California Form 3805d - Net Operating Loss (Nol) Carryover Computation And Limitation - Pierce'S Disease Page 2
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32016 Instructions for Form FTB 3805D
Net Operating Loss (NOL) Carryover Computation and Limitation – Pierce’s Disease
Important Information
General Information
A Purpose
Taxable year 2016 is the last year that a
For taxable years beginning on or after
Use form FTB 3805D to determine the correct
Pierce’s disease net operating loss (PDV NOL)
January 1, 2001, and before January 1, 2003,
amount of NOL carryover that you can
carryover deduction may be claimed, if a
farmers were allowed a deduction for losses
deduct this taxable year for prior year losses
carryover amount is still available.
sustained due to PDV in California. This loss
sustained due to PDV. Attach form FTB 3805D
created an NOL which can be carried forward
to your California tax return.
For taxable years beginning in 2010 and 2011,
for nine years at 100%.
California suspended the NOL carryover
B Definitions
deduction. Taxpayers may continue to
The carryover periods for an NOL incurred in
compute and carryover NOLs during the
years:
Pierce’s Disease. Pierce’s disease is a
pathogen (a plant killing bacterium) which
suspension period. However, the NOL
• Beginning before January 1, 2002, have
attacks a plant’s water-conducting tissues.
suspension rules do not apply to:
been extended for two years.
Vector. A vector is an insect that carries and
• Corporations with net income after state
• Beginning on or after January 1, 2002,
transmits a disease-causing organism. The
adjustments (pre-apportioned income) of
and before January 1, 2003, have been
specific “vector” in Pierce’s disease is the
less than $300,000,
extended for one year.
glassy-winged sharpshooter.
• Taxpayers other than corporations with
For more information, get FTB Legal Ruling
modified adjusted gross income of less
Affected Area. The affected area is the
2011-04.
than $300,000,
taxpayer’s area confirmed by the CDFA as
To claim these NOLs, the California
• Taxpayers claiming a disaster loss
having a pest infestation resulting from
Department of Food and Agriculture (CDFA)
carryover.
Pierce’s disease and its vectors.
must confirm that a pest infestation occurred
For taxable years beginning in 2008 and
Business Income. Business income is defined
due to PDV. For more information, go to
2009, California suspended the NOL carryover
as income arising from transactions and
cdfa.ca.gov or call 916.900.5024.
deduction. Taxpayers may continue to
activities in the regular course of the trade or
The PDV NOL carryover can be deducted
compute and carryover an NOL during
business. Business income includes income
only against income apportioned to the area
the suspension period. However, the NOL
from tangible and intangible property if the
affected by PDV using a two-factor (Property
suspension rules do not apply to:
acquisition, management, and disposition of
and Payroll) formula.
the property constitute integral parts of the
• Corporations with taxable income of less
PDV NOL Election. If the taxpayer made
regular trade or business operations.
than $500,000,
an election and designated the carryover
• Taxpayers with a net business income of
Nonbusiness Income. Nonbusiness income
category on the original return for the taxable
less than $500,000,
is all income other than business income.
year of a loss and filed form FTB 3805D, Net
• Taxpayers claiming a disaster loss
See Cal. Code Regs., tit. 18 section 25120
Operating Loss (NOL) Carryover Computation
carryover.
for more information and examples of
and Limitation – Pierce’s Disease, for each
nonbusiness income.
The carryover period for any NOL or NOL
taxable year in which an NOL deduction is
carryover, for which a deduction is disallowed
Farming Business Activities. Farming
being taken, this election is irrevocable.
because of the 2008-2011 suspension, are
business activities are generally determined
The NOL allowed in computing the California
extended by:
by the transactions and activities in the
taxable income of a nonresident or part-year
regular course of the farming trade or
• One year for losses incurred in taxable
resident is no longer limited by the amount of
business as related to the production of
years beginning on or after January 1,
NOLs from all sources. Only your California
crops, fruits, other agricultural products,
2010, and before January 1, 2011.
sourced income and losses are considered
or for the sustenance of livestock. For more
• Two years for losses incurred in taxable
in determining if you have a California NOL.
information, see Cal. Code Regs., tit. 18
years beginning before January 1, 2010.
For more information, get form FTB 3805Q or
section 25128-2.
• Three years for losses incurred in taxable
FTB 3805V.
years beginning before January 1, 2009.
C Determining the Income
If your residency status changes from the
• Four years for losses incurred in taxable
time you generate the NOL carryover to the
years beginning before January 1, 2008.
California source farming business income
time you apply the NOL carryover deduction,
is apportioned to an area affected by PDV
For more information, get FTB Legal
you will need to recompute the NOL carryover
by multiplying the total California farming
Ruling 2011-04.
amount. For more information, get FTB
business income of the taxpayer by a fraction.
Also, California modified the NOL carryback
Pub. 1100, Taxation of Nonresidents and
The numerator is the property factor plus
provision. For more information, get form
Individuals Who Change Residency.
the payroll factor, and the denominator is
FTB 3805Q, Net Operating Loss (NOL)
S Corporations. PDV NOLs incurred prior to
two. Those factors with zero balances in the
Computation and NOL and Disaster Loss
becoming an S corporation cannot be used
totals of column (a) will not be included in the
Limitations — Corporations, or form
against S corporation income. However, an S
computation of the average apportionment
FTB 3805V, Net Operating Loss (NOL)
corporation is allowed to deduct a PDV NOL
percentage. For example, if the taxpayer has
Computation and NOL and Disaster Loss
incurred after the “S” election is made. An S
payroll expenses, or property, but not both in
Limitations – Individuals, Estates, and Trusts.
corporation may use the NOL as a deduction
California, the taxpayer must enter on line 4
against income subject to the 1.5% entity-
the same percentage listed on line 3.
level tax (3.5% for financial S corporations).
Property Factor. Property is defined as the
The expenses and income giving rise to
average value of all real and tangible personal
the loss are also passed through to the
property owned or rented by the business and
shareholders in the taxable year the loss is
used during the taxable year.
incurred.
FTB 3805D Instructions 2016 Page 1
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