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Changes to 2010 Forms

Updates to the Form 3805D on 07/11/2011 — Net Operating Loss (NOL) Carryover Computation and Limitation - Pierce's Disease

We replaced text on Form 3805D, Page 1, Column 1, What's New.

Previous Version

Net Operating Loss - For taxable years beginning in 2010 and 2011, California suspended the net operating loss (NOL) carryovers deduction. Corporations may continue to compute and carryover NOLs during the suspension period. However, corporations with net income after state adjustments (pre-apportioned income) of less than $300,000 or with disaster loss carryovers are not affected by the NOL suspension rules.

Also, California modified the NOL carryback provisions. For more information, see form FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Corporations

Revised Version

Net Operating Loss - For taxable years beginning in 2010 and 2011, California suspended the net operating loss (NOL) carryovers deduction. Taxpayers may continue to compute and carryover NOLs during the suspension period. However, the NOL suspension rules do not apply to:

  • Corporations with net income after state adjustments (pre-apportioned income) of less than $300,000,
  • Taxpayers other than corporations with modified adjusted gross income of less than $300,000,
  • Taxpayers claiming disaster loss carryovers.

The carryover period for any NOL or NOL carryover, for which a deduction is disallowed because of the 2008-2011 suspension, are extended by:

  • One year for losses incurred in taxable years beginning on or after January 1, 2010, and before January 1, 2011.
  • Two years for losses incurred in taxable years beginning before January 1, 2010.
  • Three years for losses incurred in taxable years beginning before January 1, 2009.
  • Four years for losses incurred in taxable years beginning before January 1, 2008.

Also, California modified the NOL carryback provisions. For more information, get form FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Corporations or form FTB 3805V, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trust.

Reason for the changes

The 2010 and 2011 NOL suspension rules apply to all taxpayers with exceptions. We are revising NOL suspension language to include other taxpayers in addition to corporations and to add NOL carryover information.

Impact

This revision may decrease the allowable NOL deduction for certain taxpayers which would increase their tax liability.

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