Schedule R: Apportionment and Allocation of Income (2025)
California · FTB · Used for tax years 2025
California Schedule R calculates business income or loss apportioned to California and nonbusiness income or loss allocated to California. It combines these amounts and applicable adjustments to determine net income or loss for California purposes and is attached to the Californi
What you'll need
Have your California tax return available. Schedule R takes income figures from Form 100, 100W, 100S, or 100X. Form 565 and Form 568 filers use the Schedule K amounts specified on line 1a.
Depending on your entries, you will also need:
- Applicable Schedules R-1 through R-7.
- Supporting schedules for interest, royalties, gains or losses from selling a nonbusiness partnership or LLC interest, and miscellaneous nonbusiness income or loss.
- A supplemental Schedule R for income or loss from a separate trade or business.
- Sales figures within and outside California for Schedule R-1. The three-factor formula also uses property and payroll figures.
- Form FTB 2424 for a water’s-edge foreign investment interest offset.
Water’s-edge filers must attach Form 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 and all applicable Schedules R-1 through R-7.
Attach Schedule R behind your California tax return and before the supporting schedules.
If you make the Schedule R-7 group return election, complete it fully and file it annually with Schedule R. The key corporation must file the unitary taxpayers’ group return.
Common mistakes
- Completing the wrong part of Schedule R-1: Complete Part A only if the corporation uses the single-sales factor formula. Complete Part B only if it uses the three-factor formula.
- Including excluded property: Schedule R-1 says to exclude property not connected with the business and the value of construction in progress.
- Deducting interest expense 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: This section should contain only corporations required to file a California return and subject to California income or franchise tax. Corporations without a California filing requirement belong in Part II.
Questions people ask
What if no nonbusiness income or loss is allocable to California?
Do not complete Side 1, lines 19 through 26. Enter zero on line 27 and go to Side 2, line 28.
Where do I enter the apportionment percentage?
Transfer the percentage from Schedule R-1, Part A, line 2, or Part B, line 5, to Schedule R, Side 1, line 18a.
Where does the final California net income or loss go?
Enter Schedule R, line 35, on Form 100 or Form 100W, Side 2, line 18, or Form 100S, Side 2, line 15.
Does the Schedule R-7 election need to be filed every year?
Yes. The form says 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.