from ABC, Inc . .  .  .  .  .  .  .  .75,000
                                                          amount above .
An S corporation may use 1/3 of the EZ credit                                                              Interest on savings account  .  .  .  .  .  .  .  .  .  .1,000
                                                      S Corporations                                       Dividends  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .3,000
to reduce the tax on the S corporation’s EZ
                                                      Complete only Part III of Schedule Z if your         Schedule K‑1 (100S) from ABC, Inc .:
business income . In addition, S corporation
                                                      entity‑level tax before credits is more than the       Ordinary income  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .40,000
shareholders may claim their pro‑rata share of
                                                      minimum franchise tax .                                EZ business expense
the entire amount of the EZ credits computed
under the Personal Income Tax Law .                   Corporations and S corporations subject to              deduction  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . (5,000)*
                                                      the minimum franchise tax only                       John’s unreimbursed employee
Example: In 2008, an S corporation qualified
                                                      Complete only Part IV of Schedule Z .                   expenses from federal Schedule A  . (2,000)
for a $3,000 EZ hiring credit . The S corporation
will be able to use 1/3 of the credit ($3,000 x       All others                                           *The EZ business expense deduction is a
1/3 = $1,000), to offset the tax on the               Complete Part I and Part II of Schedule Z .          separately stated item on Schedule K‑1 (100S),
corporation’s EZ business income .                                                                         line 11 .
                                                      Part I – Computation of Credit
The S corporation will also pass through a            Limitations                                          The Anderson’s EZ business income (total
$3,000 credit to its shareholders to offset their                                                          amount to be reported on line 3) is computed
                                                      For filers with NOLs or NOL carryovers .
individual tax (computed under the Personal                                                                as follows:
Income Tax Law) on EZ business income .               • Complete Worksheet VI first if you have a          John’s EZ salary
                                                          current year NOL or an NOL carryover .              ($100,000 x 50%) .  .  .  .  .  .  .  .  .  .  .  .  .  .$50,000
S corporations attach form FTB 3805Z to               • Then complete Schedule Z if you have any
Form 100S, California S Corporation Franchise                                                              Jackie’s EZ salary
                                                          EZ credits .                                        ($75,000 x 100%) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .75,000
or Income Tax Return, to claim the tax credits .
                                                      If you do not have a current year NOL or any         Pass‑through ordinary income from
Shareholders should attach Schedule(s) K‑1            NOL carryovers:                                         ABC, Inc . ($40,000 x 80%)  .  .  .  .  .  .  .  .32,000
(100S), Shareholder’s Share of Income,                                                                     EZ business expense
Deductions, Credits, etc ., to their individual tax   • Individuals: Go to Worksheet V, Section C .
                                                          Follow the instructions there . Enter the           deduction from ABC, Inc .  .  .  .  .  .  .  .  . (5,000)
returns .                                                                                                  John’s unreimbursed
                                                          amount from Worksheet V, Section C,
Carryover                                                 line 14, column (c) on Schedule Z, Part I,          employee business
If the amount of EZ credit available this year            line 1 and line 3 (skip line 2) .                   expenses (2,000 x 50%)  .  .  .  .  .  .  .  .  . (1,000)
exceeds your tax, you may carry over any              • Corporations: Follow the instructions for          Total EZ income
excess credit to future years until exhausted .           line 1 below .                                      (Schedule Z, Part I, line 3)  .  .  .  .  .  .$151,000
Apply the carryover to the earliest taxable year                                                           The standard deduction and personal or
possible . In no event can the credit be carried      Line 1 – Enter all trade or business income .
                                                      See Part IV instructions for the definition of       dependency exemptions are not included in the
back and applied against a prior year’s tax .                                                              computation of EZ business income since they
                                                      business income .
                                                                                                           are not related to trade or business activities .
                                                                                                                        FTB 3805Z Booklet 2008                                  Page 1
John and Jackie compute the tax (to be entered             Line 8B, column (c) – Enter the amount of              540, 540NR, or 541), column (b) . The amount
on Schedule Z, Part I, line 6a) on the total EZ            the total prior year credit carryover . This is the    cannot be greater than the amount on line 9A,
business income of $151,000 (as if it represents           amount of credit that was previously computed          column (e) or the amount computed on
all of their income) .                                     on Worksheet I, Section A in the prior year            line 9B, column (d) . Enter this amount on form
Line b – Corporations and S corporations                  minus the amount that was allowed to be taken          FTB 3805Z, Side 1, line 1c .
If the amount on line 6b is the minimum                    on the prior year return .                             Line 9B, column (b) – Enter the amount of
franchise tax ($800), you cannot use your                  Line 8B, column (d) – Add the amount of the            the current year credit that was computed on
EZ credits this year . Complete Part IV of                 current year credit on line 8B, column (b) and         Worksheet II, line 2, column (c) .
Schedule Z to compute the amount of credit                 the amount of the total prior year carryover on        Line 9B, column (c) – Enter the amount of
carryover .                                                line 8B, column (c) .                                  the total prior year credit carryover . This is the
Part II – Limitation of Credits                            Line 8B, column (e) – Compare the amounts              amount of credit that was previously computed
for Corporations, Individuals,                             on line 8A, column (e) and line 8A, column (f) .       on Worksheet II, line 2, column (c) minus the
Estates, and Trusts                                        Enter the smaller amount .                             amount that was allowed to be taken on the
                                                           Line 8B, column (g) – Subtract the amount              prior year return .
Use Part II of Schedule Z if you are a corporation,
individual, estate, or trust . Corporations and            on line 8B, column (e) from the amount on              Line 9B, column (d) – Add the amount of the
S corporations that are subject to paying only the         line 8B, column (d) . Enter the result on line 8B,     current year credit on line 9B, column (b) and
minimum franchise tax, go to Part IV .                     column (g) . This is the amount of credit that         the amount of the total prior year carryover on
                                                           can be carried over to future years .                  line 9B, column (c) .
Line 8A, column (e) – Enter the amount from
line 7 . This is the amount of limitation based            This carryover includes both the Schedule P            Line 9B, column (e) – Compare the amounts
on the tax on EZ business income .                         (100, 100W, 540, 540NR, or 541) limitation             on line 9A, column (e) and line 9A, column (f) .
                                                           and the limitation based on EZ business                Enter the smaller amount .
Line 8A, column (f) – Enter the amount of                  income .
credit that is used on Schedule P (100, 100W,                                                                     Line 9B, column (g) – Subtract the amount
540, 540NR, or 541), column (b) . The amount               Line 9A, column (e) – Subtract the amount              on line 9B, column (e) from the amount on
cannot be greater than the amount on line 8A,              on line 8B, column (e) from the amount on              line 9B, column (d) . Enter the result on line 9B,
column (e) or the amount computed on                       line 8A, column (e) . If the result is zero, your      column (g) . This is the amount of credit that
line 8B, column (d) . Enter this amount on form            remaining credits are limited and must be              can be carried over to future years .
FTB 3805Z, Side 1, line 1a .                               carried over to future years . In this case,           This carryover includes both the Schedule P
                                                           enter the amount from line 9B, column (d) on           (100, 100W, 540, 540NR, or 541) limitation
Line 8B, column (b) – Enter the amount of                  line 9B, column (g) .
the current year credit that was computed on                                                                      and the limitation based on EZ business
Worksheet I, Section A, line 6 .                           Line 9A, column (f) – Enter the amount of              income .
                                                           credit that is used on Schedule P (100, 100W,
Example: Part II
Assume the ABC Business has $8,000 of tax . The business computed a credit limitation based on zone income of $7,000 on Schedule Z, line 7 .
The business has the following credits:
Hiring credit                 —         $500 and a $300 carryover from a prior year
Sales or use tax credit       —         $9,000
Schedule Z, Part II would be computed as follows:
Part II Limitation of Credits for Corporations, Individuals, Estates, and Trusts. See instructions .
              (a)                   (b)                      (c)               (d)                 (e)                         (f)                      (g)
          Credit name              Credit             Total prior year     Total credit         Limitation       Credit used on Schedule P         Carryover
                                  amount                 carryover           col . (b)        based on zone         can never be greater         col . (d) minus
                                                                           plus col . (c)    business income       than col . (d) or col . (e)        col . (e)

                           A                                                                     7,000                       800
8 Hiring credit
                           B         500                  300                   800                 800                                              –0–

9 Sales or use             A                                                                     6,200                    6,200
  tax credit
                           B      9,000                   –0–                9,000               6,200                                             2,800
Part III – Limitation of Credits for                       Line 10 and Line 11, column (c) – Multiply             Line 10 and Line 11, column (d) – Enter the
S corporations                                             the amounts on line 10 and line 11, column (b)         amounts of total prior year credit carryover .
Use Part III of Schedule Z only if you are an              by 1/3 . Enter these amounts in column (c) .           This is the amount of credit that was previously
S corporation . Adjust Schedule C (100S) to                The amounts in column (c) are the maximum              computed on Worksheet I or Worksheet II,
reflect the EZ business tax limitation (Part I,            amounts of the current year credits that               minus the amount that was allowed to be taken
line 7) after completing this worksheet .                  may be used by the S corporation to offset             on the prior year return .
                                                           its 1 .5% entity‑level tax (3 .5% for financial        Line 10 and Line 11, column (e) – Add
Line 10 and Line 11, column (b) – Enter                    S corporations) .
the amount of current year credits that were                                                                      the amounts of the current year credits in
computed on Worksheet I and Worksheet II                   Also include this amount on Schedule C,                column (c) and the total prior year carryovers
in column (b) for line 10 and line 11, as                  Form 100S .                                            in column (d) .
applicable . Also include this amount on
Form 100S, Schedule K, line 13d .
Page       FTB 3805Z Booklet 2008
Line 10 and Line 11, column (f) – Enter           Line 1 and Line 13, column (c) – Enter
the credit amounts that were used by the          the amounts of the total prior year credit
S corporation in the current year to offset       carryovers . These are the amounts of credits
its 1 .5% entity‑level tax (3 .5% for financial   that were previously computed on Worksheet I
S corporations) . Enter the amounts in            and Worksheet II in the prior year, minus the
column (f) for line 10 and line 11 on form        amounts that were allowed to be taken on the
FTB 3805Z, Side 1, line 1a and line 1c, as        prior year return . S corporations may enter
applicable .                                      only 1/3 of the amounts from Worksheet I
Line 10 and Line 11, column (g) – Subtract        and Worksheet II in the prior year, minus the
the amount in column (f) for each line from the   amounts that were allowed to be taken on the
amounts in column (e) . These are the credit      prior year return .
amounts that can be carried over to future        Line 1 and Line 13, column (d) – Add the
years and used by the S corporation .             amounts in column (b) and column (c) for
                                                  line 12 and line 13 . These are the credit amounts
Part IV – Limitation of Credits for               that can be carried over to future years .
Corporations and S Corporations
Subject to Paying Only the
Minimum Franchise Tax
Use Part IV of Schedule Z if you are a
corporation or S corporation subject to paying
only the minimum franchise tax .
Line 1 and Line 13, column (b) – Enter the
amounts of current year credits that were
computed on Worksheet I and Worksheet
II . S corporations may enter only 1/3 of the
amounts from Worksheet I and II on line 12,
column (b) and line 13, column (b), as
applicable .




                                                                                                       FTB 3805Z Booklet 2008   Page 3
Standard Industrial Classification Manual, 1987 Edition (Partial Listing)
The Standard Industrial Classification (SIC) Manual            The complete Standard Industrial Classification Manual,
classifies business activities based upon establishments,      1987 Edition, is available for purchase from:
which are defined in the SIC Manual as an economic unit,         NATIONAL TECHNICAL INFORMATION SERVICE
generally at a single physical location, where business          5285 PORT ROYAL ROAD
is conducted, or where services or industrial operations         SPRINGFIELD VIRGINIA 22161
are performed. A taxpayer’s enterprise may consist of            Order No. PB 87-100012
more than one establishment. The SIC Manual provides
the following examples of establishments: A factory, mill,     The manual is also available on the Internet, go to
store, hotel, movie theater, mine, farm, ranch, bank,          osha.gov and search for sic code.
railroad depot, airline terminal, sales office, warehouse,     The four-digit industry codes within Division D of the
or central administrative office. Where distinct and           sic Manual are:
separate economic activities are performed at a single         3721 Research and Development on Aircraft
physical location (such as construction activities operated    3724 Aircraft Engines and Engine Parts
out of the same physical location as a lumber yard), each
activity should be treated as a separate establishment         3728 Aircraft Parts and Auxiliary Equipment, not elsewhere
where:                                                               classified
(1) No one industry description in the SIC Manual              3812 Search and Navigation Equipment
     includes such combined activities.
(2) The employment in each economic activity is
     significant.
(3) Separate reports are prepared on the number
     of employees, their wages and salaries, sales or
     receipts, property and equipment, and other types
     of financial data, such as financial statements, job
     costing, and profit center accounting.
The SIC Manual is organized using a hierarchial
structure, first by division, next by two-digit major groups
within each division, then by three-digit industry groups
within each major group, and finally by four-digit industry
codes within each industry group.
For purposes of this publication, SIC Codes 3721,
3724, 3728, and 3812 are listed since only Long Beach
taxpayers with establishments in these industry codes
qualify for the EZ hiring credit.




Page    FTB 3805Z Booklet 2008
FTB 3805Z                                                                              Code
                                                                                       315210 Cut & Sew Apparel Contractors
                                                                                                                                   Code
                                                                                                                                   332810 Coating, Engraving, Heat
Principal Business Activity codes                                                      315220 Men’s & Boys’ Cut & Sew                       Treating, & Allied Activities
                                                                                                 Apparel Mfg                       332900 Other Fabricated Metal Product
This list of principal business activities and their associated                        315230 Women’s & Girls’ Cut & Sew                    Mfg
                                                                                                 Apparel Mfg                       Machinery Manufacturing
codes is designed to classify a business by the type of                                315290 Other Cut & Sew Apparel Mfg          333100 Agriculture, Construction, &
activity in which it is engaged to facilitate the administration                       315990 Apparel Accessories & Other                   Mining Machinery Mfg
                                                                                                 Apparel Mfg                       333200 Industrial Machinery Mfg
of the California R&TC. For taxable years beginning
                                                                                       Leather and Allied Product                  333310 Commercial & Service Industry
on or after January 1, 1998, these principal business                                  Manufacturing                                        Machinery Mfg
activity codes are based on the North American Industry                                316110 Leather & Hide Tanning &             333410 Ventilation, Heating, Air-
                                                                                                 Finishing                                  Conditioning, & Commercial
Classification System published by the United States Office                            316210 Footwear Mfg (including rubber                Refrigeration Equipment Mfg
of Management and Budget.                                                                        & plastics)                       333510 Metalworking Machinery Mfg
                                                                                       316990 Other Leather & Allied Product       333610 Engine, Turbine, & Power
                                                                                                 Mfg                                        Transmission Equipment Mfg
For purposes of qualifying for the Long Beach EZ hiring                                                                            333900 Other General Purpose
                                                                                       Wood Product Manufacturing
credit, refer to the Standard Industrial Classification Manual.                        321110 Sawmills & Wood Preservation                  Machinery Mfg
A partial listing of the SIC codes is located on page 24 of                            321210 Veneer, Plywood, & Engineered        computer and Electronic Product
                                                                                                 Wood Product Mfg                  Manufacturing
this booklet.                                                                          321900 Other Wood Product Mfg               334110 Computer & Peripheral
                                                                                                                                            Equipment Mfg
                                                                                       Paper Manufacturing
                                                                                                                                   334200 Communications Equipment
                                                                                       322100 Pulp, Paper, & Paperboard                     Mfg
Agriculture, Forestry, Fishing,           construction                                           Mills
                                                                                                                                   334310 Audio & Video Equipment Mfg
and Hunting                               Code                                         322200 Converted Paper Product Mfg
                                                                                                                                   334410 Semiconductor & Other
Code                                      construction of Buildings                    Printing and Related support                         Electronic Component Mfg
crop Production                           236110 Residential Building                  Activities                                  334500 Navigational, Measuring,
111100 Oilseed & Grain Farming                     Construction                        323100 Printing & Related Support                    Electromedical, & Control
                                          236200 Nonresidential Building                         Activities                                 Instruments Mfg
111210 Vegetable & Melon Farming
         (including potatoes & yams)               Construction                        Petroleum and coal Products                 334610 Manufacturing & Reproducing
111300 Fruit & Tree Nut Farming           Heavy and civil Engineering                  Manufacturing                                        Magnetic & Optical Media
111400 Greenhouse, Nursery, &             construction                                 324110 Petroleum Refineries (including      Electrical Equipment, Appliance, and
         Floriculture Production          237100 Utility System Construction                     integrated)                       component Manufacturing
111900 Other Crop Farming (including      237210 Land Subdivision                      324120 Asphalt Paving, Roofing, &           335100 Electric Lighting Equipment
         tobacco, cotton, sugarcane,      237310 Highway, Street, & Bridge                       Saturated Materials Mfg                    Mfg
         hay, peanut, sugar beet, & all            Construction                        324190 Other Petroleum & Coal               335200 Household Appliance Mfg
         other crop farming)              237990 Other Heavy & Civil                             Products Mfg                      335310 Electrical Equipment Mfg
Animal Production                                  Engineering Construction            chemical Manufacturing                      335900 Other Electrical Equipment &
112111 Beef Cattle Ranching &             specialty Trade contractors                  325100 Basic Chemical Mfg                            Component Mfg
         Farming                          238100 Foundation, Structure, &              325200 Resin, Synthetic Rubber, &           Transportation Equipment
112112 Cattle Feedlots                             Building Exterior Contractors                 Artificial & Synthetic Fibers &   Manufacturing
112120 Dairy Cattle & Milk Production              (including framing carpentry,                 Filaments Mfg                     336100 Motor Vehicle Mfg
112210 Hog & Pig Farming                           masonry, glass, roofing, &          325300 Pesticide, Fertilizer, & Other       336210 Motor Vehicle Body & Trailer
112300 Poultry & Egg Production                    siding)                                       Agricultural Chemical Mfg                  Mfg
112400 Sheep & Goat Farming               238210 Electrical Contractors                325410 Pharmaceutical & Medicine            336300 Motor Vehicle Parts Mfg
                                          238220 Plumbing, Heating, & Air-                       Mfg                               336410 Aerospace Product & Parts Mfg
112510 Animal Aquaculture (including
         shellfish & finfish farms &               Conditioning Contractors            325500 Paint, Coating, & Adhesive Mfg       336510 Railroad Rolling Stock Mfg
         hatcheries)                      238290 Other Building Equipment              325600 Soap, Cleaning Compound, &           336610 Ship & Boat Building
112900 Other Animal Production                     Contractors                                   Toilet Preparation Mfg
                                                                                                                                   336990 Other Transportation
                                          238300 Building Finishing Contractors        325900 Other Chemical Product &                      Equipment Mfg
Forestry and Logging                               (including drywall, insulation,               Preparation Mfg
113110 Timber Tract Operations                     painting, wallcovering, flooring,                                               Furniture and Related Product
                                                                                       Plastics and Rubber Products                Manufacturing
113210 Forest Nurseries & Gathering                tile, & finish carpentry)           Manufacturing
         of Forest Products               238900 Other Specialty Trade                                                             337000 Furniture & Related Product
                                                                                       326100 Plastics Product Mfg                          Manufacturing
113310 Logging                                     Contractors (including site         326200 Rubber Product Mfg
Fishing, Hunting and Trapping                      preparation)                                                                    Miscellaneous Manufacturing
                                                                                       Nonmetallic Mineral Product                 339110 Medical Equipment & Supplies
114110 Fishing                            Manufacturing                                Manufacturing                                        Mfg
114210 Hunting & Trapping                                                              327100 Clay Product & Refractory Mfg
                                          Food Manufacturing                                                                       339900 Other Miscellaneous
support Activities for Agriculture and    311110 Animal Food Mfg                       327210 Glass & Glass Product Mfg                     Manufacturing
Forestry                                  311200 Grain & Oilseed Milling               327300 Cement & Concrete Product
115110 Support Activities for Crop        311300 Sugar & Confectionery Product                   Mfg                               Wholesale Trade
         Production (including cotton              Mfg                                 327400 Lime & Gypsum Product Mfg            Merchant Wholesalers, Durable Goods
         ginning, soil preparation,                                                    327900 Other Nonmetallic Mineral
         planting, & cultivating)         311400 Fruit & Vegetable Preserving &                                                    423100 Motor Vehicle & Motor Vehicle
                                                   Specialty Food Mfg                            Product Mfg                               Parts & Supplies
115210 Support Activities for Animal
         Production                       311500 Dairy Product Mfg                     Primary Metal Manufacturing                 423200 Furniture & Home Furnishings
115310 Support Activities for Forestry    311610 Animal Slaughtering and               331110 Iron & Steel Mills & Ferroalloy      423300 Lumber & Other Construction
                                                   Processing                                    Mfg                                       Materials
Mining                                    311710 Seafood Product Preparation &         331200 Steel Product Mfg from               423400 Professional & Commercial
211110   Oil & Gas Extraction                      Packaging                                     Purchased Steel                           Equipment & Supplies
212110   Coal Mining                      311800 Bakeries & Tortilla Mfg               331310 Alumina & Aluminum                   423500 Metal & Mineral (except
212200   Metal Ore Mining                 311900 Other Food Mfg (including                       Production & Processing                   Petroleum)
212310   Stone Mining & Quarrying                  coffee, tea, flavorings, &          331400 Nonferrous Metal (except             423600 Electrical & Electronic Goods
212320   Sand, Gravel, Clay, & Ceramic             seasonings)                                   Aluminum) Production &            423700 Hardware, & Plumbing &
         & Refractory                     Beverage and Tobacco Product                           Processing                                Heating Equipment & Supplies
                                          Manufacturing                                331500 Foundries                            423800 Machinery, Equipment, &
Minerals Mining & Quarrying                                                                                                                Supplies
212390 Other Nonmetallic Mineral          312110 Soft Drink & Ice Mfg                  Fabricated Metal Product
                                          312120 Breweries                             Manufacturing                               423910 Sporting & Recreational Goods
         Mining & Quarrying                                                                                                                & Supplies
213110 Support Activities for Mining      312130 Wineries                              332110 Forging & Stamping
                                          312140 Distilleries                          332210 Cutlery & Handtool Mfg               423920 Toy & Hobby Goods & Supplies
Utilities                                 312200 Tobacco Manufacturing                 332300 Architectural & Structural           423930 Recyclable Materials
221100 Electric Power Generation,                                                                Metals Mfg                        423940 Jewelry, Watch, Precious
       Transmission & Distribution        Textile Mills and Textile Product Mills                                                          Stone, & Precious Metals
                                          313000 Textile Mills                         332400 Boiler, Tank, & Shipping
221210 Natural Gas Distribution                                                                  Container Mfg                     423990 Other Miscellaneous Durable
221300 Water, Sewage, & Other             314000 Textile Product Mills                                                                     Goods
                                                                                       332510 Hardware Mfg
       Systems                            Apparel Manufacturing                        332610 Spring & Wire Product Mfg
221500 Combination Gas & Electric         315100 Apparel Knitting Mills                332700 Machine Shops, Turned
                                                                                                 Product, & Screw, Nut, & Bolt
                                                                                                 Mfg


                                                                                                                              FTB 3805Z Booklet 2008 Page 5
Code                                     Code                                       Code                                         Code
Merchant Wholesalers, Nondurable         clothing and clothing Accessories          support Activities for Transportation        securities, commodity contracts,
Goods                                    stores                                     488100 Support Activities for Air            and Other Financial investments and
424100 Paper & Paper Products            448110 Men’s Clothing Stores                        Transportation                      Related Activities
424210 Drugs & Druggists’ Sundries       448120 Women’s Clothing Stores             488210 Support Activities for Rail           523110 Investment Banking &
424300 Apparel, Piece Goods, &           448130 Children’s & Infants’ Clothing               Transportation                                Securities Dealing
        Notions                                   Stores                            488300 Support Activities for Water          523120 Securities Brokerage
424400 Grocery & Related Products        448140 Family Clothing Stores                       Transportation                      523130 Commodity Contracts Dealing
424500 Farm Product Raw Materials        448150 Clothing Accessories Stores         488410 Motor Vehicle Towing                  523140 Commodity Contracts
424600 Chemical & Allied Products        448190 Other Clothing Stores               488490 Other Support Activities for                    Brokerage
424700 Petroleum & Petroleum             448210 Shoe Stores                                  Road Transportation                 523210 Securities & Commodity
        Products                         448310 Jewelry Stores                      488510 Freight Transportation                          Exchanges
424800 Beer, Wine, & Distilled           448320 Luggage & Leather Goods                      Arrangement                         523900 Other Financial Investment
        Alcoholic Beverages                       Stores                            488990 Other Support Activities for                    Activities (including portfolio
424910 Farm Supplies                                                                         Transportation                                management & investment
                                         sporting Goods, Hobby, Book, and                                                                  advice)
424920 Book, Periodical, &               Music stores                               couriers and Messengers
        Newspapers                                                                  492110 Couriers                              insurance carriers and Related
                                         451110 Sporting Goods Stores                                                            Activities
424930 Flower, Nursery Stock, &          451120 Hobby, Toy, & Game Stores           492210 Local Messengers & Local
        Florists’ Supplies                                                                   Delivery                            524140 Direct Life, Health, & Medical
                                         451130 Sewing, Needlework, & Piece                                                                Insurance & Reinsurance
424940 Tobacco & Tobacco Products                 Goods Stores                      Warehousing and storage
424950 Paint, Varnish, & Supplies                                                                                                          Carriers
                                         451140 Musical Instrument & Supplies       493100 Warehousing & Storage (except         524150 Direct Insurance & Reinsurance
424990 Other Miscellaneous                        Stores                                     lessors of miniwarehouses &
        Nondurable Goods                                                                                                                   (except Life, Health, & Medical)
                                         451211 Book Stores                                  self- storage units)                          Carriers
Wholesale Electronic Markets and         451212 News Dealers & Newsstands
Agents and Brokers                                                                  information                                  524210 Insurance Agencies &
                                         451220 Prerecorded Tape, Compact                                                                  Brokerages
425110 Business to Business                       Disc, & Record Stores             Publishing industries (except internet)      524290 Other Insurance Related
        Electronic Markets                                                          511110 Newspaper Publishers                            Activities (including third-party
                                         General Merchandise stores
425120 Wholesale Trade Agents &                                                     511120 Periodical Publishers                           administration of insurance and
        Brokers                          452110 Department stores
                                                                                    511130 Book Publishers                                 pension funds)
                                         452900 Other General Merchandise
Retail Trade                                      Stores                            511140 Directory & Mailing List              Funds, Trusts, and Other Financial
                                                                                              Publishers                         Vehicles
Motor Vehicle and Parts Dealers          Miscellaneous store Retailers              511190 Other Publishers                      525100 Insurance & Employee Benefit
441110 New Car Dealers                   453110 Florists                            511210 Software Publishers                             Funds
441120 Used Car Dealers                  453210 Office Supplies & Stationery                                                     525910 Open-End Investment Funds
                                                  Stores                            Motion Picture and sound Recording
441210 Recreational Vehicle Dealers                                                 industries                                             (Form 1120-RIC)
441221 Motorcycle Dealers                453220 Gift, Novelty, & Souvenir Stores                                                 525920 Trusts, Estates, & Agency
                                                                                    512100 Motion Picture & Video
441222 Boat Dealers                      453310 Used Merchandise Stores                       Industries (except video rental)             Accounts
441229 All Other Motor Vehicle Dealers   453910 Pet & Pet Supplies Stores           512200 Sound Recording Industries            525930 Real Estate Investment Trusts
441300 Automotive Parts, Accessories,    453920 Art Dealers                                                                                (Form 1120-REIT)
         & Tire Stores                   453930 Manufactured (Mobile) Home          Broadcasting (except internet)
                                                                                                                                 525990 Other Financial Vehicles
                                                  Dealers                           515100 Radio & Television                              (including closed-end
Furniture and Home Furnishings                                                                Broadcasting
stores                                   453990 All Other Miscellaneous Store                                                              investment funds)
                                                  Retailers (including tobacco,     515210 Cable & Other Subscription            “Offices of Bank Holding Companies” and
442110 Furniture Stores                                                                       Programming
                                                  candle, & trophy shops)                                                        “Offices of Other Holding Companies”
442210 Floor Covering Stores
                                         Nonstore Retailers                         internet Publishing and Broadcasting         are located under Management of
442291 Window Treatment Stores                                                                                                   companies (Holding companies) on
                                         454110 Electronic Shopping & Mail-         516110 Internet Publishing &
442299 All Other Home Furnishings                                                             Broadcasting                       next page.
         Stores                                   Order Houses
Electronics and Appliance stores
                                         454210 Vending Machine Operators           Telecommunications                           Real Estate and Rental and
443111 Household Appliance Stores
                                         454311 Heating Oil Dealers                 517000 Telecommunications (including         Leasing
                                         454312 Liquefied Petroleum Gas                       paging, cellular, satellite,
443112 Radio, Television, & Other                 (Bottled Gas) Dealers                       cable & other program              Real Estate
         Electronics Stores                                                                   distribution, resellers, & other   531110 Lessors of Residential
                                         454319 Other Fuel Dealers
443120 Computer & Software Stores                                                             telecommunications)                         Buildings & Dwellings
                                         454390 Other Direct Selling
443130 Camera & Photographic                      Establishments (including         internet service Providers, Web              531114 Cooperative Housing
         Supplies Stores                          door-to-door retailing, frozen    search Portals, and Data Processing          531120 Lessors of Nonresidential
Building Material and Garden                      food plan providers, party plan   services                                              Buildings (except
Equipment and supplies Dealers                    merchandisers, & coffee-break     518111 Internet Service Providers                     Miniwarehouses)
444110 Home Centers                               service providers)                518112 Web Search Portals                    531130 Lessors of Miniwarehouses &
444120 Paint & Wallpaper Stores                                                                                                           Self-Storage Units
                                         Transportation and                         518210 Data Processing, Hosting, &
                                                                                                                                 531190 Lessors of Other Real Estate
444130 Hardware Stores                                                                        Related Services
444190 Other Building Material Dealers
                                         Warehousing                                                                                      Property
                                                                                    Other information services                   531210 Offices of Real Estate Agents &
444200 Lawn & Garden Equipment &         Air, Rail, and Water Transportation
                                                                                    519100 Other Information Services                     Brokers
         Supplies Stores                 481000 Air Transportation                            (including news syndicates &
                                         482110 Rail Transportation                                                              531310 Real Estate Property Managers
Food and Beverage stores                                                                      libraries)                         531320 Offices of Real Estate
445110 Supermarkets and Other            483000 Water Transportation
         Grocery (except Convenience)    Truck Transportation
                                                                                    Finance and insurance                                 Appraisers
                                                                                                                                 531390 Other Activities Related to Real
         Stores                          484110 General Freight Trucking, Local     Depository credit intermediation                      Estate
445120 Convenience Stores                484120 General Freight Trucking, Long-     522110 Commercial Banking
                                                                                    522120 Savings Institutions                  Rental and Leasing services
445210 Meat Markets                                 distance
                                                                                    522130 Credit Unions                         532100 Automotive Equipment Rental
445220 Fish & Seafood Markets            484200 Specialized Freight Trucking                                                              & Leasing
445230 Fruit & Vegetable Markets         Transit and Ground Passenger               522190 Other Depository Credit
                                                                                              Intermediation                     532210 Consumer Electronics &
445291 Baked Goods Stores                Transportation                                                                                   Appliances Rental
445292 Confectionery & Nut Stores        485110 Urban Transit Systems               Nondepository credit intermediation          532220 Formal Wear & Costume Rental
445299 All Other Specialty Food Stores   485210 Interurban & Rural Bus              522210 Credit Card Issuing                   532230 Video Tape & Disc Rental
445310 Beer, Wine, & Liquor Stores                  Transportation                  522220 Sales Financing                       532290 Other Consumer Goods Rental
Health and Personal care stores          485310 Taxi Service                        522291 Consumer Lending                      532310 General Rental Centers
446110 Pharmacies & Drug Stores          485320 Limousine Service                   522292 Real Estate Credit (including         532400 Commercial & Industrial
446120 Cosmetics, Beauty Supplies, &     485410 School & Employee Bus                         mortgage bankers &                          Machinery & Equipment Rental
         Perfume Stores                             Transportation                            originators)                                & Leasing
446130 Optical Goods Stores              485510 Charter Bus Industry                522293 International Trade Financing
                                                                                                                                 Lessors of Nonfinancial intangible
446190 Other Health & Personal Care      485990 Other Transit & Ground              522294 Secondary Market Financing            Assets (except copyrighted works)
         Stores                                     Passenger Transportation        522298 All Other Nondepository Credit        533110 Lessors of Nonfinancial
                                         Pipeline Transportation                              Intermediation                              Intangible Assets (except
Gasoline stations
447100 Gasoline Stations (including      486000 Pipeline Transportation             Activities Related to credit                          copyrighted works)
                                                                                    intermediation
         convenience stores with gas)    scenic & sightseeing Transportation
                                                                                    522300 Activities Related to Credit          Professional, scientific, and
                                         487000 Scenic & Sightseeing                          Intermediation (including loan     Technical services
                                                    Transportation                            brokers, check clearing, &         Legal services
                                                                                              money transmitting)                541110 Offices of Lawyers
                                                                                                                                 541190 Other Legal Services


Page      FTB 3805Z Booklet 2008
Code                                        Code                                       Code                                         Code
Accounting, Tax Preparation,                561500 Travel Arrangement &                Other Ambulatory Health care                 Food services and Drinking Places
Bookkeeping, and Payroll services                    Reservation Services              services                                     722110 Full-Service Restaurants
541211 Offices of Certified Public          561600 Investigation & Security            621900 Other Ambulatory Health Care          722210 Limited-Service Eating Places
         Accountants                                 Services                                     Services (including ambulance     722300 Special Food Services
541213 Tax Preparation Services             561710 Exterminating & Pest Control                   services & blood & organ                  (including food service
541214 Payroll Services                              Services                                     banks)                                    contractors & caterers)
541219 Other Accounting Services            561720 Janitorial Services                 Hospitals                                    722410 Drinking Places (Alcoholic
Architectural, Engineering, and             561730 Landscaping Services                622000 Hospitals                                     Beverages)
Related services                            561740 Carpet & Upholstery Cleaning
                                                     Services
                                                                                       Nursing and Residential care                 Other services
541310 Architectural Services                                                          Facilities
                                            561790 Other Services to Buildings &                                                    Repair and Maintenance
541320 Landscape Architecture                                                          623000 Nursing & Residential Care
         Services                                    Dwellings                                    Facilities                        811110 Automotive Mechanical
                                            561900 Other Support Services                                                                    & Electrical Repair &
541330 Engineering Services                                                            social Assistance                                     Maintenance
                                                     (including packaging & labeling
541340 Drafting Services                             services, & convention & trade    624100 Individual & Family Services          811120 Automotive Body, Paint,
541350 Building Inspection Services                  show organizers)                  624200 Community Food & Housing,                      Interior, & Glass Repair
541360 Geophysical Surveying &              Waste Management and Remediation                      & Emergency & Other Relief        811190 Other Automotive Repair &
         Mapping Services                   services                                              Services                                   Maintenance (including oil
541370 Surveying & Mapping (except          562000 Waste Management &                  624310 Vocational Rehabilitation                      change & lubrication shops &
         Geophysical) Services                       Remediation Services                         Services                                   car washes)
541380 Testing Laboratories                                                            624410 Child Day Care Services               811210 Electronic & Precision
                                            Educational services                                                                             Equipment Repair &
specialized Design services
                                            611000 Educational Services                Arts, Entertainment, and                              Maintenance
541400 Specialized Design Services                 (including schools, colleges, &     Recreation                                   811310 Commercial & Industrial
         (including interior, industrial,          universities)                                                                             Machinery & Equipment
         graphic, & fashion design)                                                    Performing Arts, spectator sports,
                                                                                       and Related industries                                (except Automotive &
computer systems Design and                 Health care and social                                                                           Electronic) Repair &
                                                                                       711100 Performing Arts Companies
Related services                            Assistance                                 711210 Spectator Sports (including
                                                                                                                                             Maintenance
541511 Custom Computer                      Offices of Physicians and Dentists                   sports clubs & racetracks)         811410 Home & Garden Equipment
         Programming Services               621111 Offices of Physicians (except                                                             & Appliance Repair &
                                                                                       711300 Promoters of Performing Arts,                  Maintenance
541512 Computer Systems Design                       mental health specialists)                  Sports, & Similar Events
         Services                           621112 Offices of Physicians, Mental                                                    811420 Reupholstery & Furniture
                                                                                       711410 Agents & Managers for Artists,                 Repair
541513 Computer Facilities                           Health Specialists                          Athletes, Entertainers, & Other
         Management Services                621210 Offices of Dentists                           Public Figures                     811430 Footwear & Leather Goods
541519 Other Computer Related                                                                                                                Repair
                                            Offices of Other Health Practitioners      711510 Independent Artists, Writers, &
         Services                                                                                Performers                         811490 Other Personal & Household
                                            621310 Offices of Chiropractors                                                                  Goods Repair & Maintenance
Other Professional, scientific, and                                                    Museums, Historical sites, and similar
Technical services                          621320 Offices of Optometrists                                                          Personal and Laundry services
                                            621330 Offices of Mental Health            institutions
541600 Management, Scientific, &                                                       712100 Museums, Historical Sites, &          812111 Barber Shops
         Technical Consulting Services               Practitioners (except
                                                     Physicians)                                 Similar Institutions               812112 Beauty Salons
541700 Scientific Research &                                                                                                        812113 Nail Salons
         Development Services               621340 Offices of Physical,                Amusement, Gambling, and
                                                     Occupational & Speech             Recreation industries                        812190 Other Personal Care Services
541800 Advertising & Related Services                Therapists, & Audiologists                                                              (including diet & weight
541910 Marketing Research & Public                                                     713100 Amusement Parks & Arcades                      reducing centers)
                                            621391 Offices of Podiatrists              713200 Gambling Industries
         Opinion Polling                                                                                                            812210 Funeral Homes & Funeral
                                            621399 Offices of All Other                713900 Other Amusement &
541920 Photographic Services                         Miscellaneous Health                                                                    Services
541930 Translation & Interpretation                                                              Recreation Industries (including   812220 Cemeteries & Crematories
                                                     Practitioners                               golf courses, skiing facilities,
         Services                                                                                                                   812310 Coin-Operated Laundries &
                                            Outpatient care centers                              marinas, fitness centers, &
541940 Veterinary Services                                                                       bowling centers)                            Drycleaners
541990 All Other Professional,              621410 Family Planning Centers                                                          812320 Drycleaning & Laundry
         Scientific, & Technical Services   621420 Outpatient Mental Health &          Accommodation and Food                                Services (except Coin-
                                                     Substance Abuse Centers
Management of companies                     621491 HMO Medical Centers
                                                                                       services                                              Operated)
                                                                                                                                    812330 Linen & Uniform Supply
(Holding companies)                         621492 Kidney Dialysis Centers             Accommodation
                                                                                                                                    812910 Pet Care (except Veterinary)
                                            621493 Freestanding Ambulatory             721110 Hotels (except Casino Hotels)                  Services
551111 Offices of Bank Holding                                                                & Motels
       Companies                                     Surgical & Emergency Centers                                                   812920 Photofinishing
                                            621498 All Other Outpatient Care           721120 Casino Hotels
551112 Offices of Other Holding                                                                                                     812930 Parking Lots & Garages
       Companies                                     Centers                           721191 Bed & Breakfast Inns
                                                                                                                                    812990 All Other Personal Services
                                            Medical and Diagnostic Laboratories        721199 All Other Traveler
Administrative and support                  621510 Medical & Diagnostic
                                                                                              Accommodation                         Religious, Grantmaking, civic,
and Waste Management and                                                               721210 RV (Recreational Vehicle)             Professional, and similar
                                                     Laboratories                                                                   Organizations
Remediation services                                                                          Parks & Recreational Camps
                                            Home Health care services                  721310 Rooming & Boarding Houses             813000 Religious, Grantmaking,
Administrative and support services         621610 Home Health Care Services                                                                 Civic, Professional, & Similiar
561110 Office Administrative Services                                                                                                        Organizations (including
561210 Facilities Support Services                                                                                                           condominium and homeowners
561300 Employment Services                                                                                                                   associations)
561410 Document Preparation
        Services
561420 Telephone Call Centers
561430 Business Service Centers
        (including private mail centers
        & copy shops)
561440 Collection Agencies
561450 Credit Bureaus
561490 Other Business Support
        Services (including
        repossession services,
        court reporting, & stenotype
        services)




                                                                                                                               FTB 3805Z Booklet 2008            Page 
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                                   ftb.ca.gov




Page 8   FTB 3805Z Booklet 2008
 TAXABLE YEAR
                                           Enterprise Zone                                                                                                                                                                                                                    CALIFORNIA FORM


      2008                                 Deduction and Credit Summary                                                                                                                                                                                                          3805Z
Attach to your California tax return.                                                                                                                                                                                                  SSN or ITIN or California corporation number



Name(s) as shown on return                                                                                                                                                                                                             FEIN



                                                                                                                                                                                                   Secretary of State (SOS) file number
                                                                                                                                                                                                                                                         -

A. Check the appropriate box for your entity type:
     Individual         Estate         Trust                            C corporation                                        S corporation                                       Partnership
           Exempt organization                         Limited liability company                                                            Limited liability partnership
B. Enter the name of the enterprise zone business: ______________________________________________________________________________________
C. Enter the address (actual location) where the enterprise zone business is conducted:
   ____________________________________________________________________________________________________________________________
D. Enter the name of the enterprise zone in which the business and/or investment activity is located .
   ____________________________________________________________________________________________________________________________
E. Enter the six‑digit Principal Business Activity Code of the EZ Business  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                     ______________________
   Enter the six‑digit Principal Business Activity Code from the chart . For the Long Beach
   Enterprise Zone, enter the four‑digit Standard Industrial Classification (SIC) code number from the chart .
F. Total number of employees in the enterprise zone  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                            ______________________
G. Number of employees included in the computation of the hiring credit, if claimed  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                    ______________________
H. Number of new employees included in the computation of the hiring credit, if claimed  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                            ______________________
I. Gross annual receipts of the business .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .          ______________________
J. Total asset value of the business  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . ______________________

Part I Credits and Recapture (Complete Schedule Z on Side 2 before you complete this part .)
1 Hiring and sales or use tax credits claimed on the current year return:
  a Hiring credit from Schedule Z, line 8A, column (f) or line 10, column (f)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                     1a______________________
  b Hiring credit recapture from Worksheet I, Section B, line 2, column (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                    1b______________________
  c Sales or use tax credit from Schedule Z, line 9A, column (f) or line 11, column (f) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                                 1c______________________
  d Add line 1a and line 1c .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   1d______________________
Part II Business Expense Deduction and Recapture
 a Enter the cost of qualified property purchased for the enterprise zone that is being deducted as a current year
      business expense from Worksheet III, Section A, line 5, column (b) .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                               a______________________
      ELECTION: The act of deducting a portion of the cost of any property as a current year expense rather than adding it
      to the capital account constitutes an election to treat that property in accordance with R&TC Sections 17267 .2
      or 24356 .7 . That election may not be revoked except with the written consent of the Franchise Tax Board (FTB) .
  b Business expense deduction recapture from Worksheet III, Section B, line 2, column (b)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                                               b______________________
Part III Net Interest Deduction for Lenders
3 Enter the amount of net interest received on loans to businesses located in the enterprise zone from
  Worksheet IV, line 2, column (f)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .          3 ______________________
Part IV Portion of Business Attributable to the Enterprise Zone
 Enter the average apportionment percentage of your business that is in the enterprise zone from Worksheet V, Section A,
  line 4 . If your operation is wholly within the enterprise zone, the average apportionment percentage is 100% (1 .00)  .  .  .  .  .  .  .  .                                                                                                                         ______________________
Part V Net Operating Loss (NOL) Carryover and Deduction
5 a Enter the enterprise zone NOL carryover from prior years from Worksheet VI, Section C, line 26, column (b)  .  .  .  .  .  .  .  .  .  .  . 5a ______________________
  b Enter the total enterprise zone NOL deduction used in the current year from Worksheet VI, Section C, line 26,
     column (c) . Enter this amount on Schedule CA (540 or 540NR), line 21e, column B; Form 100, line 21;
     Form 100W, line 21; Form 100S, line 19; or Form 109, line 6  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5b______________________
       c Enter the enterprise zone NOL carryover to future years from Worksheet VI, Section C, line 26, column (e)  .  .  .  .  .  .  .  .  .  .  .  .                                                                                                                 5c______________________
       ELECTION: For those taxpayers eligible for an NOL carryover under R&TC Sections 17276 .2, 17276 .4, 17276 .5, 17276 .6, 24416 .2,
       24416 .4, 24416 .5, or 24416 .6, the act of claiming an NOL carryover on this form constitutes the irrevocable election to apply the
       loss under R&TC Sections 17276 .2 or 24416 .2, for taxpayers operating a trade or business within the enterprise zone . If you elect to carry
       over an NOL under the enterprise zone provisions, you cannot carry over any other type and amount of NOL from this year .



For Privacy Notice, get form FTB 1131.                                                                                                             7541083                                                                                                             FTB 3805Z 2008 Side 1
Schedule Z Computation of Credit Limitations — Enterprise Zones
Part I Computation of Credit Limitations. See instructions .
 1 Trade or business income . Individuals: Enter the amount from the Worksheet V, Section C, line 14, column (c)
    on this line and on line 3 (skip line 2) . See instructions . Corporations filing a combined
    report, enter the taxpayer’s business income apportioned to California . See instructions for Part IV .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                                                       1
  Corporations: Enter the average apportionment percentage from Worksheet V, Section A, line 4 . See instructions  .  .  .  .  .  .  .  .                                                                                                                                 
 3 Multiply line 1 by line 2 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   3
  Enter the enterprise zone NOL deduction from Worksheet VI, Section C, line 26, column (c)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                                                                    
 5 Enterprise zone taxable income . Subtract line 4 from line 3  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                                   5
  a Compute the amount of tax due using the amount on line 5 .
        See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . a
    b Enter the amount of tax from Form 540, line 24; Long Form 540NR, line 27;
        Form 541, line 21; Form 100, line 24; Form 100W, line 24; Form 100S, line 22;
        or Form 109, line10 . Corporations and S corporations, see instructions .  .  .  .  .  .  .  .  .  .  .  .  . b
  Enter the smaller of line 6a or line 6b . This is the limitation based on the enterprise zone business income .
    Go to Part II, Part III, or Part IV . See instructions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .                                 


Part II Limitation of Credits for Corporations, Individuals, Estates, and Trusts. See instructions .
                 (a)                                          (b)                                             (c)                                            (d)                                        (e)                      (f)                                                  (g)
                Credit                                       Credit                                          Total                                      Total credit                                Limitation     Credit used on Schedule P                                     Carryover
                name                                        amount                                        prior year                                       col . (b)                                 based on         can never be greater                                     col . (d) minus
                                                                                                          carryover                                     plus col . (c)                          EZ business income   than col . (d) or col . (e)                                    col . (e)


8 Hiring                            A
  credit
                                    B
9 Sales or                          A
  use tax
  credit                            B

Part III Limitation of Credits for S corporations Only. See instructions .
                 (a)                                          (b)                                         (c)                                                 (d)                                            (e)                                              (f)                     (g)
                Credit                                       Credit                                 S corporation                                            Total                                      Total credit                                     Credit used             Carryover
                name                                        amount                                  credit col . (b)                                      prior year                                       col . (c)                                     this year by          col . (e) minus
                                                                                                   multiplied by 1/3                                      carryover                                     plus col . (d)                                  S corporation               col . (f)

10         Hiring
           credit
11         Sales or use
           tax credit


Part IV Limitation of Credits for Corporations and S Corporations Subject to Paying Only the Minimum Franchise Tax. See instructions .
                 (a)                                          (b)                                             (c)                                         (d)
                Credit                                       Credit                                          Total                                    Total credit
                name                                        amount                                        prior year                               carryover col . (b)
                                                                                                          carryover                                   plus col . (c)

1         Hiring
           credit
13         Sales or use
           tax credit


Refer to page 5 for information on how to claim deductions and credits .




Side                 FTB 3805Z 2008                                                                                                                  7542083
How to Get California Tax Information                                                                                                        (Keep This Page For Future Use)
Your Rights as a Taxpayer                              Letters                                                                               EZ Contact Information
Our goal at the Franchise Tax Board (FTB) is to        If you write to us, be sure your letter includes                                      For business eligibility or zone related
make certain that your rights are protected so         your FEIN, Secretary of State (SOS) file                                              information, including questions regarding EZ
that you will have the highest confidence in the       number, California corporation number,                                                geographic boundaries, contact the local zone
integrity, efficiency, and fairness of our state tax   social security number or individual taxpayer                                         program manager in which the business is
system . FTB Pub . 4058, California Taxpayers’         identification number, your daytime and                                               located . For a list of program managers, go to
Bill of Rights, includes information on your           evening telephone numbers, and a copy of the                                          www.hcd.ca.gov and search for eda .
rights as a California taxpayer, the Taxpayers’        notice (if applicable) . Send your letter to:                                         For information that is not tax‑specific or zone‑
Rights Advocate Program, and how you can                   PROFESSIONAL RESOURCES AND                                                        specific, you may contact the Department of
request written advice from the FTB on whether             EDUCATION SECTION MS F283                                                         Housing and Community Development at:
a particular transaction is taxable . See “Where           FRANCHISE TAX BOARD
to Get Tax Forms and Publications” below .                                                                                                       DEPARTMENT OF HOUSING AND
                                                           PO BOX 1468                                                                           COMMUNITY DEVELOPMENT
                                                           SACRAMENTO CA 95812‑1468                                                              FINANCIAL ASSISTANCE DIVISION
Where to Get Tax Forms and                             We will respond to your letter within ten weeks .                                         STATE ENTERPRISE AND ECONOMIC
Publications                                           In some cases, we may need to call you for                                                DEVELOPMENT SECTION
By Internet – You can download, view, and              additional information .                                                                  ENTERPRISE ZONE PROGRAMS
print California tax forms and publications from       Do not attach correspondence to your tax                                                  1800 THIRD STREET, SUITE 390‑1
our website at ftb.ca.gov.                             return unless the correspondence relates to an                                            SACRAMENTO CA 95811
Access other state agencies’ websites through          item on your return .                                                                     Telephone: 916 .322 .1554
the State Agencies Directory on California’s                                                                                                     FAX: 916 .322 .2904
website at ca.gov .                                    General Toll-Free Phone                                                                   Website: www.hcd.ca.gov
By phone – To order current year California            Service                                                                               or you may also contact:
tax forms and publications, call our automated         Telephone assistance is available year‑round                                              FRANCHISE TAX BOARD
phone service . To order a form:                       from 7 a .m . until 6 p .m . Monday through                                               Telephone: 916 .845 .3464
• Refer to the list in your tax booklet and find       Friday, except for holidays .                                                             Website: ftb.ca.gov
    the code number for the form you want to           From within the
    order .                                               United States, call  .  .  .  .  .  .  .  .  . 800 .852 .5711
• Call 800 .338 .0505 and follow the                   From outside the United
    instructions .                                        States, call (not toll‑free)  .  .  .  . 916 .845 .6500
Allow two weeks to receive your order . If you         Assistance for persons with disabilities:
live outside California, allow three weeks to          The FTB complies with the Americans with
receive your order .                                   Disabilities Act . Persons with a hearing or
In person – Many post offices provide free             speech impairments, call:
California personal income tax booklets during         From TTY/TDD  .  .  .  .  .  .  .  .  .  .  .  .  .  . 800 .822 .6268
the filing season .                                                (Direct line to FTB customer service)
Employees at post offices cannot provide tax           Asistencia bilingüe en español:
information or assistance .                            Asistencia telefónica esta disponible todo el
By mail – Write to:                                    año durante las 7 a .m . y las 6 p .m . lunes a
    TAX FORMS REQUEST UNIT                             viernes, excepto días festivos .
    FRANCHISE TAX BOARD                                Dentro de los Estados Unidos,
    PO BOX 307                                            llame al:  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 800 .852 .5711
    RANCHO CORDOVA CA 95741‑0307                       Fuera de los Estados Unidos,
                                                          llame al (cargos aplican)  .  .  .  .  . 916 .845 .6500
                                                       Sitio web:  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .ftb.ca.gov
                                                       Asistencia para personas discapacitadas:
                                                       El FTB está en conformidad con el Acta de
                                                       Americanos Discapacitados . Personas con
                                                       problemas auditivos o de habla pueden llamar:
                                                       De TTY/TDD  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .800 .822 .6268
                                                           (Linea directa al servicio de clientes del FTB)




                                                                                                                                                    FTB 3805Z Booklet 2008 Page 31

				
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