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Changes to 2006 Form

2006 Updates to Form 3805V-Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations-Individuals, Estates, and Trusts

Revision Date: 04/27/2007

Revision Details: We revised the NOL reference to instruct the taxpayer to only claim the disaster losses on FTB 3805V for 2002 and 2003 taxable years, since the NOLs were suspended for these years. In 2004 we modified the form to reflect that the taxpayer could now use their NOLs; however, not all of the instructions were revised to show that the taxpayer could use their NOLs. Thus, this situation may have confused the taxpayers.

Page 3, FTB 3805V flat; and page 596 of the Package X.

  • FTB 3805V, page 3 of the instructions, column 2, line 2 (b)

It should read:

Column (b)-If the loss is due to a disaster, enter the disaster code from the list of designated disasters on page 2.

  • FTB 3805V, page 3 of the instructions, column 2, line 2 (e)

It should read:

Column (e)-Enter the amount from your 2005 form FTB 3805V, part III, column (h). You should have already reduced by 50% any remaining 2000 disaster loss carryover.

  • FTB 3805V, page 3 of the instructions, column 3, line 2 (f)

It should read:

Column (f)-Enter the smaller of the amountin column (e) or the balance in column (g). If column (g) of the previous line has been reduced to zero, your remaining NOL carryover may be eligible for carryover to 2007. See General Information B, Types of NOLs.

  • FTB 3805V, page 3 of the instructions, column 3, line 2 (h)

It should read:

Column (h)-Subtract the amount in column (f) from the amount in column (e) and enter the result. Any remaining 2001 disaster loss carryover to 2007 must be reduced by 45%. If you have a current year NOL relating to one of the following areas or zones and need more information:

  • EZ (R&TC Section 17276.2), get form FTB 3805Z

  • LAMBRA (R&TC Section 17276.5), get form FTB 3807

  • TTA (R&TC Section 17276.6), get form FTB 3809

Then you must:

  • Make the election in a statement attached to the original return to carry over only one of these losses or the loss under R&TC Section 17276 (relating to general NOLs).

  • Use the applicable economic development area form to calculate the NOL.

This election is irrevocable.

This revision will impact tax liability by decreasing the taxpayer tax liability.
The revised internet version is available for download.


2006 Updates to Form 3805V

Revision Date: 03/26/07

Revision Details: FTB 3805V Instructions, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Individuals, Estates, and Trusts

Under Section 17207(b)(1) a disaster is carried forward for five-years taxable years following the year with the loss was claimed. If there is an additional disaster loss carryover after that five-year period then it may be carried forward for 10 additional years. Code 3, 4, 5, and 6 are expired because the 15-year carry over period has expired. Code 6 would still have a one year more till it expires if the taxpayer did not elect to make an IRC 165(i) election, we added a new ** not to explain this. Code 16 followed the normal NOL rules and is expired.

Page 2, FTB 3805V flat; and page 595 of the Package X.

  • Page 2, column 2, Designated Disasters, codes 3, 4, 5, 6, and 16

It should read:

1996 16 Firestorms 96 (expired)*
1196 6 Oakland/Berkeley fire and other related casualties (expired)**
1990 5 Santa Barbara fires and other related casualties(expired)
1989 4 Bay Area earthquake and other related casualties(expired)
1987 3 Forest fires, October earthquake, and other related casualties (expired)

  • Page 2, column 2, after the sentence with one asterisk

It should read:

**Corporations that elect to deduct the diaster loss in the prior year under IRC Section 165(i), the disaster loss carryover expires this year. Corporations that did not elect IRC Section 165(i), the disaster loss carryover expires next year.

This change will have an impact to the tax liability because the taxpayer can no longer claim the NOL on their 2006 tax return.

The revised internet version is available for download.

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