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The delayed reapplication method.

June 20, 1988

January 1, 1990

applies whether or not you are liable for alternative

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The 10% method.

July 10, 1989

January 1, 1990

minimum tax (AMT) for the filing year or for any

prior taxable year.

For purposes of the look-back method, include this

Specific Line Instructions

adjustment amount in the amount entered on line 2

Interest is computed under the look-back method to

for the taxable year from which the adjustment arose.

the extent your total tax liability (including the AMT

Part I — Regular Method

Attach a schedule showing your computation.

liability) would have differed if the percentage of

completion method had been applied using actual,

Use Part I only if you are not electing, do not have

Prepare the schedule in columns for the affected

rather than estimated, contract price and contract

an election in effect, or are not required to use the

years so that the net adjustment shown in each

costs.

simplified marginal impact method as described in

column on the attached schedule agrees with the

General Information H, Simplified Marginal Impact

amounts shown on line 2.

G Amended Form FTB 3834

Method.

Line 4 and Line 5 – Reduce the tax on line 4 and

Columns (a) and (b) – At the top of each column,

Individuals, estates, or trusts, file an amended form

line 5 (but not below the minimum franchise tax)

enter the ending month and year for each prior

FTB 3834 only if the amount shown on Part I, line 6 or

by allowable credits (other than refundable credits).

taxable year in which you were required to report

Part II, line 7 for any prior year changes as a result of

Include any taxes (such as AMT) required to be taken

income from the completed long-term contract(s)

an error, an income tax examination, or the filing of an

into account in the computation of your tax liability

and for any other year affected.

amended income tax return. Follow the corresponding

determined as of the latest of the following:

filing instructions for Part I, line 9 and line 10.

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The original due date.

Line 2 – In each column, show a net increase to

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The date of an amended or adjusted return.

income as a positive amount and a net decrease

H Simplified Marginal Impact

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The last previous application of the look-back

to income as a negative amount. For apportioning

method.

taxpayers, the net increase or net decrease to income

Method

is after apportionment. For more information, see

See Treas. Reg. Section 1.460-6(c)(3)(iii) for

Cal. Code Regs., tit. 18 section 25137-2.

Treasury Regulation (Treas. Reg.) Section 1.460-6(d)

exceptions and further explanation.

established the simplified marginal impact method

In figuring the net adjustment to enter in each

Line 7 and Line 8 – For an increase (or decrease) in

for figuring look-back interest. Pass-through entities,

column on line 2, be sure to take into account any

tax for each prior year, interest due or to be refunded

as defined in IRC Section 460(b)(4)(C)(ii), that are

other income and expense adjustments that may

must be compounded on a daily basis from the due

not closely held must use this simplified method.

result from the increase (or decrease) to income

date (not including extensions) of the return for the

All other taxpayers may elect to use this method for

from long-term contracts. For example, in the

prior year until the earlier of the following:

domestic contracts.

case of an individual, a change to adjusted gross

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The due date (not including extensions) of the

A pass-through entity is considered closely held if,

income may affect investment expenses and medical

return for the contract completion year.

at any time during any taxable year for which there

expenses under R&TC Section 17201; in the case of

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The date the return for the contract completion

is income under the contract, 50% or more (by

a corporation, the apportionment percentage may be

year is filed and any tax due for that year has

value) of the beneficial interests in the entity are held

affected by a change in the gross receipts included in

been fully paid.

(directly or indirectly) by or for five or fewer persons.

the sales factor.

Contracts Completed in Taxable Years Ending

Under the simplified method, hypothetical

Attach separate schedules for regular taxable income

Before January 1, 2013

underpayments or overpayments of tax in prior

or net income and AMTI that include the following:

Note: The chart for the Corporate Overpayment Rates

years are figured using an assumed marginal tax

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Identification of each completed long-term

is on the next page.

rate which is generally the highest statutory rate

contract by contract number, job name, or any

For contracts completed in taxable years ending

of tax in effect for each prior year under R&TC

other reasonable method used in your records to

before January 1, 2013, the interest rates to be

Sections 17041 and 23151. This method eliminates

identify each contract.

compounded daily are:

the need to refigure your tax liability based on actual

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The amount of income previously reported for

contract price and actual contract costs each time

each contract based on estimated contract price

Period

Rate

the look-back method is applied.

and costs for each prior year.

July 1, 1989, through December 31, 1989 . . . . 12%

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The amount of income for each contract allocable

If you elect the simplified method, use the same

January 1, 1990, through June 30, 1991 . . . . . 11%

to each prior year based on actual contract price

method in the election year and all later years, unless

July 1, 1991, through June 30, 1992 . . . . . . . . 10%

and costs.

the FTB consents to a revocation of the election. Use

July 1, 1992, through December 31, 1992 . . . . . 9%

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The net adjustment to income from long-term

Part II to figure the simplified marginal impact method.

January 1, 1993, through June 30, 1993 . . . . . . 8%

contracts for each prior year.

S Corporations

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Any other adjustments that result from the

July 1, 1993, through December 31, 1994 . . . . . 7%

change to income from long-term contracts.

January 1, 1995, through June 30, 1995 . . . . . . 8%

S corporations using Part II, the Simplified Marginal

July 1, 1995, through December 31, 1998 . . . . . 9%

An owner of an interest in a pass-through entity

Impact Method, must complete form FTB 3834 for

is not required to provide the detail listed in the

January 1, 1999, through June 30, 1999 . . . . . . 8%

each completed long-term contract to compute the

first three items above with respect to prior years.

July 1, 1999, through December 31, 1999 . . . . . 7%

interest due or to be refunded to the S corporation

The entity should provide the line 2 amounts on

January 1, 2000, through December 31, 2000 . . 8%

as a result of the franchise tax imposed on

Schedule K-1 (100S, 541, 565, or 568), Share of

January 1, 2001, through December 31, 2001 . . 9%

S corporations. An S corporation cannot file form

Income, Deductions, Credits, etc., or on a separate

January 1, 2002, through June 30, 2002 . . . . . . 7%

FTB 3834 on behalf of its shareholders. Shareholders

statement for its taxable year in which the contracts

of the S corporation make separate elections and file

July 1, 2002, through June 30, 2003 . . . . . . . . . 6%

are completed or adjusted.

form FTB 3834 using the applicable individual rates.

July 1, 2003, through June 30, 2004 . . . . . . . . . 5%

If you are reporting line 2 amounts from more than

July 1, 2004, through June 30, 2005 . . . . . . . . . 4%

J Miscellaneous

one Schedule K-1 (100S, 541, 565, or 568) or similar

July 1, 2005, through December 31, 2005 . . . . . 5%

statement, you must attach a schedule detailing

January 1, 2006, through June 30, 2006 . . . . . . 6%

If more than three prior years are involved, check

by entity the net change to income from long-term

the box above Part I, Side 1 of form FTB 3834.

July 1, 2006, through December 31, 2006 . . . . . 7%

contracts.

Attach additional form(s) FTB 3834 as needed. Enter

January 1, 2007, through June 30, 2008 . . . . . . 8%

Net Adjustment

your name, identifying number, and taxable year.

July 1, 2008, through December 31, 2008 . . . . . 7%

California law requires taxpayers to make an

Complete Part I, line 1 through line 8; or Part II,

January 1, 2009, through June 30, 2009 . . . . . . 5%

adjustment to income upon completion of a contract

line 1 through line 9; but do not enter totals in Part I,

July 1, 2009, through December 31, 2009 . . . . . 5%

to correct any underreporting or overreporting of

column (c) or Part II, column (d). Enter totals only in

January 1, 2010, through June 30, 2010 . . . . . . 4%

income resulting from differences between state

Part I, column (c) or Part II, column (d) of the form

and federal law for the taxable year in which the

July 1, 2010, through December 31, 2010. . . . . 4%

FTB 3834 that you sign.

contract began. This adjustment may be necessary:

January 1, 2011, through June 30, 2011 . . . . . . 4%

Follow the instructions for federal Form 8697, when

For a contract

During a

July 1, 2011, through December 31, 2011 . . . . . 3%

applying the look-back method under these special

entered

taxable year

January 1, 2012, through June 30, 2012 . . . . . . 4%

situations:

into after:

beginning before:

July 1, 2012 to present . . . . . . . . . . . . . . . . . . . 3%

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Change orders.

February 28, 1986

January 1, 1987

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Treatment of amounts properly taken into

October 13, 1987

January 1, 1990

account after contract completion.

Page 2 FTB 3834 Instructions 2013

Instructions For Form Ftb 3834 - Interest Computation Under The Look-Back Method For Completed Long-Term Contracts - 2013 Page 2

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