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| look at your federal tax return closely to see exactly what kind of bonds are taxable and included or excluded from federal taxable and based on the facts, make your Schedule CA adjustments accordingly. Some bonds you may need to subtract from California gross income and some bonds you may add to California gross income. If the bonds are California bonds they will usually not be taxable for California tax purposes. |
| Loans made to a business located in an enterprise zone |
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California offers tax breaks for businesses located in economically challenged business zones. You can get tax breaks if you make loans to businesses located in an enterprise zone. California has tax incentives for taxpayers who invest in or operate a business within an enterprise zone. These tax incentives are the Hiring credit, Sales or use tax credit, Business expense deduction, Net interest deduction, and a Net operating loss (NOL) deduction. |
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California allows an interest net interest deduction on business loans and mortgage loans. You must meet certain criteria in order to qualify for the net interest deduction on business loans within a designated enterprise zone. First, the funds must be loaned within the time period allowed for designation of the enterprise zone. This is the time that includes the date of designation and after this date, and the period before the designation expires. The business must be located within the designated enterprise zone. Furthermore, the loan proceeds must be used only for the purpose of the business within the enterprise zone. Finally, the business owners must not also be the lenders. If the loan takes longer to pay that the designated time of doing business within stipulated time and once the designation period expires, you can no longer deduct interest for the loans. If you have this kind of interest deduction for your California tax return, you must make an adjustment since federal does not have such deduction to use on your federal tax return. You must fill out Form FTB 3805Z to claim this incentive on your California tax return. You must first fill out Form 3805Z and then transfer the amounts to your Schedule CA of Form 540 or 540NR, line 8, column B along with “FTB 3805Z” net to the dotted line on Form 540 or 540NR, line 14 to indicate you are claiming the a net interest deduction for a business operated within an enterprise zone. It may be worthwhile to look into making business loans to businesses located in certain enterprise zones. |
| Settlement payment interest from persecution during Ottoman Turkish Empire |
| So many cultures and people have been persecuted for being different or not being like the rest of the population. California understand that such a problem existed during the Ottoman Turkish Empire. Under federal and California tax law, any gross income includes all income regardless of source, unless the income is specifically listed as excluded. Federal law does not specifically exclude income derived from settlement payments from the persecution during the Ottoman Turkish Empire. Items that are specifically listed as excludable in both California and federal law codes are payments for Holocaust restitution payments for victims or their heirs of the Holocaust. Although interest on payments from the Ottoman Turkish Empire are similar to the circumstances behind the Holocaust restitution payments, they are not specifically excluded and therefore they are taxable at the federal level. |
| However, any eligible individual who persecuted during the Ottoman Turkish Empire and who receives interest income from settlement payments may exclude the interest income from California gross income. This exclusion applies for any of the victims directly affected or for the heirs of these persecuted victims. The Ottoman Turkish Empire persecution occurred from 1915 until 1923. The individual or their heirs would be the qualifying individuals for the California exclusion from their gross income. Enter the interest received from settlement payments from persecution during the Ottoman Turkish Empire on Schedule CA of Form 540 or Form 540NR, line 8, column B to deduct it from the amount reported on your federal gross income. As with all differences in tax treatment, if there is nonconformity with credits and deductions, you note this nonconformity by filling out California Schedule CA and deducting it or adding it to California gross income. Settlement payment interest from persecution during |
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| Revised: 07/09/15 |
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