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Changes to 2009 Forms

Updates to the Form 3805V Instructions on 02/26/2014 –– Instructions for 3805V Form, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts

We replaced text on:

Revision 1: Page 1, Column 3, Line 4 through Line 7, below the second paragraph

Revision 2: Page 2, Column 1, Line 16, below the first paragraph

Revision 3: Page 2, Column 1, Line 19

Revision 4: Page 2, Column 1, Line 23

Revision 5: Page 2, Column 1, Line 25

Revision 6: Page 2, Column 2, Full-Year Nonresidents

Revision 7: Page 2, Column 2, Complete column A

Revision 8: Page 2, Column 3, Complete column B

Revision 9: Page 2, Column 3, Complete column C and D

Revision 10: Page 2, Column 3, Column E, Line 25

Previous Version

Revision 1:
Note: new text added.

Revision 2:
Note: new text added.

Revision 3:
Note: new text added.

Revision 4:
Line 23 – Enter the amount of your prior year NOL and disaster loss carryover from your 2008 form FTB 3805V, Part III, line 5 and line 6.

Revision 5:
Line 25 – Enter the amounts from line 25 on Part III, line 4, column (d) and column (h). If you have an NOL from more than one source, list each loss separately.

If you have an NOL or disaster loss from prior years (line 23), complete Part II and Part III, to determine the loss carryover to future years.

Revision 6:
Full Year Nonresidents: Complete Part I, Section B, column A and column B. Enter amounts from line 25 on Part III, line 4, column (d) and column (h).

Revision 7:
Complete column A, line 1 through line 25 as if you were a California resident for the entire year.

Revision 8:
Complete column B, line 1 through line 25, if you were a nonresident for the entire year.

Revision 9:
Complete column C and D, line 1 through line 25 using the dates of transactions.......

Revision 10:
Column E, line 25 enter this amount on Part III, line 4, column (d) and column (h).

Revised Version

Revision 1:
Enter your nonbusiness capital gains without regard to any R&TC Section 18152.5 exclusion.

Revision 2:
Enter your business capital gains without regard to any R&TC Section 18152.5 exclusion.

Revision 3:
Line 19 – Enter the amount of gain from small business stock that you excluded from gross income under R&TC Section 18152.5 (enter as a positive number).

Revision 4:
Line 25 – Enter the amount of your prior year NOL and disaster loss carryover from your 2008 form FTB 3805V, Part III, line 5 and line 6.

Revision 5:
Line 27 – Enter the amounts from line 27 on Part III, line 4, column (d) and column (h). If you have an NOL from more than one source, list each loss separately.

If you have an NOL or disaster loss from prior years (line 25), complete Part II and Part III, to determine the loss carryover to future years.

Revision 6:
Full Year Nonresidents: Complete Part I, Section B, column A and column B. Enter amounts from line 27 on Part III, line 4, column (d) and column (h).

Revision 7:
Complete column A, line 1 through line 27 as if you were a California resident for the entire year.

Revision 8:
Complete column B, line 1 through line 27, if you were a nonresident for the entire year.

Revision 9:
Complete column C and D, line 1 through line 27 using the dates of transactions.......

Revision 10:
Column E, line 27 enter this amount on Part III, line 4, column (d) and column (h).

Reason for the changes

AB 1412 (Stats. 2013, ch. 546), signed by the Governor on October 4, 2013, retroactively allows the Qualified Small Business Stock (QSBS) deferral and 50 percent gain exclusion for tax years 2008 through 2012.

Impact

This revision may increase the tax liability for taxpayers who did not report a QSBS exclusion or deferral for taxable years beginning on or after January 1, 2008.

Back to Tax Form Changes for 2009


Updates to the Form 3805V Instructions on 02/19/2013 –– Instructions for 3805V Form, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts

We replaced text on:

Revision 1: Page 1, Column 3, Line 4 through Line 7, last paragraph

Revision 2: Page 2, Column 1, Line 16, last paragraph

Revision 3: Page 2, Column 1, Line 19

Revision 4: Page 2, Column 1, Line 25

Revision 5: Page 2, Column 2, Line 27

Revision 6: Page 2, Column 2, Full-Year Nonresidents

Revision 7: Page 2, Column 2, Complete column A

Revision 8: Page 2, Column 3, Complete column B

Revision 9: Page 2, Column 3, Complete column C and D

Revision 10: Page 2, Column 3, Column E, Line 27

Previous Version

Revision 1:
Enter your nonbusiness capital gains without regard to any R&TC Section 18152.5 exclusion.

Revision 2:
Enter your business capital gains without regard to any R&TC Section 18152.5 exclusion.

Revision 3:
Line 19 – Enter the amount of gain from small business stock that you excluded from gross income under R&TC Section 18152.5 (enter as a positive number).

Revision 4:
Line 25 – Enter the amount of your prior year NOL and disaster loss carryover from your 2008 form FTB 3805V, Part III, line 5 and line 6.

Revision 5:
Line 27 – Enter the amounts from line 27 on Part III, line 4, column (d) and column (h). If you have an NOL from more than one source, list each loss separately.

If you have an NOL or disaster loss from prior years (line 25), complete Part II and Part III, to determine the loss carryover to future years.

Revision 6:
Full Year Nonresidents: Complete Part I, Section B, column A and column B. Enter amounts from line 27 on Part III, line 4, column (d) and column (h).

Revision 7:
Complete column A, line 1 through line 27 as if you were a California resident for the entire year.

Revision 8:
Complete column B, line 1 through line 27, if you were a nonresident for the entire year.

Revision 9:
Complete column C and D, line 1 through line 27 using the dates of transactions. If the dates are unknown because they were not specifically reported to you, then you will need to prorate the amounts. For column C, multiply the amount in column A by the number of days you were a resident divided by 365 days. For column D, multiply the amount in column B by the number of days you were a nonresident divided by 365 days.

Revision 10:
Column E, line 27 enter this amount on Part III, line 4, column (d) and column (h).

Revised Version

Revision 1:
Note: text deleted.

Revision 2:
Note: text deleted.

Revision 3:
Note: text deleted.

Revision 4:
Line 23 – Enter the amount of your prior year NOL and disaster loss carryover from your 2008 form FTB 3805V, Part III, line 5 and line 6.

Revision 5:
Line 25 – Enter the amounts from line 25 on Part III, line 4, column (d) and column (h). If you have an NOL from more than one source, list each loss separately.

If you have an NOL or disaster loss from prior years (line 23), complete Part II and Part III, to determine the loss carryover to future years.

Revision 6:
Full Year Nonresidents: Complete Part I, Section B, column A and column B. Enter amounts from line 25 on Part III, line 4, column (d) and column (h).

Revision 7:
Complete column A, line 1 through line 25 as if you were a California resident for the entire year.

Revision 8:
Complete column B, line 1 through line 25, if you were a nonresident for the entire year.

Revision 9:
Complete column C and D, line 1 through line 25 using the dates of transactions. If the dates are unknown because they were not specifically reported to you, then you will need to prorate the amounts. For column C, multiply the amount in column A by the number of days you were a resident divided by 365 days. For column D, multiply the amount in column B by the number of days you were a nonresident divided by 365 days.

Revision 10:
Column E, line 25 enter this amount on Part III, line 4, column (d) and column (h).

Reason for the changes

The Court of Appeal’s held in Cutler v. Franchise Tax Board (2012) 208 Cal. App. 4th 1247, that the qualified small business stock exclusion and deferral statutes under California Revenue and Taxation Code (R&TC) Sections 18152.5 and 18038.5 are unconstitutional. These sections are now invalid and unenforceable.

Impact

This revision increases the tax liability for taxpayers who reported a qualified small business stock exclusion or deferral for taxable years beginning on or after January 1, 2008.

Back to Tax Form Changes for 2009


Updates to the Form 3805V Instructions on 01/11/2012 –– Instructions for 3805V Form, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts

We revised text on Page 2, Type of NOL and Description Chart, New Business and Eligible Small Business NOLs.

Previous Version

Type of NOL and Description Taxable Year NOL Incurred NOL Carried Over Carryover Period
New Business NOL (NB) Refer to Franchise Tax Board Legal Ruling 96-5 issued August 19, 1996.
Incurred by a trade or business that first commenced in California on or after January 1, 1994. During the first three years of business, 100% of an NOL may be carried over for an extended period, but only to the extent of the net loss from the new business. If a taxpayer’s NOL exceeds the net loss from the new business, the excess may be carried over as a general NOL.
Beginning on or after 1/1/00 100%
For the
first three
years of
business
10 Years
Eligible Small Business (ESB) Refer to Franchise Tax Board Legal Ruling 96-5 issued August 19, 1996.
Incurred in operating a trade or business activity that has gross receipts, less returns and allowances, of less than $1 million during the taxable year. 100% of an NOL may be carried over, but only to the extent of the net loss from the eligible small business. If a taxpayer’s NOL exceeds the net loss from an eligible small business, the excess may be carried over as a general NOL.
Beginning on or after 1/1/00 100% 10 Years

Revised Version

Type of NOL and Description Taxable Year NOL Incurred NOL Carried Over Carryover Period
New Business NOL (NB) Refer to Franchise Tax Board Legal Ruling 96-5 issued August 19, 1996.
New Business means any trade or business that first commenced in California on or after January 1, 1994. 100% of an NOL may be carried over, but only to the extent of the net loss from the new business. If a taxpayer’s NOL exceeds the net loss from the new business, the excess may be carried over as a general NOL.
Beginning on or after 1/1/08
Beginning on or after 1/1/00 and before 1/1/08
100%


100%
For the first three years of business
20 Years


10 Years
Eligible Small Business (ESB) Refer to Franchise Tax Board Legal Ruling 96-5 issued August 19, 1996.
Incurred in operating a trade or business activity that has gross receipts, less returns and allowances, of less than $1 million during the taxable year. 100% of an NOL may be carried over, but only to the extent of the net loss from the eligible small business. If a taxpayer’s NOL exceeds the net loss from an eligible small business, the excess may be carried over as a general NOL.
Beginning on or after 1/1/08
Beginning on or after 1/1/00 and before 1/1/08
100%


100%
20 Years


10 Years

Reason for the changes

For taxable years beginning on or after January 1, 2008, California conforms to the federal provision for a 20 year NOL carryover. We added new instructions to the NOL chart to clarify that general, new businesses and eligible small businesses can also carryover 100% of their NOL for 20 years.

Impact

There is no tax impact.

Back to Tax Form Changes for 2009


Updates to the Form 3805V Instructions on 02/17/2010 – – Instructions for 3805V Form, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts.

We replaced text on the Form 3805V Instructions, Page 3, Column 1, Part III - Limitations.

Previous Version:

Line 1 - The NOL carryover deduction is suspended for 2008 and 2009 if your net business income is $500,000 or more. Net business income is reflected, respectively, on California Schedule CA (540) line 12, line 14, and line 18 as adjusted by Column B (subtractions) and Column C (additions) and the federal Schedule E, Supplemental Income and Loss, line 26, line 32, and line 40; and the federal Form 4797, Sales of Business Property line 9, using California amounts. You may continue to compute and carryover an NOL during the suspension period.

Revised Version:

Line 1 - The NOL carryover deduction is suspended for 2008 and 2009 if your net business income is $500,000 or more. Net business income is reflected, respectively, on California Schedule CA (540NR), Column E, line 12, line 14, and line 18 or California Schedule CA (540) line 12, line 14, and line 18 as adjusted by Column B (subtractions) and Column C (additions) and the federal Schedule E, Supplemental Income and Loss, line 26, line 32, and line 40; and the federal Form 4797, Sales of Business Property. line 9, using California amounts. You may continue to compute and carryover an NOL during the suspension period.

Reason for the changes

This change clarifies nonresidents include only their California sourced business income to determine if they meet the $500,000 NOL suspension threshold.

Impact

This may increase or decrease the nonresident's tax liability depending upon the specific circumstances.


Updates to the Form 3805V Instructions on 01/22/2010 – – Instructions for 3805V Form, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts

We replaced text on the Form 3805V Instructions, Page 3, Column 1, Part III - Limitations.

Previous Version:

Line 1 - The NOL carryover deduction is suspended for 2008 and 2009 if your net business income is $500,000 or more. Net business income is reflected, respectively, on California Schedule CA (540) line 12 and line 18 as adjusted by Column B (subtractions) and Column C (additions) and the federal Schedule E, line 26, line 32, and line 40; and the federal Form 4797, line 9, using California amounts. You may continue to compute and carryover an NOL during the suspension period.

Revised Version:

Line 1 - The NOL carryover deduction is suspended for 2008 and 2009 if your net business income is $500,000 or more. Net business income is reflected, respectively, on California Schedule CA (540) line 12, line 14, and line 18 as adjusted by Column B (subtractions) and Column C (additions) and the federal Schedule E, line 26, line 32, and line 40; and the federal Form 4797, line 9, using California amounts. You may continue to compute and carryover an NOL during the suspension period.

Reason for the changes

Net business income includes recapture amounts resulting from the sale of business property. We added line 14 to include the recapture amounts from the sale of depreciable business assets.

Impact

This change includes recapture amounts in the net business income computation. This may result in an increased tax liability if the taxpayer meets the criteria for a NOL carryover suspension and credit limitation.

Back to Tax Form Changes for 2009