Could you clarify if line 1 on CA form 568 refers to gross receipts or gross income, and what specific types of income need to be reported there?

California Form 568 Line 1 Income Types

Line 1 of California Form 568 is designed to report the income of a Limited Liability Company (LLC) taxed as a partnership. The income reported on this line encompasses the following:

- Gross Receipts or Gross Income:

- Gross receipts generally refer to the total amounts received from all sources without subtracting any costs or expenses.

- Gross income for an LLC typically includes, but is not limited to, revenue from sales of goods or services, rental income, interest, dividends, and any other income.

Exclusions from Gross Receipts

According to the provided information, certain exclusions apply to what constitutes gross receipts:

- Exclusions as per [California Code, Revenue and Taxation Code - RTC § 6352]:

- Gross receipts are exempt from taxes if the sale of tangible personal property, or the storage, use, or other consumption of such property, is prohibited from being taxed by the state under the U.S. Constitution or California Constitution.

- Separately Stated Taxes:

- As indicated in the information from [10-52-1.1], gross receipts do not include any tax imposed by certain chapters that is separately stated on the invoice, bill of sale, or similar document given to the purchaser.

Reporting Requirements

The reporting requirements for gross receipts are further detailed in [California Code, Revenue and Taxation Code - RTC § 6453], which outlines the following:

- Sales Tax Reporting:

- For sales tax purposes, the return must show the gross receipts of the seller during the preceding reporting period.

- Use Tax Reporting:

- For use tax purposes, the return filed by a retailer must show the total sales price of the property sold, the storage, use, or consumption of which became subject to the use tax during the preceding reporting period.

Conclusion

When completing Line 1 of California Form 568, it is important to include all gross receipts or gross income, while also being mindful of the specific exclusions and definitions provided by California tax law. The information provided from the California Revenue and Taxation Code and other sources should be used to accurately determine what should be reported as gross receipts or gross income for the LLC.

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Sources:

California Code, Revenue and Taxation Code - RTC § 6453 2023-01-01

California Code, Revenue and Taxation Code - RTC § 6352 2023-01-01

10-52-1.1. 10-52-1 2023-12-01

Internal Revenue Bulletin: 2012-51 2012-12-16