Instructions For Form Ftb 3885f - Depreciation And Amortization

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Instructions for Form FTB 3885F
Depreciation and Amortization
General Information
Use form FTB 3885F to compute depreciation
California has conformed to IRC Section 197
and amortization allowed as a deduction on
relating to the amortization of intangibles as of
In general, California tax law conforms to the
Form 541. Attach form FTB 3885F to
January 1, 1994. No deduction is allowed
Internal Revenue Code (IRC) as of January 1,
Form 541 or Form 109, California Exempt
under this section for any taxable year
1998. However, there are continuing
Organization Business Income Tax Return.
beginning prior to January 1, 1994. If a
differences between California and federal tax
taxpayer made an election for federal
B Calculation Methods
law. California has not conformed to the
purposes under the Revenue Reconciliation
changes made to the IRC by the federal
Act of 1993 (Public Law 103-66), relating to
California did not allow depreciation under the
Internal Revenue Service (IRS) Restructuring
the election to have amendments apply to
federal Accelerated Cost Recovery System,
and Reform Act of 1998 (Public Law 105-206)
property acquired after July 25, 1991, or
(ACRS) for years prior to 1987.
and the Tax and Trade Relief Extension Act
relating to an elective binding contract
As a result of California legislation enacted in
of 1998 (Public Law 105-277).
exception, a separate election for state
1997 any grapevine replaced in a vineyard in
purposes is not allowed under R&TC
California conforms to provisions relating to:
California as a direct result of Pierce’s
Section 17024.5(e)(3). The federal election is
Disease in any taxable year beginning on or
The limitations on the use of the income
binding. In the case of an intangible that was
after January 1, 1997, will be considered
forecast method;
acquired in a taxable year beginning before
five-year property for accelerated cost
The changes to depreciation for ‘‘qualified
January 1, 1994, and that is amortized under
recovery provisions.
rent to own’’ property; and
IRC Section 197, the amount to be amortized
Exemption of the incremental cost of a
Note: The IRC Section 179 expense election
cannot exceed the adjusted basis of that
clean fuel vehicle from the limits on
does not apply to estates and trusts.
intangible as of the first day of the first taxable
depreciation for vehicles.
Line 1 – Complete columns (a) through (i) for
year beginning on or after January 1, 1994.
each asset or group of assets placed in
This amount must be amortized ratably over
A Purpose
service after December 31, 1997. Enter the
the period beginning on or after January 1,
Depreciation is a deduction the estate or trust
column (f) totals on line 1(f). Enter the column
1994, and ending 15 years after the month in
can claim for reasonable exhaustion, wear
(i) totals on line 1(i).
which the intangible was acquired.
and tear, and normal obsolesence of property
Line 2 – Enter total California depreciation for
Assets with a Federal Basis Different from
used in business or held to produce income.
assets placed in service before January 1,
California Basis — Some assets placed in
Amortization is an amount the estate or trust
1998, taking into account differences in asset
service on or after January 1, 1987, will have
can deduct for certain capital expenses over a
basis or differences in California and federal
a different basis for California purposes due to
fixed period.
tax law.
the credits claimed for accelerated write-offs
In 1987, the California rates for depreciation
of the assets. For more information about
Line 4 – Enter total California amortization for
were changed to conform to the federal
adjustments, get FTB Pub. 1001,
intangibles placed in service before January 1,
Modified Accelerated Cost Recovery System
Supplemental Guidelines to California
1998, taking into account any differences in
(MACRS). The California MACRS applies to
Adjustments.
asset basis or differences in California and
assets placed in service on or after
federal tax law.
Line 6 – Add line 3 and line 5. Enter the total
January 1, 1987.
on line 6. See the instructions to Form 541,
line 3, for information on depreciation and
amortization reported on federal Schedule C.
Note: Attach a schedule if you need
additional space.
FTB 3885F/Schedule D (541) 1998
Page 1

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