Products Affected:
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- ProSeries/California Partnership
- ProSeries/California Limited Liability
Situation
If you started a pension plan in 2007, you are an eligible small business, and you incur qualified startup costs, you are eligible for the Small Employer Pension Plan startup cost credit which is limited to $500.
Pension contributions are entered on Form 1065, line 18. The credit is calculated on federal Form 8881. If the credit is present it will reduce your actual cost to fund the plan as reported on page 1 of Form 1065. When you transfer to the California Partnership or California Limited Liability Company products, the amount that appears on line 19 of Form 565 or Form 568, will be the same amount reported on federal Form 1065, line 18. This will cause an out of balance condition on the state products because this is a federal credit.
Solution
This situation will be corrected in the ProSeries/California Partnership and ProSeries/California Limited Liability updates that we anticipate will be available online on or about February 15, 2008. Download and install the appropriate update when it becomes available. (Go to the Update menu and select Update Installed Products.)
Workaround (prior to update)
On line 19 of California Form 565 or Form 568, manually override the incorrect amount with the correct amount.