2424: Water’s-Edge Foreign Investment Interest Offset (2025)
California · FTB · Used for tax years 2025
California Form 2424 calculates the Water’s-Edge Foreign Investment Interest Offset using a dividend deduction and interest expense attributable to foreign investment. The calculated offset is entered on Schedule R, and the form is attached to Form 100W or Form 100S.
Who files this form
Form 2424 calculates the water’s-edge foreign investment interest offset and is attached to Form 100W or Form 100S.
Check the dividend deduction from Schedules H (100W or 100S), Part II, line 4, column (g). If that amount is zero, the interest offset is zero. Do not complete Form 2424.
What you'll need
Have these forms and figures available to complete Form 2424:
- The key corporation’s name and California corporation number.
- Schedules H (100W or 100S), Part II, line 4, column (g), for the dividend deduction.
- Total interest expense and amounts specifically assignable to foreign investment, domestic investment, or other property.
- Unassigned interest expense, separated by whether the debt was incurred before January 1, 1988, or on or after that date.
- Interest expense on debt incurred on or after January 1, 1988, whose proceeds were deposited in restricted accounts.
- Unassigned foreign investment and unassigned total assets.
- Schedule R, where the calculated offset is entered, and Form 100W or Form 100S, to which Form 2424 is attached.
How to file
Attach Form 2424 to the back of Form 100W or Form 100S.
Enter the amount from Form 2424, line 17, on Schedule R, Side 1, line 1b.
Common mistakes
- Completing the form when line 1 is zero. The form says the interest offset is zero in that case and tells you not to complete it.
- Forgetting to attach Form 2424 to the back of Form 100W or Form 100S.
- Overlooking the rule for remaining interest expense. The form states that it is subject to R&TC Section 24344(b).
Questions people ask
Where does the dividend deduction on line 1 come from?
Use Schedules H (100W or 100S), Part II, line 4, column (g).
What if my dividend deduction is zero?
If line 1 is zero, the interest offset is zero. Do not complete Form 2424.
How is the final interest offset calculated?
On line 16, enter the smaller of line 1 or line 15. Multiply that amount by 75% (.75) and enter the result on line 17.
Where do I report the offset?
Enter the line 17 amount on Schedule R, Side 1, line 1b. Attach Form 2424 to the back of Form 100W or Form 100S.