Instructions For Form Ftb 3801-Cr - Passive Activity Credit Limitations

property placed in service after 1989. If you held

the property through a partnership, S corpora-

Part II

an indirect interest in the property through a

tion, or other pass-through entity, use Work-

Special Allowance for Credits from Rental Real

partnership, S corporation, or other pass-

sheet 3 only if you acquired your interest in the

Estate Activities with Active Participation

through entity, use this part only if your interest

pass-through entity after 1989.

in the pass-through entity was also acquired

Caution: If you were married filing a separate

Line 9 – Married persons filing separate returns

after 1989.

return and lived with your spouse at any time

who lived together at any time during the year

during the year, include the credits in Worksheet 4

are not eligible to complete Part II.

Part V — Passive Activity Credits Allowed

but not in Worksheet 2 or Worksheet 3.

Use Part V to figure the amount of the passive

Line 10 – Enter your federal modified adjusted

activity credit (as determined in Part I) that is

Line 3a through Line 3c – Individuals, including

gross income from federal Form 8582-CR,

allowed for 2001 for all passive activities.

limited partners, and qualifying estates who had

line 10.

low-income housing credits for property placed

Part VI — Election to Increase Basis of Credit

Line 15 – Figure the tax attributable to the amount

in service after 1989, should include those

Property

on line 14 using the following worksheet.

credits on line 3a and line 3b instead of

Use Part VI if you disposed of your entire

A. Taxable income . . . . . . . A______

Worksheet 2. If you held an indirect interest in

interest in a passive activity in 2001 and elect to

B. Tax on line A . . . . . . . . . . . . . . . . . . B______

the property through a partnership, S corpora-

increase the basis of credit property used in a

C. Enter amount from

tion, or other pass-through entity, use line 3a

passive activity.

line A above . . . . . . . . . C ______

and line 3b only if you also acquired your

D. Enter amount from

interest in the pass-through entity after 1989.

Specific Line Instructions

form FTB 3801-CR,

Line 4a through Line 4c – Individuals should

line 14 . . . . . . . . . . . . . . D ______

include on line 4a and line 4b credits from

For purposes of these instructions, “worksheet”

E. Subtract line D from

passive activities which were not entered on

refers to Worksheet 1 through Worksheet 9 in

line C . . . . . . . . . . . . . . . E ______

line 1a and line 1b, line 2a and line 2b, or line 3a

the instructions for federal Form 8582-CR. You

F. Tax on line E . . . . . . . . . . . . . . . . . . F ______

and line 3b. Estates (other than qualifying

must use California amounts when completing

G. Subtract line F from line B and

estates), trusts, and S corporations, should

these worksheets. Use only the credits subject to

enter the result on form

include credits from all passive activities on

the California passive credit limitation rules

FTB 3801-CR, line 15 . . . . . . . . . . G ______

line 4a through line 4c.

(described in General Information C, Who Must

Note: When using taxable income in the above

File). Keep these worksheets for your records.

Line 1, Line 2, Line 3, and Line 4 – If you are

computation, it is not necessary to refigure

using a different form to report credits from the

items that are based on a percentage of

Part I

same activity, keep them separate by listing the

adjusted gross income.

activity each time for each credit.

Computation of 2001 Passive Activity Credits

Part III

Line 6 – If form FTB 3801, line 3, shows net

Line 1a through Line 1c – Individuals and

income or if you did not complete form

Special Allowance for Low-Income Housing

qualifying estates that actively participated in

FTB 3801 because you had net passive income,

Credits for Property Placed in Service Before

rental real estate activities (other than rental real

you will have to figure the tax on the net passive

1990 (or from Pass-Through Interests Acquired

estate activities with low-income housing

income. If you have an overall loss on an entire

Before 1990)

credits) should include the credits from these

disposition of your interest in a passive activity,

activities on line 1a through line 1c. Use

Note: Married persons filing separate returns

reduce net passive income, if any, on form

Worksheet 1 to figure the amounts to enter on

who lived together at any time during the year

FTB 3801, line 3, to the extent of the loss (but

line 1a and line 1b.

are not eligible to complete Part III.

not below zero) and use only the remaining net

A qualifying estate is one that is treated as

passive income in the computation below. If you

Caution: In computing the special allowance for

actively participating for the two tax years

had a net passive activity loss, enter -0- on

rental real estate activities with active participa-

following the death of the taxpayer. The

line 6, and go on to line 7.

tion, the dollar limitation for the low-income

decedent must have actively participated in the

housing credit is more than the amount allowed

Figure the tax on net passive income as follows:

rental real estate activity in the tax year he or

under federal law. The California limitation is

A. Taxable income

she died.

$75,000 ($37,500 if married filing a separate

including net

Caution: If you were married filing a separate

return, and you lived apart for the entire year).

passive income . . . . . . . A ______

return and lived with your spouse at any time

Line 21 – The special allowance for low-income

B. Tax on line A . . . . . . . . . . . . . . . . . B ______

during the year, even if you actively participated in

housing credits for property placed in service

C. Taxable income without

rental real estate activities, include the credits in

before 1990 (or from pass-through interests

net passive income . . . . C ______

Worksheet 4 but not on Worksheet 1.

acquired before 1990) is completely phased out

D. Tax on line C . . . . . . . . . . . . . . . . . D ______

Caution: You may take credits that arose in a

once federal modified adjusted gross income

E. Subtract line D from line B

prior tax year (other than low-income housing

reaches $350,000 ($175,000 if married filing a

and enter the result on form

credits) under the special allowance only if you

separate return and you lived apart for the entire

FTB 3801-CR, line 6 . . . . . . . . . . . E ______

actively participated in the rental real estate

year). If you completed Part II of this form and

Note: When using taxable income in the above

activity for both that prior year and this year. If

your federal modified adjusted gross income on

computation, it is not necessary to refigure

you did not actively participate for both years,

line 10 was $200,000 or less ($100,000 or less

items that are based on a percentage of

include the credits in Worksheet 4 but not in

if married filing separate and you lived apart for

adjusted gross income.

Worksheet 1.

the entire year), enter $75,000 on line 24

Line 7 – If line 7 is zero because the tax on net

($37,500 if married filing a separate return and

Line 2a through Line 2c – Individuals, including

passive income on line 6 is more than your

you lived apart for the entire year).

limited partners, and qualifying estates who had

credits from passive activities on line 5, all of

low-income housing credits for property placed

Line 22 – Enter your federal modified adjusted

your passive activity credits are allowed. In this

in service before 1990, should include the

gross income from federal Form 8582-CR,

case, enter the amount from line 5 on line 37.

credits from those activities on line 2a and

line 22.

Report the credits on the related credit forms.

line 2b.

Do not complete Worksheet 5 through

However, if you have low-income housing

Worksheet 9.

credits for property placed in service after 1989,

include those credits in Worksheet 3 instead of

Worksheet 2. If you held an indirect interest in

Page 2 FTB 3801-CR Instructions 2001

Instructions For Form Ftb 3801-Cr - Passive Activity Credit Limitations - 2001 Page 2

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