Instructions For Form Ftb 3885p - Depreciation And Amortization

Instructions for Form FTB 3885P

Depreciation and Amortization

General Information

Line 2 – California depreciation for assets placed in service

before January 1, 1998

In general, California tax law conforms to the Internal

Enter total California depreciation for assets placed in

Revenue Code (IRC) as of January 1, 1998. However,

service prior to January 1, 1998, taking into account any

there are continuing differences between California and

differences in asset basis or differences in California and

federal tax law. California has not conformed to the

federal tax law.

changes made to the IRC by the federal Internal Revenue

Line 4 – California amortization for intangibles placed in service

Service (IRS) Restructuring and Reform Act of 1998 (Public

before January 1, 1998

Law 105-206) and the Tax and Trade Relief Extension Act

of 1998 (Public Law 105-277).

Enter total California amortization for intangibles placed in

service prior to January 1, 1998, taking into account any

California law is the same as federal law regarding:

•

differences in asset basis or differences in California and

Exemption of the incremental cost of a fuel vehicle from

federal tax law.

the limits on depreciation for vehicles;

•

As of January 1, 1994, California conformed to IRC Section

Suspension of taxable income limit on percentage

197 relating to the amortization of intangibles. No deduction

depletion for marginal production properties for tax years

is allowed under this section for any taxable year beginning

beginning after December 31, 1997, and before

prior to January 1, 1994. If a taxpayer made an election for

January 1, 2000;

•

federal purposes under the Revenue Reconciliation Act of

Limitations on property for which the income forecast

1993 (P.L. 103-66), relating to the election to have

method may be used; and

•

amendments apply to property acquired after July 25, 1991,

Recognition of gain for a constructive sale of property in

or relating to an elective binding contract exception, a

which the partnership held an appreciated interest.

separate election for state purposes is not allowed under

A Purpose

R&TC Section 17024.5(e)(3), and the federal election is

binding. In the case of an intangible that was acquired in a

Use form FTB 3885P to compute depreciation and

taxable year beginning before January 1, 1994, and that is

amortization allowed as a deduction on Form 565. Attach

amortized under IRC Section 197, the amount to be

form FTB 3885P to Form 565.

amortized cannot exceed the adjusted basis of that

intangible as of the first day of the first taxable year

Depreciation is the annual deduction allowed to recover the

cost or other basis of business or income producing

beginning on or after January 1, 1994. This amount must

be amortized ratably over the period beginning with the first

property with a determinable useful life of more than one

year. Land is not depreciable.

month of the first taxable year beginning on or after

January 1, 1994, and ending 15 years after the month in

Amortization is similar to the straight-line method of

which the intangible was acquired.

depreciation in that an annual deduction is allowed to

recover certain costs of intangibles over a fixed period of

Assets with a Federal Basis Different from California

time.

Basis

Some assets placed in service on or after January 1, 1987,

In general, California personal income tax law follows

federal law for assets placed in service on or after

will have a different adjusted basis for California purposes

due to the credits claimed or accelerated write-offs of the

January 1, 1987. See California Revenue and Taxation

Code (R&TC) Section 17250.

assets. Review the list of depreciation and amortization

items in the instructions for Schedule CA (540), California

B Calculation Methods

Adjustments — Residents, and Schedule CA (540NR),

California Adjustments — Nonresidents or Part-Year

California did not allow depreciation under the federal

Residents. If the partnership has any other adjustments to

ACRS for years prior to 1987.

make, get FTB Pub. 1001, Supplemental Guidelines to

California does not conform to federal law for accelerated

California Adjustments, for more information.

depreciation for property on Indian reservations.

Line 6 – Total Depreciation and Amortization

As a result of California legislation:

Add line 3 and line 5. Enter the total on line 6 and on

•

Any grapevine replaced in a California vineyard in any

Form 565, Side 1, line 16a.

taxable year beginning on or after January 1, 1997, as a

If depreciation or amortization is from more than one trade

direct result of Pierce’s Disease will be considered

or business activity, or from more than one rental real

five-year property for accelerated cost recovery

estate activity, the partnership should separately compute

provisions; and

•

depreciation for each activity. Use the depreciation

The corporate provision for the five-year amortization of

computed on this form to identify the net income for each

child care facilities has been repealed.

activity. Report the net income from each activity on an

attachment to Schedule K-1 (565) for purposes of passive

Specific Line Instructions

activity reporting requirements. Use California amounts to

determine the depreciation amount to enter on line 14 of

federal Form 8825, Rental Real Estate Income and

Line 1 – California depreciation for assets placed in service after

Expenses of a Partnership or an S Corporation.

December 31, 1997 and amortization for intangibles

placed in service after December 31, 1997

Complete column (a) through column (i) for each asset or

group of assets or property placed in service after

December 31, 1997. Enter the column (f) totals on line 1(f).

Enter the column (i) totals on line 1(i).

FTB 3885P/Schedule D (565) Instructions 1998

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Instructions For Form Ftb 3885p - Depreciation And Amortization - 1998

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