California Form 3840 - California Like-Kind Exchanges

F Failure to File

A related party includes your spouse, child, grandchild, parent, brother,

sister, or a related corporation, S corporation, partnership, trust, or

For taxpayers who fail to file form FTB 3840 for any year in which the

estate. For special rules for exchanges between related parties see IRC

gain or loss is deferred from the exchange, the FTB may issue a Notice

Section 1031(f) for more information.

of Proposed Assessment to adjust the income for the deferred California

source gain plus any applicable penalties and interest.

Part I – Information on Like-Kind Exchange

When completing Part I and Part II, see the instructions below and refer to

G Multiple Exchanges

federal Form 8824 instructions.

If the taxpayer reported more than one like-kind exchange for federal

Line 1 through Line 6 – Enter the like-kind property descriptions and

purposes in which the taxpayer gave up California property and acquired

dates as shown on federal Form 8824, Part I, line 1 through line 6.

out of state property, file a separate form FTB 3840 for each such

exchange.

Part II – Realized Gain or (Loss), Recognized Gain, and Basis of

Like-Kind Property Received

H Multiple Asset Exchanges

Line 7 through line 20 – Enter the federal amounts from federal Form

A multi-asset exchange involves the transfer and receipt of more than one

8824, Part III, line 12 through line 25 on form FTB 3840, Part II, line

group of like-kind properties. For example, an exchange of land, vehicles,

7 through line 20, respectively. For more information, see Specific

and cash for land and vehicles is a multi-asset exchange. An exchange of

Instructions for federal Form 8824.

land, vehicles, and cash for land only is not a multi-asset exchange. The

Schedule A – Properties Given Up and Received

transfer or receipt of multiple properties within one like-kind group is also

a multi-asset exchange. Special rules apply when figuring the amount

of gain recognized and basis in properties received in a multi-asset

Part I – Properties Given Up

exchange. For details, see Treasury Regulations section 1.1031(j)-1. For

Line 1 – List each property given up in the exchange. Indicate if the

more information, see instructions for federal Form 8824.

property was located in California and the taxpayer’s percentage of

For California purposes, taxpayers must file form FTB 3840, if a multiple

ownership.

asset exchange contains both real and personal property located in

Enter the full address where the property given up was located. If the

California for like-kind property located outside of California. See the

property does not have a street address, then provide the assessor’s parcel

instructions under Schedule A, Part I, Properties Given Up, and Part II,

number, the county, and the state in which the property is located.

Properties Received, line 1 and line 9, for information on how to report

If personal property located in California was exchanged for personal

both real and personal property.

property located outside of California as part of a single exchange that

Taxpayers who exchange only personal property assets are not required to

included California real property exchanged for non-California real

file form FTB 3840.

property, combine each type of like-kind personal property given-up and

report such personal property given-up as a separate property. Provide

Specific Instructions

the location where the personal property given up was located as if it were

separately sold or exchanged.

Using black or blue ink, print the taxpayer’s name, taxpayer identification

number, and street address in the spaces provided at the top of the form.

If more than three properties were given up, enter those properties on

another Schedule A (Side 2 of form FTB 3840). Attach each Schedule A to

Additional Information

form FTB 3840.

Use the Additional Information field for “In-Care-Of” name, “Owner/

Line 2 – Check “Yes” or “No” to indicate if the property given up was

Representative/Attention” name, and other supplemental address

acquired as replacement property in a prior tax deferred exchange.

information only.

Line 3 – Consideration/Sale price

Foreign Address

For each property, enter the consideration or total sales price the taxpayer

If you have a foreign address enter the city, foreign country name, foreign

received for the property. This includes all money and notes received,

province/state/county name, and foreign postal code in the appropriate

plus any mortgages or other debts assumed by the buyer or paid from the

boxes. Do not abbreviate the foreign country name. Follow the country’s

proceeds of the sale, plus the fair market value of any other property or any

practice for entering the province/state/county name and foreign postal code.

services received.

General Questions A through C

Line 4 – Selling expenses paid/incurred

Question A – Check the box indicating whether the taxpayer is, for

Enter selling expenses paid or incurred pertaining to the sale of each

tax reporting purposes, an individual, estate, trust, C corporation,

property given up and for which the taxpayer is liable. Selling expenses

S corporation, partnership, limited liability company, or an exempt

include commissions, advertising, legal fees, escrow fees, title certification

organization.

and insurance, termite inspection fees, and loan charges paid by the

Question B – Check each box as appropriate to indicate whether this form

seller, such as loan placement fees or “points.” Do not include exchange

FTB 3840 is the initial information return (for the year of the exchange), an

expenses on this line.

amended information return (correcting a previously filed form FTB 3840)

Line 6 – California adjusted basis

or a final information return (future forms FTB 3840 will not be filed for

Enter the adjusted basis for each property given up as determined using

this exchange.) If filing an amended or final form FTB 3840, attach a

statement with a detailed explanation.

California tax law. The California adjusted basis is the basis of the property

increased or decreased by certain amounts. Increases to basis typically

Question C – Check each box as applicable to indicate the type of property

include:

that was involved in the exchange. If the exchange involved both real and

• Capital improvements

personal property, check both boxes.

• Assessments for local improvements

If the exchange involved a related party, also check the “related party” box.

• Amounts to restore damaged property after a casualty

Enter the name of the related party and the social security number (SSN),

• Legal fees for title search or to perfect title

individual taxpayer identification number (ITIN), or federal employer

• Zoning costs

identification number (FEIN) in the space provided.

Page 2 FTB 3840 Instructions (NEW 2014)

California Form 3840 - California Like-Kind Exchanges - 2014 Page 4

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