2015 Instructions For Form Ftb 3801 Passive Activity Loss Limitations printable pdf download

2015 Instructions for Form FTB 3801

Passive Activity Loss Limitations

These instructions are based on the Internal Revenue Code (IRC) as of January 1, 2015, and the California Revenue and Taxation Code (R&TC).

General Information

A Purpose

Nonresident

In determining California taxable income,

In general, for taxable years beginning on or

Individuals, estates, trusts, and S corporations

nonresidents compute prior year items by

after January 1, 2015, California law conforms

use form FTB 3801, Passive Activity Loss

taking into account only those items with a

to the Internal Revenue Code (IRC) as of

Limitations, to figure both of the following:

California source, subject to any limitations

January 1, 2015. However, there are continuing

• Allowable California passive activity

provided by law. For example, passive losses

differences between California and federal law.

loss (PAL).

are limited to passive gains (IRC Section 469

When California conforms to federal tax law

• Adjustment you must make to account for

and R&TC Sections 17551 and 17561). Make

changes, we do not always adopt all of the

any difference between your California PAL

this computation whether you were always a

changes made at the federal level. For more

and your federal PAL.

nonresident or a former resident who moved

information, go to ftb.ca.gov and search for

out of California.

Generally, California law is the same as federal

conformity. Additional information can be found

law concerning PAL limitations. However,

Part-Year Resident

in FTB Pub. 1001, Supplemental Guidelines

differences, such as the special treatment

California taxes part-year residents as

to California Adjustments, the instructions for

for real estate professionals (as described in

residents for the period of the year they were

California Schedule CA (540 or 540NR), and the

General Information) may cause your California

California residents and as nonresidents for

Business Entity tax booklets.

PAL to be different from your federal PAL.

the period of the year they were nonresidents.

The instructions provided with California tax

Therefore, a part-year resident must compute

B Who Must File

forms are a summary of California tax law

any suspended passive losses as if they were

and are only intended to aid taxpayers in

a California resident for all prior years and as

Form FTB 3801 is filed by individuals, estates,

preparing their state income tax returns. We

if they were a nonresident for all prior years.

trusts, and S corporations that have losses

include information that is most useful to the

These amounts must then be prorated based

(including prior year unallowed losses) from

greatest number of taxpayers in the limited

upon the period of California residency and the

passive activities. Additional information

space available. It is not possible to include

period of nonresidency for the year.

for nonresidents, part-year residents, and

all requirements of the California Revenue

S corporations is provided below.

For more information get FTB Pub. 1100,

and Taxation Code (R&TC) in the tax booklets.

Taxation of Nonresidents and Individuals Who

Exception. You do not have to file

Taxpayers should not consider the tax booklets

Change Residency.

form FTB 3801 if you meet both of the

as authoritative law.

following conditions:

Renewal Communities

Registered Domestic Partners (RDP)

California law does not conform to the tax

• You have a net loss from rental real estate

For purposes of California income tax,

incentives related to “renewal communities.”

activities that is fully deductible under the

references to a spouse, husband, or wife also

special allowance for rental real estate.

refer to a California RDP, unless otherwise

Expense treatment for small business,

• You have no other passive activities.

specified. When we use the initials RDP they

IRC Section 179(b)(1): California law generally

refer to both a California registered domestic

conforms to the federal rules for expensing

Full-Year Nonresidents

“partner” and a California registered domestic

IRC Section 179. However, federal limitation

A full-year nonresident is taxable only on

“partnership,” as applicable. For more

amounts may be different than California

income derived from California sources.

information on RDPs, get FTB Pub. 737, Tax

limitation amounts. For California purposes, the

Part-Year Residents

Information for Registered Domestic Partners.

maximum IRC Section 179 expense deduction

Part-year residents are taxable on all income

allowed for 2015 is $25,000.

Military Personnel

from all sources while a California resident and

Servicemembers domiciled outside of

Material Participation in Real Property

only on income derived from California sources

California, and their spouses/RDPs, may

Business – IRC Section 469(c)(7): Beginning

while a nonresident.

exclude the servicemember’s military

in 1994, and for federal purposes only, rental

Full-year nonresidents and part-year residents

compensation from gross income when

real estate activities of taxpayers engaged in

see Nonresident and Part-Year Resident

computing the tax rate on nonmilitary income.

real property business are not automatically

Instructions on page 4.

Requirements for military servicemembers

treated as passive activities. California did

domiciled in California remain unchanged.

S Corporations

not conform to this provision. For California

Military servicemembers domiciled in

The PAL rules apply as if the S corporation

purposes, all rental activities are passive

California must include their military pay in

were an individual. For example, losses from

activities. Therefore, an election under IRC

total income. In addition, they must include

passive activities may not be used to offset

section 469(c)(7) is inapplicable for purposes

their military pay in California source income

other income, except for the $25,000 special

of California personal income or franchise tax

when stationed in California. However, military

allowance for losses from active participation

and taxpayers should group rental activities

pay is not California source income when

in rental real estate activities. Refer to

without regard to IRC section 469(c)(7). Get

a servicemember is permanently stationed

IRC Section 469. However, the material

federal Form 8582, Passive Activity Loss

outside of California. Beginning in 2009,

participation rules apply as if the S corporation

Limitations, for general rules regarding

the Military Spouses Residency Relief Act

were a closely-held C corporation. The

grouping of activities.

may affect the California income tax filing

material participation rules for closely-held

Disclosure Requirements for Groupings

requirements for spouses of military personnel.

C corporations are explained in the instructions

On January 24, 2010, the Internal Revenue

For more information, get FTB Pub. 1032, Tax

for federal Form 8810, Corporate Passive

Service issued Revenue Procedure 2010-13

Information for Military Personnel.

Activity Loss and Credit Limitations. Refer to

regarding disclosure requirements for

IRC Section 469(h)(4) and the regulations for

groupings. California generally conforms

more information.

to Revenue Procedure 2010-13, which is

effective for tax years beginning on or after

January 25, 2010. A separate disclosure

statement is not required for state purposes.

Get federal Form 8582 for more information.

FTB 3801 Instructions 2015 Page 1

2015 Instructions For Form Ftb 3801 Passive Activity Loss Limitations

Related Articles

Related forms

Related Categories