Schedule D (Form 540nr) - California Capital Gain Or Loss Adjustment - 2011 Page 2
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3Installment Sales. If you sold property at a gain (other than publicly
• Special Credits – California law authorizes special tax credits not
traded stocks or securities) and you will receive a payment in a tax year
allowed under federal law or computed differently under federal law. If
after the year of sale, report the sale on the installment method unless
you claimed special credits related to capital assets, reduce your basis
you elect not to do so. Get form FTB 3805E, Installment Sale Income.
in the assets by the amount of credit.
Also, use that form if you received a payment in 2011, for an installment
Other adjustments may apply differently to the federal and California
sale made in an earlier year.
basis of your capital assets. Figure the original basis of your asset using
You may elect to not use the installment sale method for California by
the California law in effect when the asset was acquired, and adjust it
reporting the entire gain on Schedule D (540NR) (or Schedule D-1, Sale
according to provisions of California law in effect during the period of
of Business Property, for business assets) in the year of the sale and
your ownership.
filing your return on or before the due date.
Line 1b – R&TC Section 18152.5 Exclusion. If the gain qualifying for the
At-Risk Rules and Passive Activity Limitations. If you dispose of
IRC Section 1202 exclusion also qualifies for the California exclusion
(1) an asset used in an activity to which the at-risk rules apply, or (2)
under R&TC Section 18152.5: Enter in column (a) “Section 18152.5
any part of your interest in an activity to which the at-risk rules apply,
Exclusion.” Complete column (b) and column (c) according to the
and you have amounts in the activity for which you are not at risk, get
instructions for line 1a. Enter in column (d) the amount of gain that
and complete federal Form 6198, At-Risk Limitations, using California
qualifies for the California exclusion. Enter in column (e) the entire gain
amounts to figure your California deductible loss under the at-risk rules.
realized. If the gain qualifying for the IRC Section 1202 exclusion
Once a loss becomes allowable under the at-risk rules, it becomes
does not qualify for the California exclusion: Complete column (a),
subject to the passive activity rules. Get form FTB 3801, Passive Activity
column (b), and column (c) according to the instructions for line 1a.
Loss Limitations.
Enter -0- in column (d) and enter the entire gain realized in column (e).
Line 2 – Net Gain or (Loss) Shown on California Schedule(s) K-1 (100S,
Specific Line Instructions
541, 565, and 568). Combine gain(s) and loss(es) from all California
Schedule(s) K-1 (100S, 541, 565, and 568), Share of Income, Deductions,
Line 1a – List each capital asset transaction.
Credits, etc. See California Schedule K-1 (100S, 541, 565, and 568)
Column (a) – Description of Property. Describe the asset you sold
instructions for more information on capital gains and losses. Enter the
or exchanged.
net loss on line 2, column (d) or the net gain on line 2, column (e).
Column (b) – Sales Price. Enter in this column either the gross sales
Line 3 – Capital Gain Distributions. If you receive federal Form 2439,
price or the net sales price. If you received a Form 1099-B, Proceeds
Notice to Shareholder of Undistributed Long-Term Capital Gains, from a
From Broker and Barter Exchange Transactions; Form 1099-S, Proceeds
mutual fund, do not include the undistributed capital gain dividends on
From Real Estate Transactions; or similar statement showing the
Schedule D (540NR). If you receive federal Form 1099-DIV, Dividends
gross sales price, enter that amount in column (b). However, if box 2
and Distributions, enter the amount of distributed capital gain dividends.
of Form 1099-B indicates that gross proceeds less commissions and
Line 6 – 2010 California Capital Loss Carryover. If you had California
option premiums were reported to the IRS, enter that net amount in
capital loss carryover from 2010, recalculate those losses as if you had
column (b). If you entered the net amount in column (b), do not include
been a resident for all prior years. Enter this amount on line 6. Get FTB
the commissions and option premiums in column (c).
Pub. 1100 for more information.
Column (c) – Cost or Other Basis. In general, the cost or other basis is
Line 8 – Net Gain or Loss. If the amount on line 4 is more than the
the cost of the property plus purchase commissions and improvements,
amount on line 7, subtract line 7 from line 4. Enter the difference as a
minus depreciation, amortization, and depletion. Enter the cost or
gain on line 8.
adjusted basis of the asset for California purposes. Use your records and
If the amount on line 7 is more than the amount on line 4, subtract line 4
California tax returns for years before 1987 to determine the California
from line 7 and enter the difference as a negative amount on line 8.
amount to enter in column (c). If you used an amount other than cost as
the original basis, your federal basis may be different from your California
Use the worksheet on the next page to figure your capital loss carryover
basis. Other reasons for differences include:
to 2012.
• Depreciation Methods and Property Expensing – Before 1987,
Line 9 – If line 8 is a net capital loss, enter the smaller of the loss on
California law disallowed the use of accelerated cost recovery system
line 8 or $3,000 ($1,500 if married or an RDP filing a separate return).
(ACRS) and disallowed the use of an asset depreciation range 20%
Line 12a – Compare the amounts entered on line 10 and line 11 to figure
above or below the standard rate. Before 1999, California had different
the adjustment to enter on Schedule CA (540NR), line 13, column B.
limits on the expensing of property under IRC Section 179. California
For example:
law permits rapid write-off of certain property such as solar energy
Loss on line 10 is less than loss on line 11.
systems, pollution control devices, and property used in an Enterprise
Federal loss on line 10 is. . . . . . . . . . . . . . . . . . . . . . . . . . . .($1,000)
Zone, LAMBRA, Targeted Tax Area, or Los Angeles Revitalization
California loss on line 11 is . . . . . . . . . . . . . . . . . . . . . . . . . .($2,000)
Zone (LARZ).
Difference between line 10 and line 11 . . . . . . . . . . . . . . . . . $1,000
• Inherited Property – The California basis of property inherited from a
Gain on line 10 and loss on line 11.
decedent is generally fair market value (FMV) at the time of death.
Federal gain on line 10 is . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,000
• S Corporation Stock – Prior to 1987, California law did not recognize
California loss on line 11 is . . . . . . . . . . . . . . . . . . . . . . . . . .($3,000)
S corporations and your California basis in S corporation stock may
Difference between line 10 and line 11 . . . . . . . . . . . . . . . . . $6,000
differ from your federal basis. In general, your California basis will
Line 12b – Compare the amounts entered on line 10 and line 11 to figure
be cost-adjusted for income, loss, and distributions received after
the adjustment to enter on Schedule CA (540NR), line 13, column C.
1986, while your stock was California S corporation stock. Your
For example:
federal basis will be cost-adjusted for income, loss, and distributions
Loss on line 10 is more than loss on line 11.
received during the time your stock qualified for federal S corporation
Federal loss on line 10 is. . . . . . . . . . . . . . . . . . . . . . . . . . . .($2,000)
treatment. Effective for taxable years beginning on or after
California loss on line 11 is . . . . . . . . . . . . . . . . . . . . . . . . . .($1,000)
January 1, 2002, any corporation with a valid federal S corporation
Difference between line 11 and line 10 . . . . . . . . . . . . . . . . . $1,000
election is considered an S corporation for California purposes.
Loss on line 10 and gain on line 11.
Existing law already requires federal C corporations to be treated as
Federal loss on line 10 is . . . . . . . . . . . . . . . . . . . . . . . . . . . . .($2,000)
C corporations for California purposes.
California gain on line 11 is . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,000
Difference between line 10 and line 11 . . . . . . . . . . . . . . . . . . $7,000
Side 2 Schedule D (540NR) Instructions 2011
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