Deed - 14903 Catalina St - File 1334, 19921993

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C Exemptions from Withholding (Part 1) The seller is exempt from the withholding requirements if they have answered "Yes" to any of the questions in Part I. The completed Form 597-W should be signed by the seller and given to the buyer or other withholding agent. The buyer, or other withholding agent, should retain the form for five years following the close of the transaction. The buyer, or other withholding agent, will be relieved of the real estate withholding requirements if the buyer relies in good faith on a completed and signed Form 597-W. A completed Form 597-W certifying an exemption of withholding does not eliminate the require- ment that the seller must file a California income tax return and pay the tax due. The seller should answer "Yes" in Part I when: 1. The L4t1 sales price of the California real property is $100,000 or less. 2. The seller is a California resident on the date escrow closes. A California resident is any individual who is in California for other than a temporary or transitory purpose or any individual domiciled in California who is absent for a temporary or transitory purpose. Sellers who are uncertain of their residency status can get assistance by calling the FTB at (800) 852-5711 or by getting FTB Pub 1031, Guidelines for Determining Resident Status, for more information. 3. The property qualifies -as the seller's principal residence under IRC Section 121. The home in which you live is your principal residence. You can only have one principal residence at a time. If you have two homes and live in both of them, the principal residence is the one you lived in most of the time. Even though you do not currently live in the property, it may still qualify as your principal residence for purposes of the withholding exemption. An example is a former California resident who moved out of state prior to the close of escrow. The property can qualify for the withholding exemption if the seller still considers it to be the principal residence, or if it qualifies for the exclusion of income under IRC Section 121. An individual can exclude up to $250,000 (up to $500,000 for a married couple) of the gain on the sale of a principal residence. Sellers can qualify for this exclusion if, during the 5-year period ending on the date of the sale they owned and lived in the property as their principal residence for at least 2 years. For examples and more details, get federal Publication 523, Selling Your Home, by accessing the Internal Revenue Service's (IRS) website at: www.irs.gov or by calling the IRS at (800) 829-3676. 4. The seller is a corporation that is registered in California or has a permanent place of business in California immediately after the transfer. A corporation has a permanent place of business in California if it is organized and existing under the laws of California or if it is a foreign corporation qualified to transact intrastate business by the California Secretary of State's Office. A corporation that has not qualified to transact intrastate business, such as a corporation engaged exclusively in interstate commerce, will be considered as having a permanent place of business in California only if it maintains a permanent office in Califomia and the office is permanently staffed by its employees. The seller is a partnership or LLC and the recorded title to the property is in the name of the partnership or LLC. A partnership includes a syndicate, group pool, joint venture, or other unincorpo- rated organization through which the business operation is carried on and which is not a corporation, trust, or estate. A partnership or LLC may be required to withhold on distributions of California source income to nonresident partners or members. For more informa- tion, get FTB Pub 1017, Nonresident Withholding — Partnership Guidelines. The seller is exempt from tax under either California or federal law. The seller is a California irrevocable trust. For withholding purposes, an irrevocable trust is considered a California trust if at least one trustee is a California resident. Irrevocable trusts are required to withhold on distributions of California source income to their nonresident beneficiaries. Note: If the seller is a revocable/grantor trust and one or more of the grantors is a nonresident, with- holding is required. If all of the grantors of a revocable/grantor trust are residents of California, no withholding is required. The seller is a California estate. For withholding purposes, an estate is considered a California estate if the decedent was a California resident at the time of death. Estates are required to withhold on distributions of California source income to their nonresident beneficiaries. 9. The seller is a bank or a bank acting as the fiduciary for a trust. 10. The seller is an insurance company or a federally qualified pension or profit- sharing plan. D Nonresident Withholding Waiver Request (Part 11) This section should be completed if you do not meet any of the exemptions to withhold- ing as shown in Part I and you believe that your estimated tax liability from the sale will be less than the required withholding. Waiver requests are handled on a case -by - case basis. Generally, the FTB will reduce or eliminate the withholding amount when: • The 3 1/3% withholding amount exceeds the estimated California tax liability from the sale; for example: Selling Price ................ $250,000 Withholding Rate ............. x 3.33% Withholding Amount.......... $ 8,325 Gain on Sale ............... $ 50,000 Maximum Tax Rate ............ 9.3%' Estimated Tax Liability........ $ 4,650 'The maximum tax rates are 9.3% for individuals and 8.84% for corporations. In this example, the withholding amount would be reduced to $4,650. If the documen- tation provided shows that the estimated tax liability will be $0 from the sale, a full waiver will be granted. • The transaction involves an IRC Section 1031 exchange, a foreclosure, or an installment sale; or • The transaction involves multiple sellers, some of whom are nonresidents of California. Note: The withholding amount is 3 1/3% of the total sales price regardless of the percentage of interest owned in the property. To receive a prompt determination, include all required information and documentation to support your request. Failure to include the required information, signatures and documents can result in either a delay or denial of your request. Below is a list of the minimum documentation required for the FTB to make a determination. Do not send original documentations. This is a general guide. Additional informa- tion may be requested on a case -by -case basis. • Loss or Small Gain ❑ The current sales escrow document (estimated closing statement, sales contract, or closing statement). ❑ Purchase escrow document (closing statement) from the original transaction. ❑ List of any improvements and related costs. Inherited Property ❑ The current sales escrow document (estimated closing statement, sales contract, or closing statement). ❑ The court documents showing the fair market value of the property at the time of inheritance, or the death certificate if the death occurred less than one year ago. If the property was inherited more than two years ago, also: ❑ State whether the property was a rental. If yes, state how long it was rental property. Form 597-W (NEW 1999) Page 3