Form 3805d - Net Operating Loss (Nol) Carryover Computation And Limitation - Pierce'S Disease - 2013 Page 2
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3Instructions for Form FTB 3805D
Net Operating Loss (NOL) Carryover Computation and Limitation – Pierce’s Disease
Important Information
B Definitions
The carryover periods for an NOL incurred in
years:
Pierce’s Disease. Pierce’s disease is a
For taxable years beginning in 2010 and 2011,
• Beginning before January 1, 2002, have
pathogen (a plant killing bacterium) which
California suspended the net operating loss
been extended for two years.
attacks a plant’s water-conducting tissues.
(NOL) carryovers deduction. Taxpayers may
• Beginning on or after January 1, 2002,
continue to compute and carryover NOLs
Vector. A vector is an insect that carries and
and before January 1, 2003, have been
during the suspension period. However, the
transmits a disease-causing organism. The
extended for one year.
NOL suspension rules do not apply to:
specific “vector” in Pierce’s disease is the
For more information, get FTB Legal Ruling
• Corporations with net income after state
glassy-winged sharpshooter.
2011-04.
adjustments (pre-apportioned income) of
Affected Area. The affected area is the
To claim these NOLs, the California
less than $300,000,
taxpayer’s area confirmed by the CDFA as
• Taxpayers other than corporations with
Department of Food and Agriculture (CDFA)
having a pest infestation resulting from
modified adjusted gross income of less
must confirm that a pest infestation occurred
Pierce’s disease and its vectors.
due to Pierce’s disease and its vectors. For
than $300,000,
Business Income. Business income is defined
more information, go to cdfa.ca.gov or call
• Taxpayers claiming disaster loss
as income arising from transactions and
carryovers.
916.900.5024.
activities in the regular course of the trade or
The PDV NOL carryover can be deducted
For taxable years beginning in 2008 and
business. Business income includes income
only against income apportioned to the area
2009, California suspended the NOL carryover
from tangible and intangible property if the
deduction. Taxpayers may continue to
affected by PDV using a two-factor (Property
acquisition, management, and disposition of
compute and carryover an NOL during
and Payroll) formula.
the property constitute integral parts of the
the suspension period. However, the NOL
regular trade or business operations.
PDV NOL Election. If the taxpayer made
suspension rules do not apply to:
an election and designated the carryover
Nonbusiness Income. Nonbusiness income
• Corporations with taxable income of less
category on the original return for the taxable
is all income other than business income. See
year of a loss and filed form FTB 3805D, Net
than $500,000,
Cal. Code Regs. tit. 18, section 25120 for more
Operating Loss (NOL) Carryover Computation
• Taxpayers with a net business income of
information and examples of nonbusiness
less than $500,000,
and Limitation – Pierce’s Disease, for each
income.
• Taxpayers claiming disaster loss
taxable year in which an NOL deduction is
Farming Business Activities. Farming
being taken, this election is irrevocable.
carryovers.
business activities are generally determined
The carryover period for any NOL or NOL
The NOL allowed in computing the California
by the transactions and activities in the
carryover, for which a deduction is disallowed
taxable income of a nonresident or part-year
regular course of the farming trade or
because of the 2008-2011 suspension, are
resident is no longer limited by the amount of
business as related to the production of
NOLs from all sources. Only your California
extended by:
crops, fruits, other agricultural products,
sourced income and losses are considered
or for the sustenance of livestock. For more
• One year for losses incurred in taxable
in determining if you have a California NOL.
information, see Cal Code Regs. tit.18,
years beginning on or after January 1,
For more information, get form FTB 3805Q or
section 25128-2.
2010, and before January 1, 2011.
FTB 3805V.
• Two years for losses incurred in taxable
C Determining the Income
years beginning before January 1, 2010.
If your residency status changes from the
• Three years for losses incurred in taxable
time you generate the NOL carryover to the
California source farming business income
years beginning before January 1, 2009.
time you apply the NOL carryover deduction,
is apportioned to an area affected by PDV
• Four years for losses incurred in taxable
you will need to recompute the NOL carryover
by multiplying the total California farming
years beginning before January 1, 2008.
amount. For more information, get FTB
business income of the taxpayer by a fraction.
Pub. 1100, Taxation of Nonresidents and
The numerator is the property factor plus
For more information, get FTB Legal Ruling
Individuals Who Change Residency.
the payroll factor, and the denominator is
2011-04.
two. Those factors with zero balances in the
S Corporations. Pierce’s disease NOLs
Also, California modified the NOL carryback
totals of column (a) will not be included in the
incurred prior to becoming an S corporation
provision. For more information, get form
computation of the average apportionment
cannot be used against S corporation income.
FTB 3805Q, Net Operating Loss (NOL)
percentage. For example, if the taxpayer has
However, an S corporation is allowed to
Computation and NOL and Disaster Loss
payroll expenses, or property, but not both in
deduct a Pierce’s disease NOL incurred after
Limitations — Corporations or form
California, the taxpayer must enter on line 4
the “S” election is made. An S corporation
FTB 3805V, Net Operating Loss (NOL)
the same percentage listed on line 3.
may use the NOL as a deduction against
Computation and NOL and Disaster Loss
income subject to the 1.5% entity-level tax
Property Factor. Property is defined as the
Limitations – Individuals, Estates, and Trust.
(3.5% for financial S corporations). The
average value of all real and tangible personal
General Information
expenses and income giving rise to the loss
property owned or rented by the business and
are also passed through to the shareholders
used during the taxable year.
For taxable years beginning on or after
in the taxable year the loss is incurred.
Rented property is valued at eight times the
January 1, 2001, and before January 1, 2003,
net annual rental rate. The net annual rental
farmers were allowed a deduction for losses
A Purpose
rate for any item of rented property is the
sustained due to Pierce’s disease and its
Use form FTB 3805D to determine the correct
total rent paid for the property, less total
vectors (PDV) in California. This loss created
amount of NOL carryover that you can
annual subrental rates paid by subtenants.
an NOL which can be carried forward for nine
deduct this taxable year for prior year losses
years at 100%.
sustained due to PDV. Attach form FTB 3805D
to your California tax return.
FTB 3805D Instructions 2013 Page 1
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