Schedule R: Apportionment and Allocation of Income (2024)
California · FTB · Used for tax years 2024
California Schedule R calculates business income or loss apportioned to California and nonbusiness income or loss allocated to California. It reports net income or loss for California purposes and is attached to the California tax return.
What you'll need
Have your California tax return and the schedules that apply to your income ready:
- Starting income figures: Form 100, 100W, 100S, or 100X. Form 565 and Form 568 filers use the Schedule K amounts specified on Schedule R, line 1a.
- Applicable Schedules R-1 through R-7: These cover apportionment, the sales questionnaire, nonbusiness rentals and asset sales, interest offsets, contributions adjustments, and the group return election.
- Supporting schedules: Attach schedules for reported interest, royalties, sales of nonbusiness interests in partnerships or LLCs, and miscellaneous nonbusiness income or loss where requested.
- Separate trades or businesses: Attach a supplemental Schedule R for income or loss reported on lines 11 and 29.
- Water’s-edge items: Use FTB 2424, line 17, for the foreign investment interest offset. Water’s-edge filers must attach FTB 2416 if controlled foreign corporations are included in the combined report.
How to file
Complete both Side 1 and Side 2 of Schedule R, along with all applicable Schedules R-1 through R-7.
Attach Schedule R behind your California tax return and before the supporting schedules.
If making the Schedule R-7 group return election, complete the election fully and file it annually with Schedule R. The key corporation must file the unitary taxpayers’ group return.
The supplied form does not give a mailing address or e-file instructions.
Common mistakes
- Filling in allocation lines when no income or loss is allocable to California: Skip lines 19 through 26, enter zero on line 27, and go to Side 2, line 28.
- Including excluded property in Schedule R-1: Exclude property not connected with the business and construction in progress from the property factor.
- Deducting an interest offset without the related income: Do not deduct interest expense on Side 1, line 26, if no interest or dividend income is reported on line 19a or 19b.
- Leaving Schedule R-7 incomplete: Missing information in Part I, Section A, may cause an electing member’s election to be disallowed. That member must then file a separate California return.
- Listing the wrong corporations in Schedule R-7, Part I, Section A: Corporations without a California return filing requirement belong in Part II, not Part I, Section A. List the key corporation first, and make sure its information matches Form 100 or 100W, Side 1.
Questions people ask
Which part of Schedule R-1 should I complete?
Complete Part A only if the corporation uses the single-sales factor formula. Complete Part B only if it uses the three-factor formula.
When should I complete Schedule R-5?
Schedule R-5 is for California domiciliaries only. Complete it only if Schedule R has entries on line 2 and/or line 3 and Schedule R-1 is required.
Where does the final Schedule R income amount go?
Enter Schedule R, Side 2, line 35, on Form 100 or Form 100W, Side 2, line 18, or Form 100S, Side 2, line 15.
Does the Schedule R-7 group return election need to be filed every year?
Yes. The election must be filed annually with Schedule R. Signing the California tax return acknowledges that the key corporation and its electing affiliates agree to the election’s terms and conditions.