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Changes to 2010 Forms

Updates to the Form 3805V on 02/14/2013 –– Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts

We replaced text on:

Revision 1: Side 1, Section A, Line 3a

Revision 2: Side 1, Section A, instructions above Line 4

Revision 3: Side 1, Section A, Line 18 through Line 27

Revision 4: Side 2, Section B, Line 3a

Revision 5: Side 2, Section B, instructions above Line 4

Revision 6: Side 2, Section B, Lines 18 through 27

Previous Version

Revision 1:
3 a Combine line 1 and line 2. (Estates and Trusts, enter taxable income, see instructions.) If negative, use brackets. If positive, enter -0- here and on line 27. Do not complete the rest of Section A. You do not have a current year NOL. Complete Part II and Part III if you have a carryover from prior years.

Revision 2:
Enter amounts on line 4 through line 26 as if they were all positive numbers. See instructions.

Revision 3:

18 Enter the loss, if any, from line 8 of Schedule D (540). Estates and Trusts, enter the loss, if any, from line 9, column (c), of Schedule D (541). If you do not have a loss on that line (and do not have an R&TC Section 18152.5 exclusion), skip line 18 through line 23 and enter on line 24 the amount from line 17...



18




| 00
19 R&TC Section 18152.5 exclusion. Enter as a positive number...
19

| 00
20 Subtract line 19 from line 18. If zero or less, enter -0-... 20 | 00
21 Enter the loss, if any, from line 9 of Schedule D (540). Estates and Trusts, enter the loss, if any, from line 10 of Schedule D (541). Enter as a positive number...

21


| 00
22 If line 20 is more than line 21, enter the difference; otherwise, enter -0-...
22

| 00
23 If line 21 is more than line 20, enter the difference; otherwise, enter -0-...
23

| 00
24 Subtract line 22 from line 17. If zero or less, enter -0-... 24 | 00
25 NOL and disaster loss carryovers from prior years. See instructions...
25

| 00
26 Add lines 11, 19, 23, 24, and 25... 26 | 00
27 2008 NOL carryover. Combine line 3c and line 26. If more than zero, enter -0-. You do not have a current year NOL to carryover...

27


| 00

Revision 4:
3 a Combine line 1 and line 2. If negative, use brackets. If positive, enter -0- here and on line 27. Complete Part II and Part III if you have a carryover from prior years.

Revision 5:
Enter amounts on line 4 through line 26 as if they were all positive numbers.

Revision 6:

18 Enter the loss, if any, from line 4 of Schedule D (540NR) worksheet for nonresidents and part-year residents. If you do not have a loss on that line (and do not have an R&TC Section 18152.5 exclusion), skip line 18 through line 23 and enter on line 24 the amount from line 17...



18




| 00
19 R&TC Section 18152.5 exclusion. Enter as a positive number...
19

| 00
20 Subtract line 19 from line 18. If zero or less, enter -0-... 20 | 00
21 Enter the loss, if any, from line 5 of Schedule D (540NR) worksheet for nonresidents and part-year residents. Enter as a positive number...

21


| 00
22 If line 20 is more than line 21, enter the difference; otherwise, enter -0-...
22

| 00
23 If line 21 is more than line 20, enter the difference; otherwise, enter -0-...
23

| 00
24 Subtract line 22 from line 17. If zero or less, enter -0-... 24 | 00
25 NOL and disaster loss carryovers from prior years. See instructions...
25

| 00
26 Add lines 11, 19, 23, 24, and 25... 26 | 00
27 2008 NOL carryover. Combine line 3c and line 26. If more than zero, enter -0-...
27

| 00

Revised Version

Revision 1:
3 a Combine line 1 and line 2. (Estates and Trusts, enter taxable income, see instructions.) If negative, use brackets. If positive, enter -0- here and on line 25. Do not complete the rest of Section A. You do not have a current year NOL. Complete Part II and Part III if you have a carryover from prior years.

Revision 2:
Enter amounts on line 4 through line 24 as if they were all positive numbers. See instructions.

Revision 3:

18 Enter the loss, if any, from line 8 of Schedule D (540). Estates and Trusts, enter the loss, if any, from line 9, column (c), of Schedule D (541). If you do not have a loss on that line, skip line 18 through line 21 and enter on line 22 the amount from line 17...



18




| 00
19 Enter the loss, if any, from line 9 of Schedule D (540). Estates and Trusts, enter the loss, if any, from line 10 of Schedule D (541). Enter as a positive number...

19


| 00
20 If line 18 is more than line 19, enter the difference; otherwise, enter -0-...
20

| 00
21 If line 19 is more than line 18, enter the difference; otherwise, enter -0-...
21

| 00
22 Subtract line 20 from line 17. If zero or less, enter -0-... 22 | 00
23 NOL and disaster loss carryovers from prior years. See instructions...
23

| 00
24 Add lines 11, 21, 22, and 23... 24 | 00
25 2008 NOL carryover. Combine line 3c and line 24. If more than zero, enter -0-. You do not have a current year NOL to carryover...

25


| 00

Revision 4:
3 a Combine line 1 and line 2. If negative, use brackets. If positive, enter -0- here and on line 25. Complete Part II and Part III if you have a carryover from prior years.

Revision 5:
Enter amounts on line 4 through line 24 as if they were all positive numbers.

Revision 6:

18 Enter the loss, if any, from line 4 of Schedule D (540NR) worksheet for nonresidents and part-year residents. If you do not have a loss on that line, skip line 18 through line 21 and enter on line 22 the amount from line 17...



18




| 00
19 Enter the loss, if any, from line 5 of Schedule D (540NR) worksheet for nonresidents and part-year residents. Enter as a positive number...

19


| 00
20 If line 18 is more than line 19, enter the difference; otherwise, enter -0-...
20

| 00
21 If line 19 is more than line 18, enter the difference; otherwise, enter -0-...
21

| 00
22 Subtract line 20 from line 17. If zero or less, enter -0-... 22 | 00
23 NOL and disaster loss carryovers from prior years. See instructions...
23

| 00
24 Add lines 11, 21, 22, and 23... 24 | 00
25 2008 NOL carryover. Combine line 3c and line 24. If more than zero, enter -0-...
25

| 00

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 2010


Updates to the Form 3805V on 01/20/2011—Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts

We replaced text on the Form 3805V on page 3, Column 1, Part III - Limitations, Line 1

Previous Version

Line 1 — The NOL carryover deduction is suspended for 2010 and 2011 taxable years if your modified adjusted gross income (AGI) is $300,000 or more. Modified AGI is your adjusted gross income modified for California law without regard to your NOL deduction (540/540NR, Line 17 plus the NOL deduction listed on Schedule CA (540/540NR) Column B, lines 21d and 21e). Taxpayers may continue to compute and carryover NOLs during the suspension period.

However, taxpayers with modified adjusted gross income of less than $300,000, or with disaster loss carryovers are not affected by the NOL suspension rules.

Revised Version

Line 1 — The NOL carryover deduction is suspended for 2010 and 2011 taxable years if your modified adjusted gross income (AGI) is $300,000 or more. Modified AGI is the amount shown on the federal tax return for the same taxable year without regard to the federal NOL deduction (540/540NR, Line 13 plus the federal NOL deduction listed on Schedule CA (540/540NR) column C, line 21c).

Taxpayers with modified adjusted gross income of less than $300,000 or with disaster loss carryovers are not affected by the NOL suspension rules.

Reason for the changes

The definition for modified AGI was changed from using CA AGI to using the federal AGI.

Impact

Tax liability could either increase or decrease depending on the CA adjustments.

Back to Tax Form Changes for 2010