California Form 3802 - Corporate Passive Activity Loss And Credit Limitations - 2012 Page 2
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1
2Part I – 2012 Passive Activity Loss
figuring PALs, California PTPs are treated the same
The following credits from passive activities are
as federal PTPs. Follow the “Special Instructions
included on form FTB 3802:
Line 1d and Line 3
for PTPs” in the instructions for federal Form 8582,
Credit
Code
If line 1d or line 3 shows net income or zero, all of
Passive Activity Loss Limitations.
Orphan drug credit carryover
185
the deductions and losses are allowed, including any
C Who Must File
Low-income housing credit
172
prior year unallowed losses entered on line 1c. If the
Research credit
183
“federal reconciliation” method was used to complete
Personal service corporations and closely held
Form 100 or Form 100W, compare the California
Credit Limitations
C corporations that have losses or credits from
amount on form FTB 3802, line 1d or line 3 to the
Each credit is subject to specific requirements and
passive activities must file form FTB 3802. See
amount on federal Form 8810, line 1d or line 3. Enter
limitations. Get the applicable credit form for more
the instructions for federal Form 8810 for the
the difference as a state adjustment on Form 100 or
information before applying the passive credit
definitions of personal service corporations and
Form 100W, line 8 or line 16, whichever is applicable.
limitations.
closely held C corporations. S corporations must
Line 2 – Closely held C corporations
Line 7
use forms FTB 3801 and FTB 3801-CR instead of
Closely held C corporations can offset the loss, if
Use Part I or Part II of the Computation for Line 7 in
form FTB 3802.
any, on line 1d with net active income. Net active
the instructions for federal Form 8810 to figure the
D Coordination With Other
income is the corporation’s taxable income for
tax attributable to net passive/active income.
the taxable year, determined without regard to the
Limitations
Enter -0- on line 7, if any of the following apply:
following items:
Items of deduction or loss from passive activities
•
The corporation is a personal service corporation
•
Net passive income or loss.
are subject to basis and at-risk limitations before
with a loss on form FTB 3802, line 1d.
•
Portfolio income.
they are subject to the passive loss limitations.
•
The corporation is a personal service corporation
•
Deductions attributable to portfolio income
For details on at-risk rules, get federal Form 6198,
with net passive income on form FTB 3802,
described in Temporary Treas. Reg.
At-Risk Limitations. Complete federal Form 6198
line 1d, and the corporation had an overall loss
Section 1.469-2T(d)(2)(i), (ii), and (iv).
using California amounts before completing form
from the entire disposition of a passive activity
•
Interest expense allocated under Temporary Treas.
FTB 3802.
that was equal to or greater than the net income
Reg. Section 1.163-8T to a portfolio expenditure
on line 1d.
E Special Rules for Corporations
within the meaning of Section 1.163-8T(b)(6).
•
The corporation is a closely held C corporation
•
Gain on the disposition of substantially
Filing a Combined Report
with a loss on form FTB 3802, line 1d, and the
appreciated property formerly held for investment.
corporation had no net active income.
The PAL and passive activity credit of a corporation
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 are determined by taking
with net passive income on form FTB 3802,
into account the following items of all members of
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 group:
disposition that was equal to or greater than
•
Gross income and deductions from any trade
•
Passive activity gross income and deductions.
the amount on form FTB 3802, line 1d, and the
or business activity from trading certain
•
Gain or loss on dispositions.
corporation had no net active income.
personal property described in Temporary Treas.
•
Net active income (in the case of a corporation
See the instructions for federal Form 8810, line 7, for
Reg. Section 1.469-1T(e)(6), but only if the
filing a combined report treated as a closely held
more information.
corporation does not materially participate in the
C corporation).
activity for the taxable year.
Line 8 – Unallowed passive activity credit
•
Credits from passive activities.
If line 8 is zero, all of the passive activity credits on
Net active income includes an overall loss from a
Specific Instructions
line 6 are allowed. See the instructions for line 9 for
passive activity if there is a fully taxable disposition
how to report the credits.
of an entire interest in a passive activity. Include the
The PAL rules of IRC Section 469 apply to closely
overall loss to the extent that it exceeds net passive
Line 9 – Allowed passive activity credit
held corporations and personal service corporations.
income. If there is a net passive loss, include all of
If the credits allowed on line 9 do not have to
Corporations subject to the PAL rules must complete
the loss.
be allocated between activities or different types
form FTB 3802 to compute the allowable PAL and
of credits, report the amount on line 9 on the
For purposes of computing net active income,
credit limitations. Before completing form FTB 3802,
appropriate credit form.
figure any contribution deduction by taking 10% of
complete federal Worksheet 1 through Worksheet 6
net active income (figured without the contribution
in the instructions for federal Form 8810, using
If the credits allowed on line 9 must be allocated
deduction) and subtract the smaller of that amount
California amounts.
between activities or different types of credits,
or the contribution deduction from the net active
complete federal Worksheet 6 using California
Also, see Temporary Treas. Reg. Section 1.163-8T,
income (figured without the contribution deduction).
amounts to determine the credit amount allowed for
which provides rules for allocating interest expense
each activity.
Line 4 – Total deductions and losses allowed
among activities. The interest offset computation
Use Worksheet 3 and Worksheet 4 in the instructions
should be made before allocating this interest expense
Part III – Election to Increase Basis of
for federal Form 8810 to figure the unallowed
among activities. Get Schedule R, Apportionment and
Credit Property
deductions and losses to be carried forward and the
Allocation of Income, for more information.
allowed deductions and losses to report on the 2012
When a taxpayer disposes of an entire interest in a
A state adjustment may be required on Form 100,
California forms. Federal Worksheet 2, columns (d)
passive activity through a taxable transaction, the
California Corporation Franchise or Income Tax
and (e), will show whether an activity had an overall
taxpayer may elect to increase the property’s basis,
Return, or Form 100W, California Corporation
gain or loss. If an activity has an overall gain on
immediately before the disposition, by the credit
Franchise or Income Tax Return - Water’s-Edge Filers,
Worksheet 2, column (d), report all of the deductions
amount if both of the following circumstances are met:
line 8 or line 16, if the corporation uses the “federal
and losses listed in Worksheet 1 and any prior year
reconciliation” method to file Form 100 or Form 100W.
•
The taxpayer was required to reduce the
unallowed losses in Worksheet 2 for those activities
See General Information I, Net Income Computation, in
property’s basis by the amount of the credit.
on the appropriate lines of Form 100 or Form 100W.
the Form 100 Tax Booklet or Form 100W Tax Booklet
•
The taxpayer was not able to apply all or part
Use Worksheet 3 and Worksheet 4 for activities in
for more information.
of the credit against tax liability because of the
Worksheet 2 that show an overall loss in column (e).
limitations imposed by the passive activity rules.
Specific Line Instructions
Part II – 2012 Passive Activity Credits
See IRC Section 469(j)(9) for more information. The
To complete form FTB 3802, see the instructions
amount of the unallowed credit which a taxpayer
Use form FTB 3802, Part II to determine the amount
below and the specific instructions for federal
may elect to add back to the basis of property for
of certain credits allowed from passive activities for
Form 8810, Part I and Part II.
California tax purposes may differ from the amount
the current taxable year and the passive activities
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 2012
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