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2013 Instructions for Form FTB 3805V

Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations — Individuals, Estates, and Trusts

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2009, and the California Revenue and Taxation Code (R&TC).

What’s New

To make the election, check the box in Part I

Extended Carryovers for Suspended NOLs –

under Section C - Election to Waive Carryback,

The carryover period for any NOL or NOL

Net Operating Loss (NOL) Carryback – NOLs

of form FTB 3805V, and attach form FTB 3805V

carryover, for which a deduction is disallowed

incurred in taxable years beginning on or

to the tax return. The election shall be made

because of the 2008-2011 suspension, are

after January 1, 2013, shall be carried back to

by the due date (including extensions of time)

extended by:

each of the preceding two taxable years. The

for filing the taxpayer’s return for the taxable

• One year for losses incurred in

allowable NOL carryback percentage varies. For

year of the NOL for which the election is to

taxable years beginning on or

an NOL incurred in a taxable year beginning on

be in effect. If the taxpayer filed the return

after January 1, 2010, and before

or after:

on time without making the election, the

January 1, 2011.

• January 1, 2013, and before

taxpayer can still make the election on the form

• Two years for losses incurred in taxable

January 1, 2014, the carryback amount

FTB 3805V and attach it to the amended return

years beginning before January 1, 2010,

shall not exceed 50% of the NOL.

filed within 6 months of the due date of the

• Three years for losses incurred in taxable

• January 1, 2014, and before

return (excluding extensions). Once made, the

years beginning before January 1, 2009.

January 1, 2015, the carryback amount

election shall be irrevocable for such taxable

• Four years for losses incurred in taxable

shall not exceed 75% of the NOL.

year.

years beginning before January 1, 2008.

• January 1, 2015, the carryback amount

For more information, get FTB Legal Ruling

shall be 100% of the NOL.

General Information

2011-04.

The Individuals, Estates, and Trusts

In general, for taxable years beginning on or

Carryovers – For NOLs incurred in taxable

compute the NOL carryback in Part IV of

after January 1, 2010, California law conforms

years beginning on or after January 1, 2008,

form FTB 3805V, Net Operating Loss (NOL)

to the IRC as of January 1, 2009. However,

California has extended the NOL carryover

Computation and NOL and Disaster Loss

there are continuing differences between

period from 10 taxable years to 20 taxable

Limitations – Individuals, Estates, and Trusts.

California and federal law. When California

years following the year of the loss.

For more information, see Revenue and

conforms to federal tax law changes, we do not

For taxable years that began in 2002 and

Taxation Code (R&TC) Section 17276.20

always adopt all of the changes made at the

2003, California suspended the NOL carryover

and get FTB Legal Ruling 2011-04 (see

federal level. For more information, go to

Situation 3).

deduction. Taxpayers continued to compute

ftb.ca.gov and search for conformity.

and carryover an NOL during the suspension

Amended Return – The Individuals, Estates,

Additional information can be found in

period. However, the deduction for disaster

and Trusts claim the NOL carryback by

FTB Pub. 1001, Supplemental Guidelines to

losses was not affected by the NOL suspension

amending the 2011 and/or 2012 tax return

California Adjustments, the instructions for

rules.

using Form 540X, Amended Individual Income

California Schedule CA (540 or 540NR), and

The carryover period for an NOL incurred in

Tax Return, or Form 541, California Fiduciary

the Business Entity tax booklets.

taxable years:

Income Tax Return.

The instructions provided with California tax

Note: If the Individuals, Estates, and Trusts

• Beginning before January 1, 2002, have

forms are a summary of California tax law

will claim the NOL as a carryback in any

been extended for two years.

and are only intended to aid taxpayers in

• Beginning on or after January 1, 2002,

of the previous two years, the Individuals,

preparing their state income tax returns. We

Estates, and Trusts will first file the applicable

and before January 1, 2003, have been

include information that is most useful to the

2013 tax return and attach the completed

extended for one year.

greatest number of taxpayers in the limited

2013 form FTB 3805V to the tax return. After

For more information, get FTB Legal Ruling

space available. It is not possible to include all

the 2013 tax return is filed, the Individuals,

2011-4.

requirements of the California R&TC in the tax

Estates, and Trusts will file the amended

booklets. Taxpayers should not consider the

Carryover Percentages – For taxable years

return for 2011 and/or 2012 to claim the

tax booklets as authoritative law.

beginning on or after January 1, 2004, the

NOL carryback deduction and provide the

NOL carryover percentage is 100%. The NOL

NOL Suspensions – For taxable years

following explanation on Form 540X, Part II,

carryover percentage varies for NOLs incurred

beginning in 2010 and 2011, California

Explanation of Changes, line 5: “2013 NOL

prior to January 1, 2004. See the chart on the

suspended the NOL carryover deduction.

carryback deduction”. For amended Form 541,

next page for more information.

Taxpayers continued to compute and carryover

attach a statement and provide the following

NOLs during the suspension period. However,

explanation: “2013 NOL carryback deduction”.

A Purpose

taxpayers with a modified adjusted gross

Do not attach the 2013 form FTB 3805V to

income of less than $300,000 or with disaster

Individuals, Estates, or Trusts use form

the 2011 or 2012 amended return. Attaching

loss carryovers were not affected by the NOL

FTB 3805V to figure the current year NOL

form FTB 3805V may delay processing of the

suspension rules.

and to limit the NOL carryback/carryover and

amended return.

disaster loss deductions.

For taxable years beginning in 2008 and

Election to Waive Carryback – Any taxpayer

2009, California suspended the NOL carryover

Form FTB 3805V is divided into four parts:

entitled to a carryback period pursuant to Internal

deduction. Taxpayers continued to compute

Revenue Code (IRC) Section 172(b)(3) may elect

Part I:

Computation of Current Year NOL.

and carryover their NOL during the suspension

to relinquish/waive the entire carryback period

Part II:

Determine Modified Taxable Income

period. However, taxpayers with a net business

with respect to an NOL incurred in the 2013

(MTI). MTI is the amount of your

income of less than $500,000 or with disaster

taxable year. By making the election, the taxpayer

taxable income that can be offset by

loss carryovers were not affected by the NOL

is electing to carry an NOL forward instead of

your prior years’ NOL carryover.

suspension rules.

carrying it back in the previous two years.

Part III:

NOL Carryover and Disaster Loss

Carryover Limitations.

Part IV:

NOL Carryback.

FTB 3805V Instructions 2013 Page 1

Instructions For Form Ftb 3805v - Net Operating Loss (Nol) Computation And Nol And Disaster Loss Limitations - Individuals, Estates, And Trusts - 2013

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