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Changes to 2010 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 2, Column 1, Line 4 through Line 7, above Line 8

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

Revision 3: Page 2, Column 2, Line 19

Revision 4: Page 2, Column 2, Line 23

Revision 5: Page 2, Column 2, Line 25

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

Revision 7: Page 2, Column 3, 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 2009 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 2009 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 2010


Updates to the Form 3805V Instructions on 02/14/2013 –– 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 2, Column 1, Line 4 through Line 7, last paragraph

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

Revision 3: Page 2, Column 2, Line 19

Revision 4: Page 2, Column 2, Line 25

Revision 5: Page 2, Column 2, Line 27

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

Revision 7: Page 2, Column 3, 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 2007 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 2007 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 2010


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.


Updates to the Form 3805V Instructions on 03/10/2011 — 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 on Page 3, Column (b):

  1. Under Designated Disasters chart.
  2. Under paragraph four.

Previous Version

1.

Designated Disasters

Year Code Event
2011
2010
47 Severe Winter Storms, Flooding, Debris and
Mud Flows 12/10, 01/11
2010 46 San Bruno Explosion
2010 45 Kern County Wildfires
2010 44 CA Winter Storms, 1/10, 2/10

2. Taxpayers who did not elect IRC Section 165(i), the final year to deduct the disaster loss carryover is this year.

Revised Version

1.

Designated Disasters

Year Code Event
2011
2010
47 Severe Winter Storms, Flooding, Debris and
Mud Flows 12/10, 01/11**
2010 46 San Bruno Explosion
2010 45 Kern County Wildfires
2010 44 CA Winter Storms, 1/10, 2/10

2. Taxpayers who did not elect IRC Section 165(i), the final year to deduct the disaster loss carryover is this year.

**Carryover period and percentage are limited to the NOL rules. No special legislation was enacted.

Reason for the changes

The President declared a major disaster for the following counties: Inyo, Kern, Kings, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, and Tulare for the period of December 17, 2010, to January 4, 2011. However, no special legislation was enacted; therefore, the carryover period and percentage are limited to the NOL rules.

Impact

There is no tax impact.


Updates to the Form 3805V Instructions on 02/15/2011 — Instructions for Form FTB 3805V, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations — Individuals, Estates, and Trusts

Previous Version

Year Code Event
2010 46 San Bruno Explosion
2010 45 Kern County Wildfires

Revised Version

Year Code Event
2010/2011 47 Severe Winter Storms, Flooding, Debris, and Mud Flows 12/10, 01/11
2010 46 San Bruno Explosion
2010 45 Kern County Wildfires

Reason for the changes

On January 26, 2011, President Obama declared a major disaster for Inyo, Kern, Kings, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, and Tulare counties as a result of the severe winter storms, flooding, and debris and mud flows during the period of December 17, 2010, to January 4, 2011.

Impact

Taxpayers affected by the storms, flooding, and debris and mud flows in 2010 may claim a disaster loss deduction on their 2009 or 2010 California tax return, which will reduce their tax liability.

Back to Tax Form Changes for 2010