California Form 3840 - California Like-Kind Exchanges

2014 Instructions for Form FTB 3840

California Like-Kind Exchanges

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2009, and to the California Revenue and Taxation Code (R&TC).

In general, for taxable years beginning on or after January 1, 2010,

and personal property located in California for like-kind property located

California law conforms to the Internal Revenue Code (IRC) as of

outside of California are also subject to this requirement.

January 1, 2009. However, there are continuing differences between

If the taxpayer is not otherwise required to file a California tax return, the

California and federal law. When California conforms to federal tax law

taxpayer must complete the entire form FTB 3840, including the signature

changes, we do not always adopt all of the changes made at the federal

area at the bottom of Side 1, and file form FTB 3840 at the address

level. For more information, go to ftb.ca.gov and search for conformity.

shown in General Information D, Where to File.

Additional information can be found in FTB Pub. 1001, Supplemental

Form FTB 3840 must be filed for the year in which the exchange is

Guidelines to California Adjustments, the instructions for California

completed and for each subsequent year until the California source

Schedule CA (540 or 540NR), and the Business Entity Tax booklets.

deferred gain is recognized.

The instructions provided with California tax forms are a summary of

For purposes of the California filing requirement, the term “taxpayer” or

California tax law and are only intended to aid taxpayers in preparing

“taxpayers” includes all individuals, estates, trusts, general partnerships,

their state income tax returns. We include information that is most useful

limited partnerships, limited liability partnerships, limited liability

to the greatest number of taxpayers in the limited space available. It is

companies, and corporations.

not possible to include all requirements of the California Revenue and

Taxation Code (R&TC) in the tax booklets. Taxpayers should not consider

C When to File

the tax booklets as authoritative law.

File form FTB 3840 for the year of the exchange and annually thereafter

General Information

until the deferred gain or loss is recognized. Attach form FTB 3840 to the

California tax return, or file separately as a California information return

Like-Kind Exchanges – For taxable years beginning on or after January 1,

if the taxpayer does not otherwise have a California filing requirement, by

2014, California requires taxpayers who exchange real property located

the following dates:

in California for like-kind property located outside of California, and meet

Individuals, Estates, and Trusts

all requirements of IRC Section 1031, to file an annual information return,

Calendar Year:

April 15, 2015

form FTB 3840, California Like-Kind Exchanges, with the Franchise

Tax Board (FTB). For information on filing requirements, see General

Extended Due Date:

October 15, 2015

Information B, Who Must File.

Corporations and S Corporations

California R&TC Sections 18031 and 24941 conform to IRC

Calendar Year:

March 16, 2015

Section 1031, with regard to like-kind exchanges. IRC Section 1031

Fiscal Year:

15th day of the 3rd month following the close of

provides that no gain or loss is recognized if the taxpayer exchanges

the taxable year

business or investment property solely for business or investment

Extended Due Date:

October 15 or the 15th day of the 10th month

property of a like-kind. A valid like-kind exchange has the benefit of

following the close of the taxable year

deferred taxation, meaning that the taxpayer does not bear a tax liability

at the time of the exchange. The taxpayer recognizes the realized gain

Partnerships and Limited Liability Companies

or loss when the like-kind property received is sold or disposed of in a

Calendar Year:

April 15, 2015

subsequent taxable transaction.

Fiscal Year:

15th day of the 4th month following the close of

To qualify as a like-kind exchange, the property received in the

the taxable year

exchange must be both qualifying property and like-kind property. For

Extended Due Date:

October 15 or the 15th day of the 10th month

more information, get federal Form 8824, Like-Kind Exchanges, IRC

following the close of the taxable year

Section 1031, and the applicable regulations.

Exempt Organizations

The source of a gain or loss from the sale or exchange of property

Calendar Year:

May 15, 2015

located in California is determined at the time the gain or loss is realized.

The source of such gain or loss is preserved without regard to when such

Fiscal Year:

15th day of the 5th month following the close of

gain or loss may be recognized.

the taxable year

Form FTB 3840 must be filed for the year in which the exchange is

Extended Due Date:

December 15 or the 15th day of the 12th month

completed and each subsequent year, until the California source deferred

following the close of the taxable year

gain or (loss) is recognized on a California tax return. See R&TC

When the due date falls on a weekend or holiday, the deadline to file is

Sections 18032 and 24953 for more information.

extended to the next business day.

If the taxpayer fails to file the annual form FTB 3840, the FTB may

D Where to File

estimate net income and assess tax with any applicable penalties and

interest.

For taxpayers who are required to file a California tax return, attach form

FTB 3840 to the tax return and file using the address for that tax return.

A Purpose

For taxpayers with no California filing requirement, mail form FTB 3840 to:

Use form FTB 3840 to report like-kind exchanges of California business

FRANCHISE TAX BOARD

or investment property for like-kind out of state property, and to allocate

PO BOX 1998

the California source deferred gain to the properties received in the

RANCHO CORDOVA, CA 95471-1998

exchange.

E Signature

B Who Must File

If form FTB 3840 is attached to a California tax return, no signature is

All taxpayers, regardless of residence status or commercial domicile,

needed.

who exchange real property located in California for like-kind property

located outside of California, must file form FTB 3840 with their California

If form FTB 3840 is filed separately, sign and complete the signature area

on Side 1 of this form.

tax return. Taxpayers who exchange multiple assets involving both real

FTB 3840 Instructions (NEW 2014) Page 1

California Form 3840 - California Like-Kind Exchanges - 2014 Page 3

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