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State of California Franchise Tax Board

Changes to 2013 Forms

Updates to the Form 3805Q Instructions on 02/11/2015 –– Instructions for 3805-Q Form, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Corporations

We replaced text on:

  1. Page 2, Col 2, Specific Line Instructions, Part I, Line 6, NOL carryback general rule paragraph.
  2. Page 3, Col 2, double asterisk (**) paragraph.
  3. Page 4, NOL Carryback table.

Previous Version

  1. The two-year carryback period does not apply to the portion of an NOL attributable to a qualified disaster.
  2. **Carryover period and percentage are limited to the NOL rules. No special legislation was enacted.
  3. Does not include loss incurred from a disaster loss.

Revised Version

  1. Note: text deleted.
  2. **Carryover period and percentage are limited to the NOL rules. No special legislation was enacted.

    For taxable years beginning on or after January 1, 2013, the corporation can claim 100% of the disaster loss deduction (from Tuolumne, Mariposa, and San Francisco Counties Rim Fire occurred on 08/13 to 10/13) in the year the loss was incurred, or make an election under IRC Section 165(i) to claim the disaster loss deduction against the previous year’s income. If the disaster loss deduction (from Tuolomne, Mariposa, and San Francisco Counties Rim Fire) is claimed in 2013, any remaining disaster loss would create an NOL for 2013, and the applicable NOL carryback and carryforward rules for 2013 would apply. The corporation must carryback the NOL attributable to the disaster loss for two years or elect to carryforward the NOL for 20 years.
  3. Note: text deleted.

Reason for the changes

R&TC Section 24416.20 allows an NOL attributable to a taxable year beginning on or after January 1, 2013, to be carried back to each of the two taxable years preceding the taxable year of the loss. This provision also applies to an NOL attributable to a qualified disaster loss. As a result, the form and instructions are revised to allow an NOL attributable to a qualified disaster loss to be carried back.

Impact

There is no impact to tax liability for 2013. However, if loss is carried back to the prior year(s) 2011 and 2012, net income will be decreased, which will result in a decrease in the tax liability for 2011 and 2012.

Back to Tax Form Changes for 2013


Updates to the Form 3805Q Instructions on 02/07/2014 –– Instructions for 3805Q Form, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations - Corporations

We replaced text on Page 3, Column 1, on chart "List of events that have been declared disasters."

Previous Version

List of events that have been declared disasters:

Year Code Event
2011 51 Los Angeles and San Bernardino County Severe Winds 11/11***

Revised Version

List of events that have been declared disasters:

Year Code Event
2013 52 Tuolumne, Mariposa, and San Francisco Counties Rim Fire 08/13 to 10/13**
2011 51 Los Angeles and San Bernardino County Severe Winds 11/11***

Reason for the changes

The President declared a major disaster for Tuolumne, Mariposa, and San Francisco counties affected by the Rim Fire that occurred during the period of August 17, 2013 to October 24, 2013. No special state legislation was enacted.

Taxpayers can claim the disaster loss deduction in the taxable year in which the disaster occurred or in the taxable year immediately before the disaster occurred.

Impact

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

Back to Tax Form Changes for 2013

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