FTB delaying California tax basis capital reporting requirement

The FTB will not require partnerships or LLCs to report their tax basis capital accounts under California law on 2022 returns. In FTB Notice 2023-01, released today, the FTB stated that it has “become aware that certain persons required to file Schedule K-1 (565) and Schedule K-1 (568) may be unable to timely comply with the requirement to report partner capital on the tax basis method as calculated under California law for 2022.”

As a result, the FTB will allow partnerships and LLCs to report their partners’ or members’ capital accounts on Schedule K-1 using the tax basis method as determined under federal law and reported on the federal Schedule K-1 (1065) or by using the tax basis method as determined under California law.​​​​

The mandate to use tax basis capital reporting as determined under California law will not go into effect until the 2023 taxable year.

FTB Notice 2023-01 is available at: