Get California 109 Form

The California 109 form is a tax return specifically designed for exempt organizations, detailing their business income and tax obligations. This form is essential for organizations operating within California, as it helps determine their unrelated business taxable income. Understanding how to fill out this form accurately can ensure compliance with state tax regulations. To get started, fill out the form by clicking the button below.

Structure

The California Form 109 is an essential document for organizations operating within the state, specifically tailored for exempt entities. This form serves multiple purposes, including reporting unrelated business taxable income (UBTI) and claiming various tax benefits. Organizations must indicate whether this is their first return or if they are amending a previous submission. Additionally, it includes sections for detailing the nature of the organization, accounting methods, and any tax credits being claimed. The form also requires information about any audits or previous IRS interactions, ensuring transparency and compliance with state regulations. Understanding the nuances of the California Form 109 is crucial for organizations to navigate their tax obligations effectively, thereby fostering a responsible and informed approach to their financial responsibilities.

California 109 Preview

TAXABLE YEAR			California Exempt Organization																								FORM
TAXABLE YEAR																											FORM
																							109
2021			Business Income Tax Return																				109

Calendar Year 2021 or fiscal year beginning (mm/dd/yyyy)													, and ending (mm/dd/yyyy)

Corporation/Organization name																					California corporation number

Additional information. See instructions.																					FEIN

Street address (suite/room no.)																					PMB no.

City (If the corporation has a foreign address, see instructions.)																State					ZIP code

Foreign country name							Foreign province/state/county														Foreign postal code

A First return filed?			. . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . .	. . .		□ Yes		□ No			H Is the organization a non-exempt charitable trust as
B Is this an education IRA within the meaning of												described in IRC Section 4947(a)(1)? . . . .											. .	. . . . . . .		. . . • □ Yes		□ No
B Is this an education IRA within the meaning of
R&TC Section 23712?				. . . . .	. . .		□ Yes		□ No			I Is this organization claiming any former; Enterprise Zone
C Is the organization under audit by the IRS or has the IRS												(EZ), Local Agency Military Base Recovery Area (LAMBRA),
C Is the organization under audit by the IRS or has the IRS						•□ Yes						Targeted Tax Area (TTA), or Manufacturing Enhancement
audited in a prior year?				. . . . .		•□ Yes			□ No			Targeted Tax Area (TTA), or Manufacturing Enhancement
D Final return?												Area (MEA) tax benefits?								.	. . .	. .	. .	. . . . . . .		. . . • □ Yes		□ No
D Final return?
• □ Dissolved			□ Surrendered (Withdrawn)	□ Merged/Reorganized								J Is this organization a qualified pension, profit-sharing,
Enter date(mm/dd/yyyy)					.	•		/	/				or stock bonus plan as described in IRC													• □ Yes
Enter date(mm/dd/yyyy)				. . . . .		•		/	/																			□ No
E Amended return?					.	• □ Yes			□ No				. . . . . . . . . . . . . .Section 401(a)?							.	. . .	. .	. .	. . . . . . . . . .				□ No
E Amended return?				. . . . .		• □ Yes			□ No			K Unrelated Business Activity (UBA) code . .											.•
F Accounting method used: (1) □ Cash (2) □ Accrual						(3) □ Other						L Is this a hospital?													.			. . . • □ Yes		□ No
G Nature of trade or business _____________________________________												L Is this a hospital?							.	. . .	. .	. .	. . . . . .					. . . • □ Yes		□ No
												If “Yes,” attach federal Schedule H (Form 990)
												If “Yes,” attach federal Schedule H (Form 990)
	1	Unrelated business taxable income from Side 2, Part II, line 30												. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •		1						00
Taxable	2	Multiply line 1 by the average apportionment percentage ________% from the Schedule R,																			. •
Corpora-		Apportionment Formula Worksheet, Part A, line 2 or Part B, line 5. See instructions																			. •		2						00
tion	3	Enter the lesser amount from line 1 or line 2. If the unrelated business activity is wholly in California																			. •
	3
		and Schedule R was not completed, enter the amount from line 1												. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .				3						00
Taxable	4	Unrelated business taxable income from Side 2, Part II, line 30																			. •		4						00
Trust	4											. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .				. •		4						00
	5	Unrelated business taxable income from line 3 or line 4								. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •		5						00
	6	EZ, LAMBRA, or TTA NOL carryover deduction . .						. . . . . . . . . . .		. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •		6						00
Tax	7	Net Operating Loss deduction. See General Information N							. . . .	. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •		7						00
Computa-	8	Add line 6 and line 7		. . . . . .		. . .		. . . . . . . . . . .		. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •		8						00
tion	9	Net unrelated business taxable income. Subtract line 8 from line 5																			. •		9						00
	9											. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •		9						00
	10	Tax ________% x line 9. See General Information J								. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •	10							00
	11	Tax credits from Schedule B. See instructions				. . .		. . . . . . . . . . .		. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •	11							00
Total	12	Balance. Subtract line 11 from line 10. If line 11 is greater than line 10, enter -0-																			. •	12							00
Total	13	Alternative minimum tax. See General Information O																			. •	13							00
Tax	13	Alternative minimum tax. See General Information O							. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .			. •	13							00
	14	Total tax. Add line 12 and line 13 . . . .		. . . . . .		. . .		. . . . . . . . . . .		. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •	14							00
	15	. . . . . . . . . .Overpayment from a prior year allowed as a credit								. .	.	. •		15						00
	16	. .2021 estimated tax payments. See instructions						. . . . . . . . . . .		. .	.	. •		16						00
Payments	17	Withholding (Form 592-B and/or 593). See instructions								. .	.	. •		17						00
	18	Amount paid with extension (form FTB 3539)				. . .		. . . . . . . . . . .		. .	.	. •		18						00
	19	Total payments and credits. Add line 15 through line 18																			•	19							00
	19	Total payments and credits. Add line 15 through line 18							. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .			•	19							00
	20	USE TAX. See instructions		. . . . . .		. . .		. . . . . . . . . . .		. .	.	. . . .		. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •	20							00
Use Tax/	21	Payments balance. If line 19 is more than line 20, subtract line 20 from line 19																			. •	21							00
Use Tax/	22	USE TAX BALANCE. If line 20 is more than line 19, subtract line 19 from line 20																			. •	22							00
Tax Due/	22																				. •	22							00
Overpay-	23	Tax due. Subtract line 21 from line 14. Pay entire amount with return. See instructions																			. •	23							00
ment	23																				. •	23							00
ment	24	Overpayment. Subtract line 14 from line 21. See instructions																			. •	24							00
	24											. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .				. •	24							00
	25	. . . . . . . . . .Enter amount of line 24 to be applied to 2022 estimated tax												. . . .	. . . . . . . . . . . .	. . . . .		. . .	. .		. •	25							00

3641213

Form 109 2021 Side 1

		26	. . . . . . . . . . . . . . . . . . . . . . .Refund. If line 25 is less than line 24, then subtract line 25 from line 24				•. . .	. . •	26
			. . . . . . . . .a Fill in the account information to have the refund directly deposited. Routing number				•. . .	26a
			b Type: Checking	•□	Savings	c Account Number	•	26c
Refund or				•□		•□	•
Amount		27	Penalties and interest. See General Information M				.	. . •	27
Due		27	Penalties and interest. See General Information M				. .	. . •	27
		28	• □ Check if estimate penalty computed using Exception B or C and attach form FTB 5806				. . .	. . . .
		29	Total amount due. Add line 22, line 23, line 25, and line 27, then subtract line 24				. . .	. . •	29
Unrelated Business Taxable Income
Part I	Unrelated Trade or Business Income

1	a	Gross receipts or gross sales______________ b Less returns and allowances______________ c Balance	• 1c		00
2	Cost of goods sold and/or operations (Schedule A, line 7)		•	2	00
3	Gross profit. Subtract line 2 from line 1c		•	3	00
4	a	Capital gain net income. See Specific Line Instructions – Trusts attach Schedule D (541)	• 4a		00

	b	Net gain (loss) from Part II, Schedule D-1	• 4b		00

	c	Capital loss deduction for trusts	• 4c		00

5Income (or loss) from partnerships, limited liability companies, or S corporations. See Specific Line Instructions.

	Attach Schedule K-1 (565, 568, or 100S) or similar schedule	•	5	00
6	Rental income (Schedule C)	•	6	00
7	Unrelated debt-financed income (Schedule D)	•	7	00
8	Investment income of an R&TC Section 23701g, 23701i, or 23701n organization (Schedule E)	•	8	00
9	Interest, Annuities, Royalties and Rents from controlled organizations (Schedule F)	•	9	00
10	Exploited exempt activity income (Schedule G)	• 10		00

11	Advertising income (Schedule H, Part III, Column A)	• 11		00

12	Other income. Attach schedule	• 12		00

13	Total unrelated trade or business income. Add line 3 through line 12	• 13		00

Part II Deductions Not Taken Elsewhere (Except for contributions, deductions must be directly connected with the unrelated business income.)

14	Compensation of officers, directors, and trustees from Schedule I	. . .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	14	00
15	Salaries and wages	. . .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	15	00
16	Repairs	. . .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	16	00
17	Bad debts	. . .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	17	00
18	Interest. Attach schedule	. . .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	18	00
19	Taxes. Attach schedule	. . .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	19	00
20	Contributions. See instructions and attach schedule	. . .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	20	00
21	a Depreciation (Corporations and Associations – Schedule J) (Trusts – form FTB 3885F)	•	21a		00
	b Less: depreciation claimed on Schedule A. See instructions		21b		00	21	00
22	Depletion. Attach schedule	. .	. . . . .	. . . . . . . . . . . . . . . . . . . . . .	•	22	00
23	a Contributions to deferred compensation plans	. .	. . . . .	. . . . . . . . . . . . . . . . . . . . . .	. .	23a	00
	b Employee benefit programs. See instructions	. .	. . . . .	. . . . . . . . . . . . . . . . . . . . . ..	•. .	23b	00
24	Other deductions. Attach schedule	. .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•. .	24	00
25	Total deductions. Add line 14 through line 24	. .	. . . . .	. . . . . . . . . . . . . . . . . . . . . ..	•. .	25	00
26	Unrelated business taxable income before allowable excess advertising costs. Subtract line 25 from line 13				•. .	26	00
				.	•
27	Excess advertising costs (Schedule H, Part III, Column B)	. .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	27	00
				.	•
28	Unrelated business taxable income before specific deduction. Subtract line 27 from line 26				•	28	00
				.	•
29	Specific deduction. See instructions	. .	. . . . .	. . . . . . . . . . . . . . . . . . . . .	•	29	00
30	Unrelated business taxable income. Subtract line 29 from line 28. If line 28 is a loss, enter line 28				. .	30	00

Our privacy notice can be found in annual tax booklets or online. Go to ftb.ca.gov/privacy to learn about our privacy policy statement, or go to ftb.ca.gov/forms and search for 1131 to locate FTB 1131 EN-SP, Franchise Tax Board Privacy Notice on Collection. To request this notice by mail, call 800.338.0505 and enter form code 948 when instructed.

Sign	Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and
Here	belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
Here				Title		Date		• Telephone
	Signature	▶		Title		Date		• Telephone
	Signature
	of officer
	Preparer’s				Date	Check if self-		• PTIN
						Check if self-
		▶					▶ □
Paid	signature	▶				employed	▶ □
Paid								• Firm’s FEIN
Preparer’s								• Firm’s FEIN
Preparer’s	Firm’s name (or yours,
Use Only	if self-employed)		▶
	and address							• Telephone
	and address							• Telephone

May the FTB discuss this return with the preparer shown above? See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • □ Yes □ No

Side 2 Form 109 2021

3642213

➤ PDF File

Document Data

Fact Name	Details
Purpose	The California 109 form is used by exempt organizations to report business income tax.
Tax Year	This form is specifically for the taxable year 2020.
Governing Law	The form is governed by the California Revenue and Taxation Code (R&TC) Section 23712.
Filing Requirement	Organizations must file this form if they have unrelated business income.
First Return	Organizations can indicate if this is their first return by checking the appropriate box.
Accounting Methods	Organizations can choose between cash, accrual, or other accounting methods.
Amended Return	If changes are needed, organizations can file an amended return by checking the box.
Final Return	Organizations must indicate if this is their final return by selecting the appropriate option.
Tax Calculation	The form includes sections to calculate unrelated business taxable income and applicable taxes.
Signature Requirement	A signature is required, affirming the accuracy of the information provided on the form.

How to Use California 109

Filling out the California 109 form is essential for organizations that need to report their business income tax return. After completing the form, it should be submitted to the California Franchise Tax Board by the specified deadline. Ensure all information is accurate to avoid delays or issues.

Identify the Taxable Year: Enter the calendar year or fiscal year dates at the top of the form.
Provide Organization Information: Fill in the corporation or organization name, California corporation number, and Federal Employer Identification Number (FEIN).
Enter Address: Complete the street address, city, state, ZIP code, and any foreign address details if applicable.
Answer Initial Questions: Indicate if this is the first return, if the organization is under audit, and if it is a final return.
Accounting Method: Select the accounting method used (cash, accrual, or other).
Unrelated Business Taxable Income: Calculate and enter the unrelated business taxable income from the specified lines on Side 2.
Tax Calculation: Multiply the taxable income by the appropriate tax rate and enter the result.
Tax Credits: Enter any tax credits claimed from Schedule B.
Calculate Balance: Subtract tax credits from the total tax to find the balance due or overpayment.
Payment Information: Fill in any overpayments, estimated tax payments, or withholding amounts.
Refund Information: If applicable, provide account details for direct deposit of any refund.
Sign and Date: The authorized officer must sign and date the form, confirming the accuracy of the information.

Key Facts about California 109

What is the California 109 form?

The California 109 form is a tax return specifically designed for exempt organizations in California. It is used to report unrelated business taxable income (UBTI) for organizations that may engage in business activities unrelated to their exempt purposes. This form helps the California Franchise Tax Board (FTB) assess the tax obligations of these organizations for the taxable year.

Who needs to file the California 109 form?

Organizations that are recognized as exempt under California law and engage in unrelated business activities must file the California 109 form. This includes charitable organizations, educational institutions, and other non-profits that earn income from activities not directly related to their exempt purposes. If your organization has UBTI, it is important to file this form to comply with state tax laws.

What information do I need to complete the California 109 form?

To complete the California 109 form, you will need various pieces of information, including your organization’s name, address, and federal employer identification number (FEIN). Additionally, you will need to report any unrelated business income, expenses, and deductions. It’s also important to indicate whether this is your first return, an amended return, or if the organization is under audit by the IRS.

What is unrelated business taxable income (UBTI)?

Unrelated business taxable income refers to income generated from activities that are not substantially related to an organization’s exempt purpose. For example, if a charity runs a gift shop that sells items unrelated to its mission, the income from that shop would be considered UBTI. Understanding UBTI is crucial because it can affect your organization’s tax obligations in California.

What are the deadlines for filing the California 109 form?

The California 109 form is typically due on the 15th day of the 5th month after the end of your organization’s taxable year. For most organizations that operate on a calendar year basis, this means the form is due on May 15th. If you need more time, you can file for an extension, but it’s important to ensure that any taxes owed are paid by the original deadline to avoid penalties.

What happens if I don’t file the California 109 form?

Failing to file the California 109 form can lead to significant consequences, including penalties and interest on any unpaid taxes. The California Franchise Tax Board may also take action against your organization, which could jeopardize your tax-exempt status. It is essential to file the form accurately and on time to maintain compliance and avoid any issues with state tax authorities.

Common mistakes

Filling out the California 109 form can be challenging, and mistakes are common. One frequent error is not providing complete information about the organization. This includes the name, address, and federal employer identification number (FEIN). Missing details can lead to processing delays or even rejection of the form.

Another mistake is neglecting to indicate whether this is the organization's first return. Marking “Yes” or “No” is crucial, as it helps the tax authorities understand the organization's filing history. Failing to answer this question can create confusion and lead to additional inquiries.

People often forget to check if the organization qualifies for specific tax benefits, such as being a non-exempt charitable trust or a qualified pension plan. These designations can significantly impact tax obligations. Not confirming these statuses can result in missed opportunities for tax relief.

Many filers also overlook the importance of selecting the correct accounting method. Whether using cash, accrual, or another method should be clearly indicated. Choosing the wrong method can affect income reporting and tax calculations.

Additionally, some individuals make errors when calculating unrelated business taxable income. This figure is essential for determining tax liability. Miscalculating this amount can lead to underreporting or overreporting income, resulting in penalties.

Another common issue is failing to report all sources of unrelated business income. For example, income from partnerships or rental activities should be included. Omitting these sources can lead to inaccurate income declarations and potential audits.

People sometimes misinterpret the apportionment percentage, which is necessary for determining the taxable income attributed to California. This percentage must be calculated correctly to ensure that the organization pays the right amount of tax.

Moreover, not claiming available tax credits can be a costly mistake. Many organizations qualify for various credits that can reduce their tax liability. Failing to identify and claim these credits means leaving money on the table.

Finally, individuals may forget to sign and date the form. This step is crucial for validating the submission. An unsigned form can be returned, causing delays and potential penalties.

Documents used along the form

The California Form 109 is an essential document for organizations that need to report their business income for tax purposes. However, it is often accompanied by several other forms that provide additional information or support the data reported on Form 109. Understanding these associated forms can help organizations ensure compliance and accuracy in their tax filings.

Schedule A: This schedule is used to report the cost of goods sold and operational expenses related to the unrelated business income. It requires organizations to detail their inventory, purchases, and any costs associated with producing goods or services.
Schedule B: Organizations use this schedule to claim tax credits. It allows them to list various credits they are eligible for, which can help reduce their overall tax liability.
Schedule R: This apportionment formula worksheet is crucial for organizations engaged in business both within and outside California. It helps determine the percentage of income that should be allocated to California, ensuring that the tax is accurately calculated based on the organization’s business activities.
Schedule C: This schedule is specifically for reporting rental income from real property. It requires organizations to disclose details about the property, the rent received, and any deductions directly related to the rental income.

By utilizing these additional forms, organizations can provide a comprehensive picture of their financial activities and comply with California tax regulations. Each schedule plays a vital role in ensuring that the tax return is complete and accurate, ultimately supporting the organization's financial health and legal standing.

Similar forms

Form 990: This is the annual information return that tax-exempt organizations must file with the IRS. Like the California 109 form, Form 990 provides detailed information about the organization's finances, including income, expenses, and activities. Both forms are crucial for maintaining tax-exempt status and ensuring compliance with federal and state regulations.
Form 990-EZ: This form serves as a shorter version of Form 990 for smaller organizations. Similar to the California 109, it requires organizations to report their income, expenses, and other key financial data. The streamlined nature of Form 990-EZ makes it accessible for smaller entities, much like how the California 109 accommodates specific state requirements.
Form 1040: This is the standard individual income tax return form used in the United States. While it serves a different audience, both the California 109 and Form 1040 require detailed reporting of income and deductions. They share a common purpose of ensuring transparency and compliance with tax obligations, albeit for different types of taxpayers.
Form 990-PF: This form is specifically for private foundations. Like the California 109, it requires detailed financial reporting and disclosures about the foundation’s income, expenditures, and charitable activities. Both forms aim to ensure that organizations adhere to their tax-exempt purposes and comply with the relevant tax laws.

Dos and Don'ts

When filling out the California 109 form, it is essential to follow specific guidelines to ensure accuracy and compliance. Below is a list of four things you should and shouldn't do:

Do double-check all entries for accuracy before submission.
Do ensure that you have included all necessary schedules and attachments as required.
Do provide a valid Employer Identification Number (EIN) for your organization.
Do use the correct accounting method that applies to your organization.

Don't leave any sections blank; fill out all applicable fields.
Don't forget to sign and date the form before submitting it.
Don't ignore the instructions specific to your organization's type.
Don't submit the form without reviewing the latest updates to tax laws that may affect your filing.

Misconceptions

Understanding the California 109 form is crucial for organizations to ensure compliance and avoid penalties. Here are nine common misconceptions about this form:

All organizations must file Form 109. Not all organizations are required to file this form. Only specific exempt organizations that engage in unrelated business activities must submit it.
Form 109 is only for nonprofit organizations. While many nonprofits use this form, it also applies to certain types of trusts and corporations that have unrelated business taxable income.
Filing Form 109 guarantees tax-exempt status. Filing does not guarantee tax-exempt status. Organizations must meet specific criteria to maintain their tax-exempt status.
There are no penalties for late filing. Late filing can result in significant penalties. It is essential to file on time to avoid additional costs.
Form 109 is the same as federal forms. California's Form 109 has unique requirements that differ from federal forms, such as Form 990. Organizations must pay attention to state-specific instructions.
Only income from sales needs to be reported. All forms of unrelated business income, including rental income and investment income, must be reported on Form 109.
Amended returns are not allowed. Organizations can file amended returns if they discover errors after submission. It is important to correct any inaccuracies promptly.
All deductions can be claimed. Only deductions directly connected to the unrelated business income can be claimed. Organizations should carefully review which expenses qualify.
Once filed, no further action is needed. Organizations must keep records and may need to respond to inquiries or audits from the California Franchise Tax Board regarding their Form 109 filing.

It is vital to clarify these misconceptions to ensure proper compliance with California tax laws. Take action to understand your obligations and avoid costly mistakes.

Key takeaways

Filling out the California 109 form requires careful attention to detail. Here are seven key takeaways to keep in mind:

Understand the Purpose: The California 109 form is used for reporting unrelated business taxable income for exempt organizations.
Accurate Information: Ensure that all corporate information, including name, address, and FEIN, is accurate and complete.
Check the Boxes: Respond to all questions, such as whether this is the first return filed or if the organization is under IRS audit.
Review Deductions: Carefully list all deductions related to unrelated business income, as these can significantly affect tax calculations.
Calculate Taxable Income: Follow the instructions to calculate unrelated business taxable income accurately, using the correct lines and figures.
Keep Records: Maintain supporting documentation for all reported income and deductions in case of future audits.
Submit on Time: Ensure that the form is filed by the deadline to avoid penalties and interest on any unpaid taxes.

By following these guidelines, organizations can navigate the complexities of the California 109 form effectively.