Form 3802 - California Corporate Passive Activity Loss And Credit Limitations - 2015 Page 2
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1
2Part I – Passive Activity Loss
Because California and federal laws differ, PTPs may
The following credits from passive activities are
have different income amounts for state and federal
included on form FTB 3802:
Line 1d and Line 3
purposes (see form FTB 3801). However, when
Credit
Code
If line 1d or line 3 shows net income or zero, all of
figuring PALs, California PTPs are treated the same
Orphan drug credit carryover
185
the deductions and losses are allowed, including any
as federal PTPs. Follow the “Special Instructions
Low-income housing credit
172
prior year unallowed losses entered on line 1c. If the
for PTPs” in the instructions for federal Form 8582,
Research credit
183
“federal reconciliation” method was used to complete
Passive Activity Loss Limitations.
Form 100 or Form 100W, compare the California
Credit Limitations
C Who Must File
amount on form FTB 3802, line 1d or line 3 to the
Each credit is subject to specific requirements and
amount on federal Form 8810, line 1d or line 3. Enter
limitations. Get the applicable credit form for more
Personal service corporations and closely held
the difference as a state adjustment on Form 100 or
information before applying the passive credit
C corporations that have losses or credits from
Form 100W, line 8 or line 15, whichever is applicable.
limitations.
passive activities must file form FTB 3802. See
Line 2 – Closely held C corporations
Line 7
the instructions for federal Form 8810 for the
Closely held C corporations can offset the loss, if
Use Part I or Part II of the Computation for Line 7 in
definitions of personal service corporations and
any, on line 1d with net active income. Net active
the instructions for federal Form 8810 to figure the
closely held C corporations. S corporations must
income is the corporation’s taxable income for
tax attributable to net passive/active income.
use forms FTB 3801 and FTB 3801-CR instead of
the taxable year, determined without regard to the
form FTB 3802.
Enter -0- on line 7, if any of the following apply:
following items:
D Coordination With Other
•
The corporation is a personal service corporation
•
Net passive income or loss.
with a loss on form FTB 3802, line 1d.
Limitations
•
Portfolio income.
•
The corporation is a personal service corporation
•
Deductions attributable to portfolio income
Items of deduction or loss from passive activities
with net passive income on form FTB 3802,
described in Temporary Treas. Reg.
are subject to basis and at-risk limitations before
line 1d, and the corporation had an overall loss
Section 1.469-2T(d)(2)(i), (ii), and (iv).
they are subject to the passive loss limitations.
from the entire disposition of a passive activity
•
Interest expense allocated under Temporary Treas.
For details on at-risk rules, get federal Form 6198,
that was equal to or greater than the net income
Reg. Section 1.163-8T to a portfolio expenditure
At-Risk Limitations. Complete federal Form 6198
on line 1d.
within the meaning of Section 1.163-8T(b)(6).
using California amounts before completing form
•
The corporation is a closely held C corporation
•
Gain on the disposition of substantially
FTB 3802.
with a loss on form FTB 3802, line 1d, and the
appreciated property formerly held for investment.
corporation had no net active income.
E Special Rules for Corporations
See Treas. Reg. Section 1.469-2(c)(2)(iii).
•
The corporation is a closely held C corporation
•
Gross income from certain oil or gas properties
Filing a Combined Report
with net passive income on form FTB 3802,
treated under Treas. Reg. Section 1.469-2(c)(6)
line 1d, and had an overall loss from an entire
as if from a non-passive activity.
The PAL and passive activity credit of a corporation
disposition that was equal to or greater than
filing a combined report are determined by taking
•
Gross income and deductions from any trade
the amount on form FTB 3802, line 1d, and the
or business activity from trading certain
into account the following items of all members of
corporation had no net active income.
personal property described in Temporary Treas.
the group:
See the instructions for federal Form 8810, line 7, for
Reg. Section 1.469-1T(e)(6), but only if the
•
Passive activity gross income and deductions.
more information.
corporation does not materially participate in the
•
Gain or loss on dispositions.
activity for the taxable year.
Line 8 – Unallowed passive activity credit
•
Net active income (in the case of a corporation
If line 8 is zero, all of the passive activity credits on
Net active income includes an overall loss from a
filing a combined report treated as a closely held
line 6 are allowed. See the instructions for line 9 for
C corporation).
passive activity if there is a fully taxable disposition
how to report the credits.
of an entire interest in a passive activity. Include the
•
Credits from passive activities.
overall loss to the extent that it exceeds net passive
Line 9 – Allowed passive activity credit
Specific Line Instructions
income. If there is a net passive loss, include all of
If the credits allowed on line 9 do not have to
the loss.
be allocated between activities or different types
The PAL rules of IRC Section 469 apply to closely
of credits, report the amount on line 9 on the
For purposes of computing net active income,
held corporations and personal service corporations.
appropriate credit form.
figure any contribution deduction by taking 10% of
Corporations subject to the PAL rules must complete
net active income (figured without the contribution
form FTB 3802 to compute the allowable PAL and
If the credits allowed on line 9 must be allocated
deduction) and subtract the smaller of that amount
credit limitations. Before completing form FTB 3802,
between activities or different types of credits,
or the contribution deduction from the net active
complete federal Worksheet 1 through Worksheet 6
complete federal Worksheet 6 using California
income (figured without the contribution deduction).
in the instructions for federal Form 8810, using
amounts to determine the credit amount allowed for
California amounts.
each activity.
Line 4 – Total deductions and losses allowed
Use Worksheet 3 and Worksheet 4 in the instructions
Also, see Temporary Treas. Reg. Section 1.163-8T,
Part III – Election to Increase Basis of
for federal Form 8810 to figure the unallowed
which provides rules for allocating interest expense
Credit Property
deductions and losses to be carried forward and the
among activities. The interest offset computation
allowed deductions and losses to report on the 2015
should be made before allocating this interest expense
When a taxpayer disposes of an entire interest in a
California forms. Federal Worksheet 2, columns (d)
among activities. Get Schedule R, Apportionment and
passive activity through a taxable transaction, the
and (e), will show whether an activity had an overall
Allocation of Income, for more information.
taxpayer may elect to increase the property’s basis,
gain or loss. If an activity has an overall gain on
immediately before the disposition, by the credit
A state adjustment may be required on Form 100,
Worksheet 2, column (d), report all of the deductions
amount if both of the following circumstances are met:
California Corporation Franchise or Income Tax
and losses listed in Worksheet 1 and any prior year
Return, or Form 100W, California Corporation
•
The taxpayer was required to reduce the
unallowed losses in Worksheet 2 for those activities
Franchise or Income Tax Return - Water’s-Edge Filers,
property’s basis by the amount of the credit.
on the appropriate lines of Form 100 or Form 100W.
line 8 or line 15, if the corporation uses the “federal
•
The taxpayer was not able to apply all or part
Use Worksheet 3 and Worksheet 4 for activities in
reconciliation” method to file Form 100 or Form 100W.
of the credit against tax liability because of the
Worksheet 2 that show an overall loss in column (e).
See General Information I, Net Income Computation, in
limitations imposed by the passive activity rules.
the Form 100 Tax Booklet or Form 100W Tax Booklet
Part II – Passive Activity Credits
See IRC Section 469(j)(9) for more information. The
for more information.
amount of the unallowed credit which a taxpayer
Use form FTB 3802, Part II to determine the amount
To complete form FTB 3802, see the instructions
may elect to add back to the basis of property for
of certain credits allowed from passive activities for
that follow and the specific instructions for federal
California tax purposes may differ from the amount
the current taxable year and the passive activities
Form 8810, Part I and Part II.
of unallowed credit entered on federal Form 8810,
credit carryover amount.
Part III, because of differences in California and
federal law. Complete Part III to make the election for
California tax purposes.
Page 2 FTB 3802 Instructions 2015
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