Instructions For Form Ftb 3801 - Passive Activity Loss Limitations

or S corporation in which you hold an interest

Activity Loss and Credit Limitations. Refer to

This may require you to figure the California/

and you determine the activity is passive,

IRC Section 469(h)(4) and the regulations for

federal depreciation or amortization adjustment

skip Step 1 and use the California amount

more information.

using form FTB 3885A, Depreciation and

from your Schedule K-1 (565, 568, or 100S),

Amortization Adjustments.

To compute your California PAL for

column (d), to complete Worksheet 1 and

S corporations, use the worksheets on Side 2

Step 2

Worksheet 2 on form FTB 3801, Side 3.

to determine the amounts to enter on form

Complete form FTB 3801, Side 1. The result

FTB 3801 and the S corporation’s allowed loss.

will be your total losses allowed from all

Step 2 — Completing Form

passive activities for 2013.

The S corporation’s PAL adjustment will be

FTB 3801, Side 1

the difference between the current year net

Step 3

income (loss) from all passive activities before

Use the amount from the California Passive

Carry the amounts from form FTB 3801,

Activity Worksheet, Side 2, column (f) to

application of the PAL rules and the total

Side 1, to the worksheets on form FTB 3801,

allowable net income (loss) from all passive

complete form FTB 3801, Side 3, Worksheet 1

Side 3 and Side 4. You will use these

activities after application of the PAL rules.

and Worksheet 2. These worksheets will

worksheets to compute the allowable loss for

Enter the PAL adjustment on either line 7 or

determine the amounts to enter on form

each separate passive activity.

line 13 on Form 100S.

FTB 3801, Side 1, lines 1a, 1b, 2a, and 2b.

Step 4

Complete form FTB 3801, Side 1 as follows:

C Coordination with Other

The net income (loss) for each passive activity

Part I

will be carried back to the California form or

Limitations

Enter the amounts from form FTB 3801,

schedule on which it is usually reported. If

Side 3, Worksheet 1 and Worksheet 2.

there are no California forms to carry these

Generally, losses from passive activities

amounts to (i.e., amounts from federal

are subject to other limitations, such as

Get federal Form 8582, Passive Activity Loss

Schedule C, Profit or Loss from Business (Sole

basis and at-risk limitations, before they are

Limitations, for specific line instructions and

Proprietorship), Schedule E, Supplemental

subject to the passive loss limitations. Once

examples.

Income and Loss, and Schedule F, Profit or

a loss becomes allowable under these other

Line 3

Loss From Farming), complete the California

limitations, you must determine whether the

If line 3 shows income, all of your losses are

Adjustment Worksheets on form FTB 3801,

loss is limited under the passive loss rules.

allowed, including any prior year unallowed

Side 2.

Get federal Form 6198, At-Risk Limitations, for

losses entered on line 1c or line 2c. Transfer

more information on at-risk rules. However,

If you are completing the California

the income and losses to the form or schedule

capital losses that are allowable under the

Adjustment Worksheets, include any

on which you normally report them. See

passive loss rules may be limited under IRC

nonpassive activities that are reported on

Step 4, “Figuring the California Adjustment.”

Section 1211. Similarly, percentage depletion

the same federal schedules as the passive

Part II

deductions that are allowable under the

activities for which you are completing these

Enter all numbers in Part II as positive

passive loss rules may be limited under IRC

worksheets. For example, if you have both

amounts. Get federal Form 8582 for line

Section 613A(d).

passive and nonpassive Schedule E activities,

instructions and examples.

you will include all of them on your California

Complete federal Form 6198 using California

Trusts: You do not qualify for the $25,000

Adjustment Worksheet, Schedule E Activities.

amounts before completing form FTB 3801.

special allowance for rental real estate with

By including both your passive and nonpassive

Passive Activity Credit Limitations. The

active participation.

activities on the California Adjustment

following credits may be limited by passive

Estates: If the taxpayer actively participated in

Worksheets, you will be able to compute

activity income:

rental real estate before death, you may use the

a single adjustment amount to transfer to

Credit

Code

$25,000 special allowance for rental real estate

Schedule CA (540 or 540NR), line 12, line 17,

Orphan drug credit carryover

185

for two years. The $25,000 special allowance is

or line 18.

Low-income housing

172

reduced by the amount used by the surviving

General Instructions

Research

183

spouse/RDP.

To determine how much credit is allowed for

Step 1 — Figuring your

Line 5

the current year:

If you are married/RDPs filing separate tax

California Passive Activity

• Individuals, estates, trusts, and

returns who lived apart at all times during

Income (Loss)

S corporations get form FTB 3801-CR,

the year, enter $75,000 on line 5 instead of

Passive Activity Credit Limitations.

$150,000. If you are married/RDPs filing

Use the California Passive Activity Worksheet

• Personal Service Corporations and

separate tax returns who lived together at any

on form FTB 3801, Side 2, to determine the

closely-held corporations subject to the

time during the year, you are not eligible for

current year California net income or net loss

passive loss rules get form FTB 3802,

this special allowance. You must enter -0- on

from each passive activity before application

Corporate Passive Activity Loss and Credit

line 9 and go to line 10.

of the PAL rules. Enter information for each

Limitations.

Line 6

passive activity on the schedule separately. The

Enter your modified federal adjusted gross

amount to enter in column (d) of the schedule

D Overview of Form

income from federal Form 8582, line 7. For

is on the federal form on which the activity

Form FTB 3801 contains four steps which are

RDPs, enter your federal modified adjusted

is reported. If you need more space, attach

briefly described below:

gross income from your refigured federal

additional sheets.

Form 8582, line 7.

Step 1

Example: You reported a rental loss on federal

Complete form FTB 3801, Side 2, California

If you are a military servicemember domiciled

Schedule E. The amount of this loss before

Passive Activity Worksheet, in order to figure

outside of California, subtract your military

the application of the PAL rules is on federal

your current year California passive activity

pay from your modified federal adjusted gross

Schedule E, line 21. Enter this amount in

income (loss) amounts. You must figure the

income.

column (d) of the worksheet.

current year California income (loss) amount

If you have not already done so, complete

Note for partners, members of limited

for each passive activity before application of

Federal Form 8582 to figure your modified

liability companies (LLCs), and shareholders

the PAL rules.

adjusted gross income.

of S corporations: If you do not materially

participate in the activity of a partnership, LLC,

S Corporations: Enter the amount from

Page 2 FTB 3801 Instructions 2013

Instructions For Form Ftb 3801 - Passive Activity Loss Limitations - 2013 Page 2

Related Articles

Related forms

Related Categories