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Changes to 2011 Forms

Updates to the Form 3805Q Instructions on 09/27/2012 –– Instructions for 3805Q Form, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Corporations

We replaced text on:

  1. Page 1, Column 1, above Important Information Section.
  2. Page 3, Column 2, on and below "List of events that have been declared disasters."

Previous Version

1. Note: new section added.

2. List of events that have been declared disasters:

Year Code Event
2011 49 Mendocino County Tsunami Wave Surge 03/11

Revised Version

1. What's New

Disaster Loss Deductions - Disaster loss deductions are allowed for losses sustained in the County of Santa Cruz as a result of the severe storms that occurred in March 2011, and for losses sustained in the Counties of Los Angeles and San Bernardino as a result of the severe winds that occurred in November 2011.

  • Taxpayers may make an election under IRC Section 165(i) on a prior year return or an amended return filed on or before the due date of the return, determined with regard to extension, for the taxable year in which the disaster occurred.
  • These disasters qualify for the 20 year general NOL carryover provision, instead of the 15 year carryover provision. These disaster loss deductions are allowed at 100%.
  • In addition, any provision of law that suspends, defers, reduces, or otherwise diminishes the deduction of a NOL does not apply to a NOL attributable to the losses sustained in the Counties of Santa Cruz, Los Angeles and San Bernardino.

For more information, refer to R&TC Sections 24347.11 and 24347.12.


2. List of events that have been declared disasters:

Year Code Event
2011 51 Los Angeles and San Bernardino County Severe Winds 11/11***
2011 50 Santa Cruz County Severe Storms 03/11***
2011 49 Mendocino County Tsunami Wave Surge 03/11

***Note: The Santa Cruz County Severe Storms (occurred in March 2011) and the Los Angeles and San Bernardino County Severe Winds (occurred in November 2011) disaster loss deductions are allowed at 100% and can be carried over for 20 years. Corporations can elect to deduct the disaster loss in the prior year return under IRC Section 165(i). Any provision of law that suspends, defers, reduces, or otherwise diminishes the deduction of a NOL does not apply to a NOL attributable to the Santa Cruz County Severe Storms occurred in March 2011 and the Los Angeles and San Bernardino County Severe Winds occurred in November 2011. Refer to R&TC Sections 24347.11 and 24347.12 for more information.


Reason for the changes

AB 2332, chaptered in August 2012 and added R&TC Section 24347.11. This new law allows disaster loss deductions for losses sustained in the County of Santa Cruz as a result of the severe storms that occurred in March 2011.

SB 1544, chaptered in September 2012 and added R&TC Section 24347.12. This new law allows disaster loss deductions for losses sustained in the Counties of Los Angeles and San Bernardino as a result of the severe winds that occurred in November 2011.

Taxpayers can claim the disaster loss deduction in the taxable year in which the disaster occurred or on a prior taxable year’s return.


Impact

If the taxpayers claim the disaster loss deduction, the net income for tax purposes will decrease, which will result in a decrease in the tax liability.

Back to Tax Form Changes for 2011