STATE OF CALIFORNIA
FRANCHISE TAX BOARD
California
Forms & Instructions
568
2001
Limited Liability Company Tax
Booklet
Members of the Franchise Tax Board
Kathleen Connell, Chair
Claude Parrish, Member
B. Timothy Gage, Member
This booklet contains:
Form 568,
Limited Liability Company
Return of Income
FTB 3537,
Payment Voucher for Automatic
Extension for Limited Liability Companies
FTB 3522,
Limited Liability Company Tax
Voucher
FTB 3832,
Limited Liability Company’s List
of Members and Consents
FTB 3885L,
Depreciation and Amortization
Schedule D (568),
Capital Gain or Loss
Schedule K-1 (568),
Member’s Share of
Income, Deductions, Credits, etc.
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Page 2
Form 568 Booklet 2000
2001 Instructions for Form 568, Limited Liability Company Return of Income
References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 1998, and to the California Revenue and Taxation Code (R&TC).
Table of Contents
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Instructions for Form 568 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Instructions for Schedule K (568) and Schedule K-1 (568) . . . . . . . . 11
Limited Liability Company Income Worksheet . . . . . . . . . . . . . . . . . . 16
Form 568 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule K-1 (568) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
FTB 3885L/Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Instructions for FTB 3885L/Schedule D . . . . . . . . . . . . . . . . . . . . . . . 31
Member’s Instructions for Schedule K-1 (568) . . . . . . . . . . . . . . . . . 35
FTB 3832 and Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
FTB 3537 and Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
FTB 3522 and Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
How to Get California Tax Information . . . . . . . . . . . . . . . . . . . . . . . . 48
General Information
A What’s New
Limited Liability Company Fee
The limited liability company (LLC) fee is now a fixed amount for each
total income bracket for taxable years beginning on or after January 1,
2001. See General Information G, Limited Liability Company Tax and
Fee, for the revised LLC fee.
"Total Income" Definition
LLCs that are members in another LLC or hold an economic interest in
another LLC may be able to exclude these distributions. See Specific
Line Instruction for Line 1, for more details.
LLC Filing Requirement
All LLCs must now attach a copy of the Limited Liability Company
Income Worksheet to their return.
File Paperless Schedules K-1 (568)
Save time, paper, and money! If you are using computer software to
complete the LLC's Schedules K-1 (568), you already have the
information needed to prepare paperless Schedules K-1 (568). For
more information, see General Information U, Substitute Schedules.
Credits Available
• Solar Energy System Credit is available from January 1, 2001 until
January 1, 2006.
• Joint Strike Fighter Credit is available as of January 1, 2001.
Nonresident Returns
For the 2001 tax year, a new form is available for nonresidents and
part-year residents: Short Form 540NR, California Nonresident or Part-
Year Resident Income Tax Return. The Short Form 540NR is for
nonresident and part-year taxpayers who have limited income sources
and deductions. The Form 540NR name has been changed to Long
Form 540NR, California Nonresident or Part-Year Resident Income Tax
Return. References to the Form 540NR in this booklet mean the Long
Form 540NR.
Amended/Extended Credits
• The Employer Child Care Program Credit and the Employer Child
Care Contribution Credit are extended until January 1, 2007.
• The Community Development Financial Institution Investments
Credit is extended until January 1, 2007. Changes to the credit
include renaming “qualified deposits” to “qualified investments”
and defining “qualified investments,” limiting the eligible investment
amount, and requiring Franchise Tax Board (FTB) to advise and
assist in the administration of the credit.
Income Exclusion
Amounts received as rebates or vouchers from a local water agency,
energy agency, or energy supplier for the purchase and installation of
water conservation appliances and devices are excludable from
income.
Reference Change
Any references to Bank and Corporation Tax Law (B&CTL) is changed
to Corporation Tax Law (CTL) as of January 1, 2001.
Napa Valley Losses
The losses sustained as a result of the 2000 Napa Valley earthquakes
can be carried forward at 100% for five years, then the remaining
balance can be carried forward an additional ten years at 55%.
Electronic Postmarks
California law will now conform to the federal law that permits
electronic postmarks to be proof of the date of an e-filed return.
B Important Information
Federal/State Conformity
In general, California law conforms to the Internal Revenue Code (IRC)
as of January 1, 1998. However, there are continuing differences
between California and federal law. California has not conformed to
most of the changes made to the IRC by the federal Internal Revenue
Service Restructuring and Reform Act of 1998 (Public Law 105-206)
and the Ticket to Work and Work Incentives Improvement Act of 1999
(Public Law 106-170). California has not conformed to any of the
changes made by the Tax and Trade Relief Extension Act of 1998
(Public Law 105-277), the Miscellaneous Trade and Technical Correc-
tions Act of 1999 (Public Law 106-36), the FSC Repeal and Extraterrito-
rial Income Exclusion Act of 2000 (Public Law 106-519), the
Consolidated Appropriations Act of 2001 (Public Law 106-554), and
the Economic Growth and Tax Relief Reconciliation Act of 2001 (Public
Law 107-16).
California Tax Information on the Internet
You can download, view, and print California tax forms and publica-
tions. Go to our Website at: www.ftb.ca.gov
Federal Tax Information on the Internet
The Internal Revenue Service (IRS) has federal forms and publications
available to download, view, and print. The IRS’s Website is at:
www.irs.gov
State Agencies' Websites
Access other state agencies' websites through the State Agency Index
on California's Website at: www.ca.gov
Providing California and Federal Returns
The FTB may request a copy of California or federal returns that are
subject to or related to a federal examination. Generally, the California
statute of limitations is four years from the due date of the return or
from the date filed, whichever is later. However, the statute is extended
in situations in which an individual or a business entity is under
examination by the IRS. For additional information concerning
extended statute of limitation due to a federal examination, see General
Information K, Amended Return.
The FTB recommends keeping copies of returns and records that verify
income, deductions, adjustments, or credits reported, for at least the
minimum time required under the statute of limitations. However, some
records should be kept much longer. For example, members should
keep records substantiating their basis in an LLC and property owners
should keep records to figure the basis of property.
Federal/State Differences
For LLCs classified as partnerships, California tax law generally
conforms to federal tax law in the area of partnerships (Internal
Revenue Code, Subchapter K — Partners and Partnerships). However,
there are some differences:
• An $800 annual tax is generally imposed on limited partnerships
(LPs), LLCs, limited liability partnerships (LLPs), and real estate
mortgage investment conduits (REMICs) that are partnerships or
classified as partnerships for tax purposes.

Form 568 Booklet 2001
Page 3
• Distributions to certain nonresident partners are subject to
withholding for California tax.
• Deductions for taxes paid to other states is not allowed.
• California follows federal law by requiring partnerships to use a
required tax year. However, California does not conform to the
federal required payment provision.
• California law has specific provisions concerning the distributive
share of partnership taxable income allocable to California, with
special apportionment formulas for professional partnerships.
• California law modifies the federal definitions for unrealized
receivables and substantially appreciated inventory items.
• California does not conform to the electing large partnership
provisions.
• Partnerships cannot electronically file their California partnership
returns.
• California has not conformed to the provisions relating to the Tax
Equity and Fiscal Responsibility Act. (TEFRA).
• California has not adopted the federal definition of small
partnerships, as defined in IRC Section 6231.
Note: This list is not intended to be all-inclusive of the federal and state
differences. For additional information, please consult California’s
Revenue and Taxation Code (R&TC).
Conversion to a Limited Liability Company
A partnership (or other business entity) that converts to an LLC during
the year must file two California returns. Even if the partners/members
and the business operations remain the same, the partnership should
file Form 565, Partnership Return of Income, (or the appropriate form)
for the beginning of the year to the date of change. For the remainder
of the year, the newly converted LLC would file Form 568, Limited
Liability Company Return of Income. See General Information J,
Accounting Periods, for further instructions.
C Introduction
The Beverly-Killea Limited Liability Company Act of 1994 (SB 469;
Stats.1994, Ch. 1200) authorized the formation of LLCs in California
and recognized out-of-state LLCs doing business in California. LLCs
combine traditional corporate and partnership characteristics. LLC
members are afforded:
• Limited liability with the extent of a member’s liability limited to the
member’s equity investment;
• Flexible management alternatives; and
• Liberal membership qualification requirements.
LLCs classified as partnerships, for tax purposes, generally will
determine their California income, deductions, and credits under the
Personal Income Tax Law. They will be subject to an annual tax (due on
the 15th day of the 4th month of the LLC’s taxable year) as well as the
LLC fee based on total income. See General Information G, Limited
Liability Company Tax and Fee, for more information.
LLCs organized in California are vested with all the rights and powers
enjoyed by a natural person in carrying out business affairs. California
law, however, does not allow the formation or registration of LLCs
(foreign or domestic) in California to render any type of professional
service for which a license, certification, or registration is required
under the Business and Professions Code or the Chiropractic Act, with
the exception of insurance agents and insurance brokers.
California law requires LLCs not organized in the state of California to
register with the California Secretary of State (SOS) before entering
into any intrastate business in California. The laws of the state or
foreign country in which the LLC is organized generally govern the
internal affairs of the LLC. The SOS may not deny recognition of an LLC
because the laws of the organization’s home state or foreign country
differ from California’s laws, except in the case of professional service
LLCs, which are not allowed to register as LLCs in California.
For more information about organizing and registering an LLC, contact:
LIMITED LIABILITY COMPANIES
CALIFORNIA SECRETARY OF STATE
PO BOX 944228
SACRAMENTO CA
94244-2280
Telephone: (916) 653-3795
or contact the SOS on its Website at: www.ss.ca.gov
D Purpose
Use Form 568:
• To determine the amount of the LLC fee (including a disregarded
entity’s fee) based on total income;
• To pay the LLC fee;
• To report the annual tax;
• To pay any nonconsenting nonresident member’s tax; and
• To report income, deductions, gains, losses, etc., from the
operation of a multiple member LLC that has elected to be classified
as a partnership. Form 568 is the return for calendar year 2001 or
any fiscal year beginning in 2001.
E Who Must File
Every LLC that is:
• Doing business in California;
• Organized in California;
• Organized in another state or foreign country, but registered with
the SOS; or
• Has income from California sources
must file Form 568 unless the LLC: 1) has elected to be taxed as a
corporation for federal tax purposes or 2) is a single member limited
liability company (SMLLC) that was treated as an association taxable
as a corporation prior to January 1, 1997, for California tax purposes,
and did not elect to change that tax treatment in the current taxable
year.
Regardless of where the trade or business of the LLC is primarily
conducted, an LLC is considered to be doing business in California if
any of its members, managers, or other agents are conducting
business in California on behalf of the LLC. For additional information
see FTB Pub. 1063, Guide for Corporations That May Be Subject to the
Provisions of the California Corporation Tax Law.
LLCs organized under the laws of another state or foreign country are
required to register with the SOS before entering into intrastate
business in California.
If the LLC is registered in California, but:
• Is not doing business in California; and
• Does not have California source income;
the LLC is still required to file Form 568. However, the LLC’s filing
requirement will be satisfied by:
1. Completing Form 568 with all supplemental schedules;
2. Completing and attaching California Schedule K-1s (568) for
members with California addresses;
3. Writing “SB 1106 Filing” in red on top of the front page of
Form 568; and
4. Entering the total number of members in Question J on the front of
the Form 568.
An LLC may be classified for tax purposes as a partnership, a corpora-
tion, or a disregarded entity. The LLC should file the appropriate
California return. LLCs classified as general corporations file Form 100,
California Corporation Franchise or Income Tax Return. LLCs classified
as S corporations file Form 100S, California S Corporation Franchise or
Income Tax Return. LLCs classified as disregarded entities, See
General Information Section T – Check the Box Regulations. The LLC
must file the appropriate California return for its classification.
An LLC that is an electing large partnership for federal purposes and
uses the federal Form 1065-B, U.S. Return of Income for Electing
Large Partnerships, must still use Form 568. California law does not

Page 4
Form 568 Booklet 2001
conform to the federal electing large partnership provisions.
Certain publicly traded partnerships treated as corporations under
IRC Section 7704 must file Form 100.
A resident member of an out-of-state LLC taxed as a partnership not
required to file Form 568, may be required to furnish a copy of federal
Form 1065, U.S. Partnership Return of Income, to substantiate the
member’s share of LLC income or loss.
Nonregistered foreign LLCs that are not doing business, but are
deriving income from the California or filing to report an election on
behalf of a California resident, file Form 565.
Nonregistered foreign LLCs that are members of an LLC doing
business in California or general partners in a limited partnership doing
business in California are considered doing business in California and
should file Form 568.
F When and Where to File
An LLC must file Form 568, pay the LLC fee, and any nonconsenting
member’s tax by the 15th day of the 4th month (fiscal year) or April 15,
2002 (calendar year) following the close of its taxable year.
Mail Form 568 with payment to:
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA
94257-0601
Make the check or money order payable to the “Franchise Tax Board.”
Write the LLC’s federal employer identification number (FEIN), SOS file
number, and “2001 Form 568” on the check or money order.
Mail Form 568 without payment to:
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA
94257-0600
Extension
California does not require the filing of written extensions. If the LLC
cannot file its Form 568 by the return’s due date, the LLC is granted an
automatic six month extension.
However, the automatic extension does not extend the time to pay the
LLC fee or nonconsenting nonresident members’ tax.
If the LLC will be filing its return after the due date, see form FTB 3537,
Payment Voucher for Automatic Extension for Limited Liability
Companies, to submit the required payments.
Annual Limited Liability Company Tax
If the 2001 annual tax of $800 was not paid on or before the 15th day
of the 4th month after the beginning of the taxable year (fiscal year) or
April 16, 2001 (calendar year), the tax should be sent using the 2001
form FTB 3522, Limited Liability Company Tax Voucher.
Also see General Information H, Penalties and Interest, for the
additional amount that is now due. To assure proper application of the
tax payment to the LLC account, do not send the $800 annual tax with
Form 568.
Note: The 2002 $800 annual tax is due on or before the 15th day of the
4th month after the beginning of the 2002 taxable year (fiscal year) or
April 15, 2002 ( calendar year). The payment is sent with form
FTB 3522. Do not mail the $800 annual tax with Form 568.
Private Delivery Services
California law conforms to federal law regarding the use of certain
designated private delivery services to meet the “timely mailing as
timely filing/paying” rule for tax returns and payments. See the
instructions for federal Form 1065 for a list of designated delivery
services. If a private delivery service is used, address the return to:
FRANCHISE TAX BOARD
SACRAMENTO CA
95827
Caution: Private delivery services cannot deliver items to PO boxes. If
using one of these services to mail any item to the FTB, DO NOT use an
FTB PO box.
G Limited Liability Company Tax and Fee
Annual Limited Liability Company Tax
LLCs are subject to an $800 annual tax if they are doing business in
California or have articles of organization accepted, or a certificate of
registration issued by the SOS. The annual tax is prepaid for the
privilege of doing business in California, and is due and payable on or
before the 15th day of the 4th month after the beginning of the taxable
year. The annual tax must be paid for each taxable year until the
appropriate papers are filed. See General Information R, Cancelling a
Limited Liability Company, for more information.
Use form FTB 3522 to submit the $800 annual tax payment. Make the
check or money order payable to the “Franchise Tax Board.” Write the
LLC’s FEIN, SOS file number, and “2002 FTB 3522” on the check or
money order.
If the 15th day of the 4th month of an existing foreign LLC’s taxable
year has passed before the existing foreign LLC commences business
in California or registers with the SOS, the annual tax should be paid
immediately after commencing business or registering with the SOS.
Limited Liability Company Fee
In addition to the annual tax, every LLC must pay a fee based on total
annual income. The LLC fee is due on or before the 15th day of the 4th
month after the close of the LLC’s taxable year. For taxable years
beginning on or after January 1, 2001, use the following chart to
compute the fee:
If total annual income from
The
Form 568, Side 1, line 1 is:
fee is:
equal to or over –
but not over –
$ 250,000
$ 499,999
$ 900
500,000
999,999
2,500
1,000,000
4,999,999
6,000
5,000,000
and over
11,790
To determine the LLC fee see the Specific Line Instructions for line 1.
If the FTB determines multiple LLCs were formed for the primary
purpose of reducing fees, the LLC’s total income from all sources that
are reportable to California could include the aggregate total income of
all commonly controlled LLC members. “
Commonly controlled” means
control of more than 50% of the capital interests or profit interests of
the taxpayer and any other LLC or partnership by the same persons.
Nonconsenting Nonresident Member’s Tax
Every nonresident member must sign a form FTB 3832, Limited
Liability Company’s List of Members and Consents. The LLC returns
the signed form with Form 568. If a member fails to sign form
FTB 3832, the LLC is required to pay tax on the member’s distributive
share of income at the highest marginal rate. Any amount paid by the
LLC will be considered a payment made by the member.
Reminder: All members must file a California tax return. The comple-
tion of form FTB 3832 does not satisfy the members California filing
requirement. Corporate members are also considered doing business
in California and may have additional filing requirements. For more
information, get FTB Pub. 1060, Starting a Corporation in California.
Nonresident individuals may qualify to file a group Form 540NR and
should get FTB Pub. 1067, Guidelines for Filing a Group Form 540NR.
If the LLC’s return is being filed on or before the 15th day of the 4th
month (fiscal year) or April 15, 2002 (calendar year), the LLC com-
pletes the Schedule T. See Specific Line Instructions for Schedule T in
this booklet for further information.
If the LLC owes a tax and/or fee and is unable to complete Form 568 on
or before the original due date, it must complete form FTB 3537.
However, the nonconsenting nonresident members’ tax along with the
voucher must be received on or before the 15th day of the 4th month
(fiscal year) or April 15, 2002 (calendar year) after the close of the
taxable year. Failure to do so causes penalties and interest to be
assessed. See the instructions for form FTB 3537 included in this
booklet.

Form 568 Booklet 2001
Page 5
H Penalties and Interest
Failure to File a Timely Return or Provide Information
A penalty is assessed if the LLC is required to file a Form 568 and it:
• Fails to file the return on time, including extensions; or
• Files a return (including Schedules K-1 (568)) that fails to show all
the information required.
The amount of the penalty for each month, or part of a month (for a
maximum of five months), that the failure continues, is $10 multiplied
by the total number of members in the LLC during any part of the
taxable year for which the return is due. Interest will be charged on the
penalty from the date the notice of tax due is mailed until the date the
return is filed.
For “small partnerships,” as defined in IRC Section 6231, the federal
exception to the imposition of penalties for failure to file partnership
returns does not apply for California purposes. Get FTB
Notice CR-88-692 for more information and see R&TC Section 19172.
Failure to File a Timely Return
Any LLC that fails to file Form 568 on or before the extended due date
is assessed a penalty. The penalty is 5% of the unpaid tax (which
includes the LLC fee and Nonconsenting Nonresident Members’ tax)
for each month, or part of the month, the return remains unfiled from
the due date of the return until filed. The penalty may not exceed 25%
of the unpaid tax. If an LLC does not file its return by the extended due
date, the automatic extension will not apply and the late filing penalty
will be assessed from the original due date of the return.
Failure to Pay by the Due Date
The failure to pay penalty is imposed from the due date of the return or
the due date of the payment. Since the LLC fee and the nonconsenting
nonresident member's tax are due with the return, the penalty is
calculated from the 15th day of the 4th month after the close of the
taxable year. The annual tax payment date is the 15th day of the 4th
month during the taxable year, so the penalty is calculated from this
date. The penalty for each item is calculated separately.
The failure to pay penalty begins at 5%. Every month or fraction thereof
the amount is not paid the penalty increases .5%. The penalty contin-
ues to increase for 40 months, thereby maximizing at 25%.
Note: If an LLC is subject to both the penalty for failure to file a timely
return and the penalty for failure to pay the total tax by the due date, a
combination of the two penalties may be assessed, but the total penalty
may not exceed 25 percent of the unpaid tax.
Interest
Interest is due and payable on any tax due if not paid by the original
due date. Interest is also due on some penalties. The automatic
extension of time to file does not stop interest from accruing. California
follows federal rules for the calculation of interest. Get FTB Pub. 1138,
Refund/Billing Information, for more information.
Other Penalties/Fees
A penalty may also be charged if a check is returned for insufficient
funds. In addition, fees may be charged for the cost of collection.
I
Accounting Methods
Compute ordinary income or loss by the accounting method regularly
used to maintain the LLC’s books and records. This method must
clearly reflect the LLC’s income or loss.
LLCs given permission to change their accounting method for federal
purposes should see IRC Section 481 for information relating to the
adjustments required by changes in accounting method.
Generally, an LLC may not use the cash method of accounting if the
LLC has a corporate member, averages annual gross receipts of more
than $5 million, or is a tax shelter. For exceptions, see IRC
Section 448.
The mark-to-market accounting method is required for securities
dealers. The IRC Section 481 adjustment is taken into account ratably
over five years beginning with the 1st income year.
Rounding to Whole-Dollar Amounts
Whole dollar amounts should be shown on the return and accompany-
ing schedules. To round, drop any amount less than 50 cents and
increase any amount from 50 cents through 99 cents to the next whole
dollar.
J
Accounting Periods
LLC returns normally must be filed for an accounting period that
includes 12 full months. A short period return may be filed if the LLC is
created or terminated within the taxable year. In that case, write
“Short Period” in red ink at the top of Form 568, Side 1.
For information on the required taxable year of a partnership that also
applies to LLCs, see the instructions for federal Form 1065.
K Amended Return
If, after the LLC files its return, it becomes aware of changes it must
make, the LLC should file an amended Form 568 and an amended
Schedule K-1 (568) for each member, if applicable. Check the amended
return box in Item I(3) Form 568, Side 1. Give a corrected Schedule K-1
(568) with box G(2) checked and label “Amended” to each affected
member. If the LLC originally filed a Form 540NR group nonresident
member return, the LLC should file an amended Form 540NR.
Note: If the LLC wishes to file amended Schedules K-1 (568) via
magnetic media see General Information U, Substitute Schedules.
If the LLC’s federal return is changed for any reason, the federal change
may affect the LLC’s California return. This would include changes
made because of an examination. The LLC must file an amended return
within six months of the final federal determination if the fee the LLC or
tax a member owes has been affected. The LLC should attach a copy of
the federal Revenue Agent’s Report or other notice of the adjustments
to the return. The LLC should inform the members that they may also
be required to file amended returns within six months from the date of
the final federal determination.
L
Required Information Returns
Every LLC must file information returns if, in the course of its trade or
business, it:
• Makes payments to one person of rents, salaries, wages, annuities,
or other fixed or determinable income during one calendar year
totaling $600 or more;
• Pays an individual or one payee interest and dividends totaling $10
or more during one calendar year; and
• Receives cash payments over $10,000.
Payments of any amount by a broker, dealer, or barter exchange agent
must also be reported. Get FTB Pub. 4227A, Guide to Information
Returns Filed With California, for more information.
LLCs must report payments made to California residents by providing
copies of federal Form 1099 (series). For nonresidents, see the
reporting and withholding requirements on Form 592, Nonresident
Withholding Annual Return; Form 592-A, Nonresident Withholding
Remittance Statement; and Form 592-B, Nonresident Withholding Tax
Statement.
LLCs must submit a copy of federal Form 8300, Report of Cash
Payments Over $10,000 Received in a Trade or Business, within
15 days after the date of the transaction.
LLCs must report interest paid on municipal bonds that are issued by a
state other than California or a municipality other than a California
municipality and that are held by California taxpayers. Entities paying
interest to California taxpayers on these types of bonds are required to
report interest payments aggregating $10 or more paid after
January 1, 2001. Information returns will be due June 1, 2002. Get
form FTB 4800, Federal Tax Exempt Non-California Bond Interest and
Interest-Dividend Payment, for more information.
LLCs must use form FTB 3834, Interest Computation Under the Look-
Back Method for Completed Long-Term Contracts, to report interest

Page 6
Form 568 Booklet 2001
due or to be refunded under the look-back method on long-term
contracts.
Any information returns required for federal purposes under
IRC Section 6038, IRC Section 6038A, and IRC Section 6038B are also
required for California purposes. Attach the information returns to the
Form 568 when filed. If the information returns are not provided,
penalties may be imposed under R&TC Section 19141.2 and R&TC
Section 19141.5
All information returns, unless otherwise noted, are mailed separately from
the Form 568. Information returns should be sent to:
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA
94257-0500
M Special Items
California LLC tax law generally follows federal partnership tax law for
LLCs classified as partnerships, in the areas of:
• IRC Section 702(a) items;
• Elections;
• Distributions of unrealized receivables and inventory;
• Members’ dealings with the LLC;
• Contributions to the LLC;
• Income of foreign nonresident members subject to withholding-at-
source, Form 592, Form 592-A, and Form 592-B;
• Basis and at-risk rules;
• Passive activity limitations;
• Net operating loss deduction by a member of the LLC (An LLC is
not allowed the deduction for net operating losses for California or
federal purposes);
• Publicly traded partnerships;
• Long-term contracts;
• Installment sales;
• Vacation pay;
• Amortization of past service costs;
• Distributions of contributed property by an LLC; and
• Recognition of precontribution gain in certain LLC distributions to
members.
See the instructions for federal Form 1065 for specific information
about these areas.
N Signatures
Form 568 is not considered a valid return unless it is signed by an
authorized member or manager of the LLC. If a receiver, trustee in
bankruptcy, or assignee controls the organization’s property or
business, that individual must sign the return.
Paid Preparer’s Information
Anyone who is paid to prepare the LLC return must sign the return and
complete the “Paid Preparer’s Use Only” area of the return.
The paid preparer must:
• Complete the required preparer information;
• Sign by hand in the space provided for the preparer’s signature
(signature stamps or labels are not acceptable); and
• Give the LLC a copy of the return in addition to the copy to be filed
with the FTB.
An individual who prepares the return and does not charge the LLC
should not sign the LLC return.
O Group Returns
Nonresident members of an LLC doing business or deriving income
from sources in California may elect to file a group nonresident return
(R&TC Section 18535). Get FTB Pub. 1067, Guidelines for Filing a
Group Form 540NR, for more information.
P Investment Partnerships
Income of nonresident members, including banks or corporations,
derived from “
qualifying investment securities” of an LLC that qualifies
as an “
investment partnership” is considered income from sources
other than California, except as noted below. Therefore, nonresident
individuals or foreign members generally will not be taxed on this
income. The LLC should inform its nonresident individuals or foreign
members if all or a portion of their distributive share of income is from
“qualifying investment securities” of an “investment partnership” and
whether it is sourced to California. See Question K instructions for
definitions of “
investment partnership” and “qualifying investment
securities.”
However, for apportioning purposes income from an LLC that is an
investment partnership (LLC investment partnership) is generally
considered business income (see Appeal of Estate of Marion Markus,
Cal. St. Bd. of Equal., May 6, 1986). LLC investment partnerships that
are doing business within and outside California should apportion
California source income using Schedule R, Apportionment and
Allocation of Income. LLC investment partnerships that are doing
business solely within California should treat all business income of the
LLC investment partnership as California source income.
LLC investment partnerships that have California source income should
show on Schedule K-1 (568), column (e) each member’s distributive
share of California source income.
Generally, members who are nonresident individuals would not record
this income as California source income. However, there are two
exceptions to the general rule when a nonresident individual may have
California source income from an LLC investment partnership.
Nonresident individual members will be taxed on their distributive
shares of income from the “LLC investment partnership” if the income
from the qualifying investment securities is interrelated with:
• Any other business activity of the nonresident member; or
• Any other entity in which the nonresident member owns an interest
that is separate and distinct from the investment activity of the
partnership and that is conducted in California.
Nonresident individual members will be taxed on their distributive
share of investment income from an LLC investment partnership if the
qualifying securities were purchased with working capital of a trade or
business the nonresident owns an interest in and that is conducted in
California (R&TC Section 17955).
Corporations that are members in an LLC investment partnership are
not generally taxed on their distributive share of LLC income, provided
that the income from the LLC is the corporation’s only California
source income. However, if the corporation:
• Participates in the management of the investment activities of the
LLC investment partnership; or
• Has income derived from or attributable to sources within this state
other than income from the LLC investment partnership,
then the corporation will be taxed on its distributive share of California
source income from the LLC.
Q Nonresident Members
An LLC with one or more nonresident members is required to file form
FTB 3832 with Form 568. Form FTB 3832 is signed by the nonresident
individuals and foreign entity members to show their consent to
California’s jurisdiction to tax their distributive share of income
attributable to California sources.
Form FTB 3832 is required to be filed:
• For the first taxable period for which the LLC became subject to tax;
and
• For any taxable period in which the LLC had a nonresident member
not previously listed on form FTB 3832.
Separate forms for an individual (or groups of individuals) are
permissible. The LLC must maintain and have available for examination
a form FTB 3832 signed by each nonresident member.
The LLC must pay the tax for every nonresident member that did not
sign a form FTB 3832. The LLC is responsible for paying the tax on
that nonresident member’s distributive share of income determined at

Form 568 Booklet 2001
Page 7
the highest marginal rate for that member. See General Information G,
Limited Liability Company Tax and Fee, for more information.
If the LLC fails to timely pay the tax of such nonresident member, the
LLC shall be subject to penalties and interest (R&TC Section 19132 and
Section 19101). Any amount paid by the LLC on behalf of a nonresident
individual or foreign entity member will be considered a payment made
by the member.
An LLC may recover from the nonresident member the tax it paid on
behalf of the nonresident member.
R Cancelling a Limited Liability Company
LLCs are required to pay the $800 annual tax and file a California return
until the appropriate papers are filed. In order to cancel an LLC, the
following steps must be taken:
1. File a Form LLC-4/7, Certificate of Cancellation, with the SOS. The
SOS also requires a domestic LLC to file a Form LLC-3, Certificate
of Dissolution. Please contact the SOS for more details;
2. Pay the $800 annual tax to the FTB (Using form FTB 3522);
3. File a final California LLC return (Form 568) with the FTB; and
4. File form FTB 3555L, Request for Tax Clearance Certificate Limited
Liability Company or Limited Liability Partnership, with the FTB.
For additional information, get FTB Pub. 1151, Terminating a Business
Entity or contact the SOS at:
LIMITED LIABILITY COMPANIES
CALIFORNIA SECRETARY OF STATE
PO BOX 944228
SACRAMENTO CA
94244-2280
Telephone: (916) 653-3795
Or at the SOS’s Website: www.ss.ca.gov
If the LLC is being cancelled to be converted to another type of
business entity, be sure to file the appropriate forms with the SOS.
S Withholding Requirements
Foreign Nonresident Members
As described in IRC Section 1446 and modified by R&TC
Section 18666, if an LLC has any income or gain from a trade or
business within California, and if any portion of that income or gain is
allocable under IRC Section 704 to a foreign nonresident member, the
LLC is required to withhold tax on the allocable amount.
State and Federal Differences
California generally conforms to IRC Section 1446 and corresponding
federal rulings and procedures. The main differences between
California and federal laws in this area are:
a. The California withholding rate is 8.84% for C corporations, 1.5%
for S corporations, and 9.3% for individuals, partnerships, LLCs,
and fiduciaries.
b. Income attributable to the disposition of California real property is
subject to withholding under R&TC Section 18666.
Domestic Nonresident Members
An LLC is required to withhold funds for income or franchise taxes
when it makes a distribution of income to a domestic nonresident
member (R&TC Section 18662). This includes prior year income that
should have been, but was not previously reported as income from
California sources on the member’s California income tax return.
However, withholding is not required if distributions of income from
California sources to the member are $1,500 or less during the
calendar year or if the FTB directs the payer not to withhold.
Domestic nonresident members include individuals who are
nonresidents of California and corporations that are not qualified to do
business in California or do not have a permanent place of business in
California. Domestic nonresident members also include nonresident
estates and trusts, partnerships, and LLCs that do not have a perma-
nent place of business in California. Foreign nonresident members
covered under R&TC Section 18666 are not domestic nonresident
members.
LLCs with income from both within and outside California must make a
reasonable estimate of the ratio, to be applied to the distributions, that
approximates the ratio of California source income to total income. The
ratio for the prior year will generally be accepted as reasonable in
determining the California part of the distribution subject to withhold-
ing. LLCs are required to withhold tax at a rate of 7% of distributions
(including property) of income from California sources made to
domestic nonresident members. For more information, get
Schedule R.
The FTB has administrative authority to allow reduced withholding
rates, including waivers, when requested in writing. These authoriza-
tions may be one-time, annual, or for a longer period. Waivers or
reduced withholding rates will normally be approved when distribu-
tions are made by publicly-traded partnerships and on distributions to
brokerage firms, tax-exempt organizations, and tiered LLCs.
No withholding of tax is required if the distribution is a return of
capital or does not represent taxable income for the current or prior
years. Although a waiver is not required in this situation, if upon
examination the FTB determines that tax withholding was required on a
distribution, the LLC may be liable for the amount that should have
been withheld and penalties.
Send waiver requests and inquiries to:
NONRESIDENT WITHHOLDING SECTION
FRANCHISE TAX BOARD
PO BOX 651
SACRAMENTO CA
95812-0651
Telephone:
(888) 792-4900 (U.S. toll-free) or
(916) 845-4900
The tax withholding should be reported on and paid with Form 592,
Form 592-A, and/or Form 592-B.
The taxable income of nonresident members is the distributive share of
California sourced LLC income, not the distributed amount. For more
information, get FTB Pub. 1017, Nonresident Withholding Partnership
Guidelines.
T Check-the-Box Regulations
California generally conforms to the federal entity classification
regulations (commonly known as “check-the-box” regulations). These
regulations allow certain unincorporated entities to choose tax
treatment as a partnership, a corporation, or a single member LLC
(SMLLC) (SB 1234; Stats. 1997, Ch. 608).
Generally, any elections made for federal purposes under the federal
“
check-the-box” regulations are considered for California elections. No
separate elections are allowed. If federal Form 8832, Entity Classifica-
tion Election, is filed with the federal return, a copy should be attached
to the electing entity’s California return for the year in which the
election is effective. The entity should file the appropriate California
return.
An “
eligible entity” may choose its classification. An eligible entity is a
business entity that is not a trust, a corporation organized under any
federal or state statute, a foreign entity specifically listed as a per se
corporation or other special business entities. Other special business
entities under the IRC include publicly traded partnerships, REMICs,
financial asset securitization investment trusts (FASITs), or regulated
investment companies (RICs). An eligible entity with two or more
owners will be a partnership for tax purposes unless it elects to be
taxed as a corporation. For tax purposes, an eligible entity with a single
owner will be disregarded. If the separate existence of an entity is
disregarded, its activities are treated as activities of the owner and
reported on the appropriate California return.
Exceptions
There is an exception to the general rule. The exception exists in the
case of an eligible business entity, other than one which, within the
60 month period preceding January 1, 1997:

Page 8
Form 568 Booklet 2001
• Was not doing business in California;
• Did not derive income from sources within California; or
• Had no members who were residents of California;
and that was properly classified as an association taxable as a
corporation (R&TC Section 23038(b)(2)(c)).
These entities are generally:
1) business trusts that were classified as corporations under California
law, but were classified as partnerships for federal tax purposes for
taxable years beginning before January 1, 1997; and
2) previously existing foreign SMLLCs that were classified as corpora-
tions under California law but claimed to be partnerships for federal tax
purposes for taxable years beginning before January 1, 1997.
These business trusts and previously existing foreign SMLLCs will
continue to be classified as corporations for California tax purposes and
must continue to file Form 100, unless they make an irrevocable election
to be classified or disregarded the same as they are for federal tax
purposes. See form FTB 3574, Special Election for Business Trusts and
Certain Foreign Single Member LLCs, and Title 18, Cal. Code Reg.
Sections 23038(a)-(b).
California regulations make the classification of business entities under
federal regulations (Treas. Reg. Sections 301.7701 through
301.7701-3) generally applicable to California. If an eligible entity is
disregarded for federal tax purposes, it is also disregarded for state tax
purposes, except that a SMLLC must still pay a tax and fee, file a
return, and limit tax credits.
Filing Requirements for Disregarded Entities
A SMLLC need only complete Form 568, Side 1, and Side 3
(Schedule K) and pay the annual tax and LLC fee. The LLC should have
filed by the 15th day of the 4th month of the taxable year. The single
owner would include the various items of income, deductions, credits,
etc., of the SMLLC on the tax return filed by the owner.
Note: Utilization of credits attributable to the SMLLC is limited to the
regular tax liability on the income attributable to the activities of the
SMLLC. The limitation on the SMLLC’s credits is the difference
between: 1) the regular tax liability of the single owner computed with
the items of income, deductions, etc., attributable to the SMLLC; and
2) the regular tax liability of the single owner computed without the
items of income, deductions, etc., attributable to the SMLLC. It is the
responsibility of the single owner to limit the credits on the owner’s tax
return. The single owner should be prepared to furnish information
supporting the use of any credits attributable to the SMLLC.
The owner of the SMLLC should perform the following steps to
determine the SMLLC’s credit limitation:
• Compute the owner’s tax with the SMLLC income, and the owner’s
tax without the SMLLC income.
• Complete Schedule P (100, 100W, 540, 540NR, or 541), up to the
line where the credit is to be taken.
• Determine the credit to be utilized. The amount allowed is the lesser
of:
1. The total credit or the limitation based on the LLC’s business
income; or
2. The net tax balance that may be offset by credits on Schedule P
(100, 100W, 540, 540NR, or 541) on the line above the line
where the credit is to be taken.
The following example shows the credit limit calculation for an SMLLC
that is owned by a C corporation. The SMLLC has a Research credit of
$4,000. The computation of the C corporation’s regular tax liability with
the SMLLC income is $5,000. The computation of the C corporation’s
regular tax liability without the SMLLC income is $3,000. The difference
in tax is $2,000, which is the C corporation’s credit limitation on all LLC
credits. The owner of the SMLLC then performs the following steps:
1. Complete Schedule P (100), Side 2 down to line 4, column (c). The
amount is $1,000.
2. Enter the limitation amount from Schedule P (100), Side 2, line 4,
column (c) in column (f).
3. Enter the following amounts from the table below on the Schedule P
(100):
• $4,000 from column (d) of the table below, to Schedule P (100),
Side 2, line 5, column (a);
• $1,000 from column (f) of the table below, to Schedule P (100),
Side 2, line 5, column (b);
• $3,000 from column (g) of the table below, to Schedule P (100),
Side 2, line 5, column (d).
(a) Credit (b) Credit (c) Total
(d) Total
(e)
(f) Credit
(g)
name
amount
prior year credit:
Limitation used on
Carryover:
credit
add
based on Sch P
col. (d)
carryover col. (b)
LLC
(but not
minus the
& col. (c) business greater
smaller of
income
than col.
col. (e) or
(d) or
col. (f)
col. (e))
Research $4,000
0
$4,000
$2,000
$1,000
$3,000
U Substitute Schedules
LLCs or their tax professional must get approval from the FTB to use a
substitute schedule, if the LLC:
• Wants to use paperless Schedules K-1 (568);
• Does not use the official California Schedule K-1 (568) prepared by
the FTB; or
• Does not use a software program with an FTB approved
Schedule K-1 (568).
If computer software is used, please read the company's user manual
to ensure you have the necessary hardware and printer fonts to
produce FTB approved forms. All printing should be done to the
standards specified in FTB Pub. 1098, Guidelines for the Development
and Use of Substitute, Scannable, and Reproduced Tax Forms.
LLCs are subject to penalties for failure to file the appropriate
Schedule K-1 (568). See General Information H, Penalties and Interest.
To participate in the FTB's substitute forms program, get FTB Pub. 1098,
and form FTB 1096, Agreement to Comply with FTB Pub. 1098.
Paperless Schedule K-1 (568)
To help accomplish paperless Schedule K-1 (568) filing, the FTB has
prepared FTB Pub. 1062, Guide for Filing Paperless Schedules K-1 (565
or 568), and K-1 (565 or 568) TestWare.
For the procedures, formatting specifications, and record layouts
needed to program for paperless Schedule K-1 (568) get FTB 1062.
FTB Pub. 1062 also includes form FTB 3604, Transmittal of Paperless
Schedules K-1 (565 or 568), the form the LLC needs to transmit
paperless Schedules K-1 (568).
K-1 (565 or 568) TestWare is also available at no charge. K-1 (565 or
568) Testware helps identify and correct errors during programming
and before submitting the paperless schedules. K-1 (565 or 568)
TestWare includes two programs:
• K-1 Verify, which edits the Schedule K-1 (568) records to ensure
the fields are the correct length and position the FTB requires, and
produces an edit report; and
• K-1 Convert, which converts spreadsheet formats to standard fixed
length formats so you can use them with K-1 Verify.
Once verification is made to ensure paperless Schedules K-1 (568)
pass the K-1 Verify program, send the schedules to the FTB using form
FTB 3604, which contains mailing instructions. Multiple LLCs can be
put on the same magnetic media. It is not necessary to provide a
separate CD or diskette for each LLC. However, do include each LLC’s
name, FEIN, and number of K-1s for that LLC in the space provided on
form FTB 3604.
If the LLC files paperless Schedules K-1 (568), please file all Schedules
K-1 (568) for that LLC using the paperless format. Do not file paper
Schedules K-1 (568) with your Form 568 if the LLC has already filed or
will file paperless Schedules K-1 (568).

Form 568 Booklet 2001
Page 9
Note: Do not file Schedules K-1 (568) on microfiche or file federal
Schedules K-1 (1065) with the Form 568.
To get all the publications and the K-1 (565 or 568) TestWare men-
tioned above, visit the Electronic Services page on our Website at:
www.ftb.ca.gov
Assistance is available; contact our e-file Help Desk at (916) 845-0353.
Specific Instructions
Form 568
Fill In All Applicable Lines and Schedules
Enter any items specially allocated to the members on the appropriate
line of the member’s Schedule K-1 (568) and the total amount on the
line of Schedule K (568). Do not enter these items directly on
Form 568, Side 2, or on Schedule A or Schedule D.
Reminder: Whole numbers should be shown on the return and
accompanying schedules.
Name, Address, SOS File Number, and FEIN
Filing Form 568 without errors will expedite processing. Before mailing,
make sure entries have been made for the:
• SOS file number (12-digit);
• FEIN (9-digit); and
• LLC legal or trade name (DBA)
If the LLC leases a private mailbox (PMB) from a private business,
rather than a PO box from the United States Postal Service, include the
box number in the field labeled “PMB no.” in the address area of the
Form 568.
Item C – Principal Business Code
California uses the 6-digit federal Principal Business Activity (PBA)
Code based on the North American Industry Classification System
(NAICS).
Common trust funds are required to use the PBA code 525920.
Investment clubs are required to use PBA code 523910.
Item F – Total Assets at End of Taxable Year
See the instructions for Question R before completing this item.
If the LLC is required to complete this item, enter the total assets at the
end of the LLC’s taxable year. This is determined by the accounting
method regularly used to maintain the LLC’s books and records. If
there are no assets at the end of the taxable year, enter the total assets
as of the beginning of the taxable year.
Question J
Enter the maximum number of members in the LLC at any time during
the taxable year. The number of Schedules K-1 (568) attached to the
Form 568 must equal the number of members entered on Question J.
Do not use abbreviations or terms such as “Various.”
Question K through Question V
Check the “Yes” or “No” box.
Note: SMLLCs are excluded from providing a Schedule K-1 (568).
Question K
An “
investment partnership” is a partnership that meets both of the
following criteria:
1. No less than 90% of the cost of the partnership’s total assets
consist of:
• Qualifying investment securities;
• Deposits at banks or other financial institutions; and
• Office equipment and office space reasonably necessary to carry
on the activities of an investment partnership.
2. No less than 90% of the partnership’s gross income is from
interest, dividends, and gains from the sale or exchange of
“
qualifying investment securities.”
“Qualifying investment securities,” include:
• Common and preferred stock, as well as debt securities convertible
into common stock;
• Bonds, debentures, and other debt securities;
• Foreign and domestic currency deposits or equivalents and
securities convertible into foreign securities;
• Mortgage-backed or asset-backed securities secured by govern-
mental agencies;
• Repurchase agreements and loan participations;
• Foreign currency exchange contracts and forward and futures
contracts on foreign currencies;
• Stock and bond index securities and futures contracts, and other
similar securities;
• Regulated futures contracts; and
• Options to purchase or sell any of the preceding qualified invest-
ment securities, except regulated futures contracts.
“Qualifying investment securities” do not include an interest in a
partnership, unless the partnership qualifies as an “investment
partnership.”
See R&TC Section 17955 and Section 23040.1 and General
Information P, Investment Partnerships, for more information.
Question M
If Question M is answered “Yes,” see the federal partnership instruc-
tions concerning an election to adjust the basis of the LLC’s assets
under IRC Section 754.
Question O
Answer “Yes” to Question O if:
Under R&TC Section 64(c):
• The percentage of membership interests, including interests in both
the capital and profits, of this company or in any of its
subsidiary(ies) owned by one person or one entity cumulatively
surpassed 50% during this year;
• The total membership interests, including capital and profits
interests, transferred to one irrevocable trust cumulatively
surpassed 50% during this year;
• One or more members transferred the control of, or the interests in,
more than 50% of the total membership interests, including capital
and profits interests, to one person or one entity during this year;
• This company’s cumulative ownership or control of the member-
ship interests, including capital and profits interests, voting stock
or other ownership interests in any other legal entity surpassed
50% during this year; or
Under R&TC Section 64(d):
• Cumulatively more than 50% of the total membership interests,
including capital and profits interests, in this company have been
transferred this year in one or more transactions that have occurred
since March 1, 1975.
If the answer is “Yes,” file BOE-100-B, Statement of Change in Control
and Ownership of Legal Entities, with the State Board of Equalization
(BOE), or substantial penalties may result. Forms and information may
be obtained from the BOE at (916) 323-5685.
Question P
California requires taxes to be withheld from certain payments or
allocations of income and sent to the FTB (R&TC Section 18662 and
Section 18666). If upon the examination, the FTB determines that tax
withholding was required, the LLC may be liable for the tax and
penalties.
The reference to Form 592, Form 592-A, and Form 592-B relates to
LLC withholding. If you need additional information concerning LLC
withholding, please see General Information L, Required Information
Returns, and General Information S, Withholding Requirements, in this
booklet.
Question R
If Question 5a through Question 5c on federal Form 1065, Schedule B,
are all answered “Yes,” also answer “Yes” to Question R on Form 568,
Side 1.
If Question R is answered “Yes,” the LLC is not required to complete
Schedules L, M-1, M-2, or Item F on Side 1 of Form 568 or Item I on
Schedule K-1 (568).

Page 10
Form 568 Booklet 2001
Question U
See General Information T, Check-the-Box Regulations, for the filing
requirements for disregarded entities.
Question V
Federal Form 8271, Investor Reporting of Tax Shelter Registration
Number, is required to be attached to any return on which a deduction,
loss, credit, or any other tax benefit is claimed or reported, or any
income reported, from an interest in a registration-required tax shelter.
If the LLC is required to file this form with the federal return, attach a
copy to the LLC’s Form 568. Do not attach copies of federal
Schedule K-1 (1065).
Specific Line Instructions
Form 568, Side 1
Line 1 – Total Income from the LLC Income Worksheet
Enter the LLC's “Total Income” as computed on the LLC Income
Worksheet, line 19. The amount entered must be a positive number.
“Total Income” for the LLC fee means the gross income plus the cost of
goods sold that are paid or incurred in connection with the trade or
business (R&TC Section 17942). Compute the LLC's “Total Income”
from all sources before taking into consideration any apportionment
and allocation. Line items reported on the LLC Income Worksheet
cannot be negative numbers.
Note: The definition of “Total Income” excludes allocations,
distributions, or gain to an LLC from another LLC, if that allocation,
distribution, or gain was already subject to the LLC fee.
LLCs with ownership interest in a pass-through entity must report their
distributive share of the pass-through entity's “Total Income.” Contact
the pass-through entity to get the necessary information for lines 3, 9c,
10c, 13b, 14b, 15b, 16b, 17b, and 18d.
SMLLCs that are disregarded entities, compute the “Total Income” on
the LLC Income Worksheet. Use the applicable lines. Ignore the line
items that address Schedule B.
LLCs that own a disregarded entity report the disregarded entity items
on Schedule B. Do not enter any amounts in the disregarded entity
lines.
Note: Attach a copy of the completed LLC Income Worksheet to the
LLC's return.
Line 2 – Limited Liability Company Fee
Enter the amount of the LLC fee. See General Information G, Limited
Liability Company Tax and Fee.
Line 3 – 2001 Limited Liability Company Tax
Enter the $800 annual tax. This tax was due the 15th day of the 4th
month (fiscal year) or April 16, 2001 (calendar year) after the begin-
ning of the LLC’s 2001 tax year and paid with the 2001 form FTB 3522.
If the annual LLC tax was not paid within the prescribed time period,
penalties and interest are now due. See General Information H,
Penalties and Interest, for more details.
Line 4 – Nonconsenting Nonresident Members’ Tax Liability
Enter the total tax computed on Schedule T. The LLC is responsible for
paying the tax of nonconsenting nonresident members and
nonconsenting owners of disregarded entities. Treat a nonconsenting
owner of a disregarded entity in the same manner as a nonconsenting
nonresident member. See the Specific Line Instructions for Schedule T.
Line 8 – Nonresident Withholding Credit
If taxes were withheld from payment to the LLC, the LLC can either
allocate the entire withholding credit to all its members or claim a
portion on line 8 (not to exceed the total tax and fee due) and allocate
the remaining portion to all its members. If the LLC claims any of the
amount withheld, be sure to attach the Form 592-B from the withhold-
ing entity to the front lower portion of the LLC return. The LLC must file
Forms 592 and 592-B to allocate any remaining withholding credit to
its members. For additional information, get FTB Pub. 1017, Nonresi-
dent Withholding Partnership Guidelines.
Line 14 – Penalties and Interest
Enter penalties and interest. See General Information H, Penalties and
Interest.
Single Member LLC Information and Consent
Please complete all requested information. If the owner has both a
federal Taxpayer Identification Number (TIN) and a California SOS file
number, enter both. Provide the identification numbers of the entity
that will report the items of income, deductions, credits, etc., of the
disregarded entity and the type of return the owner will file. This owner
will be responsible for limiting any credits attributable to the disre-
garded entity.
The LLC must treat the failure of the sole owner to sign this consent in
the same manner as the failure of a nonresident to sign form FTB 3832.
See the Specific Line Instructions for Schedule T.
If the single owner of the LLC signs the consent, complete only
Form 568, Side 1, Schedule K, and pay the amount due. Multiple
member LLCs will complete the remaining schedules, as appropriate.
Schedule A — Cost of Goods Sold
California’s reporting requirements for LLCs are generally the same as
the federal reporting requirements for partnerships. Follow the
instructions for federal Form 1065, Schedule A.
Schedule B — Income and Deductions
Line 1 through Line 8
California’s reporting requirements for LLCs classified as partnerships
are generally the same as the federal reporting requirements for
partnerships.
Follow the instructions for federal Form 1065 and include only trade or
business activity income on line 1 through line 8. However, for California
tax purposes, business income of the LLC is defined using the rules set
forth in R&TC Section 25120. Therefore, certain income that may be
portfolio income for federal purposes may be included as business
income for California sourcing purposes. Do not include rental activity
income or portfolio income on these lines. Rental activity income and
portfolio income are separately reported on Schedule K (568) and
Schedule K-1 (568). Rental real estate activities are also reported on
federal Form 8825, Rental Real Estate Income and Expenses of a
Partnership or an S Corporation. Attach a copy of federal Form 8825 to
Form 568. Use California numbers and attach a statement reconciling
any differences between federal and California amounts.
Note: Use worldwide amounts determined under California law when
completing these lines.
Line 5 – Net Farm Profit (Loss)
Enter the LLC’s net profit (loss) from federal Schedule F (Form 1040),
Profit or Loss From Farming. Attach federal Schedule F to Form 568. If
the amount includable for California purposes is different from the
amount on federal Schedule F, enter the California amount and attach
an explanation of the difference.
Line 6 – Net Gain (Loss) from Schedule D-1
Include only ordinary gains or losses from the sale, exchange, or
involuntary conversion of assets used in a trade or business activity.
Ordinary gains or losses from the sale, exchange, or involuntary
conversion of rental activity assets must be reported separately on
Schedule K (568) and Schedule K-1 (568), generally as part of the net
income (loss) from the rental activity.
An LLC that is a member in another LLC or partner in a partnership
must include on Schedule D-1, Sales of Business Property, its share of
ordinary gains (losses) from sales, exchanges or involuntary
conversions (other than casualties or thefts) of the other LLC’s or
partnership’s trade or business assets.
Line 9 through Line 21
California’s reporting requirements for LLCs are generally the same as
the federal reporting requirements for partnerships.

Form 568 Booklet 2001
Page 11
Follow the instructions for federal Form 1065 and include only trade or
business activity deductions on line 9 through line 20. Do not include
any rental activity expenses or deductions that are allocable to portfolio
income on these lines. Rental activity deductions and deductions
allocable to portfolio income are separately reported on
Schedule K (568) and Schedule K-1 (568).
Federal reporting requirements for organization and
syndication expenses and uniform capitalization rules apply for
California.
Note: Use worldwide amounts determined under California law when
completing these lines.
Line 16a – Depreciation and Amortization
Enter on line 16a only the total depreciation and amortization claimed
on assets used in a trade or business activity. Complete and attach
form FTB 3885L, Depreciation and Amortization (included in this
booklet), to figure depreciation and amortization. Transfer the total
from form FTB 3885L, line 6, to Form 568, Side 2, line 16a, or federal
Form 8825, as appropriate (use California amounts).
Do not include any expense deduction for depreciable property (IRC
Section 179; Enterprise Zones, R&TC Section 17267.2; Targeted Tax
Area, R&TC Section 17267.6; and Local Agency Military Base Recovery
Area, R&TC Section 17268) on this line. This expense is not deducted
by the LLC. Instead, the expense is passed through separately to the
members and is reported on line 9 of Schedule K (568) and
Schedule K-1 (568).
Schedule L — Balance Sheets
California’s reporting requirements for LLCs classified as partnerships,
are the same as the federal reporting requirements for partnerships.
The amounts reported on the balance sheet should agree with the
books and records of the LLC and should include all amounts whether
or not subject to taxation. Attach a statement explaining any differ-
ences between federal and state amounts or the balance sheet and the
LLC’s books and records. Follow the instructions for federal
Form 1065, Schedule L.
Note: Domestic LLCs with 10 or fewer members may not have to
complete Schedule L. See the instructions for Question R for the
specific requirements to qualify for this exception.
Schedule M-1 — Reconciliation of Income (Loss)
per Books With Income (Loss) per Return, and
Schedule M-2 — Analysis of Members’ Capital
Accounts
Domestic LLCs with 10 or fewer members may not have to complete
Schedule M-1 and Schedule M-2. See the instructions for Question R
for the specific requirements to qualify for this exception.
If the LLC is required to complete Schedule M-1 and Schedule M-2,
the amounts shown should agree with the LLC’s books and records
and the balance sheet amounts. Attach a statement explaining any
differences.
Note: Use worldwide amounts determined under California law when
completing Schedule M-1. Also, the amounts on Schedule M-2 should
equal the total of the amounts reported in Item I, column (c), of all the
members’ Schedule K-1s (568).
Schedule O — Amounts from Liquidation Used to
Capitalize a Limited Liability Company
Complete Schedule O if “initial return” is checked in Question I of
Form 568.
Schedule O is a summary of the entities liquidated to capitalize the LLC
and the amount of gains recognized in such liquidations.
Include the complete names and identification numbers of all entities
liquidated. Check the appropriate box for the type of entity liquidated.
Include the amount of liquidation gains recognized in order to capitalize
the LLC.
Schedule T — Nonconsenting Nonresident
Members’ Tax Liability
Use Schedule T to compute the nonconsenting nonresident members’
tax liability to be paid by the LLC. List the names and identification
numbers of all nonresident members who have not signed a form
FTB 3832 and have not consented to be subject to California tax. Also,
list the nonresident member’s distributive share of income.
To compute the amount of tax that must be paid by the LLC on behalf
of a nonconsenting nonresident member, multiply such member’s
distributive share of income by the following tax rates:
• 8.84% if the member is a C corporation; or
• 9.3% if the member is an individual, partnership, LLC, estate, or
trust; or
• 1.5% if the member is an S corporation.
The tax being paid by the LLC on behalf of nonconsenting nonresident
members is due on the 15th day of the 4th month following the close
of the LLC’s taxable year.
Reminder: All members must file a California tax return. The comple-
tion of Schedule T or form FTB 3832 does not satisfy the members
California filing requirement. Corporate members are also considered
doing business in California and may have additional filing require-
ments. For additional information get, FTB Pub. 1060, Starting a
Corporation in California. Nonresident individuals may qualify to file a
group Form 540NR and should get FTB Pub. 1067, Guidelines for Filing
a Group Form 540NR.
Schedule K (568) and Schedule K-1 (568) —
Member’s Share of Income, Deductions, Credits,
Etc.
Purpose of Schedules
Schedule K (568) is a summary schedule for the LLC’s income,
deduction, credits, etc. and Schedule K-1 (568) shows each member’s
distributive share. The line items for both of these schedules are the
same unless otherwise noted.
One copy of each Schedule K-1 (568) must be attached to the
Form 568 when it is filed unless, the LLC wishes to file paperless
Schedules K-1 (568). See General Information U, for additional
information.
Be sure to give each member a copy of their respective
Schedule K-1 (568). The LLC should also include a copy of the
Member’s Instructions for Schedule K-1 (568) or specific instructions
for each item reported. These items should be provided to the member
on or before the due date of the Form 568.
Schedule K (568) Only
In column (b) on Schedule K (568), Members’ Shares of Income,
Deductions, Credits, Etc., enter the amounts from federal Sched-
ule K (1065), Partners’ Shares of Income, Credits, Deductions, Etc.
In column (c), enter the adjustments resulting from differences
between California and federal law (not adjustments related to
California source income). In column (d), enter the worldwide income
computed under California law.
For members to comply with the requirements of IRC Section 469, trade
or business activity income (loss), rental activity income (loss), and
portfolio income must be considered separately by the member. Rental
activity income (loss) and portfolio income are not reported on
Form 568, Side 2 so that these amounts are not combined with trade or
business activity income (loss). Instead, these amounts are reported on
Schedule K, lines 2, 3, and 4.
Compliance with LLC Filing Requirements
To help ensure the accurate and timely processing of the LLC’s
Form 568, please verify the following:
• A Schedule K-1 (568) has been attached to Form 568 for each
member included on Form 568, Side 1, Question J. LLCs eligible for

Page 12
Form 568 Booklet 2001
the reduced filing program, see General Information E, Who Must
File.
• The attached Schedule K-1 (568) contains the member’s correct
name, address, and identifying number.
• Items A through I and Questions are completed on
Schedule K-1 (568), Side 1.
• The appropriate entity type box (Schedule K-1 (568), Side 1,
Question A) is checked for each member.
• All attached Schedules K-1 (568) reconcile to Schedule K.
• The member’s percentage (Schedule K-1 (568), Question C) is
expressed in decimal format and carried to four decimal places
(i.e., 33.5432). Do not print fractions, percentage symbol (%), or
use terms such as “Various.”
• Substitute computer-generated Schedule K-1 (568) forms have
been approved by the FTB.
Schedule K-1 (568)
The Schedule K-1 (568) details each member’s distributive share of the
LLC’s income, deductions, credits, etc. The LLC completes the entire
Schedule K-1 (568) by filling out the member’s and LLC’s information
(name, address, identifying numbers), Questions A through I and the
member’s distributive share of items.
Note: For members with PMB addresses, include the designation
number in the member’s information area.
If a husband and wife each had an interest in the LLC, prepare a
separate Schedule K-1 (568) for each spouse. If a husband and wife
held an interest together, prepare a single Schedule K-1 (568) since
they are considered to be one member.
For each individual member, enter the member’s social security
number. For all other members enter their FEIN. However, if a member
is an individual retirement arrangement (IRA), enter the identifying
number of the custodian of the IRA. Do not enter the social security
number of the person for whom the IRA is maintained.
The LLC files one California Schedule K-1 (568) for each member with
the LLC return and gives one copy to the appropriate member. Do not
attach federal Schedules K-1 (1065). The LLC should also provide each
member with a copy of either the Member’s Instructions for
Schedule K-1 (568) or specific instructions for each item reported.
Determining the Source of the LLC’s Income for a Resident Member
A resident member should include the entire distributive share of LLC
income in their California income. If the LLC apportions its income, the
member may be entitled to a tax credit for taxes paid to other states.
The member should be referred to Schedule S, Other State Tax Credit,
for more information.
Determining the Source of the LLC’s Income for a Nonresident
Member
Business Income: Regardless of the classification of income for
federal purposes, the LLC’s income from California sources is
determined in accordance with California law (Title 18, Cal. Code Reg.
Section 17951-4). If the LLC conducts:
• A trade or business wholly within California, then income from that
trade or business is California source income;
• A business within and outside California, but the part within the
state is so separate and distinct that it can be separately accounted
for, then only that separate income from within the state is
California source income; or
• A single trade or business within and outside California;
then California source business income of that trade or business is
determined by apportionment. The LLC should apportion business
income using the Uniform Division of Income for Tax Purposes Act
(R&TC Section 25120 through Section 25139). Special rules apply if
the LLC has income that is not attributable to the trade or business of
the LLC (nonbusiness income).
Nonbusiness Income: Nonbusiness income attributable to real or
tangible personal property (such as rents, royalties, or gains or losses)
located in California is California source income (Title 18, Cal. Code
Reg. Section 17951-3 and R&TC Section 25124 and Section 25125).
Enter this information on the appropriate line of Schedule K-1 (568). If
the LLC believes it may have a unitary member, the information for that
member should also be entered in Table 2, Part B, for that member.
The source of nonbusiness income attributable to intangible property
depends upon the member’s state of residence or commercial
domicile. Individuals generally source this income to their state of
residence and corporations to their commercial domicile.
Note: Because the determination of the source of intangible nonbusi-
ness income must be made at the member level, this income is not
entered on Schedule K-1 (568), column (e). It is only entered in
Table 1.
Completing Schedule K-1 (568)
• In column (b), enter the amounts from federal
Schedule K-1 (1065).
• In column (c), enter the adjustments resulting from differences
between California and federal law for each specific line item.
• In column (d), enter the result of combining column (b) and
column (c). This is total income under California law.
Column (e) is used to report California source income and credits.
Include the following items in this column:
1. Income from separate businesses, trades, or professions con-
ducted wholly within California (Title 18, Cal. Code Reg.
Section 17951-4(a)).
2. Income from a trade or business conducted within and outside
California, when the part of business conducted within California
can be separately accounted for (Title 18, Cal. Code Reg.
Section 17951-4(b)).
3. Income from a trade or business conducted within and outside
California that is apportioned to California. This includes intangible
income attributable to the business, trade or profession (Title 18,
Cal. Code Reg. Section 17951-4(c) and R&TC Sections 25128
through 25137). Generally, the LLC should apportion business
income using a 4-factor formula consisting of property, payroll, and
a double weighted sales factor. Use a 3-factor formula consisting of
payroll, property and a single weighted sales factor if more than
50% of the business receipts of the LLC are from agricultural,
extractive, savings and loans, or bank and financial activities.
Apportioning LLCs should get and complete Schedule R and attach
it to Form 568.
4. Nonbusiness income from real and tangible property located in
California. Enter the member’s share of nonbusiness income from
real and tangible property located in California in column (e). If the
LLC believes it may have a unitary member, enter this income in
Table 2, Part B.
5. California credits.
Note: Nonbusiness income from intangible property should not be
entered in column (e). Enter this income in Table 1. For more informa-
tion, see Member’s Instructions for Schedule K-1 (568).
Completing Column (d) and Column (e): Schedule K-1 (568),
column (d), includes the member’s distributive share of total LLC
income, deductions, gains, or losses under California law. Column (e)
includes only income, deductions, gains or losses that are apportioned
or sourced to California. The computation of these amounts is a matter
of law and regulation. The residency of the member is not a factor in
the computation of amounts to be included in column (d) and
column (e).
For an LLC that is doing business only in California, column (e) will
generally be the same as column (d), except for nonbusiness intan-
gible income (for example, nonbusiness interest, dividends, gain, or
loss from sales of securities).
For an LLC that is doing business within and outside California, the
amounts in column (d) and column (e) may be different.

Form 568 Booklet 2001
Page 13
If the LLC knows the member is a resident individual, then the LLC
answers “No” to Schedule K-1 (568), Question H and completes
column (d), only. Otherwise, the LLC should complete column (e) for
all other members.
Completing Table 1
Complete Table 1 only if the LLC has nonbusiness intangible income. If
the LLC has nonbusiness intangible income, and knows that the
member is a resident individual, then the LLC does not need to
complete Table 1 for the member.
Completing Table 2
The LLC does not need to complete Table 2 if the LLC knows that the
member is not unitary with its trade or business or any other trade or
business.
Special Rules for Members and LLCs in a Single Unitary Business
Special rules apply if the LLC and a member are engaged in a single
unitary business. In that case, a unitary member will not use the
income information shown in column (e). Instead, the member’s
distributive share of business income is combined with the member’s
own business income. The combined business income is apportioned
using an apportionment formula that consists of an aggregate of the
member’s share of the apportionment factors from the LLC and the
member’s own apportionment factors (Title 18, Cal. Code Reg.
Section 25137-1(f)). The determination of whether a 3-factor or
4-factor apportionment formula applies to the combined income will be
made at the member level. The member’s distributive share of business
income and property, payroll, and sales factors are entered in Table 2.
If the LLC knows that all of the members are unitary with the LLC, the
LLC need not complete column (e) or attach Schedule R. For further
information, see Member’s Instructions for Schedule K-1 (568).
Special Reporting Requirements for Passive Activities
If items of income (loss), deduction, or credit from more than one
activity are reported on Schedule K-1 (568), the LLC must attach a
statement to Schedule K-1 (568) for each activity that is a passive
activity to the member. Rental activities are passive activities to all
members; trade or business activities may be passive activities to
some members. The attachment must include all the information
explained in the instructions for federal Schedule K-1 (1065).
Question A (Schedule K-1 (568))
Check the appropriate box to indicate the member’s entity type. Exempt
organizations should check the exempt organization box regardless of
legal form.
Question B (Schedule K-1 (568))
See the instructions for Question C, located on the federal
Schedule K-1 (1065).
Question C (Schedule K-1 (568))
Percentages must be 4 to 7 characters in length and have a decimal
point before the final 4 characters. For example, 50% is represented as
50.0000, 5% as 5.0000, 100% as 100.0000. Do not enter a fraction,
the percentage symbol (%), or the term ‘’Various.’’
Specific Line Instructions
The California Schedule K (568) generally follows the federal
Schedule K (1065). Where California and federal laws are the same, the
instructions for California Schedule K (568) refer to the instructions
for federal Schedule K (1065).
Question D (Schedule K-1 (568))
See the instructions for Question F located on the federal
Schedule K-1 (1065).
Income
Line 1 through Line 7
See the instructions for federal Schedule K (1065) and
Schedule K-1 (1065), Income (Loss), line 1 through line 7.
Line 1, column (c) – An adjustment to increase the business income of
a service LLC to reflect the guaranteed payment deduction adjustment
required by Title 18, Cal. Code Reg. Section 17951-4(f) should be made
here.
Note: Schedule K must include all income and losses from the LLC
activities as determined under California laws and regulations. Any
differences reported between the federal and California amounts should
be related to differences in the tax laws. Do not apply the apportion-
ment formula to the income or losses on Schedule K.
Line 6
Enter on line 6 the amount shown on Schedule D-1, Sales of Business
Property, line 7. Do not include specially allocated ordinary gains and
losses, or net gains (losses) from involuntary conversions due to
casualties or thefts on this line. Instead, report them on line 7, along
with a schedule and explanation.
If the LLC has more than one activity and the amount on line 6 is a
passive activity amount to the member, attach a statement to
Schedule K-1 (568) (or use the space provided on Side 2 of
Schedule K-1 (568)) that identifies the activity to which IRC
Section 1231 gain (loss) relates.
Deductions
Line 8 – Charitable Contributions
Enter the total amount of charitable contributions made by the LLC
during its taxable year on Schedule K (568) and each member’s
distributive share on Schedule K-1 (568). Attach an itemized list to
both schedules that show the amount subject to the 50%, 30%, and
20% limitations.
Members are allowed a deduction for contributions to qualified
organizations as provided in IRC Section 170.
Note: California conforms to IRC Section 170(f)(8) substantiation
requirement for charitable contributions.
Line 9 through Line 11
See the instructions for federal Schedule K (1065) and
Schedule K-1 (1065), Deductions, line 9 through line 11.
Investment Interest
Line 12a through Line 12b(2)
These lines must be completed whether or not a member is subject to
the investment interest rules.
Line 12a – Interest Expense on Investment Debts
Enter the interest paid or accrued to purchase or carry property held
for investment. Property held for investment includes property that
produces portfolio income (interest, dividends, annuities, royalties,
etc.). Therefore, interest expense allocable to portfolio income should
be reported on line 12a of Schedule K (568) and Schedule K-1 (568)
(rather than line 10 of Schedule K (568) and Schedule K-1 (568)).
Property held for investment includes a member’s interest in a trade or
business activity that is not a passive activity to the LLC and in which
the member does not materially participate. An example would be the
rule concerning a member’s working interest in an oil and gas property
(i.e., the member’s interest is not limited if the member does not
materially participate in the oil and gas activity). Investment interest
does not include interest expense allocable to a passive activity. For
more information, get form FTB 3526, Investment Interest Expense
Deduction.
Line 12b(1) and Line 12b(2) – Investment Interest Income and
Expenses
Enter on line 12b(1) only the investment income included on line 4a,
line 4b, line 4c, and line 4e of Schedule K (568) and
Schedule K-1 (568). Enter on line 12b(2) only the investment expense
included on line 10 of Schedule K (568) and Schedule K-1 (568).
If items of investment income or expense are included in the amounts
that are required to be passed through separately to the member on
Schedule K-1 (568) (items other than the amounts included on line 4
and line 10 of Schedule K-1 (568)), give each member a statement
identifying these amounts.

Page 14
Form 568 Booklet 2001
Investment income includes gross income from property held for
investment, gain attributable to the disposition of property held for
investment and other amounts that are gross portfolio income.
Investment income and investment expense generally do not include
any income or expense from a passive activity.
Property subject to a net lease is not treated as investment property
because it is subject to the passive loss rules. Do not reduce invest-
ment income by losses from passive activities.
Investment expenses are deductible expenses (other than interest)
directly connected with the production of investment income. Get the
instructions for form FTB 3526 for more information.
Credits
Line 13a(1) – Withholding on Payments to the Limited Liability
Company Allocated to All Members
If taxes were withheld from payments to the LLC, this withholding is
allocated to all members according to their LLC interests.
Line 13a(2) – Limited Liability Company Withholding on Nonresident
Members (Schedule K-1 (568) only)
If taxes were withheld-at-source on a domestic or foreign nonresident
member, the amount withheld is entered on the member’s
Schedule K-1 (568), line 13a(2). This is not a distributive share item.
Line 13a(3) – Total Withholding (Schedule K-1 (568) only)
The amounts on a member’s Schedule K-1 (568), line 13a(1) and
line 13a(2) are added together to get the total amount of withholding
credit for that member for the LLC year. If taxes were withheld by the
LLC or if there is a pass-through withholding credit from another
entity, the LLC must provide each affected member (including
California residents) a completed Form 592-B. Members must attach
Form 592-B to the front of their California tax return to claim the
withheld amounts. Schedule K-1 (568) may not be used to claim this
withholding credit.
Line 13b through Line 13d
These lines relate to rental activities. Use line 14 to report credits
related to trade or business activities.
Note: California line numbers are different from federal line numbers in
this section.
Line 13b – Low-Income Housing Credit
A credit may be claimed by owners of residential rental projects
providing low-income housing (IRC Section 42). Generally, the credit
is effective for buildings placed in service after 1986. Get form
FTB 3521, Low-Income Housing Credit, for more information.
Line 13c – Credits Related to Rental Real Estate Activities Other
Than Line 13b
Report any information that the members need to figure credits related
to a rental real estate activity, other than the low-income housing
credit. Attach to each member’s Schedule K-1 (568) a statement
showing the amount to be reported and the applicable form on which
the amount should be reported.
Line 13d – Credits Related to Other Rental Activities
Use this line to report information that the members need to figure
credits related to a rental activity. Attach to each member’s
Schedule K-1 (568) a statement showing the amount to be reported
and the applicable form on which the amount should be reported.
Line 13e – Nonconsenting Member Tax Paid by LLC
(Schedule K-1 (568) only)
If income tax was paid by the LLC on behalf of nonresident members
who did not sign form FTB 3832, the amount paid is entered on the
member’s Schedule K-1 (568), line 13e. This is not a distributive share
item. Members must attach a copy of Schedule K-1 (568) to their
California tax return to claim the tax paid by the LLC on their behalf.
Line 14 – Other Credits
Enter on an attached schedule each member’s allocable share of any
credit or credit information that is related to a trade or business
activity.
Credits that may be reported on line 14 (depending on the type of
activity they relate to) include:
• Community Development Financial Institution Deposits Credit. Use
credit code 209.
• Disabled Access Credit for Eligible Small Businesses. Get form
FTB 3548.
• Donated Agricultural Products Transportation Credit. Get form
FTB 3547.
• Employer Child Care Program/Contribution Credit. Get form
FTB 3501.
• Enhanced Oil Recovery Credit. Get form FTB 3546.
• Enterprise Zone (EZ) Hiring and Sales or Use Tax Credit. Get form
FTB 3805Z.
• Farmworker Housing Credit-Construction. Use credit code 207.
• Farmworker Housing Credit-Loan. Use credit code 208.
•
Joint-Strike Fighters Credit. Get form FTB 3534
• Local Agency Military Base Recovery Area (LAMBRA) Hiring and
Sales or Use Tax Credit. Get form FTB 3807.
• Manufacturers’ Investment Credit. Get form FTB 3535.
• Manufacturing Enhancement Area (MEA) Hiring Credit. Get form
FTB 3808.
• Natural Heritage Preservation Credit. Get form FTB 3505.
• Prison Inmate Labor Credit. Get form FTB 3507.
• Research Credit. Get form FTB 3523.
• Rice Straw Credit. Use credit code 206.
• Solar Energy System Credit. Get form FTB 3508.
• Targeted Tax Area (TTA) Hiring and Sales or Use Tax Credit. Get
form FTB 3809.
Line 14 may also include the distributive share of net income taxes paid
to other states by the LLC. Subject to limitations of R&TC
Section 18001 and Section 18006, members may claim a credit against
their individual income tax for net income taxes paid by the LLC to
another state. The amount of tax paid must be supported by a schedule
of the credits, the states paid, and evidence of payment of the tax.
Refer the members to Schedule S for more information.
Reminder: All of these credit forms and many others are available on
our website. Go to our Website at: www.ftb.ca.gov
Adjustments and Tax Preference Items
Line 15a through Line 15e
Enter each member’s distributive share of income and deductions that
are adjustments and tax preference items. Get Schedule P (540),
Alternative Minimum Tax and Credit Limitations — Residents;
Schedule P (540NR), Alternative Minimum Tax and Credit Limitations
— Nonresidents or Part-Year Residents; Schedule P (541), Alternative
Minimum Tax and Credit Limitations — Fiduciaries; or
Schedule P (100), Alternative Minimum Tax and Credit Limitations —
Corporations, to determine amounts and for other information.
For additional information, see instructions for federal
Schedule K (1065), Adjustments and Tax Preference Items, line 16a
through line 16e. For differences between federal and California law for
alternative minimum tax (AMT), see R&TC Section 17062.
Other
Line 16 through Line 21
See the instructions for federal Schedule K-1 (1065), “Other,” line 18
through line 24.

Form 568 Booklet 2001
Page 15
Line 22
The LLC may need to report supplemental information that is not
specifically requested on the Schedule K-1 (568) separately to each
member.
Members may need to obtain the amount of their proportionate interest
of aggregate gross receipts, less returns and allowances, from the LLC.
Alternative minimum taxable income does not include income, positive
and negative adjustments, and preference items attributed to any trade
or business of a qualified taxpayer who has gross receipts, less returns
and allowances, during the taxable year of less than $1,000,000 from
all trades or businesses in which the taxpayer is an owner or has an
ownership interest. The LLC should provide the member’s proportion-
ate interest of aggregate gross receipts on Schedule K-1 (568), line 22.
For purposes of R&TC Section 17062(b)(4), “
aggregate gross receipts,
less returns and allowances” means the sum of:
• The gross receipts of the trades or businesses which the taxpayer
owns;
• The proportionate interest of the gross receipts of the trades or
businesses which the taxpayer owns; and
• The proportionate interest of the pass-through entity’s gross
receipts in which the taxpayer holds an interest.
“
Aggregate gross receipts” means the sum of the gross receipts from
the production of business income, as defined in subdivision (a) of
R&TC Section 25120, and the gross receipts from the production of
nonbusiness income, as defined in subdivision (d) of R&TC Sec-
tion 25120. For purposes of this section, “
pass-through entity” means
a partnership (as defined by R&TC Section 17008), an S corporation, a
regulated investment company (RIC), a real estate investment trust
(REIT) and a REMIC. See R&TC Section 17062 for more information.
Also show on line 22 a statement noting each of the following:
1. Each member’s distributive share of business income apportioned
to an EZ, LAMBRA, MEA, LARZ, or TTA; and
2. Each member’s distributive share of business capital gain or loss
included in 1 above.
Analysis (Schedule K (568) only)
Line 23a and Line 23b
See the federal instructions for Schedule K (1065), Analysis of Net
Income (Loss).
Tables — (Schedule K-1 (568) only)
Table 1
Enter the member’s share of nonbusiness income from intangibles.
Because the source of this income must be determined at the member
level, do not enter income in this category in column (e). If the income
(loss) for an income item is a mixture of income (loss) in different
subclasses (for example, short-term and long-term capital gain), attach
a supplemental statement providing a breakdown of income (loss) in
each subclass.
Note: Enter nonbusiness income from intangibles in Table 1 net of
related expenses. Do not include expenses offset against nonbusiness
income from intangibles in column (e).
Table 2
The final determination of unity is made at the member level. If the LLC
and the member are unitary, or if the LLC is uncertain as to whether it
is unitary with the member, it should furnish the information in
Table 2.
Part A. Enter the member’s distributive share of the LLC’s business
income. The member will then add that income to its own business
income and apportion the combined business income.
“
Business income” is defined by Title 18, Cal. Code Reg.
Section 25120(a) as income arising in the regular course of the
corporation’s trade or business. Business income includes income
from tangible and intangible property if the acquisition, management,
and disposition of the property constitutes integral parts of the
taxpayer’s regular trade or business.
Part B. Enter the member’s share of nonbusiness income from real and
tangible property that is located in California. Because this income has
a California source, this income should also be included on the
appropriate line in column (e).
Nonbusiness income is all income other than business income.
Part C. Enter the member’s distributive share of the LLC’s payroll,
property, and sales factors.

Page 16
Form 568 Booklet 2001
Limited Liability Company Income Worksheet — Attach to the LLC’s return
1
Total income from Form 568, Schedule B, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 _______________
2
Gross income of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 _______________
3
LLC’s distributive share of gross ordinary income from pass-through entities . . . . . . . . . . . . . . . . . . . . . . . . .
3 _______________
4
Add gross farm income from federal Schedule F (Form 1040). Use California amounts . . . . . . . . . . . . . . . . . .
4 _______________
5
Total the amounts from Schedule B, line 4 through line 7. If the total is positive, enter as a negative.
If the amount is negative, enter as a positive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 _______________
6
Enter the total of other income (not loss) from Form 568, Schedule B, line 7 . . . . . . . . . . . . . . . . . . . . . . . . .
6 _______________
7
Enter the ordinary gains (not losses) and the recapture income from Schedule D-1, Part II, line 18 . . . . . . .
7 _______________
8
Add line 1 through line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8 _______________
9
Rental real estate
a
Enter the gross rents from federal Form 8825, line 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9a _______________
b
Enter the gross rents from rental real estate of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . .
9b _______________
c
Enter the LLC’s distributive share of gross rents from rental real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9c _______________
d
Add line 9a through line 9c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9d _______________
10
Other rentals
a
Enter the gross income from other rental activities (do not include any losses from the sale or
involuntary conversion of an asset if included in Schedule K, line 3a) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10a _______________
b
Enter the gross income from other rentals of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . .
10b _______________
c
Enter the LLC’s distributive share of gross income from other rentals from pass-through entities . . . . .
10c _______________
d
Add line 10a through line 10c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10d _______________
11
Interest
a
Enter the total interest of disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11a _______________
b
Enter the interest from Schedule K, line 4a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11b _______________
c
Add line 11a and line 11b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11c _______________
12
Dividends
a
Enter the total dividends of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12a _______________
b
Enter the dividends from Schedule K, line 4b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12b _______________
c
Add line 12a and line 12b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12c _______________
13
Royalty income
a
Enter the gross royalty income of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13a _______________
b
Enter the LLC’s distributive share of gross royalty income from pass-through entities . . . . . . . . . . . . . .
13b _______________
c
Enter the LLC’s gross royalty income included in Schedule K, line 4c . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13c _______________
d
Add line 13a through line 13c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13d _______________
14
Capital gains
a
Enter the capital gains (not losses) of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14a _______________
b
Enter the LLC’s distributive share of capital gains (not losses) from pass-through entities . . . . . . . . . . .
14b _______________
c
Enter the capital gains (not losses) included in Schedule D (568) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14c _______________
d
Add line 14a through line 14c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14d _______________
15
Other portfolio income
a
Enter the other portfolio income (not loss) of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . .
15a _______________
b
Enter the LLC’s distributive share of other portfolio income (not loss) from pass-through entities . . . . .
15b _______________
c
Enter the LLC’s other portfolio income (not loss) included in Schedule K, line 4e . . . . . . . . . . . . . . . . . .
15c _______________
d
Add line 15a through line 15c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15d _______________
16
1231 gains
a
Enter the 1231 gains (not losses) of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16a _______________
b
Enter the LLC’s distributive share of 1231 gains (not losses) from pass-through entities . . . . . . . . . . . .
16b _______________
c
Enter the LLC’s 1231 gains (not losses) included in Schedule D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16c _______________
d
Add line 16a through line 16c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16d _______________
17
Other income (not loss) not included in line 6
a
Enter the other income (not loss) of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17a _______________
b
Enter the LLC’s distributive share of other income (not loss) from pass-through entities . . . . . . . . . . . .
17b _______________
c
Enter the LLC’s other income (not loss) included in Schedule K, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . .
17c _______________
d
Add line 17a through line 17c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17d _______________
18
Cost of goods sold
a
Enter the cost of goods sold of the disregarded entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18a _______________
b
Enter the cost of goods sold from Form 568, Schedule B, line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18b _______________
c
Enter the cost of goods sold from federal Schedule F (1040) (plus California adjustments) . . . . . . . . . .
18c _______________
d
Enter the LLC’s distributive share of cost of goods sold from other pass-through entities . . . . . . . . . . .
18d _______________
e
Add line 18a through line 18d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18e _______________
19
Total income. Add line 8, line 9d, line 10d, line 11c, line 12c, line 13d, line 14d, line 15d, line 16d, line 17d, and line 18e.
Enter here and on Form 568, Side 1, line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19 _______________
Note: If the LLC has membership or economic interest in another LLC, see instructions.

Form 568
C1
2001
Side 1
H
FEIN
G
Check accounting method:
b (1)
२
Cash
(2)
२
Accrual
(3)
२
Other (attach explanation)
b
E
Date business started
b
F
Enter total assets at end of year.
See instructions.
b $
I
Check applicable box
(1)
२
Initial return
b (2)
२
Final
(3)
२
Amended
return
return
Limited Liability Company Return of Income
TAXABLE YEAR
2001
For calendar year 2001 or fiscal year beginning month ________ day _______ year 2001, and ending month ________ day ________ year ________ .
56801109
CALIFORNIA FORM
568
1 Total income from Limited Liability Company Income Worksheet, line 19 . . . . . . . . . . . . . . . . . . . . . . . . . .
b
1
2 Limited Liability Company fee. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
2
3 2001 annual Limited Liability Company tax. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
3
4 Nonconsenting nonresident members’ tax liability from Schedule T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
4
5 Total tax and fee. Add line 2, line 3, and line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
5
6 Amount paid with form FTB 3537 and 2001 form FTB 3522 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
6
7 Overpayment from prior year allowed as a credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
7
8 Nonresident Withholding Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
8
9 Total payments. Add line 6, line 7, and line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
9
10 Tax and fee due. If line 5 is more than line 9, subtract line 9 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
10
11 Overpayment. If line 9 is more than line 5, subtract line 5 from line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
11
12 Amount of line 11 to be credited to 2002 tax or fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
12
13 Amount to be refunded. Subtract line 12 from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾ 13
14 Penalties and interest. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
14
15 Amount due. Add line 10 and line 14. Pay this amount with this return . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
˾
For Privacy Act Notice, get form FTB 1131.
Attach
check
or
money
order
here.
Telephone
(
)
Please
Sign
Here
Paid
Preparer’s
Use Only
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is
true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
̈
Signature of officer
Date
Preparer’s SSN/PTIN
Firm’s name (or yours,
if self-employed)
̈
and address
Preparer’s
signature
̈
Telephone
(
)
Date
Check if
self-employed
२
FEIN
-
A
Principal business activity name
(same as federal)
B
Principal product or service
(same as federal)
C
Principal business code
(same as federal)
b
Limited liability company name (type or print)
D
Secretary of State file number
b
DBA
Number and street (or PO Box number if mail is not delivered to street address)
PMB no.
City or town
State
ZIP Code
J
J
J
J
J
Enter the maximum number of members in the LLC at any time during the
year. Attach a California Schedule K-1 (568) for each of these members .
b
K
K
K
K
K
Is this LLC an investment partnership? See instructions . . . . . . . . . . . . . .
b
L
L
L
L
L
Is this LLC apportioning income to California using Schedule R? . . . . . . .
b
M
M
M
M
M
Was there a distribution of property or a transfer (for example,
by sale or death) of an LLC interest during the taxable year? . . . . . . . . . .
b
N
N
N
N
N
Is this LLC under audit by the IRS or has it been audited in a prior year? . . .
O
O
O
O
O
Did this LLC or its subsidiary(ies) have a transfer or acquisition
of more than 50% in control or ownership? (See Instructions – Penalties
May Apply.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
P
P
P
P
P
(1) Does the LLC have any foreign nonresident members? . . . . . . . . . . .
b
(2) Does the LLC have any nonresident members? . . . . . . . . . . . . . . . . . .
b
(3) Were Form 592, Form 592-A, and Form 592-B filed for these
members? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
Q
Q
Q
Q
Q
Are any members in this LLC also LLCs or partnerships? .
R
R
R
R
R
Does the LLC meet all the requirements shown in the
instructions for Question R? . . . . . . . . . . . . . . . . . . . . . . . .
S
S
S
S
S
Is this LLC a member or partner in another LLC
or partnership? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
T
T
T
T
T
Is this LLC a publicly traded partnership as defined in
IRC Section 469(k)(2)? . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U
U
U
U
U
(1) Is this LLC a business entity disregarded for tax
purposes? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
(2) If yes, see instructions and complete Side 1 and
Side 3. Are there credits or credit carryovers
attributable to the disregarded entity? . . . . . . . . . .
b
V
V
V
V
V
Is the LLC required to complete federal Form 8271?
If “Yes,” see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Single Member LLC Information and Consent — Complete only if the LLC is disregarded.
Federal TIN/SSN
b
Sole Owner’s Name (as shown on owner’s return)
SOS File No.
Street Address, City, State, and ZIP Code
Consent statement: I consent to the jurisdiction of the State of California to tax my LLC income and agree to file returns and pay tax as may be required
by the Franchise Tax Board.
Signature
̈
Date
Title
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Return filed with the FTB by the Owner
b
२ (1) Form 540 २ (5) Form 541
२ (2) Form 100 २ (6) Form 100S
२ (3) Form 565 २ (7) Form 568
२ (4) Other _________________
.....
.....
,,,,,
,,,,,

Side 2
Form 568
C1
2001
56801209
Schedule A
Cost of Goods Sold
1 Inventory at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2 Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
3 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
4 Additional IRC Section 263A costs. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
5 Other costs. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
6 Total. Add line 1 through line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
7 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on Schedule B, line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
9 a Check all methods used for valuing closing inventory:
(1)
२
Cost
(2)
२
Lower of cost or market as described in Treas. Reg. Section 1.471-4
(3)
२
Write down of “subnormal” goods as
described in Treas. Reg. Section 1.471-2(c)
(4)
२
Other. Specify method used and attach explanation ___________________________
b Check this box if the LIFO inventory method was adopted this taxable year for any goods. If checked, attach federal Form 970 . . . . . . .
२
c
Do the rules of IRC Section 263A (with respect to property produced or acquired for resale) apply to the LLC? . . . . . . . . . . . . . . . . . . .
२
Yes
२
No
d Was there any change (other than for IRC Section 263A purposes) in determining quantities, cost, or valuations between opening
and closing inventory? If “Yes,” attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
२
Yes
२
No
Schedule B
Income and Deductions
Caution:
Include only trade or business income and expenses on line 1a through line 21 below. See the instructions for more information.
1 a Gross receipts or sales $ ____________ b Less returns and allowances $ ____________ . . . c Balance
b
1c
2 Cost of goods sold (Schedule A, line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
3 GROSS PROFIT. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
3
4 Ordinary income (loss) from other LLCs, partnerships, and fiduciaries. Attach schedule . . . . . . . . . . . . . . .
b
4
5 Net farm profit (loss). Attach federal Schedule F (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
5
6 Net gain (loss) from Schedule D-1, Part II, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
6
7 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
7
8 Total income (loss). Combine line 3 through line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
8
9 Salaries and wages (other than to members) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
10 Guaranteed payments to members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
10
11 Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
12 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
12
13 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
15 Deductible interest expense not claimed elsewhere on return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
16 a Depreciation and amortization. Attach form FTB 3885L $ _________________
b Less depreciation reported on Schedule A and elsewhere on return $ _________________ . . . . c Balance
16c
17 Depletion. Do not deduct oil and gas depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
18 Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
19 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
20 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
20
21 Total deductions. Add line 9 through line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
21
22 Ordinary income (loss) from trade or business activities. Subtract line 21 from line 8 . . . . . . . . . . . . . . . . . .
b
22
Schedule T
Nonconsenting Nonresident Members’ Tax Liability
Member’s name
Social security number or FEIN
Distributive share of income x tax rate
Member’s tax due
x
x
x
x
x
Total the amount of tax due. Enter the total here and on Side 1, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ________________
Attach additional sheets if necessary.
Income
Deduc-
tions

Form 568
C1
2001
Side 3
56801309
(a)
(b)
(c)
(d)
Distributive share items
Amounts from
California
Total amounts using
federal K (1065)
adjustments
California law
1 Ordinary income (loss) from trade or business activities (Side 2, line 22)
1
b
2 Net income (loss) from rental real estate activities. Attach federal Form 8825
2
3 a Gross income from other rental activities . . . . . . . . . . . . . . . . . . . .
3a
b Less expenses. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . .
3b
c
Net income (loss) from other rental activities. Subtract line 3b
from line 3a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3c
b
4 Portfolio income (loss). See instructions:
a Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4a
b
b Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4b
b
c
Royalty income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4c
b
d Net capital gain (loss) (Schedule D (568)) . . . . . . . . . . . . . . . . . . .
4d
e Other portfolio income (loss). Attach schedule . . . . . . . . . . . . . . .
4e
b
5 Guaranteed payments to members . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
b
6 Net gain (loss) under IRC Section 1231 (other than due to casualty
or theft). Attach Schedule D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
b
7 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . .
7
8 Charitable contributions. See instructions. Attach schedule . . . . . . . .
8
9 Expense deduction for recovery property (R&TC Sections 17267.2,
17268, and IRC Section 179). Attach schedule . . . . . . . . . . . . . . . . . .
9
10 Deductions related to portfolio income . . . . . . . . . . . . . . . . . . . . . . . .
10
11 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
12 a Interest expense on investment debts . . . . . . . . . . . . . . . . . . . . . .
12a
b
b (1) Investment income included on lines 4a, 4b, 4c, and
line 4e above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12b(1)
(2) Investment expenses included on line 10 above . . . . . . . . . . .
12b(2)
13 a (1) Withholding on LLC allocated to all members . . . . . . . . . . . . .
13a(1)
b Low-income housing credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13b
c
Credit(s) other than credits shown on line 13b related
to rental real estate activities. Attach schedule . . . . . . . . . . . . . . . .
13c
d Credit(s) related to other rental activities. See instructions.
Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13d
14 Other credits. See instructions. Attach schedule . . . . . . . . . . . . . . . . .
14
b
a Total credits received. Add line 13b through line 14 . . . . . . . . . . . .
14a
15 a Depreciation adjustment on property placed in service after 1986
15a
b Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15b
c
Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . . . . . . . .
15c
d (1) Gross income from oil, gas, and geothermal properties . . . . .
15d(1)
(2) Deductions allocable to oil, gas, and geothermal properties . .
15d(2)
e Other adjustments and tax preference items. Attach schedule . . .
15e
16 a Total expenditures to which IRC Section 59(e) election
may apply. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16a
b Type of expenditures ____________________________ . . . . . . .
16b
17 Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
18 Other tax-exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
b
19 Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
20 Distributions of money (cash and marketable securities) . . . . . . . . . .
20
21 Distribution of property other than money . . . . . . . . . . . . . . . . . . . . . .
21
22 Other items and amounts reported separately to members.
Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
23 a Total distributive income/payment items. Combine line 1 through
line 7 above. From the result, subtract the sum of line 8 through
line 12a and line 16a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
b
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b
Analysis of members:
(a)
(b) Individual
(c)
(d) Exempt
(e)
(f)
Corporate
i. Active
ii. Passive
Partnership
Organization
Nominee/Other
LLC
Members
Income (Loss)
Deductions
Investment
Interest
Credits
Adjustments and T
a
x
Preference Items
Other
Analysis
Schedule K
Members’ Shares of Income, Deductions, Credits, Etc.

Side 4
Form 568
C1
2001
Schedule L
Balance Sheets. See the instructions for Question R before completing Schedules L, M-1, and M-2.
Beginning of taxable year
End of taxable year
Assets
(a)
(b)
(c)
(d)
1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 a Trade notes and accounts receivable . . . . . . . . .
b Less allowance for bad debts . . . . . . . . . . . . . .
3 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
4 U.S. government obligations . . . . . . . . . . . . . . . . . .
5 Tax-exempt securities . . . . . . . . . . . . . . . . . . . . . . .
6 Other current assets. Attach schedule . . . . . . . . . .
b
7 Mortgage and real estate loans . . . . . . . . . . . . . . . .
8 Other investments. Attach schedule . . . . . . . . . . . .
b
9 a Buildings and other depreciable assets . . . . . . .
b Less accumulated depreciation . . . . . . . . . . . . .
b
10 a Depletable assets . . . . . . . . . . . . . . . . . . . . . . . .
b Less accumulated depletion . . . . . . . . . . . . . . .
11 Land (net of any amortization) . . . . . . . . . . . . . . . .
b
12 a Intangible assets (amortizable only) . . . . . . . . .
b Less accumulated amortization . . . . . . . . . . . . .
13 Other assets. Attach schedule . . . . . . . . . . . . . . . . .
b
14 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Capital
15 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . .
b
16 Mortgages, notes, bonds payable in less than 1 year
b
17 Other current liabilities. Attach schedule . . . . . . . .
18 All nonrecourse loans . . . . . . . . . . . . . . . . . . . . . . .
b
19 Mortgages, notes, bonds payable in 1 year or more
b
20 Other liabilities. Attach schedule . . . . . . . . . . . . . . .
b
21 Members’ capital accounts . . . . . . . . . . . . . . . . . . .
b
22 Total liabilities and capital . . . . . . . . . . . . . . . . . . . .
Schedule M-1
Reconciliation of Income (Loss) per Books With Income (Loss) per Return. Use total amount under California law.
(
)
(
)
(
)
(
)
(
)
(
)
(
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(
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1 Net income (loss) per books . . . . . . . . . . . . . . . . . . .
2 Income included on Schedule K, line 1 through
line 7, not recorded on books this year.
Itemize . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
3 Guaranteed payments (other than health insurance)
4 Expenses recorded on books this year not
included on Schedule K, line 1 through
line 12a and line 16a. Itemize:
a Depreciation $ ______________ . . . . . . . . . . . . .
b Travel and entertainment $ ______________ . . .
c Annual LLC tax $ ______________ . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
5 Total of line 1 through line 4 . . . . . . . . . . . . . . . . . . .
6 Income recorded on books this year not included
on Schedule K, line 1 through line 7. Itemize:
a Tax-exempt interest $ ______________ . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
7 Deductions included on Schedule K, line 1 through
line 12a and line 16a, not charged against book
income this year. Itemize:
a Depreciation $ ______________ . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
8 Total of line 6 and line 7 . . . . . . . . . . . . . . . . . . . . .
9 Income (loss) (Schedule K, line 23a). Subtract
line 8 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 Balance at beginning of year . . . . . . . . . . . . . . . . . .
2 Capital contributed during year . . . . . . . . . . . . . . .
b
3 Net income (loss) per books . . . . . . . . . . . . . . . . . .
4 Other increases. Itemize . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
5 Total of line 1 through line 4 . . . . . . . . . . . . . . . . . .
6 Distributions:
a Cash . . . . . . . . . . . . . . . . . . . . . .
b
b Property . . . . . . . . . . . . . . . . . . .
b
7 Other decreases. Itemize . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
8 Total of line 6 and line 7 . . . . . . . . . . . . . . . . . . . . .
9 Balance at end of year. Subtract line 8 from line 5 .
Schedule M-2
Analysis of Members’ Capital Accounts. Use California amounts.
56801409
Schedule O
Amounts from Liquidation used to Capitalize a Limited Liability Company.
(Complete only if initial return box is checked on Side 1, Question I.)
Name of entity liquidated (if more than one, attach a schedule)
Type of entity:
b २ (1) C Corporation २ (2) S Corporation २ (3) Partnership २ (4) Limited Partnership २ (5) Sole Proprietor २ (6) Farmer
Entity identification number(s)
b FEIN ___________________ b SSN ___________________ b Corporation __________________ b SOS__________________
Amount of liquidation gains recognized to capitalize the LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b ____________________
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Form 568
C1
2001
Side 1
H
FEIN
G
Check accounting method:
b (1)
२
Cash
(2)
२
Accrual
(3)
२
Other (attach explanation)
b
E
Date business started
b
F
Enter total assets at end of year.
See instructions.
b $
I
Check applicable box
(1)
२
Initial return
b (2)
२
Final
(3)
२
Amended
return
return
Limited Liability Company Return of Income
TAXABLE YEAR
2001
For calendar year 2001 or fiscal year beginning month ________ day _______ year 2001, and ending month ________ day ________ year ________ .
56801109
CALIFORNIA FORM
568
1 Total income from Limited Liability Company Income Worksheet, line 19 . . . . . . . . . . . . . . . . . . . . . . . . . .
b
1
2 Limited Liability Company fee. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
2
3 2001 annual Limited Liability Company tax. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
3
4 Nonconsenting nonresident members’ tax liability from Schedule T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
4
5 Total tax and fee. Add line 2, line 3, and line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
5
6 Amount paid with form FTB 3537 and 2001 form FTB 3522 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
6
7 Overpayment from prior year allowed as a credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
7
8 Nonresident Withholding Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
8
9 Total payments. Add line 6, line 7, and line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
9
10 Tax and fee due. If line 5 is more than line 9, subtract line 9 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
10
11 Overpayment. If line 9 is more than line 5, subtract line 5 from line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
11
12 Amount of line 11 to be credited to 2002 tax or fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
12
13 Amount to be refunded. Subtract line 12 from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾ 13
14 Penalties and interest. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
˾
14
15 Amount due. Add line 10 and line 14. Pay this amount with this return . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
˾
For Privacy Act Notice, get form FTB 1131.
Attach
check
or
money
order
here.
Telephone
(
)
Please
Sign
Here
Paid
Preparer’s
Use Only
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is
true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
̈
Signature of officer
Date
Preparer’s SSN/PTIN
Firm’s name (or yours,
if self-employed)
̈
and address
Preparer’s
signature
̈
Telephone
(
)
Date
Check if
self-employed
२
FEIN
-
A
Principal business activity name
(same as federal)
B
Principal product or service
(same as federal)
C
Principal business code
(same as federal)
b
Limited liability company name (type or print)
D
Secretary of State file number
b
DBA
Number and street (or PO Box number if mail is not delivered to street address)
PMB no.
City or town
State
ZIP Code
J
J
J
J
J
Enter the maximum number of members in the LLC at any time during the
year. Attach a California Schedule K-1 (568) for each of these members .
b
K
K
K
K
K
Is this LLC an investment partnership? See instructions . . . . . . . . . . . . . .
b
L
L
L
L
L
Is this LLC apportioning income to California using Schedule R? . . . . . . .
b
M
M
M
M
M
Was there a distribution of property or a transfer (for example,
by sale or death) of an LLC interest during the taxable year? . . . . . . . . . .
b
N
N
N
N
N
Is this LLC under audit by the IRS or has it been audited in a prior year? . . .
O
O
O
O
O
Did this LLC or its subsidiary(ies) have a transfer or acquisition
of more than 50% in control or ownership? (See Instructions – Penalties
May Apply.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
P
P
P
P
P
(1) Does the LLC have any foreign nonresident members? . . . . . . . . . . .
b
(2) Does the LLC have any nonresident members? . . . . . . . . . . . . . . . . . .
b
(3) Were Form 592, Form 592-A, and Form 592-B filed for these
members? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
Q
Q
Q
Q
Q
Are any members in this LLC also LLCs or partnerships? .
R
R
R
R
R
Does the LLC meet all the requirements shown in the
instructions for Question R? . . . . . . . . . . . . . . . . . . . . . . . .
S
S
S
S
S
Is this LLC a member or partner in another LLC
or partnership? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
T
T
T
T
T
Is this LLC a publicly traded partnership as defined in
IRC Section 469(k)(2)? . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U
U
U
U
U
(1) Is this LLC a business entity disregarded for tax
purposes? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
(2) If yes, see instructions and complete Side 1 and
Side 3. Are there credits or credit carryovers
attributable to the disregarded entity? . . . . . . . . . .
b
V
V
V
V
V
Is the LLC required to complete federal Form 8271?
If “Yes,” see instructions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Single Member LLC Information and Consent — Complete only if the LLC is disregarded.
Federal TIN/SSN
b
Sole Owner’s Name (as shown on owner’s return)
SOS File No.
Street Address, City, State, and ZIP Code
Consent statement: I consent to the jurisdiction of the State of California to tax my LLC income and agree to file returns and pay tax as may be required
by the Franchise Tax Board.
Signature
̈
Date
Title
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Yes No
Return filed with the FTB by the Owner
b
२ (1) Form 540 २ (5) Form 541
२ (2) Form 100 २ (6) Form 100S
२ (3) Form 565 २ (7) Form 568
२ (4) Other _________________
.....
.....
,,,,,
,,,,,

Side 2
Form 568
C1
2001
56801209
Schedule A
Cost of Goods Sold
1 Inventory at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2 Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
3 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
4 Additional IRC Section 263A costs. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
5 Other costs. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
6 Total. Add line 1 through line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
7 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on Schedule B, line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
9 a Check all methods used for valuing closing inventory:
(1)
२
Cost
(2)
२
Lower of cost or market as described in Treas. Reg. Section 1.471-4
(3)
२
Write down of “subnormal” goods as
described in Treas. Reg. Section 1.471-2(c)
(4)
२
Other. Specify method used and attach explanation ___________________________
b Check this box if the LIFO inventory method was adopted this taxable year for any goods. If checked, attach federal Form 970 . . . . . . .
२
c
Do the rules of IRC Section 263A (with respect to property produced or acquired for resale) apply to the LLC? . . . . . . . . . . . . . . . . . . .
२
Yes
२
No
d Was there any change (other than for IRC Section 263A purposes) in determining quantities, cost, or valuations between opening
and closing inventory? If “Yes,” attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
२
Yes
२
No
Schedule B
Income and Deductions
Caution:
Include only trade or business income and expenses on line 1a through line 21 below. See the instructions for more information.
1 a Gross receipts or sales $ ____________ b Less returns and allowances $ ____________ . . . c Balance
b
1c
2 Cost of goods sold (Schedule A, line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
3 GROSS PROFIT. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
3
4 Ordinary income (loss) from other LLCs, partnerships, and fiduciaries. Attach schedule . . . . . . . . . . . . . . .
b
4
5 Net farm profit (loss). Attach federal Schedule F (Form 1040) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
5
6 Net gain (loss) from Schedule D-1, Part II, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
6
7 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
7
8 Total income (loss). Combine line 3 through line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
8
9 Salaries and wages (other than to members) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
10 Guaranteed payments to members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
10
11 Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
12 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
12
13 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
15 Deductible interest expense not claimed elsewhere on return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
16 a Depreciation and amortization. Attach form FTB 3885L $ _________________
b Less depreciation reported on Schedule A and elsewhere on return $ _________________ . . . . c Balance
16c
17 Depletion. Do not deduct oil and gas depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
18 Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
19 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
20 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
20
21 Total deductions. Add line 9 through line 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
21
22 Ordinary income (loss) from trade or business activities. Subtract line 21 from line 8 . . . . . . . . . . . . . . . . . .
b
22
Schedule T
Nonconsenting Nonresident Members’ Tax Liability
Member’s name
Social security number or FEIN
Distributive share of income x tax rate
Member’s tax due
x
x
x
x
x
Total the amount of tax due. Enter the total here and on Side 1, line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ________________
Attach additional sheets if necessary.
Income
Deduc-
tions

Form 568
C1
2001
Side 3
56801309
(a)
(b)
(c)
(d)
Distributive share items
Amounts from
California
Total amounts using
federal K (1065)
adjustments
California law
1 Ordinary income (loss) from trade or business activities (Side 2, line 22)
1
b
2 Net income (loss) from rental real estate activities. Attach federal Form 8825
2
3 a Gross income from other rental activities . . . . . . . . . . . . . . . . . . . .
3a
b Less expenses. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . .
3b
c
Net income (loss) from other rental activities. Subtract line 3b
from line 3a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3c
b
4 Portfolio income (loss). See instructions:
a Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4a
b
b Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4b
b
c
Royalty income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4c
b
d Net capital gain (loss) (Schedule D (568)) . . . . . . . . . . . . . . . . . . .
4d
e Other portfolio income (loss). Attach schedule . . . . . . . . . . . . . . .
4e
b
5 Guaranteed payments to members . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
b
6 Net gain (loss) under IRC Section 1231 (other than due to casualty
or theft). Attach Schedule D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
b
7 Other income (loss). Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . .
7
8 Charitable contributions. See instructions. Attach schedule . . . . . . . .
8
9 Expense deduction for recovery property (R&TC Sections 17267.2,
17268, and IRC Section 179). Attach schedule . . . . . . . . . . . . . . . . . .
9
10 Deductions related to portfolio income . . . . . . . . . . . . . . . . . . . . . . . .
10
11 Other deductions. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
12 a Interest expense on investment debts . . . . . . . . . . . . . . . . . . . . . .
12a
b
b (1) Investment income included on lines 4a, 4b, 4c, and
line 4e above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12b(1)
(2) Investment expenses included on line 10 above . . . . . . . . . . .
12b(2)
13 a (1) Withholding on LLC allocated to all members . . . . . . . . . . . . .
13a(1)
b Low-income housing credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13b
c
Credit(s) other than credits shown on line 13b related
to rental real estate activities. Attach schedule . . . . . . . . . . . . . . . .
13c
d Credit(s) related to other rental activities. See instructions.
Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13d
14 Other credits. See instructions. Attach schedule . . . . . . . . . . . . . . . . .
14
b
a Total credits received. Add line 13b through line 14 . . . . . . . . . . . .
14a
15 a Depreciation adjustment on property placed in service after 1986
15a
b Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15b
c
Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . . . . . . . .
15c
d (1) Gross income from oil, gas, and geothermal properties . . . . .
15d(1)
(2) Deductions allocable to oil, gas, and geothermal properties . .
15d(2)
e Other adjustments and tax preference items. Attach schedule . . .
15e
16 a Total expenditures to which IRC Section 59(e) election
may apply. Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16a
b Type of expenditures ____________________________ . . . . . . .
16b
17 Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
18 Other tax-exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
b
19 Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
20 Distributions of money (cash and marketable securities) . . . . . . . . . .
20
21 Distribution of property other than money . . . . . . . . . . . . . . . . . . . . . .
21
22 Other items and amounts reported separately to members.
Attach schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
23 a Total distributive income/payment items. Combine line 1 through
line 7 above. From the result, subtract the sum of line 8 through
line 12a and line 16a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
b
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b
Analysis of members:
(a)
(b) Individual
(c)
(d) Exempt
(e)
(f)
Corporate
i. Active
ii. Passive
Partnership
Organization
Nominee/Other
LLC
Members
Income (Loss)
Deductions
Investment
Interest
Credits
Adjustments and T
a
x
Preference Items
Other
Analysis
Schedule K
Members’ Shares of Income, Deductions, Credits, Etc.

Side 4
Form 568
C1
2001
Schedule L
Balance Sheets. See the instructions for Question R before completing Schedules L, M-1, and M-2.
Beginning of taxable year
End of taxable year
Assets
(a)
(b)
(c)
(d)
1 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 a Trade notes and accounts receivable . . . . . . . . .
b Less allowance for bad debts . . . . . . . . . . . . . .
3 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
4 U.S. government obligations . . . . . . . . . . . . . . . . . .
5 Tax-exempt securities . . . . . . . . . . . . . . . . . . . . . . .
6 Other current assets. Attach schedule . . . . . . . . . .
b
7 Mortgage and real estate loans . . . . . . . . . . . . . . . .
8 Other investments. Attach schedule . . . . . . . . . . . .
b
9 a Buildings and other depreciable assets . . . . . . .
b Less accumulated depreciation . . . . . . . . . . . . .
b
10 a Depletable assets . . . . . . . . . . . . . . . . . . . . . . . .
b Less accumulated depletion . . . . . . . . . . . . . . .
11 Land (net of any amortization) . . . . . . . . . . . . . . . .
b
12 a Intangible assets (amortizable only) . . . . . . . . .
b Less accumulated amortization . . . . . . . . . . . . .
13 Other assets. Attach schedule . . . . . . . . . . . . . . . . .
b
14 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Capital
15 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . .
b
16 Mortgages, notes, bonds payable in less than 1 year
b
17 Other current liabilities. Attach schedule . . . . . . . .
18 All nonrecourse loans . . . . . . . . . . . . . . . . . . . . . . .
b
19 Mortgages, notes, bonds payable in 1 year or more
b
20 Other liabilities. Attach schedule . . . . . . . . . . . . . . .
b
21 Members’ capital accounts . . . . . . . . . . . . . . . . . . .
b
22 Total liabilities and capital . . . . . . . . . . . . . . . . . . . .
Schedule M-1
Reconciliation of Income (Loss) per Books With Income (Loss) per Return. Use total amount under California law.
(
)
(
)
(
)
(
)
(
)
(
)
(
)
(
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1 Net income (loss) per books . . . . . . . . . . . . . . . . . . .
2 Income included on Schedule K, line 1 through
line 7, not recorded on books this year.
Itemize . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
3 Guaranteed payments (other than health insurance)
4 Expenses recorded on books this year not
included on Schedule K, line 1 through
line 12a and line 16a. Itemize:
a Depreciation $ ______________ . . . . . . . . . . . . .
b Travel and entertainment $ ______________ . . .
c Annual LLC tax $ ______________ . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
5 Total of line 1 through line 4 . . . . . . . . . . . . . . . . . . .
6 Income recorded on books this year not included
on Schedule K, line 1 through line 7. Itemize:
a Tax-exempt interest $ ______________ . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
7 Deductions included on Schedule K, line 1 through
line 12a and line 16a, not charged against book
income this year. Itemize:
a Depreciation $ ______________ . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
8 Total of line 6 and line 7 . . . . . . . . . . . . . . . . . . . . .
9 Income (loss) (Schedule K, line 23a). Subtract
line 8 from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 Balance at beginning of year . . . . . . . . . . . . . . . . . .
2 Capital contributed during year . . . . . . . . . . . . . . .
b
3 Net income (loss) per books . . . . . . . . . . . . . . . . . .
4 Other increases. Itemize . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
5 Total of line 1 through line 4 . . . . . . . . . . . . . . . . . .
6 Distributions:
a Cash . . . . . . . . . . . . . . . . . . . . . .
b
b Property . . . . . . . . . . . . . . . . . . .
b
7 Other decreases. Itemize . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
8 Total of line 6 and line 7 . . . . . . . . . . . . . . . . . . . . .
9 Balance at end of year. Subtract line 8 from line 5 .
Schedule M-2
Analysis of Members’ Capital Accounts. Use California amounts.
56801409
Schedule O
Amounts from Liquidation used to Capitalize a Limited Liability Company.
(Complete only if initial return box is checked on Side 1, Question I.)
Name of entity liquidated (if more than one, attach a schedule)
Type of entity:
b २ (1) C Corporation २ (2) S Corporation २ (3) Partnership २ (4) Limited Partnership २ (5) Sole Proprietor २ (6) Farmer
Entity identification number(s)
b FEIN ___________________ b SSN ___________________ b Corporation __________________ b SOS__________________
Amount of liquidation gains recognized to capitalize the LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b ____________________
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Schedule K-1 (568) 2001
Side 1
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Member’s Share of Income,
Deductions, Credits, etc.
For calendar year 2001 or fiscal year beginning month _______ day _______ year 2001, and ending month _______ day _______ year _______
Member’s identifying number
LLC’s FEIN
Member’s name, address, state, and ZIP Code
Secretary of State file number
LLC’s name, address, state, and ZIP Code
K156801109
K-1 (568)
CALIFORNIA SCHEDULE
† YEAR†
††
2001
A What type of entity is this member?
¼
(1)
२
Individual
(5)
२
General Partnership
(8)
२
LLC
(2)
२
S Corporation
(6)
२
Limited Partnership
(9)
२
IRA/Keogh/SEP
(3)
२
Estate/Trust
(7)
२
LLP
(10)
२
Exempt Organization
(4)
२
C Corporation
B Is this member a foreign member? . . . . . . . . . . . . . . . . .
¼ २
Yes
२
No
C Enter member’s
percentage (without
regard to special
(i) Before decrease
(ii) End of year
allocations) of:
or termination
Profit sharing . . . . . . . . . . .
__ __ __
.
__ __ __ __%
¼
__ __ __
.
__ __ __ __%
Loss sharing . . . . . . . . . . .
__ __ __
.
__ __ __ __%
¼
__ __ __
.
__ __ __ __%
Ownership of capital . . . . .
__ __ __
.
__ __ __ __%
¼
__ __ __
.
__ __ __ __%
D Member’s share of liabilities:
Nonrecourse . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¼
$ _________________
Qualified nonrecourse financing . . . . . . . . . . . . .
¼
$ _________________
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¼
$ _________________
E Tax shelter registration number __________________________________
F (1) Check here if this is a publicly traded partnership
as defined in IRC Section 469(k)(2) . . . . . . . . . . . . . . . . . . . . . . . . . .
२
(2) Check here if this is an investment partnership
(R&TC Sections 17955 and 23040.1) . . . . . . . . . . . . . . . . . . . . . . . .
२
G Check here if this is:
¼
(1)
२
A final Schedule K-1 (568)
(2)
२
An amended Schedule K-1 (568)
H Is this member a nonresident of California? . . . . . . . . .
̈
२
Yes
¼ २
No
I
Analysis of member’s capital account:
(a) Capital account at
beginning of year
(b) Capital contributed
during year
(c) Member’s share of
line 3 , line 4, and line 7
Form 568, Schedule M-2
(d) Withdrawals and
distributions
(e) Capital account at end of year
(combine column (a) through
column (d))
¼
¼
¼
(
) ¼
(a) Distributive share items
(b) Amounts from
federal Schedule K-1
(1065)
(c) California adjustments
(d) Total amounts using
California law. Combine
col. (b) and col. (c)
(e) California
source amounts
and credits
1 Ordinary income (loss) from trade or
business activities . . . . . . . . . . . . . . . . . . . .
2 Net income (loss) from rental real
estate activities . . . . . . . . . . . . . . . . . . . . . .
3 Net income (loss) from other rental activities
4 Portfolio income (loss):
a Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
b Dividends . . . . . . . . . . . . . . . . . . . . . . . . .
c Royalties . . . . . . . . . . . . . . . . . . . . . . . . . .
d Net capital gain (loss) . . . . . . . . . . . . . . .
e Other portfolio income (loss).
Attach schedule . . . . . . . . . . . . . . . . . . . .
5 Guaranteed payments to members . . . . . . .
6 Net gain (loss) under IRC Section 1231
(other than due to casualty or theft) . . . . . .
7 Other income (loss). Attach schedule . . . . .
8 Charitable contributions . . . . . . . . . . . . . . . .
9 Expense deduction for recovery property
(R&TC Sections 17267.2, 17267.6, 17268,
and IRC Section 179).
Attach schedule . . . . . . . . . . . . . . . . . . . . . .
10 Deductions related to portfolio income.
Attach schedule . . . . . . . . . . . . . . . . . . . . . .
11 Other deductions. Attach schedule . . . . . . .
Income
(Loss)
Caution: Refer to Member’s Instructions for Schedule K-1 (568) before entering information from this schedule on your California return.
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̈
̈
Deduc-
tions

Side 2
Schedule K-1 (568) 2001
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K156801209
Table 1 — Member’s share of nonbusiness income from intangibles (source of income is dependent on residence or commercial domicile of the member):
Interest
$ _____________________
Sec. 1231 Gains/Losses $ _____________________
Capital Gains/Losses $ _____________________
Dividends
$ _____________________
Royalties
$ _____________________
Other
$ _____________________
FOR USE BY APPORTIONING UNITARY MEMBERS ONLY – See instructions.
Table 2 — Member’s share of distributive items.
A. Member’s share of the LLC’s business income. See instructions. $_________________
B. Member’s share of nonbusiness income from real and tangible personal property sourced or allocable to California.
Capital Gains/Losses
$ __________________
Rents/Royalties
$ __________________
Sec. 1231 Gains/Losses $ __________________
Other
$ __________________
C. Member’s distributive share of the LLC’s property, payroll, and sales:
Factors
Total within and outside California
Total within California
Property:
Beginning
$
$
Ending
$
$
Annual Rent Expense
$
$
Payroll
$
$
Sales
$
$
(a) Distributive share items
(b) Amounts from
federal Schedule K-1
(1065)
(c) California
adjustments
(d) Total amounts using
California law. Combine
col. (b) and col. (c)
(e) California
source amounts
and credits
12 a Interest expense on investment debts . . .
b (1) Investment income included on
lines 4a, 4b, 4c, and 4e . . . . . . . . . . .
(2) Investment expenses included on line 10
13 a (1) Withholding on LLC allocated
to all members . . . . . . . . . . . . . . . . . .
(2) LLC withholding on nonresident
members . . . . . . . . . . . . . . . . . . . . . .
(3) Total withholding (equals amount on
Form 592-B if calendar year LLC) . . .
b Low-income housing credit . . . . . . . . . . .
c Credits other than line 13b related to rental
real estate activities. Attach schedule . . . .
d Credits related to other rental activities.
See instructions. Attach schedule . . . . . .
e Nonconsenting member’s tax paid by LLC
14 Other credits. Attach required schedules
or statements . . . . . . . . . . . . . . . . . . . . . . . .
15 a Depreciation adjustment on property
placed in service after 1986 . . . . . . . . . . .
b Adjusted gain or loss . . . . . . . . . . . . . . . .
c Depletion (other than oil and gas) . . . . . .
d (1) Gross income from oil, gas, and
geothermal properties . . . . . . . . . . . .
(2) Deductions allocable to oil, gas, and
geothermal properties . . . . . . . . . . . .
e Other adjustments and tax preference
items. Attach schedule . . . . . . . . . . . . . . .
16 a Total expenditures to which an
IRC Section 59(e) election may apply.
b Type of expenditures_________________
17 Tax-exempt interest income . . . . . . . . . . . . .
18 Other tax-exempt income . . . . . . . . . . . . . .
19 Nondeductible expenses . . . . . . . . . . . . . . .
20 Distributions of money (cash and
marketable securities) . . . . . . . . . . . . . . . . .
21 Distributions of property other than money
Invest-
ment
Interest
Adjust-
ments
and
Tax
Prefer-
ence
Items
¼
̈
Credits
Other
22 Supplemental information required to be reported separately to each member. Attach additional schedules. See instructions. $_________________
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Schedule K-1 (568) 2001
Side 1
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Member’s Share of Income,
Deductions, Credits, etc.
For calendar year 2001 or fiscal year beginning month _______ day _______ year 2001, and ending month _______ day _______ year _______
Member’s identifying number
LLC’s FEIN
Member’s name, address, state, and ZIP Code
Secretary of State file number
LLC’s name, address, state, and ZIP Code
K156801109
K-1 (568)
CALIFORNIA SCHEDULE
† YEAR†
††
2001
A What type of entity is this member?
¼
(1)
२
Individual
(5)
२
General Partnership
(8)
२
LLC
(2)
२
S Corporation
(6)
२
Limited Partnership
(9)
२
IRA/Keogh/SEP
(3)
२
Estate/Trust
(7)
२
LLP
(10)
२
Exempt Organization
(4)
२
C Corporation
B Is this member a foreign member? . . . . . . . . . . . . . . . . .
¼ २
Yes
२
No
C Enter member’s
percentage (without
regard to special
(i) Before decrease
(ii) End of year
allocations) of:
or termination
Profit sharing . . . . . . . . . . .
__ __ __
.
__ __ __ __%
¼
__ __ __
.
__ __ __ __%
Loss sharing . . . . . . . . . . .
__ __ __
.
__ __ __ __%
¼
__ __ __
.
__ __ __ __%
Ownership of capital . . . . .
__ __ __
.
__ __ __ __%
¼
__ __ __
.
__ __ __ __%
D Member’s share of liabilities:
Nonrecourse . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¼
$ _________________
Qualified nonrecourse financing . . . . . . . . . . . . .
¼
$ _________________
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¼
$ _________________
E Tax shelter registration number __________________________________
F (1) Check here if this is a publicly traded partnership
as defined in IRC Section 469(k)(2) . . . . . . . . . . . . . . . . . . . . . . . . . .
२
(2) Check here if this is an investment partnership
(R&TC Sections 17955 and 23040.1) . . . . . . . . . . . . . . . . . . . . . . . .
२
G Check here if this is:
¼
(1)
२
A final Schedule K-1 (568)
(2)
२
An amended Schedule K-1 (568)
H Is this member a nonresident of California? . . . . . . . . .
̈
२
Yes
¼ २
No
I
Analysis of member’s capital account:
(a) Capital account at
beginning of year
(b) Capital contributed
during year
(c) Member’s share of
line 3 , line 4, and line 7
Form 568, Schedule M-2
(d) Withdrawals and
distributions
(e) Capital account at end of year
(combine column (a) through
column (d))
¼
¼
¼
(
) ¼
(a) Distributive share items
(b) Amounts from
federal Schedule K-1
(1065)
(c) California adjustments
(d) Total amounts using
California law. Combine
col. (b) and col. (c)
(e) California
source amounts
and credits
1 Ordinary income (loss) from trade or
business activities . . . . . . . . . . . . . . . . . . . .
2 Net income (loss) from rental real
estate activities . . . . . . . . . . . . . . . . . . . . . .
3 Net income (loss) from other rental activities
4 Portfolio income (loss):
a Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .
b Dividends . . . . . . . . . . . . . . . . . . . . . . . . .
c Royalties . . . . . . . . . . . . . . . . . . . . . . . . . .
d Net capital gain (loss) . . . . . . . . . . . . . . .
e Other portfolio income (loss).
Attach schedule . . . . . . . . . . . . . . . . . . . .
5 Guaranteed payments to members . . . . . . .
6 Net gain (loss) under IRC Section 1231
(other than due to casualty or theft) . . . . . .
7 Other income (loss). Attach schedule . . . . .
8 Charitable contributions . . . . . . . . . . . . . . . .
9 Expense deduction for recovery property
(R&TC Sections 17267.2, 17267.6, 17268,
and IRC Section 179).
Attach schedule . . . . . . . . . . . . . . . . . . . . . .
10 Deductions related to portfolio income.
Attach schedule . . . . . . . . . . . . . . . . . . . . . .
11 Other deductions. Attach schedule . . . . . . .
Income
(Loss)
Caution: Refer to Member’s Instructions for Schedule K-1 (568) before entering information from this schedule on your California return.
¼
¼
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¼
¼
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¼
¼
̈
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̈
̈
̈
̈
̈
̈
̈
̈
Deduc-
tions

Side 2
Schedule K-1 (568) 2001
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K156801209
Table 1 — Member’s share of nonbusiness income from intangibles (source of income is dependent on residence or commercial domicile of the member):
Interest
$ _____________________
Sec. 1231 Gains/Losses $ _____________________
Capital Gains/Losses $ _____________________
Dividends
$ _____________________
Royalties
$ _____________________
Other
$ _____________________
FOR USE BY APPORTIONING UNITARY MEMBERS ONLY – See instructions.
Table 2 — Member’s share of distributive items.
A. Member’s share of the LLC’s business income. See instructions. $_________________
B. Member’s share of nonbusiness income from real and tangible personal property sourced or allocable to California.
Capital Gains/Losses
$ __________________
Rents/Royalties
$ __________________
Sec. 1231 Gains/Losses $ __________________
Other
$ __________________
C. Member’s distributive share of the LLC’s property, payroll, and sales:
Factors
Total within and outside California
Total within California
Property:
Beginning
$
$
Ending
$
$
Annual Rent Expense
$
$
Payroll
$
$
Sales
$
$
(a) Distributive share items
(b) Amounts from
federal Schedule K-1
(1065)
(c) California
adjustments
(d) Total amounts using
California law. Combine
col. (b) and col. (c)
(e) California
source amounts
and credits
12 a Interest expense on investment debts . . .
b (1) Investment income included on
lines 4a, 4b, 4c, and 4e . . . . . . . . . . .
(2) Investment expenses included on line 10
13 a (1) Withholding on LLC allocated
to all members . . . . . . . . . . . . . . . . . .
(2) LLC withholding on nonresident
members . . . . . . . . . . . . . . . . . . . . . .
(3) Total withholding (equals amount on
Form 592-B if calendar year LLC) . . .
b Low-income housing credit . . . . . . . . . . .
c Credits other than line 13b related to rental
real estate activities. Attach schedule . . . .
d Credits related to other rental activities.
See instructions. Attach schedule . . . . . .
e Nonconsenting member’s tax paid by LLC
14 Other credits. Attach required schedules
or statements . . . . . . . . . . . . . . . . . . . . . . . .
15 a Depreciation adjustment on property
placed in service after 1986 . . . . . . . . . . .
b Adjusted gain or loss . . . . . . . . . . . . . . . .
c Depletion (other than oil and gas) . . . . . .
d (1) Gross income from oil, gas, and
geothermal properties . . . . . . . . . . . .
(2) Deductions allocable to oil, gas, and
geothermal properties . . . . . . . . . . . .
e Other adjustments and tax preference
items. Attach schedule . . . . . . . . . . . . . . .
16 a Total expenditures to which an
IRC Section 59(e) election may apply.
b Type of expenditures_________________
17 Tax-exempt interest income . . . . . . . . . . . . .
18 Other tax-exempt income . . . . . . . . . . . . . .
19 Nondeductible expenses . . . . . . . . . . . . . . .
20 Distributions of money (cash and
marketable securities) . . . . . . . . . . . . . . . . .
21 Distributions of property other than money
Invest-
ment
Interest
Adjust-
ments
and
Tax
Prefer-
ence
Items
¼
̈
Credits
Other
22 Supplemental information required to be reported separately to each member. Attach additional schedules. See instructions. $_________________
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FTB 3885L/Schedule D (568) 2001
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Depreciation and Amortization
TAXABLE YEAR
2001
FEIN
Name as shown on return
3885L01109
CALIFORNIA FORM
3885L
-
Assets placed in service after 12/31/00 (depreciation):
Depreciation of Assets
Amortization of Property
Intangibles placed in service after 12/31/00 (amortization):
(a)
(b)
(c)
(d) Method
(e)
(f)
(g)
(h)
(i)
Description of property
Date placed
Cost or
of figuring
Life or
Depreciation for
Code
Period or
Amortization to
in service
other basis
depreciation
rate
this year
section
percentage
this year
1 Enter line 1, column (f) and column (i) totals here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Depreciation
2 California depreciation for assets placed in service before January 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 ________________
Note: Be sure to make adjustments for any basis differences.
3 Total California depreciation. Add line 1(f) and line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 ________________
Amortization
4 California amortization for intangibles placed in service before January 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 ________________
Note: Be sure to make adjustments for any basis differences.
5 Total California amortization. Add line 1(i) and line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 ________________
6 Total depreciation and amortization. Add line 3 and line 5. Enter the total here and on Form 568, Schedule B, line 16a,
if from a trade or business, or on federal Form 8825, line 14, if from rental real estate activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 ________________
7 IRC Section 179 expense election from worksheet line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 ________________
8 Carryover of disallowed deduction to 2002. Enter line 13 from worksheet here . . . . . . . . . . . . . . . . . . . . . .
8 ________________
Capital Gain or Loss
TAXABLE YEAR
2001
CALIFORNIA SCHEDULE
D (568)
(a)
(b)
(c)
(d)
(e)
(f)
Description of property
Date acquired
Date sold
Sales price
Cost or other basis.
Gain (loss)
(Example, 100 shares 7% preferred of ‘’Z’’ Co.)
(mo., day, yr.)
(mo., day, yr.)
See instructions.
See instructions.
((d) minus (e))
1 Enter line 1, column (f) total here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 ________________
2 Capital gain from installment sales, form FTB 3805E, line 26 or line 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 ________________
3 LLC’s share of net capital gain (loss), including gains (losses) from LLCs, partnerships, fiduciaries, and S corporations . . . . . . . . . .
3 ________________
4 Capital gain distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 ________________
5 Net capital gain (loss). Add line 1, line 2, line 3, and line 4. Enter total on Schedule K, line 4d, and each member’s
share on Schedule K-1 (568), line 4d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 ________________
Secretary of State File Number
FEIN
Name as shown on return
-
Secretary of State File Number

Page 30
Form 568 Booklet 2001
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Visit our Website:
www.ftb.ca.gov

FTB 3885L/Schedule D (568) Instructions 2001
Page 31
Instructions for Form FTB 3885L
Depreciation and Amortization
General Information
Federal/State Conformity
In general, California law conforms to the Internal Revenue Code (IRC)
as of January 1, 1998. However, there are continuing differences
between California and federal law. California has not conformed to
most of the changes made to the IRC by the federal Internal Revenue
Service Restructuring and Reform Act of 1998 (Public Law 105-206)
and the Ticket to Work and Work Incentives Improvement Act of 1999
(Public Law 106-170). California has not conformed to any of the
changes made by the Tax and Trade Relief Extension Act of 1998
(Public Law 105-277), the Miscellaneous Trade and Technical Correc-
tions Act of 1999 (Public Law 106-36), the FSC Repeal and Extraterrito-
rial Income Exclusion Act of 2000 (Public Law 106-519), the
Consolidated Appropriations Act of 2001 (Public Law 106-554), and
the Economic Growth and Tax Relief Reconciliation Act of 2001 (Public
Law 107-16).
Internet Access. You can download, view, and print California tax
forms and publications. Go to our Website at: www.ftb.ca.gov
Access other state agencies’ websites through the State Agency Index
on California’s Website at: www.ca.gov
A Purpose
Use form FTB 3885L, Depreciation and Amortization, to compute
depreciation and amortization allowed as a deduction on Form 568,
Limited Liability Company Return of Income. Attach form FTB 3885L
to Form 568.
Depreciation is the annual deduction allowed to recover the cost or
other basis of business or income producing property with a determin-
able useful life of more than one year. Land is not depreciable.
Amortization is an amount deducted to recover the cost of certain
capital expenses over a fixed period.
In general, California conforms to federal law for assets placed in
service on or after January 1, 1987. See California Revenue and Taxation
Code (R&TC) Section 17250.
B Federal/State Calculation Differences
California law has not always conformed to federal law with regard to
depreciation methods, special credits, or accelerated write-offs.
Consequently, the recovery periods and the basis on which the
depreciation is calculated may be different from the amounts used for
federal purposes. Reportable differences may occur if all or part of
your assets were placed in service:
• Before January 1, 1987: California did not allow depreciation
under the federal Accelerated Cost Recovery System (ACRS).
Continue to calculate California depreciation in the same manner as
in prior years for those assets.
• On or after January 1, 1987: California provides special credits and
accelerated write-offs that affect the California basis for qualifying
assets. California does not conform to all the changes to federal law
enacted in 1993. Therefore, the California basis or recovery periods
may be different for some assets.
Additional differences may occur for the following:
• Amortization of certain intangibles (IRC Section 197): Property
classified as Section 197 property under federal law is also
Section 197 property for California purposes. There is no separate
California election required or allowed. However, for Section 197
property acquired before January 1, 1994, the California adjusted
basis as of January 1, 1994, must be amortized over the remaining
federal amortization period.
• Qualified Indian reservation property: California has not
conformed to the accelerated recovery periods available under the
Alternative Depreciation System (ADS) for such property.
• Grapevines subject to Phylloxera or Pierce’s Disease: For
California purposes, replacement grapevines may be depreciated
using a recovery period of five years instead of ten years.
Note: This list is not intended to be all-inclusive of the federal and state
differences. For additional information, please refer to California’s
Revenue and Taxation Code.
Specific Line Instructions
Line 1 – California depreciation for assets placed in service
after December 31, 2000 and amortization for intangibles
placed in service after December 31, 2000.
Complete column (a) through column (i) for each asset or group of
assets or property placed in service after December 31, 2000. Enter the
column (f) totals on line 1(f). Enter the column (i) totals on line 1(i).
Line 2 – California depreciation for assets placed in service
before January 1, 2001
Enter total California depreciation for assets placed in service prior to
January 1, 2001, taking into account any differences in asset basis or
differences in California and federal tax law.
Line 4 – California amortization for intangibles placed in
service before January 1, 2001
Enter total California amortization for intangibles placed in service prior
to January 1, 2001, taking into account any differences in asset basis
or differences in California and federal tax law.
Assets with a Federal Basis Different from California Basis
Some assets placed in service on or after January 1, 1987, will have a
different adjusted basis for California purposes due to the credits
claimed or accelerated write-offs of the assets. Review the list of
depreciation and amortization items in the instructions for Schedule CA
(540), California Adjustments — Residents, and Schedule CA (540NR),
California Adjustments — Nonresidents or Part-Year Residents. If the
Limited Liability Company (LLC) has any other adjustments to make,
get FTB Pub. 1001, Supplemental Guidelines to California Adjustments,
for more information.
Line 6 – Total Depreciation and Amortization
Add line 3 and line 5. Enter the total on line 6 and on Form 568,
Schedule B, line 16a.
If depreciation or amortization is from more than one trade or business
activity, or from more than one rental real estate activity, the LLC
should separately compute depreciation for each activity. Use the
depreciation computed on this form to identify the net income for each
activity. Report the net income from each activity on an attachment to
Schedule K-1 (568), Member’s Share of Income, Deductions, Credits,
etc., for purposes of passive activity reporting requirements. Use
California amounts to determine the depreciation amount to enter on
line 14 of federal Form 8825, Rental Real Estate Income and Expenses
of Partnership or an S Corporation.

Page 32
FTB 3885L/Schedule D (568) Instructions 2001
Instructions for Schedule D (568)
Capital Gain or Loss
California Revenue and Taxation Code (R&TC) Section 18152.5
conforms to Internal Revenue Code (IRC) Section 1202, regarding the
50% exclusion of gain or losses, with modifications. In order to be
eligible for the 50% exclusion of gain on qualified small business stock
for stock issued after August 10, 1993, the corporation issuing the
stock must meet the following conditions in addition to the conditions
provided in IRC Section 1202:
• 80% of the corporation’s payroll, as measured by total
dollar value, is attributable to employment located in
California; and
• 80% (by value) of the assets of the corporation are used
by the corporation in the active conduct of a trade or
business in California.
Note: The LLC also must separately state the amount of the gain that
qualifies for the 50% exclusion under R&TC Section 18152.5 on
Schedule K, line 7. Each member must determine if he or she qualifies
for the gain at the member level.
General Information
Use Schedule D (568), Capital Gain or Loss, to report the sale or
exchange of capital assets, except capital gains (losses) that are
specially allocated to any members. Do not use this form to report the
sale of business property. For sales of business properties, use
California Schedule D-1, Sale of Business Property.
Enter specially allocated capital gains (losses) received from limited
liability companies (LLCs), partnerships, S corporations, and fiducia-
ries on Schedule D (568), line 3. Enter capital gains (losses) that are
specially allocated to members on Schedule K-1 (568), Member’s
Share of Income, Deductions, Credits, etc., line 4d. Do not include
these amounts on Schedule D (568). See the instructions for
Schedule K (568) and Schedule K-1 (568) for more information. Also,
refer to the instructions for federal Schedule D (1065).
California law conforms to federal law for the recognition of gain for a
constructive sale of property in which the LLC held an appreciated
interest.
Line 7 – Enter the Internal Revenue Code (IRC) Section 179 expense election amount from the following worksheet.
These limitations apply to the Limited Liability (LLC) Company and each member.
Election to Expense Certain Tangible Property (IRC Section 179)
Note: Follow the instructions on federal Form 4562 for listed property.
1 Maximum dollar limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 __________________
2 Total cost of IRC Section 179 property placed in service during the tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 __________________
3 Threshold cost of IRC Section 179 property placed in service during the tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 __________________
4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 __________________
5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 __________________
(a) Property
(b) Cost
(c) Elected cost
6
7 Listed property. Use federal Form 4562, Part V, line 27. Make any adjustments for California law and basis differences . . . .
7 __________________
8 Total elected cost of IRC Section 179 property. Add amounts in column (c), line 6 and line 7 . . . . . . . . . . . . . . . . . . . . . . . . .
8 __________________
9 Tentative deduction. Enter the smaller of line 5 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 __________________
10 Carryover of disallowed deduction from 2000. See instructions for line 9 through line 12 on the federal Form 4562 . . . . . . .
10 __________________
11 Income limitation. Enter the smaller of line 5 or the aggregate of the LLC’s items of income and expense described in
IRC Section 702(a) from any business actively conducted by the LLC (other than credits, tax-exempt IRC Section 179
expense deduction, and guaranteed payments under IRC Section 707(c)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 __________________
12 IRC Section 179 expense deduction. Add line 9 and line 10, but do not enter more than line 11. Enter on
Schedule K (568), line 9 and on form FTB 3885L, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 __________________
13 Carryover of disallowed deduction to 2002. Add line 9 and line 10 and subtract line 12. Enter here and on line 8
of form FTB 3885L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 __________________
$ 24,000
$200,000

FTB 3885L/Schedule D (568) 2001
12345678901234
12345678901234
12345678901234
Depreciation and Amortization
TAXABLE YEAR
2001
FEIN
Name as shown on return
3885L01109
CALIFORNIA FORM
3885L
-
Assets placed in service after 12/31/00 (depreciation):
Depreciation of Assets
Amortization of Property
Intangibles placed in service after 12/31/00 (amortization):
(a)
(b)
(c)
(d) Method
(e)
(f)
(g)
(h)
(i)
Description of property
Date placed
Cost or
of figuring
Life or
Depreciation for
Code
Period or
Amortization to
in service
other basis
depreciation
rate
this year
section
percentage
this year
1 Enter line 1, column (f) and column (i) totals here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Depreciation
2 California depreciation for assets placed in service before January 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 ________________
Note: Be sure to make adjustments for any basis differences.
3 Total California depreciation. Add line 1(f) and line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 ________________
Amortization
4 California amortization for intangibles placed in service before January 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 ________________
Note: Be sure to make adjustments for any basis differences.
5 Total California amortization. Add line 1(i) and line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 ________________
6 Total depreciation and amortization. Add line 3 and line 5. Enter the total here and on Form 568, Schedule B, line 16a,
if from a trade or business, or on federal Form 8825, line 14, if from rental real estate activities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 ________________
7 IRC Section 179 expense election from worksheet line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 ________________
8 Carryover of disallowed deduction to 2002. Enter line 13 from worksheet here . . . . . . . . . . . . . . . . . . . . . .
8 ________________
Capital Gain or Loss
TAXABLE YEAR
2001
CALIFORNIA SCHEDULE
D (568)
(a)
(b)
(c)
(d)
(e)
(f)
Description of property
Date acquired
Date sold
Sales price
Cost or other basis.
Gain (loss)
(Example, 100 shares 7% preferred of ‘’Z’’ Co.)
(mo., day, yr.)
(mo., day, yr.)
See instructions.
See instructions.
((d) minus (e))
1 Enter line 1, column (f) total here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 ________________
2 Capital gain from installment sales, form FTB 3805E, line 26 or line 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 ________________
3 LLC’s share of net capital gain (loss), including gains (losses) from LLCs, partnerships, fiduciaries, and S corporations . . . . . . . . . .
3 ________________
4 Capital gain distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 ________________
5 Net capital gain (loss). Add line 1, line 2, line 3, and line 4. Enter total on Schedule K, line 4d, and each member’s
share on Schedule K-1 (568), line 4d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 ________________
Secretary of State File Number
FEIN
Name as shown on return
-
Secretary of State File Number

Page 34
Form 568 Booklet 2001
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Visit our Website:
www.ftb.ca.gov

Schedule K-1 (568) Instructions 2001
Page 35
Member’s Instructions for Schedule K-1 (568)
General Information
A Purpose
A limited liability company (LLC) that has elected to be treated as a
partnership for tax purposes, uses Schedule K-1 (568) to report your
distributive share of the LLC’s income, deductions, credits, etc. Please
keep the Schedule K-1 (568) for your records. Information from the
Schedule K-1 (568) should be used to complete your California return.
However, do not file the schedule with your California return. The LLC
has filed a copy with the Franchise Tax Board (FTB).
As a member of the LLC, you are subject to tax on your distributive
share of the LLC income, whether or not distributed.
The amount of loss and deduction you are allowed to claim on your
California return may be less than the amount reported on
Schedule K-1 (568). Generally, the amount of loss and deduction you are
allowed to claim is limited to your basis in the LLC and the amount for
which you are considered at-risk. If you have losses, deductions, or credits
from a passive activity, you also must apply the passive activity loss and
credit rules. It is the member’s responsibility to consider and apply any
applicable limitations. See Specific Instructions C, Loss Limitations.
You should also read the federal Schedule K-1 (1065) instructions
before completing your California return with this Schedule K-1 (568)
information.
For additional information on the treatment of LLC income, deductions,
credits, etc., get the following federal publications:
— Publication 541, Tax Information on Partnerships, and
— Publication 535, Business Expenses.
Any information returns required for federal purposes under Internal
Revenue Code (IRC) Sections 6038, 6038A, and 6038B are also
required for California purposes. Attach the information returns to your
California return when filed. If the information returns are not
provided, penalties may be imposed under California Revenue and
Taxation Code (R&TC) Sections 19141.2 and 19141.5.
Internet Access
You can download, view, and print California tax forms and publica-
tions. Go to our Website at: www.ftb.ca.gov
Access other state agencies’ websites through the State Agency Index
on California’s Website at: www.ca.gov
B Definitions
Member
An individual or entity owning an interest in the LLC whose potential
personal liability for LLC debts is limited to the amount of money or
other property that the member contributed or is required to contribute
to the LLC.
Nonrecourse Loans
Liabilities of the LLC for which none of the members have assumed
any personal liability.
Qualified Nonrecourse Financing
Any financing for which no one is personally liable for repayment that
is borrowed for use in an activity of holding real property and that is
loaned or guaranteed by a federal, state, or local government, or
borrowed from a “qualified person.”
California Business Situs
The place at which intangible personal property is employed as capital
in California; or the place where the property is located if possession
and control of the property is localized in connection with the
taxpayer’s business that is within this state so that substantial use or
value attaches to the property.
Apportionment
The process by which business income from a trade or business is
conducted in two or more states (an apportioning trade or business) is
divided between taxing jurisdictions. The apportionment percentage is
determined by reference to the property (including rent), payroll, and
sales factors of the apportioning trade or business.
Unitary
A method of taxation by which all of the activities comprising a single
trade or business are viewed as a single unit, regardless of whether
those activities are conducted by divisions of a single entity or by
commonly owned or controlled entities. For further information about
unitary business principles, get FTB Pub. 1061, Guidelines for
Corporations Filing a Combined Report.
Election
The ability to choose a particular accounting method for tax reporting
purposes. Generally, the LLC decides how to compute taxable income
from its operations. For example, it chooses the accounting method
and depreciation methods it will use.
However, certain elections are made separately on your California
return and not by the LLC. These elections are made under the
following IRC Sections, to which the R&TC conforms:
• IRC Section 108(b)(5) (income from discharge of indebtedness);
and
• IRC Section 617 (deduction and recapture of certain mining
exploration expenditures, paid or incurred).
C Reporting Information from Columns (d) and (e)
If the LLC derives income from activities conducted both within and
outside California, the LLC will complete Schedule R, Apportionment
and Allocation of Income, to determine the LLC income from California
sources. Resident members will use only the information in column (c)
and column (d) to report their share of the LLC’s income or loss.
Nonresident, corporate, and other entity members must report their
share of income apportioned or allocated to California as indicated on
Schedule K-1 (568). Special rules apply if a member and the LLC
engage in a unitary business. See Title 18, Cal. Code Reg.
Sections 17951 and 25137-1 for more information. Also see General
Information E, Unitary Members.
Nonresident, corporate, and other entity members (other than members
that are unitary with the LLC) will use the information in columns (c),
(d), and (e) to report their distributive share of income (losses) or
credits. Residents, part-year residents, and some nonresidents may
qualify for a credit for taxes paid to other states on income that is
apportioned or allocated to a state other than California. For more
information get Schedule S, Other State Tax Credit.
Nonapportioning LLCs do not need to fill out column (e) on
Schedule K-1 (568) if the member is a resident and the “No” box is
checked on Question H. However, the final determination of residency
is made at the member level. If the LLC is uncertain as to the residency
status of the member, it should fill out column (e) for that member.
D Income Not from a Trade Or Business of the
LLC (Nonbusiness Income)
If the LLC has income that is not from a trade or business (nonbusi-
ness income), the source of that nonbusiness intangible income will be
determined at the member level. However, nonbusiness income from
real or tangible personal property located in California, such as rents,
royalties, gains, or losses is California source income (Title 18, Cal.
Code Reg. Section 17951-3 and R&TC Sections 25124 and 25125).
This information should be included on the appropriate line of
column (e), as well as in Table 2, Part B, if the LLC believes it is unitary
with the member or if the LLC is uncertain whether it is unitary with
the member. Non-unitary members should ignore the information in
Table 2 and use column (e).
The source of income from all nonbusiness intangibles will depend on
whether the member is required to apportion its income and whether
the member is a corporation. In most cases, income from nonbusiness

Page 36
Schedule K-1 (568) Instructions 2001
intangible property is sourced at the residence or commercial domicile
of the member.
However, for individuals, estates, trusts, and S corporations that are
not required to apportion income, income from nonbusiness intan-
gibles will have a California source if the intangible has acquired a
California business situs. For example, a nonresident pledges stocks,
bonds, or other intangible personal property in California. This pledge
is security for the payment of debt, taxes, or other liabilities incurred
for a business in this state. The pledged property will acquire a
business situs in California. Another example is a nonresident who
maintains an office and bank account in California for the business
activities in this state. The bank account will acquire a business situs in
California. See Title 18, Cal. Code Reg. Section 17951-2 and R&TC
Section 17952. If the intangible income is determined to have a
business situs by the LLC, the intangible income will be included in
column (e).
If the member is an apportioning taxpayer or is a corporation, Title 18,
Cal. Code Reg. Sections 17951-4 and 25137-1 require that nonbusi-
ness income from intangibles be allocated in accordance with the rules
of R&TC Sections 25126 and 25127.
Because the source of intangible nonbusiness income is dependent
upon the status of the individual member, that income is not included
in column (e) and is entered only in Table 1. The member must
determine the source of such income by applying the rules described
above.
E Unitary Members
Note: The following rules apply not only to corporations, but also to
individuals and other entities that conduct a trade or business that is
unitary with the LLC’s trade or business (see Title 18, Cal. Code Reg.
Section 17951, incorporating the provisions of Section 25137 and
regulations thereunder).
Unitary members cannot use the California source information
reflected in column (e). Such members must use the information in
Table 1 and Table 2 as described below and in Specific Line Instruc-
tions G and H.
The member’s distributive share of LLC items is determined by
applying the LLC rules in R&TC Sections 17851 through 17858. The
determination of the portion of the distributive share of business and
nonbusiness income that has its source in California or that is
includible in the member’s business income subject to apportionment
is made in accordance with Title 18, Cal. Code Reg. Section 25137-1 if
the member, or the LLC or both, have income from sources within and
outside this state. The member, in computing net income for its tax
accounting period, must include its distributive share of LLC items
referred to above for any LLC taxable year ending within or with the
member’s tax accounting period.
Distributive Items of Business Income
Apportionment of Business Income – Unitary Business
If the LLC’s activities and the member’s activities constitute a unitary
business under established standards (other than ownership require-
ments), the combined business income of this single trade or business
apportioned to California is determined by combining the member’s
distributive share of the LLC’s apportionment factors with the factors
of the member for any LLC year ending within the member’s tax
accounting period. Combined business income is then apportioned by
using a 3- or 4-factor formula consisting of the combined property,
payroll, and a single or double-weighted sales factor. Use of a 3-factor
formula depends upon whether combined gross business receipts
(member’s share of the LLC’s gross business receipts plus the
member’s own gross business receipts) are more than 50% from
agricultural, extractive, savings and loans, banking, or financial
business activities.
If you are a member that is unitary with the LLC, use Table 2 to
compute your factors, applying the rules shown below (see Title 18,
Cal. Code Reg. Section 25137-1 for examples). Members that are
unitary with the LLC should perform the following steps:
1. Combine your distributive share of the LLC’s business income with
your own business income to determine total business income.
2. Compute property, payroll, and sales factors by combining your
distributive share of the LLC’s factors from Table 2, Part C, with
your own factors as explained below.
3. Apply the apportionment factor determined in Step 2 to the total
business income determined in Step 1 to arrive at business income
apportioned to this state.
1. Unitary Member’s Computation of Property Factor
Use Schedule R to compute the numerator and the denominator of
the property factor. Adjust factors in accordance with Title 18, Cal.
Code Reg. Sections 25130 and 25131. Also apply the following
special rules:
A. Include in the denominator of your property factor your
distributive share of the LLC’s beginning and ending balances of
real and tangible personal property owned (if rented, multiply
rent by 8) and used during the tax accounting period in the
regular course of business. See Table 2, Part C.
B. Include in the numerator of the member’s property factor the
value of such property that is described in 1A (above) that is
located in California. See Table 2, Part C.
C. See Title 18, Cal. Code Reg. Section 25137-1(f)(1)(B) for
examples of how to avoid duplication of the value of property that
is rented by the member to the LLC or vice versa.
2. Unitary Member’s Computation of Payroll Factor
Use Schedule R to compute the numerator and the denominator of
the payroll factor in accordance with Title 18, Cal. Code Reg.
Sections 25132 and 25133. Apply the following special rules:
A. Include in the denominator of your payroll factor your distribu-
tive share of the LLC’s payroll used to produce business
income. See Table 2, Part C; and
B. Include in the numerator any such payroll described in 2A that
is applicable to California. See Table 2, Part C.
3. Unitary Member’s Computation of the Sales Factor
Compute the numerator and denominator of the sales factor in
accordance with Title 18, Cal. Code Reg. Sections 25134 to 25136.
Apply the following special rules:
A. Include in the denominator of the sales factor your distributive
share of the LLC’s sales that give rise to business income. See
Table 2, Part C;
B. Include in the numerator of your sales factor the amount of
such sales described in 3A attributable to California; and
C. Eliminate intercompany sales as follows:
• Sales by the member to the LLC to the extent of the
member’s interest in the LLC; or
• Sales by the LLC to the member not to exceed the member’s
interest in all LLC sales (see Title 18, Cal. Code Reg.
Section 25137-1(f)(3)).
Distributive Items of Nonbusiness Income for a Unitary Member
Income in Table 2, Part B, is from a California source under R&TC
Sections 25124 and 25125. Schedule K-1 (568), column (e) data is not
used by a unitary member, unitary members must make certain to
separately include such items as California source income.
Specific Instructions
A Questions and Items
The LLC completes the questions and items on each
Schedule K-1 (568) for all its members. For more information, see the
instructions for federal Schedule K-1 (1065).
B Schedule K-1 (568)
Important Note to Members: If your Schedule K-1 (568) reports losses
and/or deductions, you must first apply the basis, at-risk, and passive

Schedule K-1 (568) Instructions 2001
Page 37
activity limitations before such losses/deductions can be deducted on
your California return. See Specific Instructions C, Loss Limitations.
Also, see IRC Section 705(a) for information on how to compute basis.
Note: If your return is ever examined, you may be required to provide
your computations and the supporting documents for your member-
ship interest.
If you are an individual member, the amounts in column (c), Adjust-
ments, and column (d), Total amounts using California law, that are
from nonpassive activities must be reported on the appropriate
California form or schedule; such as, Schedule D, California Capital
Gain or Loss Adjustment, Schedule D-1, Sales of Business Property,
Schedule CA (540), California Adjustments — Residents, or
Schedule CA (540NR), California Adjustments — Nonresidents or
Part-Year Residents.
Amounts in column (e), California source amounts and credits, that are
from passive activities must be reported on form FTB 3801, Passive
Activity Loss Limitations, form FTB 3801-CR, Passive Activity Credit
Limitations, or form FTB 3802, Corporate Passive Activity Loss and
Credit Limitations. Use the related worksheets to figure any passive
loss limitations. If the LLC knows that you are a California resident, it
may leave column (e) blank. California residents are subject to tax on
their entire taxable income shown in column (d) (R&TC
Section 17041).
If you are not an individual member, report the amounts as instructed
on your California return.
If you have losses, deductions, credits, etc., from a prior year that
were not deductible or usable because of certain limitations they may
be taken into account in determining your net income, loss, etc., for
this year. However, do not combine the prior-year amounts with any
amounts shown on this Schedule K-1 (568) to get a net figure.
Instead, report the amounts on an attached schedule, statement, or
form on a year-by-year basis. See the instructions for federal
Schedule K-1 (1065) for more information.
C Loss Limitations
The amounts shown on line 1 through line 3 of your
Schedule K-1 (568) reflect your distributive share of income or loss
from the LLC’s business or rental operations. If you have losses from
the LLC, there are three potential limitations imposed on losses before
you may deduct losses on your return. These limitations and the order
in which they must be applied are:
• Basis limitations (IRC Section 704);
• At-risk limitations (IRC Section 465); and
• Passive activity loss and credit limitations (IRC Section 469).
Each of these limitations are discussed separately below.
Note: Other limitations may apply to specific deductions such as the
investment interest expense deduction. These limitations on specific
deductions generally apply before the basis, at-risk, and passive loss
limitations.
Basis Rules
Generally, California tax law conforms to federal tax law concerning
basis limitation. You may not claim your share of an LLC loss
(including a capital loss) that is greater than the adjusted basis of your
LLC interest at the end of the LLC’s taxable year.
The LLC is not responsible for keeping the information needed to
compute the basis of your LLC interest. Although the LLC does provide
you with an analysis of the changes to your capital account on your
Schedule K-1 (568), Item I, that information is based on the LLC’s
books and records and should not be used to compute your basis.
You can compute the basis of your LLC interest by adding items that
increase your basis and then subtracting items that decrease your
basis.
Items that increase your basis may include:
• Money and the adjusted basis of property you contributed to the
LLC;
• Your distributive share of the LLC’s income; and
• Your distributive share of the increase in the liabilities of the LLC
(and/or your individual liabilities caused by your assumption of LLC
liabilities).
Items that decrease your basis, but not below zero, may include:
• Money and the adjusted basis of property distributed to you;
• Your share of the LLC’s losses; and
• Your share of the decrease in the liabilities of the LLC (and/or your
individual liabilities assumed by the LLC).
Note: This is not a complete list of items and factors that determine
basis. Get federal Publication 541 for a complete discussion of how to
determine the basis of your LLC interest.
At-Risk Rules
The at-risk rules limit the amount of loss (including loss on disposition
of assets) and other deductions (such as IRC Section 179, R&TC
Sections 17267.2, 17267.6, and 17268) that you can claim to the
amount you could actually lose in the activity.
If you have: (1) a loss or other deduction from an activity carried on as
a trade or business or for the production of income by the LLC; and
(2) amounts in the activity for which you are not at-risk, you will have
to complete federal Form 6198, At-Risk Limitations, to figure the
allowable loss to report on your return. Complete federal Form 6198
using California amounts.
See the instructions for federal Schedule K-1 (1065), At-Risk Limita-
tions, and federal Publication 925, Passive Activity and At-Risk Rules,
for more information.
Passive Activity Loss and Credit Rules
IRC Section 469 limits the deduction of certain losses and credits.
California law generally conforms to this federal provision. These rules
apply to members who have a passive activity loss or credit for the
taxable year.
For California purposes, passive loss limitations apply to individuals,
estates, trusts (other than grantor trusts), closely held corporations,
and S corporations.
Even though the passive loss rules do not apply to grantor trusts,
partnerships, and LLCs, they do apply to the owners of these entities.
A passive activity is generally a trade or business activity in which the
member does not materially participate or a rental real estate activity in
which the member does not actively participate. An LLC may have
more than one activity. Each member must apply the passive activity
loss and credit limitations on an activity-by-activity basis.
Individuals, estates, trusts, and S corporations must complete form
FTB 3801 to calculate the allowable passive losses and form
FTB 3801-CR to calculate the allowable passive credits. Corporations
must complete form FTB 3802.
The amounts reported on Schedule K-1 (568), line 1 and line 14, are
normally passive activity income (loss) or credits from the trade or
business of the LLC if you are a member who did not materially
participate in the trade or business activities of the LLC. The amounts
reported on Schedule K-1 (568), line 2, line 3, and line 13b are from
rental activities of the LLC and are passive activity income (loss) or
credits to all members. There is an exception to this rule for losses
incurred by qualified investors in qualified low-income housing
projects. The LLC will identify any of these qualified amounts on an
attachment for line 2.
The passive loss rules apply to the items attributable to each publicly
traded partnership (PTP) that is not treated as a corporation under IRC
Section 7704. Thus, members who do not materially participate in the

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Schedule K-1 (568) Instructions 2001
operations of a PTP are allowed to deduct their share of PTP’s losses
only to the extent of passive income from the same PTP or when the
entire interest is sold (IRC Section 469(k)). See the instructions for
form FTB 3801 and form FTB 3802 for rules to calculate and report
income, gains, and losses from passive activities that you held through
each PTP you owned during the tax year.
See the instructions for federal Schedule K-1 (1065), Passive Activity
Limitations and federal Publication 925 for more information.
D Investment Partnership Income
If you are a nonresident individual, the amounts in column (e) will
generally not be taxable by California (R&TC Section 17955). However,
nonresident individuals will be taxed on their distributive share of
California source income from an LLC that is an investment partner-
ship if the income from the qualifying investment securities is
interrelated with:
• Any other business activity of the nonresident member; or
• Any other entity in which the nonresident member owns an interest
that is separate and distinct from the investment activity of the LLC
and that is conducted in California.
If you are a corporate member, the amounts in column (e) will
generally not be taxable in California provided the income from the LLC
is the corporation’s only California source income. However, if the
corporation:
• Participates in the management of the investment activities of the
LLC or is engaged in a unitary business with another corporation,
or partnership that participates in the management of the invest-
ment activities of the LLC; or
• Has income attributable to sources within California other than
income from the investment partnership;
Then the corporation will be taxable on its distributive share of
California source income of the LLC. See R&TC Section 23040.1 for
more information.
Specific Line Instructions
Enter the difference between federal and California amounts from
column (c) on Schedule CA (540) if you are a resident or on
Schedule CA (540NR) if you are a nonresident. Also, if you are a
nonresident, enter California source amounts from the
Schedule K-1 (568), column (e), on your Schedule CA (540NR),
column E.
F(1) – If this box is checked, the LLC is a PTP as defined in IRC
Section 469(k)(2). Follow the instructions for form FTB 3801 or form
FTB 3802 for reporting income, gains, and losses from PTPs.
F(2) – If this box is checked, the LLC qualifies as an investment
partnership as defined in R&TC Sections 17955 and 23040.1. If you
are a nonresident individual, the amounts in column (e) will generally
not be taxable in California. See Specific Line Instructions D for
additional information.
Note to Nonresident Members: The specific line instructions below
that instruct you to enter information from Schedule K-1 (568),
column (d), on other forms, apply to resident members. When the
instructions make reference to column (d), nonresident members
should take information from columns (c), (d), and (e) and apply the
information to the appropriate line relating to computation of total
income and income from California sources.
A Income (Loss)
Line 1 – Ordinary Income (Loss) from Trade or Business
Activities
The amount reported on line 1, column (d), is your share of the
ordinary income (loss) from the trade or business activities of the LLC.
For individual members, where this amount is reported depends on
whether or not this amount is a passive activity.
If, in addition to this passive activity income, you have a passive
activity loss from this LLC or from any other source, report the income
on form FTB 3801 or form FTB 3802. If a loss is reported on line 1,
column (d), report the loss on the applicable line of form FTB 3801 or
form FTB 3802 to determine how much of the loss is allowable.
Note: If the LLC income is from activities both within and outside
California, the amount nonresidents or corporate members must report
on their California return is a function of the LLC’s apportionment
percentage and allocation of income. Reporting instructions are
included in the information provided by the LLC. See Title 18, Cal.
Code Reg. Sections 17951-4 and 25137-1 for more information. In
addition, see General Information E.
Line 2 – Net Income (Loss) from Rental Real Estate Activities
Generally, the income (loss) reported on line 2, column (d), is a
passive activity amount to all members. However, the loss limitations
of IRC Section 469 do not apply to qualified investors in qualified low-
income housing projects. If applicable, the LLC will attach a schedule
for line 2 to identify such amounts. You will have to report the
California adjustment amount from column (c) on Schedule CA (540 or
540NR).
Use the following instructions to determine where to enter the line 2
amount.
• If you have a loss on line 2, column (d) (other than a qualified low-
income housing project loss), enter the loss on the applicable line
of form FTB 3801 or form FTB 3802 to determine how much of the
loss is allowable. Your share of the loss may be eligible for the
special $25,000 allowance for rental real estate losses. Get the
instructions for form FTB 3801 or form FTB 3802 for more
information.
See the federal Schedule K-1 (1065) Specific Instructions for line 2,
item 1, and item 2 for more information.
Note: If you are a qualified investor reporting a qualified low-income
housing project loss, report any California adjustment amount from
column (c) on Schedule CA (540 or 540NR).
• If you have only income on line 2, column (d), and no other passive
losses, enter any California adjustment amount from column (c) on
Schedule CA (540 or 540NR). However, if in addition to this passive
activity income, you have a passive activity loss from this LLC or
from any other source, report the line 2, column (d), income on the
applicable line of form FTB 3801 or form FTB 3802.
Line 3 – Net Income (Loss) from Other Rental Activities
The amount on line 3, column (d) is a passive activity amount for all
members.
• If line 3, column (d) is a loss, report the loss on the applicable line
of form FTB 3801 or form FTB 3802.
• If only income is reported on line 3, column (d), and you have no
other passive losses, report the California adjustment from
column (c) on Schedule CA (540 or 540NR). However, if in addition
to this passive activity income, you have a passive activity loss
from this LLC or from any other source, report the line 3 income on
the applicable line of form FTB 3801 or form FTB 3802.
Line 4a through Line 4e – Portfolio Income (Loss)
Portfolio income (loss), referred to as “portfolio” in these instructions,
is generally not subject to the passive activity limitations of IRC
Section 469. Portfolio income includes interest, dividend, royalty
income, and gain or loss on the sale of property held for investment. If
you have amounts on Schedule K-1 (568), line 4a through line 4e,
report these amounts as follows:
• Line 4a, column (c) — Report on Schedule CA (540 or 540NR),
line 8, column B or column C, whichever is applicable;
• Line 4b, column (c) — Report on Schedule CA (540 or 540NR),
line 9, column B or column C, whichever is applicable;
• Line 4c, column (c) — Report on Schedule CA (540 or 540NR),
line 17, column B or column C, whichever is applicable;

Schedule K-1 (568) Instructions 2001
Page 39
• Line 4d, column (d) — Report on Schedule D; and
• Line 4e, column (d) — Report on applicable schedule.
Caution: Generally, amounts reported on line 4d and line 4e are gains
or losses attributable to the disposition of property held for investment
and are, therefore, classified as portfolio income (loss). However, if an
amount reported on line 4d or line 4e, column (d), is a passive activity
amount, the LLC should identify the amount.
The LLC uses line 4e, column (d), to report portfolio income other than
interest, dividend, royalty, and capital gain (loss) income. The LLC
should attach a schedule to Schedule K-1 (568) to tell you what kind of
portfolio income is reported on line 4e, column (d). An example of
portfolio income that could be reported on line 4e, column (d), is from
a real estate mortgage investment conduit (REMIC) in which the LLC is
a residual interest holder.
If the LLC has a residual interest in a REMIC, it will report your share
of REMIC taxable income (net loss) on the schedule. Report the
adjustment amount from column (c) on Schedule CA (540 or 540NR).
The LLC will also report your share of “excess inclusion” and your
share of IRC Section 212 expenses. If you itemize your deductions on
federal Schedule A (1040), you may deduct these IRC Section 212
expenses as a miscellaneous deduction.
Line 5 – Guaranteed Payments to Members
Amounts on this line are not normally part of a passive activity. If there
is an amount on Schedule K-1 (568), line 5, column (c), enter this
amount on Schedule CA (540 or 540NR), line 21f, column B or
column C, whichever is applicable.
Line 6 – Net Gain (Loss) Under IRC Section 1231
(Other Than Due to Casualty or Theft)
If the amount on line 6 relates to rental activity, the IRC Section 1231
gain (loss) is a passive activity amount. If the amount relates to a trade
or business activity and you, as a member, did not materially partici-
pate, the IRC Section 1231 gain (loss) is a passive activity amount.
• If the amount is not a passive activity amount report it on
Schedule D-1, line 2, column (g). You do not have to complete
column (b) through column (f). Write “From Schedule K-1 (568)”
across these columns.
• If a gain is reported on line 6, column (d), and it is a passive
activity amount report the gain on Schedule D-1, line 2, column (g),
and be sure to see “Passive Loss Limitations” in the instructions
for Schedule D-1.
• If a loss is reported on line 6, column (d), and it is a passive activity
amount see “Passive Loss Limitations” in the instructions for
Schedule D-1. You must use form FTB 3801 to determine how
much of the loss is allowed on Schedule D-1.
Line 7 – Other Income (Loss)
Amounts reported on this line are other items of income (loss) not
included on line 1 through line 6. The LLC should give you a descrip-
tion for each of these items.
Use the following instructions to:
• Report income or gain (not losses) from passive activities; or
• Report income, gain, or losses from all other passive activities.
If you have losses from passive activities, or a combination of income,
gains, and losses from passive activities, you must first complete form
FTB 3801 or form FTB 3802 to determine if any of your losses are
limited by the passive loss rules. Use the instructions below to report
passive income and losses after the passive loss limitations have been
computed.
Line 7 items may include:
• LLC gains from disposition of farm recapture property (get
Schedule D-1) and other items to which IRC Section 1252 applies;
• Recoveries of bad debts, prior taxes, and delinquency amounts
(IRC Section 111). Report the amount from line 7, column (c), on
Schedule CA (540 or 540NR), line 21f, column B or column C,
whichever is applicable;
• Gains and losses from wagering (IRC Section 165(d)). Report the
amount from line 7, column (c), on Schedule CA (540 or 540NR),
line 21f, column B or column C, whichever is applicable;
• Any income, gain, or loss to the LLC under IRC Section 751. Report
this amount on Schedule D-1, line 10;
• Specially allocated ordinary gain or loss. Report this amount on
Schedule D-1, line 10;
• Net gain or loss from involuntary conversions due to casualty or
theft. The LLC will provide a schedule that shows the California
amounts to be entered on federal Form 4684, Casualties and Thefts,
Section B, Part II, line 34, column (b)(i), column (b)(ii), and
column (c); and
• Eligible gain from the sale or exchange of qualified small business
stock (as defined in R&TC Section 18152.5, and issued after
August 10, 1993). Also, the name of the corporation that issued the
stock and the adjusted basis of that stock should be reported on
the attachment to Schedule K (568) and Schedule K-1 (568). Any
differences between IRC Section 1202 and R&TC Section 18152.5
should be included on line 7, column (c).
B Deductions
Line 8 – Charitable Contributions
The LLC will provide a schedule that shows which contributions were
subject to the 50%, 30%, and 20% limitations. See the instructions for
federal Form 1040, for more information.
If there is an amount on Schedule K-1 (568), line 8, column (c), enter
this amount on Schedule CA (540 or 540NR), line 38.
Line 9 – Expense Deduction for Recovery Property
The maximum amount of expense deduction for recovery property
(IRC Section 179 deduction) that you can claim for all sources is
$24,000. The $24,000 limit is reduced if the total cost of IRC Section
179 property placed in service during the year exceeds $200,000.
The LLC will provide information on your share of the IRC Section 179
deduction and of the cost of the LLC’s IRC Section 179 property so
that you can compute this limitation. Your IRC Section 179 deduction
is also limited to your taxable income from all of your trades or
businesses. See form FTB 3885A, Depreciation and Amortization
Adjustments, and get federal Publication 534, Depreciating Property
Placed In Service Before 1987, for more information.
If the IRC Section 179 deduction is a passive activity amount, report it
on the applicable line of form FTB 3801. If it is not a passive activity
amount and there is an amount on Schedule K-1 (568), line 9,
column (c), enter this amount on Schedule CA (540 or 540NR),
line 21f, column B or column C, whichever is applicable.
Refer to R&TC Sections 17267.2, 17267.6, and 17268 on how to
figure the expense deduction for recovery property in an economic
development area.
Line 10 – Deductions Related to Portfolio Income
Amounts entered on this line are the deductions that are clearly and
directly allocable to portfolio income (other than investment interest
expense and expenses from a REMIC). If you have an amount on
Schedule K-1 (568), line 10, column (c), enter this amount on
Schedule CA (540 or 540NR), line 21f, column B or column C, as
applicable. If any of the line 10 amount should not be reported on
Schedule CA (540 or 540NR), the LLC should identify these amounts.
Line 11 – Other Deductions
Amounts on this line are deductions not included on line 8 through
line 10. If there is an amount on Schedule K-1 (568), line 11,
column (c), enter this amount on the applicable line of Schedule CA
(540 or 540NR).
See the instructions for federal Schedule K-1 (1065), line 11, for
examples of other deductions. Also see FTB Pub. 1001 for differences
between federal and state tax law for certain deductions.

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Schedule K-1 (568) Instructions 2001
C Investment Interest
If the LLC paid or accrued interest on debts it incurred to buy or hold
investment property, the amount of interest you can deduct may be
limited.
For more information and the special provisions that apply to invest-
ment interest expense, get form FTB 3526, Investment Interest
Expense Deduction, and federal Publication 550, Investment Income
and Expenses.
Line 12a – Interest Expense on Investment Debts
Enter the amount from column (d) on form FTB 3526 along with your
investment interest expense from any other sources. Form FTB 3526
will help you determine how much of your total investment interest is
deductible.
Line 12b(1) & Line 12b(2) – Investment Income and
Investment Expenses
Use the column (d) amounts to determine the amount to enter on form
FTB 3526, line 1.
Caution: The amounts shown include only investment income and
expenses included on lines 4a, 4b, 4c, 4e, and 10 of this Schedule K-1
(568). The LLC should attach a schedule that shows the amount of any
investment income and expenses included in any other lines of this
Schedule K-1 (568). Use these amounts, if any, to adjust line 12b(1)
and line 12b(2) to determine your total investment income and total
investment expenses from this LLC.
Combine these totals with investment income and expenses from all
other sources to determine the amount to enter on form FTB 3526,
line 1.
D Credits
If you have credits that are passive activity credits, complete form
FTB 3801-CR Passive Activity Credit Limitations (corporations use
form FTB 3802) in addition to the credit forms referenced. Get the
instructions for form FTB 3801-CR (or form FTB 3802) for more
information.
Line 13a(1) – Withholding on LLC Allocated to All Members
If taxes were withheld from payments to the LLC by another entity, this
withholding is allocated to all members according to their respective
LLC interests. Your share is entered on line 13a(1).
Line 13a(2) – LLC Withholding on Nonresident Members
If taxes were withheld-at-source on you as a domestic or foreign
nonresident member, the amount of the withholding is entered on
line 13a(2).
Line 13a(3) – Total Withholding
Add the amounts on line 13a(1) and line 13a(2) together to get the total
amount of withholding credit you have for the LLC year. If taxes were
withheld by the LLC or if there is a pass-through withholding credit
from another entity, the LLC must provide a completed Form 592-B,
Nonresident Withholding Tax Statement. Attach Form 592-B to the
front of your California return to claim the amount withheld. The
amount shown on Form 592-B should be claimed on:
• Form 540, California Resident Income Tax Return, line 38; or
• Form 540NR, California Nonresident or Part-Year Resident Income
Tax Return (Long Form), line 48; or
• Form 541, California Fiduciary Income Tax Return, line 28; or
• Form 109, California Exempt Organization Business Income Tax
Return, line 22; or
• Form 100, California Corporation Franchise or Income Tax Return,
line 36; or
• Form 100S, California S Corporation Franchise or Income Tax
Return; line 36.
Schedule K-1 (568) may not be used to claim the withholding credit. If
the LLC is not on a calendar year, the amount on line 13a(3) may not
match the amount on Form 592-B because of the difference in
accounting periods.
Line 13b – Low-Income Housing Credit
Any allowable credit is entered on form FTB 3521, Low-Income
Housing Credit. However, the passive activity credit limitations of IRC
Section 469 may limit the amount of credit. Credits from passive
activities are generally limited to tax attributable to passive activities.
Caution: You cannot claim the low-income housing credit on any
qualified low-income housing project for which any person was
allowed any benefit under IRC Section 502 of the Tax Reform Act of
1986.
Line 13c – Other Credits Related to Rental Real Estate
Activities
The information you need to compute credits related to rental real
estate activities other than the low-income housing credit is provided
with an attached schedule.
Line 13d – Credits Related to Other Rental Activities
Any information you need to compute credits related to rental activities
other than rental real estate activities is provided on this line with an
attached schedule.
Line 13e – Nonconsenting Member’s Tax Paid by LLC
This line shows any income tax paid on your behalf by the LLC if, as a
nonresident member, you did not sign form FTB 3832, Limited Liability
Company’s List of Members and Consents, consenting to California’s
jurisdiction to tax your distributive share of the LLC income attributable
to California sources. You must attach a copy of Schedule K-1 (568) to
your California return to claim the tax paid by the LLC on your behalf.
Line 14 – Other Credits
This line is used to report information you need to compute pass-
through credits and other items that are not includable on 13(a)
through 13(d) but are related to the trade or business activity. The
partnership should provide a schedule and/or statement explaining any
items.
Credits that may be reported on line 14 (depending on the type of
activity they relate to) include:
• Community Development Financial Institution Deposits Credit. Use
credit code 209.
• Disabled Access Credit for Eligible Small Businesses. Get form
FTB 3548.
• Donated Agricultural Products Transportation Credit. Get form
FTB 3547.
• Employer Child Care Program/Contribution Credit. Get form
FTB 3501.
• Enhanced Oil Recovery Credit. Get form FTB 3546.
• Enterprise Zone (EZ) Hiring and Sales or Use Tax Credit. Get form
FTB 3805Z.
• Farmworker Housing Credit-Construction. Use credit code 207.
• Farmworker Housing Credit-Loan. Use credit code 208.
• Joint Strike Fighters Credit. Get form FTB 3534.
• Local Agency Military Base Recovery Area (LAMBRA) Hiring and
Sales or Use Tax Credit. Get form FTB 3807.
• Manufacturers’ Investment Credit. Get form FTB 3535.
• Manufacturing Enhancement Area (MEA) Hiring Credit. Get form
FTB 3808.
• Natural Heritage Preservation Tax Credit. Get form FTB 3503.
• Prison Inmate Labor Credit. Get form FTB 3507.
• Research Credit. Get form FTB 3523.
• Rice Straw Credit. Use credit code 206.
• Solar Energy System Credit. Get form FTB 3508.
• Targeted Tax Area (TTA) Hiring and Sales or Use Tax Credit. Get
form FTB 3809.

Schedule K-1 (568) Instructions 2001
Page 41
Note: The passive activity limitations of IRC Section 469 may limit the
amount of credits on line 13b, line 13c, line 13d, and line 14. Line 13b,
line 13c, and line 13d credits are related to the rental activities of the
LLC. Line 14 credits are related to the trade or business activities of the
LLC. In general, passive activity credits from passive activities are
limited to tax attributable to passive activities for California purposes
(R&TC Section 17561). Credits that may be limited under the passive
activity credit rules are the:
• Research credit; and
• Low-income housing credit.
You may be able to use the low-income housing credit, and other
credits generated from rental activities, against tax on other income.
See form FTB 3801-CR for more information.
The LLC can include on line 14 your distributive share of net income
taxes paid to other states by the LLC. Subject to the limitations of
R&TC Section 18006, members may claim a credit against their
individual tax for net income taxes paid by the LLC to another state.
The amount of tax paid is required to be supported by a copy of the
return filed with the other state and evidence of the payment of the tax.
Get Schedule S for more information.
Reminder: All of these forms and many others are available on our
Website. Our Website is: www.ftb.ca.gov
E Adjustments and Tax Preference Items
Line 15a through Line 15e col. (d)
Use the information reported on line 15a through line 15e, column (d)
as well as your adjustments and tax preference items from other
sources to complete Schedule P (540), Alternative Minimum Tax and
Credit Limitations — Residents; Schedule P (540NR), Alternative
Minimum Tax and Credit Limitations — Nonresidents or Part-Year
Residents; Schedule P (541), Alternative Minimum Tax and Credit
Limitations — Fiduciaries; or Schedule P (100), Alternative Minimum
Tax and Credit Limitations — Corporations. For additional information,
see the instructions for federal Schedule K-1 (1065), Adjustments and
Tax Preference Items, line 16a through line 16e.
F Other
Line 16 through Line 19
See the federal instructions for Schedule K-1 (1065), line 18 through
line 21. The LLC should give you a description and the amount of your
share for each item applicable to California in this category.
Line 22 – Supplemental Information
The LLC will provide supplemental information required to be reported
to you on this line. If the LLC is claiming tax benefits from an EZ,
LARZ, LAMBRA, MEA, or TTA, it will give you the business income,
and business capital gains and losses, apportioned to the EZ, LARZ,
LAMBRA, MEA, or TTA, on this line. Get form FTB 3805Z, FTB 3806,
FTB 3807, FTB 3808, or FTB 3809 to claim any applicable credit.
The LLC may have provided an amount showing your proportionate
interest in the LLC’s aggregate gross receipts, less returns and
allowances on this line. A qualified taxpayer may exclude income,
positive and negative adjustments, and preference items attributable to
any trade or business from alternative minimum taxable income. A
“qualified taxpayer” is defined as an individual, estate, or trust that:
• Is the owner of, or has an ownership interest in a trade or business;
and
• Has aggregate gross receipts, less returns and allowances, of less
than $1,000,000 during the taxable year from all trades or busi-
nesses in which the taxpayer is an owner or has an ownership
interest. In the case of an ownership interest, you should include
only your proportional share of aggregate gross receipts of any
trade or business from a partnership, LLC, S corporation, regulated
investment company (RIC), real estate investment trust (REIT), or
real estate mortgage investment conduit (REMIC).
You need to add your share of the aggregate gross receipts from this
LLC to your aggregate gross receipts from all other trades or busi-
nesses in which you hold an interest to determine if you are a qualified
taxpayer.
For purposes of R&TC Section 17062(b)(4), “
aggregate gross receipts,
less returns and allowances” means the sum of:
• The gross receipts of the trades or businesses which the taxpayer
owns;
• The proportionate interest of the gross receipts of the trades or
businesses which the taxpayer owns; and
• The proportionate interest of pass-through entities gross receipts in
which the taxpayer holds an interest.
“Gross receipts” means the sum of the gross receipts from the
production of business income, as defined in subdivision (a) of R&TC
Section 25120, and the gross receipts from the production of
nonbusiness income, as defined in subdivision (d) of R&TC
Section 25120.
For purposes of this section “
pass-through entity” means a partnership
(as defined by R&TC Section 17008), an S corporation, a RIC, a REIT,
and a REMIC. See R&TC Section 17062 for more information.
See the instructions for federal Schedule K-1 (1065), line 25, for
examples of supplemental information to be reported here. Also, see
FTB Pub. 1001 for a listing of items of nonconformity for individuals.
G Table 1
Generally, nonbusiness interest and dividends are sourced to the state
of residence for nonapportioning individuals. Nonapportioning means
doing business entirely within California. For more information
regarding the sourcing of intangibles, see R&TC Section 17952.
For apportioning members, nonbusiness interest and dividends
generally are allocable to California if the taxpayer’s commercial
domicile is California. For information regarding sourcing of intan-
gibles for apportioning taxpayers, see R&TC Sections 25126 and
25127.
The income data contained in Table 1 is not reflected in column (e) of
Schedule K-1 (568). For additional information, see General
Information E.
H Table 2
The final determination of unity is made at the member level.
If the member and the LLC are engaged in a single unitary business, or
if the LLC is uncertain as to whether it is unitary with the member, the
LLC will furnish the information on Table 2.
The member’s share of the LLC’s business income is entered on
Table 2, Part A. The member then adds that income to its own
business income and apportions the combined business income using
the revised factor described below.
Table 2, Part B, reflects the member’s share of nonbusiness income
from real and tangible property wholly sourced or allocable to California.
This is added to apportioned business income and nonbusiness
intangible income allocated to California and becomes a part of
California taxable income. For more information on sourcing intangibles,
see R&TC Sections 25124 and 25125, and Title 18, Cal. Code Reg.
Sections 17951-1, 17951-2, and 17951-3.
The member’s share of the LLC’s property, payroll, and sales factors is
in Table 2, Part C. The member combines its apportionment factors
with the apportionment factors of the LLC and uses the revised factor
to compute its business income apportioned to California. For further
information, see General Information D.

Page 42
Form 568 Booklet 2001
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Visit our Website:
www.ftb.ca.gov

FTB 3832
C1
2001
Limited liability company name
Secretary of State file number
Federal employer identification number (FEIN)
TAXABLE YEAR
2001
Limited Liability Company’s List of
Members and Consents
CALIFORNIA FORM
3832
For use by limited liability companies (LLCs) with one or more nonresident members. Attach to Form 568 and give a copy to each nonresident member. Use
additional sheet(s) if necessary. Separate forms FTB 3832 for each nonresident member (or groups of nonresident members) may be used.
-
Note: Completion of this form does not satisfy the requirements for filing a California income tax return. See General Information C.
List below the names and identification numbers of nonresident members of record at the end of the LLC’s taxable year.
Only nonresident members must sign: I consent to the jurisdiction of the
Number
Member’s name
State of California to tax my distributive share of the LLC income
Member’s
attributable to California sources.
social security no./FEIN
Signature
Date
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
List below the names and identification numbers of nonresident members who sold or transferred their ownership interests before the end of the LLC’s taxable year.
Only nonresident members must sign: I consent to the jurisdiction of the
Number
Member’s name
State of California to tax my distributive share of the LLC income
Member’s
attributable to California sources.
social security no./FEIN
Signature
Date
1
2
3
4
5
383201109
For Privacy Act Notice, get form FTB 1131.
A
Purpose
When an LLC has one or more members who are
nonresidents of California, use form FTB 3832 to:
• List the names and social security numbers or
federal employer identification numbers (FEIN)
of all such members; and
• Obtain the signature of each nonresident
member evidencing consent to the jurisdiction
of the State of California to tax that member’s
distributive share of income attributable to
California sources.
If a member fails to sign a form FTB 3832, the LLC
is required to pay tax on the member’s distributive
share of income at that member’s highest marginal
rate. Any amount paid by the LLC will be considered
a payment made by the member (California
Revenue and Taxation Code Section 18633.5). See
the Limited Liability Company Tax Booklet,
Form 568 and Instructions, (General Information G)
for more information.
Note: If the nonresident member has a spouse, the
spouse must also sign the form.
B
When to File
File form FTB 3832:
• For the first taxable period for which the LLC
became subject to tax with nonresident
members; or
• For any taxable period during which the LLC had
a nonresident who has not signed a form
FTB 3832.
C
Nonresidents Who Must
File a California Return
Nonresident members (individuals, estates, trusts,
corporations, etc.) are required to file the
appropriate California tax returns, in addition to
signing a form FTB 3832. An individual nonresi-
dent must file a California return if the individual
had income from California sources and:
• Was single or unmarried at the end of 2001 and
the individual’s gross income from all sources
was more than $11,901; or adjusted gross
income from all sources was more than $9,521;
or
• Was married at the end of 2001, and the
individual and his or her spouse had a combined
gross income from all sources of more than
$23,803; or adjusted gross income from all
sources of more than $19,042; or
• Owed $1 or more of California tax.
Get the Nonresident or Part-Year Resident Booklet
for additional information.
D
Group Nonresident
Member Return
Certain nonresident members of an LLC doing
business in California may elect to file a group
nonresident return using Form 540NR. For more
information, get FTB Pub. 1067, Guidelines for
Filing a Group Form 540NR.

Page 44
Form 568 Booklet 2001
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Visit our Website:
www.ftb.ca.gov

L-EXT
Limited liability company name
Secretary of State file (SOS) number
DBA/Attention
Federal employer identification number (FEIN)
Delivery address
PMB no.
City, town, or post office
State
ZIP Code
Instructions for Form FTB 3537
Payment Voucher for Automatic Extension for Limited Liability Companies
Payment Voucher for Automatic
Extension for Limited Liability Companies
CALIFORNIA FORM
3537 (LLC)
-
TAXABLE YEAR
2001
For calendar year 2001 or fiscal year beginning month_______ day_______ year 2001, and ending month_______ day_______ year_______ .
If no payment is due, do not mail this form.
Make your check or money order payable to “Franchise Tax Board.” Write the SOS file number, FEIN, and “FTB
3537 2001” on the check or money order. Mail this voucher and the check or money order to:
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA 94257-0651
(Calendar year –
Due April 15, 2002)
General Information
California does not require the filing of written extensions. If a limited
liability company (LLC) cannot file Form 568, Limited Liability
Company Return of Income, by the return due date, the LLC is granted
an automatic six month extension.
If the tax return is filed by the 15th day of the 10th month following
the close of the taxable year (fiscal year) or by October 15, 2002
(calendar year), the automatic extension will apply.
However, an extension of time to file is not an extension of time to pay
the LLC fee or the nonconsenting nonresident members’ tax.
Only use form FTB 3537 if:
•
The LLC cannot file Form 568 by the due date; and
•
Tax is owed for 2001.
If tax or fee are not owed, there is nothing to file at this time. Do not
complete or mail this voucher.
If tax or fee are owed, complete the voucher below. Mail the voucher
along with the check or money order to the Franchise Tax Board by the
15th day of the 4th month (fiscal year) or April 15, 2002 (calendar
year) to avoid late payments, penalties, and interest.
LLCs electing to be taxed as corporations should use form FTB 3539,
Payment Voucher for Automatic Extension for Corporations and
Exempt Organizations.
Caution: Use form FTB 3522, Limited Liability Company Tax Voucher, if
paying the $800 annual LLC tax. Do not use this form.
How to Complete Form FTB 3537
Enter all the information requested on the payment voucher. To ensure
the timely and proper application of the payment to the LLC’s account,
enter the California Secretary of State (SOS) file number (assigned
upon registration with the SOS) and the federal employer identification
number (FEIN).
Note: If you lease a private mailbox (PMB) from a private business
rather than a PO box from the United States Postal Service, include the
box number in the field labeled “PMB no.” in the address area.
Side 1
Box 1, LLC fee due – This is the amount you expect to enter on
Form 568, Side 1, line 2. Use the chart located in the Limited Liability
Company Tax Booklet (General Information – G) to estimate the
LLC fee.
Box 2, Total members’ tax due – Enter the amount from Side 2. See
the Limited Liability Company Tax Booklet (Specific Instructions –
Schedule T) for the proper calculation of this tax.
Box 3, Amount of payment – Enter the total of box 1 and box 2.
Side 2
List the name, social security number, or FEIN for each nonconsenting
nonresident member that did not sign form FTB 3832, Limited Liability
Company’s List of Members and Consents.
Where to File
Detach and mail the voucher portion along with the payment to:
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA
94257-0651
If no payment is due, do not mail.
Penalties and Interest
If the LLC fails to pay its total tax liability by the due date of the tax
return, a late payment penalty and interest will be added to the tax due.
To avoid late payment penalties and interest, 100% of the LLC’s liability
must be paid by the 15th day of the 4th month, following the close of
the taxable year.
Internet Access
You can download, view, and print California tax forms and publica-
tions. Go to our Website at: www.ftb.ca.gov
Access other state agencies’ websites through the State Agency Index
on the California Website at: www.ca.gov
Box 1 – LLC fee due
Box 2 – Total members’ tax due (Side 2)
Box 3 – Amount of payment (add Box 1 and 2)
Do not use this form to pay the
annual LLC tax.
-
.....
.....
.....
353701109
FTB 3537 2001 Side 1
For Privacy Act Notice, get form FTB 1131.
,
,
,
,
,
DETACH HERE
IF NO PAYMENT IS DUE, DO NOT MAIL
DETACH HERE
¤
§

Limited liability company name
Secretary of State (SOS) file number
Federal employer identification number (FEIN)
-
Nonresident member(s) that did not sign form FTB 3832:
Taxable Year 2001
Member’s name
Social security number or FEIN
Disbributive share of income
x
tax rate
Member’s tax due
x
x
x
x
Total tax due. Enter this amount in Box 2 on Side 1 (This is the amount you expect to enter on Form 568, Side 1, line 4) . . . . . . . . . .
$
Attach additional sheets if necessary.
353701209
Side 2
FTB 3537 2001
DETACH HERE
IF NO PAYMENT IS DUE, DO NOT MAIL
DETACH HERE
¤
§

LLC
-
Instructions for Form FTB 3522
Limited Liability Company Tax Voucher
Limited Liability Company
Tax Voucher
CALIFORNIA FORM
3522
Limited liability company name
Secretary of State (SOS) file number
DBA/Attention
Federal employer identification number (FEIN)
Delivery address
PMB no.
City, town, or post office
State
ZIP Code
-
TAXABLE YEAR
2002
For calendar year 2002 or fiscal year beginning month_______ day_______ year 2002, and ending month_______ day_______ year__________ .
Amount of payment
Make your check or money order payable to “Franchise Tax Board.” Write the SOS file number, FEIN, and
“FTB 3522 2002” on the check or money order. Mail this voucher and the check or money order to:
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA
94257-0631
DUE 15TH DAY OF 4TH MONTH OF TAXABLE YEAR OR APRIL 15, 2002.
General Information
Form FTB 3522 is used to pay the annual limited liability company
(LLC) tax of $800 for taxable year 2002. An LLC should use this form if
it:
• Has articles of organization accepted by the California Secretary of
State (SOS);
• Has a certificate of registration issued by the SOS; or
• Is doing business in California.
You can download, view, and print California tax forms and publica-
tions. Got to our Website at: www.ftb.ca.gov
Access other state agencies’ websites through the State Agency Index
on California’s Website at: www.ca.gov
Who Must Pay the Annual LLC Tax?
Every LLC that is doing business in California or that has articles of
organization accepted or a certificate of registration issued by the SOS
is subject to the annual LLC tax of $800. The tax must be paid for
each taxable year until a certificate of cancellation of registration or of
articles of organization is filed with the SOS.
How to Complete Form FTB 3522
Enter all the information requested on this form. To ensure the timely
and proper application of the payment to the LLC’s account, enter the
SOS file number (assigned upon registration with the SOS), and the
federal employer identification number (FEIN).
Note: If the LLC leases a private mailbox (PMB) from a private
business rather than a PO box from the United States Postal Service,
include the box number in the field labeled “PMB no.” in the address
area.
Where to Mail
Detach and mail the voucher portion along with the payment to:
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA
94257-0631
When to Pay the Annual LLC Tax
The annual LLC tax is due and payable on or before the 15th day of the
4th month after the beginning of the LLC’s taxable year (fiscal year) or
April 15, 2002 (calendar year).
Note: The first taxable year of an LLC that was not previously in
existence begins when the LLC is organized.
If the 15th day of the 4th month of an existing foreign LLC’s taxable
year has passed before the foreign LLC commences business in
California or registers with the SOS, the annual LLC tax should be paid
immediately after commencing business or registering with the SOS.
Example: LLC1, a newly-formed calendar year taxpayer, organizes as
an LLC in Delaware on June 1, 2002. LLC1 registers with the SOS on
August 14, 2002, and begins doing business in California on
August 15, 2002. Because LLC1’s initial tax year began on
June 1, 2002, the annual LLC tax is due September 16, 2002 (the 15th
day of the 4th month of the short period taxable year). LLC1’s short
period (6/1/2002-12/31/2002) tax return is due April 15, 2003. The
annual tax payment for tax year 2003, with form FTB 3522 also is due
April 15, 2003.
Penalties and Interest
If the LLC fails to pay its total tax by the 15th day of the 4th month
after the beginning of the taxable year, a late payment penalty plus
interest will be assessed for failure to pay the annual LLC tax by the
return due date for the prior year. The penalty and interest will be
computed from the due date of the tax to the date of payment.
Late Payment of Prior Year Annual LLC Tax
If a prior year LLC tax of $800 was not paid on or before the 15th day
of the 4th month after the beginning of the taxable year, the tax should
be remitted as soon as possible, using the appropriate tax year form
FTB 3522. Do not use any other form for payment of the tax. This will
assure proper application of the payment to the LLC’s account.
352202109
FTB 3522 2001
DETACH HERE
IF NO PAYMENT IS DUE, DO NOT MAIL FORM
DETACH HERE
If amount of payment is
zero, do not mail form
}
̈
.....
¤
§

Page 48
Form 568 Booklet 2001
How to Get California Tax Information
General Toll-Free Phone Service
Our general toll-free phone service is available:
Monday - Friday, 7 a. m. until 8 p. m.
Saturdays, 8 a. m. until 5 p. m.
We may modify these hours without notice to meet operational needs.
From within the United States . . . . . . . . . . . . . . . . . . . . (800) 852-5711
From outside the United States . . . . . . . . . . . . . . . . . . . (916) 845-6500
(not toll-free)
For federal tax questions
Call the IRS at . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800) 829-1040
Assistance for persons with disabilities
The Franchise Tax Board complies with the Americans with Disabilities
Act. For persons with hearing or speech call:
From voice phone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800) 735-2922
(California Relay Service)
From TTY/TDD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800) 822-6268
(Direct line to FTB customer service)
For all other assistance or special accommodations, call
(800) 852-5711.
Asistencia bilingüe en español
Para obtener servicios en español y asistencia para completar su
declaración de impuestos/formularios, llame al número de teléfono
(anotado arriba) que le corresponde.
Letters
If you write to us, be sure your letter includes your federal employer
identification number (FEIN), your Secretary of State (SOS) file
number, your daytime and evening telephone numbers, and a copy of
the notice. Send your letter to:
FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA
94257-0040
We will respond to your letter within six weeks. In some cases, we may
need to call you for additional information. Please do not attach your
letter to your California return.
Where to Get Tax Forms and Publications
By Internet – You can download, view, and print California tax forms
and publications. Go to our Website at:
www.ftb.ca.gov
The IRS also has federal forms and publications available to download,
view, or print. The IRS’s Website address at:
www.irs.gov
By phone – Call our general toll-free phone numbers, listed above
under “General Toll-Free Phone Service’’ to get the California tax forms
you need.
By mail – Please allow two weeks to receive your order. If you live
outside California, please allow three weeks to receive your order.
Write to:
TAX FORMS REQUEST UNIT
FRANCHISE TAX BOARD
PO BOX 307
RANCHO CORDOVA CA
95741-0307
In person – Many libraries, post offices, and banks provide free
California tax booklets during the filing season. Most libraries and
some quick print businesses have forms and schedules to photocopy
(a nominal fee may apply).
Note: Employees at libraries, post offices, banks, and quick print
businesses cannot provide tax information or assistance.
Your Rights As A Taxpayer
Our goal at the Franchise Tax Board is to make certain that your rights
are protected so that you will have the highest confidence in the
integrity, efficiency, and fairness of our state tax system. FTB
Pub. 4058, California Taxpayers’ Bill of Rights, includes information on
your rights as a California taxpayer, the Taxpayers’ Rights Advocate
Program, and how you can request written advice from the Franchise
Tax Board on whether a particular transaction is taxable. See “Where to
Get Tax Forms and Publications,” on this page for how to get FTB
Pub. 4058.
Automated Toll-Free Phone Service
If you need an answer to any of the following questions, call
(800) 338-0505, select business entity, then general tax information,
follow the recorded instructions, and enter the three digit code when
you are instructed to do so.
750
How do I organize or register a limited liability company (LLC)?
751
How do I cancel my registration as an LLC?
752
What tax forms do I use to file as an LLC?
753
When is the annual tax payment due?
754
What extension voucher do I use to pay the LLC fee and/or
member’s tax?
755
Where does an LLC send its tax payments?
756
As an LLC, I never did any business or even opened a door,
bank account, or anything. Why do I owe the $800 annual LLC
tax?
757
How are the LLC fee’s calculated (for taxable years 1996-
current)?
758
I’m a corporation that has converted to an LLC during the
current year. Am I liable for the tax as a corporation and an LLC
in the same year?
759
If I have non-resident members, and cannot get all their
signatures on the consent release form, can I still file the
return?
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