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Franchise Tax Board revises Partnership Return to allow reporting federal partnership audit adjustments to California.

FTB Tax News Article 

New to the California 2018 Partnership Return of Income (FTB 565) and Limited Liability Company Return of Income (FTB 568) is the addition of a Partnership Level Tax line - FTB 565, it’s line 25 and FTB 568, it’s line 5.

The sole purpose of the Partnership Level Tax line is to allow partnerships and Limited Liability Companies classified as a partnership to report to us each change or correction made by the IRS under the centralized partnership audit regime.

The addition of the Partnership Level Tax line for the 2018 forms is necessary since the federal change or correction must be reported to us for the tax year that was examined by filing an amended return. Whereas, for federal tax purposes, the change or correction is reported in the year the audit/examination is completed.

Each IRS change or correction should be reported to us within 6 months after the date of each final federal determination.

Refer to the Bipartisan Budget Act of 2015  for more information on the centralized partnership audit regime at the federal level. Visit California Revenue and Taxation Code Section 18622.5 for information on how the results of a partnership audit for federal purposes should be reported to California.

Click here for more Information:  https://www.ftb.ca.gov/professionals/taxnews/Editions/2019/February/All-About-Business.shtml

steve@stevesimsea.com