2015 Instructions For Form Ftb 3801 Passive Activity Loss Limitations (Page 3 of 4) in pdf

If you have not already done so, complete

Example: You own an interest in a PTP. The

Remember to include nonpassive activity

Federal Form 8582 to figure your modified

PTP reports ordinary income of $8,000 for

amounts when the nonpassive activities are

adjusted gross income.

federal purposes and ordinary income of

reported on the same federal schedule as those

$7,000 for California purposes. The PTP has

activities that are passive for California.

S Corporations: Enter the amount from

a prior year IRC Section 1231 unallowed loss

Form 100S, California S Corporation Franchise

Using the California Adjustment Worksheets:

of $3,500 for federal purposes and a prior

or Income Tax Return, line 20 computed

Complete column (a) through column (d) of

year IRC Section 1231 (California conforming

without regard to any passive income (loss).

each worksheet. Group all activities from each

R&TC Section 18151) loss of $5,000 for

type of federal schedule on the appropriate

Publicly Traded Partnerships (PTPs)

California purposes. You have an overall gain

worksheet as indicated in column (a). If you

A PTP is a partnership whose interests are

of $4,500 (8,000 - 3,500) for federal purposes

need more space, attach additional sheets.

traded on an established securities market or

and overall gain of $2,000 (7,000 - 5,000) for

Column (a): Enter a description of the activity.

are readily tradable on a secondary market (or

California purposes. You would report “From

Include passive and nonpassive activities that

the substantial equivalent). See the information

PTP” $5,000 loss on California Schedule D-1.

are reported on the same federal schedule. For

provided for PTPs in the instructions for

The difference between the California loss of

example, if you have one federal Schedule E

federal Form 8582 for an explanation of

$5,000 and the federal loss of $3,500 would

activity that is passive for California and one

established securities market and secondary

be included in the California adjustment

Schedule E activity that is nonpassive for

market. Information which you receive from

on Schedule D (540 or 540NR), California

California, include both activities and their

your partnership will usually indicate whether

Capital Gain or Loss Adjustment, or California

corresponding amounts on the California

or not your partnership interest is an interest in

Schedule D-1. You would report the following

Adjustment Worksheet, Schedule E Activities.

a PTP. If you have income or loss from a PTP,

on your California Adjustment Worksheet,

see below. All others go to Step 3.

Column (b): Enter the character of the

Schedule E Activities (FTB 3801, Side 2):

activity for California purposes as passive or

Passive activity loss Rules for Partners in

(a)

(b)

(c)

(d)

nonpassive.

PTPs

Schedule E

Passive or

California

Federal

Passive losses from a PTP can only offset

Column (c): Enter your California net income

Activities

Nonpassive

Amount

income from the same PTP. Therefore, do not

(loss) from this activity after application

“From PTP” Nonpassive

$2,000

$4,500

include passive income, gains, or losses from

of the PAL rules. This will be the amount

“From PTP”

Passive

$5,000

$3,500

a PTP on form FTB 3801, Side 1. Instead, use

of any overall gain from Worksheet 1 and

Step 3 — Completing the

the following steps to figure and report your

Worksheet 2 and allowed losses from

income, gains, and losses from PTPs:

Worksheet 5 and Worksheet 6.

Worksheets on Form FTB 3801,

1. Combine current year income, gains, losses,

Column (d): Enter the federal net income (loss)

Side 3 and Side 4

and prior year unallowed losses from each

from this activity after application of the PAL

activity of the PTP. Determine whether you

After you have completed form FTB 3801,

rules (e.g., Schedule C, line 31; Schedule E

Side 1, complete Worksheets 3, 4, and 5 or 6.

have an overall gain (total gain/income

income, line 21; Schedule E loss, line 22; and

minus total losses) or an overall loss.

Schedule F, line 34).

How to Report Allowed Losses

2. If you have an overall gain, the overall gain

Get federal Form 8582, follow the instructions

If you have an activity that is nonpassive for

is nonpassive income. The remaining gain

and use Worksheet 5 and Worksheet 6 to

federal purposes and passive for California

is gain or income from a passive activity

identify the amount of allowed losses from

purposes (as in the case of rental real estate

and the total loss is a loss from a passive

each activity.

professionals), use the actual federal amounts

activity.

allowed in column (d) of the California

Step 4 — Figuring the

Adjustment Worksheets.

3. If you have an overall loss (but did not

California Adjustment

dispose of your interest in the PTP to

Complete each California Adjustment

an unrelated person in a fully taxable

Worksheet as follows:

After you have completed the Worksheets on

transaction during the year), the net loss

Side 3 and Side 4 of form FTB 3801 and you

Individuals

is disallowed and carried to the next year.

have determined the amount allowed for each

1. Add the column (c) amounts and enter the

All income or gain is income or gain from

activity, you will need to figure your California

results on the Total line for column (c).

a passive activity and losses equal to the

adjustment.

amount of income or gain reported is loss

2. Add the column (d) amounts and enter the

If California has a separate form or schedule

from a passive activity.

results on the Total line for column (d).

to figure the California adjustment, use it

4. Report all gain or income and any al-

3. Subtract the Total amount of column (d)

to compute the amount of the California

lowed losses on the forms or schedules

from the Total amount of column (c) and

adjustment. Include the allowed losses from

where the type of gain, income, or loss

enter the difference on the Total line for

Worksheet 5 or Worksheet 6 on the California

would usually be reported. For example,

column (e).

form(s) or schedule(s) on which they are

a gain from the sale of business property

normally reported. For example, California

4. California Adjustment column (e):

(IRC Section 1231 gain) would be reported

Schedule D (540 or 540NR) is comparable to

• If the Total column (e) amount is

on California Schedule D-1, Sales of Busi-

federal Schedule D, Capital Gains and Losses,

positive, you have a California addition.

ness Property. Write “From PTP” to the left

and California Schedule D-1 is comparable to

Enter this amount on Schedule CA (540

of the amount or include it according to

federal Form 4797, Sales of Business Property.

or 540NR) as follows:

your software’s instructions.

Where there are no comparable California

California Adjustment

Schedule CA

Remember to use California amounts. Include

forms or schedules, use the California

Worksheet

(540 or 540NR)

only the same types of income and losses

Adjustment Worksheets on form FTB 3801,

you would include in figuring your net income

Total, column 1(e) –

line 12, column C.

Side 2. Specifically, California does not have

or loss from a non-PTP passive activity. For

Total, column 2(e) –

line 17, column C.

forms or schedules comparable to federal

amounts reportable on Schedule E, you will

Total, column 3(e) –

line 18, column C.

Schedules C, E, or F. Each passive activity that

need to use California Adjustment Worksheet,

has no comparable California form or schedule

Schedule E Activities. See Step 4 – Figuring the

should be listed on the California Adjustment

California Adjustment.

Worksheet corresponding to the federal

schedule where it was reported.

FTB 3801 Instructions 2015 Page 3

2015 Instructions For Form Ftb 3801 Passive Activity Loss Limitations Page 3

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