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CCH Axcess Tax

Input Data Notes & Automatic Features Part I

Application for Extension

California Form 3538, Payment Voucher for Automatic Extension for Limited Partnerships, LLPs and REMICs, is produced when Form 565 will be filed after its original due date. California Form 3537, Payment Voucher for Automatic Extension for Limited Liability Companies, is produced when Form 568 will be filed after its original due date, and there is nonconsenting nonresident members tax due (Form 568 Schedule T). California Form 3519, Payment Voucher, is produced when Form 540NR will be filed after its original due date and there is a balance due.

Form 3538 or 3537 can be requested in the following ways:

• Use the options available on the California Extension section of the federal Extensions worksheet to control printing of Forms 3538 and 3537.
• Check "Produceall state extensions" on federal Extensions > Extensions > State Extension Information. California must be the home state code on InterviewBasic Data worksheet or there must be some entries on California worksheets.
• Enter CA as the State Code on . Again, California must be the home state code on InterviewBasic Data worksheet or there must be some input on California worksheets.

Extension forms will 'lock' (not be recalculated) when the return is calculated after the due date of the extension. In addition, the calculated amount of tax due on the extension is automatically carried to the 'payment due with extension' line of the main return. In prior years, additional input was needed to populate the 'paid with extension' line on the main return.

Input is available on Extensions > Extensions > Federal Extension Information to lock the amount earlier than the extension due date, or to unlock all units' extensions (which allows the extension forms to recalculate). Input is also available on Interviewthe State Extension Information section of the Other - Extensions worksheet to unlock extensions only for specific state units.

FS Codes

Most of the information needed to prepare the California partnership return carries from the Interviewworksheets.

When federal and California amounts differ, use FS and State codes, where available, to direct information to the federal or state returns. For multistate return processing, also enter a valid two-character state code in the State field since using S as the FS code with a blank State code allows information to be accessed by all states present.

FS and State code entries are treated as follows:

If California is the only state return or California is the automatic state on a multistate return and the Automatic Sale feature is used, FS and State code entries are not required on the Gains and Losses section of the Income/Deductions worksheet unless federal and state basis differs.

The Fiduciary Passthrough and Partnership Passthrough sections of the Income/Deductions worksheet, and the Additional Activity Information worksheet have state-if-different columns to identify federal / California differences.

Use the Trade or Business Income Overrides section of the California Income/Deductions worksheet to override California trade or business amounts.

Use the various Overrides sections of the California Income/Deductions worksheet to override cost of goods sold and amounts on California Schedules K and K-1, including California source amounts.

Use the Allocation and Apportionment sections of federal Commons State worksheet or California Allocation and Apportionment (Schedule R) worksheet to apportion California source amounts to the partner's Schedule K-1, column (e).

In the absence of overrides or apportionment, Schedule K-1, column (e) (California source) is generally the same as column (d), except for interest, dividends, royalties, and capital gains and losses, which carry to Schedule K-1, Table 1.

Depreciation

If California depreciation on an asset is different from federal, entries must be made on InterviewDepreciation and Amortization (Form 4562) worksheet, general section, under the state columns.

For assets purchased in a prior year with Section 179 expense or ITC basis reduction (if the prior year return was not processed by CCH Axcess), enter a zero in the Section 179 / Bonus or ITC Adjustment / Salvage fields on the Depreciation and Amortization (Form 4562) worksheet, general section. California has not conformed with the depreciation provisions of the federal Job Creation and Worker Assistance Act (JCWAA). A depreciation adjustment for current year acquisitions is calculated from entries on the Depreciation and Amortization (Form 4562) worksheet, general section. For assets acquired in the previous year, the Depreciation and Amortization (Form 4562) worksheet, general section should be used to reflect the correct amount of accumulated depreciation. If the Depreciation and Amortization Totals (Form 4562) worksheet is used to enter totals only instead of detailed asset information, enter state-if-different amounts using the State Totals tab.

If Section 179 expense exceeds the California allowable amount, also enter the state amount. If the Section 179 is NOT re-entered, the Section 179 will be limited but incorrect depreciation results for California.

If an asset qualifies for the Enterprise zone business expense deduction, you must use the Depreciation and Amortization (Form 4562) worksheet and enter the reduced basis in the cost column.

Schedule F and Form 8825 combines depreciation and amortization on the depreciation line.

State if Different Depreciation

State if different depreciation can be entered on the state columns of the Depreciation and Amortization (Form 4562) worksheet for more than the home state. A State / Book Code is available to identify any asset that is for a state or book entry other than the home state. If the State / Book Code is left blank, the following order will be used to determine where the depreciation is to flow:

1. Code "BK" is assumed if "Treat State if Different Assets as Book Assets" is selected on the Depreciation Options and Overrides section of federal General worksheet.
2. The State / Book Code is assumed to be the same state code entered on the Rent and Royalty or Farm/4835 worksheet to which the depreciation data is attached.
3. Code "BK" is assumed when "F" is entered for FS Code and a state code is not present on Rent and Royalty or Farm/4835 worksheet to which the depreciation data is attached.
4. The State / Book Code is assumed to be the "Home State Code" entered on the General worksheet, Basic Data section.
5. A code of "XX" is assumed if "Home State Code" is blank on the General worksheet, Basic Data section.

Code "XX" indicates "various," which allows the state if different asset information to apply to all states in the return .

The same asset number may be entered as many times as necessary for different non-conforming states processed within a return with the appropriate state code entries. If any one asset is indicated to flow to a particular state, ALL assets will flow through from Depreciation and Amortization (Form 4562) worksheet to the state unless a record is entered for the asset and 0.00 (zero) is entered in the state cost.

Depreciation Report

Use the Depreciation Options and Overrides section of the General worksheet to request state current or next year depreciation reports when California is the home state.

Qualified Small Business Stock and Section 1202 Dividends

Qualified small business stock capital gains and section 1202 dividends carry from the federal return to the California return. If the additional California requirements are not met, the sale or dividends should be coded as federal only, or federal with a state other than California.

California defaults to the federal special allocation codes for these items. See the section on special allocation of non-activities for California special allocation codes.