California Form 3802 - Corporate Passive Activity Loss And Credit Limitations - 2005

Corporate Passive Activity Loss

TAXABLE YEAR

CALIFORNIA FORM

2005

and Credit Limitations

3802

Attach to Form 100 or Form 100W (personal service corporations and closely held C corporations only).

Name(s) as shown on return

California corporation number

Part I

2005 Passive Activity Loss

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

Caution: Before completing Part I, complete federal Worksheet 1 and Worksheet 2 in the instructions for federal Form 8810 using California amounts.

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

1 a Current year income from federal Worksheet 2, column (a) . . . . . . . . . . . . . . . . . . . . . . .

1a

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

b Current year deductions and losses from federal Worksheet 2, column (b) . . . . . . . . . . .

1b

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

c Prior year unallowed losses from federal Worksheet 2, column (c) . . . . . . . . . . . . . . . . .

1c

d Combine line 1a, line 1b, and line 1c. If the result is net income or zero, see instructions . . . . . . . . . . . . . . . . . . . . . . . .

1d

2 Closely held C corporations, enter net active income. See instructions. Personal service corporations, enter -0- on this line

2

3 Unallowed passive activity deductions and losses. Combine line 1d and line 2. If the result is net income or zero,

see the instructions for line 1d and line 3. Otherwise, go to line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

4 Total deductions and losses allowed. Add the income, if any, on line 1a and line 2 and enter the result. See instructions . .

4

Part II 2005 Passive Activity Credits

Caution: Before completing Part II, complete federal Worksheet 5 in the instructions for federal Form 8810 using California amounts.

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

5 a Current year passive activity credits from federal Worksheet 5, column (a) . . . . . . . . . . .

5a

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

b Prior year unallowed credits from federal Worksheet 5, column (b) . . . . . . . . . . . . . . . . .

5b

1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2

6 Combine line 5a and line 5b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

7 Enter the tax attributable to net active income and net passive income. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

8 Unallowed passive activity credit. Subtract line 7 from line 6. If zero or less, enter -0-. See instructions . . . . . . . . . . . . . .

8

9 Allowed passive activity credit. Subtract line 8 from line 6. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

Part III

Election to Increase Basis of Credit Property

10 If the corporation disposed of its entire interest in a passive activity or former passive activity in a fully taxable transaction, and it elects to increase the basis

of credit property used in that activity by the unallowed credit that reduced the property’s basis, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 Name of activity disposed of

__________________________________________________________________________________________________

12 Description of the credit property for which the election is being made

_________________________________________________________________

__________________________________________________________________________________________________________________________

13 Amount of unallowed credit that reduced the property’s basis for California purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ __________________

For California purposes, all rental activities are

A personal service corporation has passive activity

General Information

passive activities regardless of the level of

credits if the passive activity credits (including prior

participation.

In general, California law conforms to the Internal

year unallowed credits) exceed the tax attributable to

Revenue Code (IRC) as of January 2005. However,

net passive income. A closely held C corporation has

•

Amortization of certain intangibles (IRC Section

there are continuing differences between California

a passive activity credit for the year if its credits from

197): Property classified as IRC Section 197

and federal law. When California conforms to federal

passive activities (including prior year unallowed

property under federal law is also IRC Section

tax law changes, we do not always adopt all of the

credits) exceed the sum of the tax attributable to net

197 property for California purposes; there is no

changes made at the federal level. For more

passive income and the tax attributable to net active

separate California election required or allowed.

information regarding California and federal law,

income.

However, for California purposes, in the case of

please visit our Website at and

IRC Section 197 property acquired before

Form FTB 3802 closely follows federal Form 8810,

search for conformity. Additional information can be

January 1, 1994, the California adjusted basis as

Corporate Passive Activity Loss and Credit

found in FTB Pub. 1001, Supplemental Guidelines to

of January 1, 1994, must be amortized over the

Limitations. In general, if you completed federal

California Adjustments, the instructions for California

remaining federal amortization period.

Form 8810 to determine the amount of the federal

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

PAL and credit limitations, you must also complete

A Purpose

Entity tax booklets.

form FTB 3802.

Note, the instructions provided with California tax

Form FTB 3802 is used by closely held

Using California amounts and federal Worksheet 1

forms are a summary of California tax law and are

C corporations and personal service corporations to

through Worksheet 6 in the instructions for federal

only intended to aid taxpayers in preparing their state

figure the amount of any passive activity loss (PAL)

Form 8810, determine the amounts to enter on form

income tax returns. We include information that is

or credit for the current taxable year and the amount

FTB 3802. Keep both the California and federal

most useful to the greatest number of taxpayers in

of losses and credits from passive activities allowed

worksheets for your records. The following

the limited space available. It is not possible to

on the corporation’s tax return. See the instructions

information provides instructions for figuring the PAL

include all requirements of the California Revenue

for federal Form 8810, Corporate Passive Activity

for California purposes.

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

Loss and Credit Limitations, for the definitions of

B Special Notes

Taxpayers should not consider the tax booklets as

personal service corporations and closely held

authoritative law.

C corporations.

S Corporations

The following may affect the computation of the

A personal service corporation has a PAL for the year

S corporations must use form FTB 3801, Passive

corporation’s passive loss and credit limitation:

if the total losses (including prior year unallowed

Activity Loss Limitations, and form FTB 3801-CR,

losses) from all of the corporation’s passive activities

Passive Activity Credit Limitations, instead of form

•

Passive loss rules – IRC Section 469(c)(7):

exceed the total income from all of the corporation’s

FTB 3802 to figure the California PAL and credit

Beginning in 1994, and for federal purposes

passive activities. A closely held C corporation has a

limitations.

only, rental real estate activities of taxpayers

PAL for the year if the total losses (including prior

engaged in a real property business are not

Publicly Traded Partnerships (PTPs)

year unallowed losses) from all its passive activities

automatically treated as a passive activity.

A PTP is a partnership whose interests are traded on

exceed the sum of the total income from all its

California did not conform to this provision.

an established securities market or are readily

passive activities and its net active income.

380205104

FTB 3802 2005