3725: Assets Transferred from Corporation to Insurance Company (2024)
California · FTB · Used for tax years 2024
California Form 3725 reports assets transferred from a corporation to an insurance company, including deferred capital gains and information about stock and property dispositions. It also reports related short-term and long-term capital gains and losses.
Who files this form
Form 3725 covers assets transferred from a corporation, called the transferor, to an insurance company. It asks about appreciated property, stock transfers, and later changes in ownership or disposal of transferred property.
The form directs the corporation to attach it to Form 100 or Form 100W.
What you'll need
Have the information needed for the applicable parts of the form:
- The transferor corporation’s name, California corporation number, and FEIN.
- The insurance company’s name, California corporation number, and/or FEIN if appreciated property was transferred.
- Property descriptions, locations, transfer dates, fair market values, and adjusted bases.
- Details of stock transfers or disposals, including cumulative percentages measured by relative fair market value.
- Share counts before and after any stock issuance or cancellation.
- Details of ownership changes and property disposals, including the percentage of property involved, dates, and amounts realized or fair market values.
The form includes signature, title, date, and telephone fields for both a corporation officer and the insurer.
How to file
Attach Form 3725 to Form 100 or Form 100W. The supplied form does not give a mailing address or e-file directions.
Complete the applicable parts by following the Yes/No routing instructions. Use additional sheets if needed for the property entries in Part I, Section B, or Part IV.
If you complete Part IV, carry the totals from lines 16 and 18 to the Schedule D lines identified on the form. Complete the signature fields for the corporation officer and the insurer.
Common mistakes
- Forgetting the attachment instruction: The form says to attach it to Form 100 or Form 100W.
- Ignoring the skip directions: If Part I, line 1 is “No,” skip lines 2 and 3 and continue with Part II. If line 2 is “No,” skip line 3 and continue with Part II.
- Completing Part IV when directed not to: Part III says not to complete Part IV if line 12 is “No” or line 14 is “Yes.”
- Leaving capital gain totals only on this form: Lines 16 and 18 direct you to also enter the totals on the specified Schedule D lines.
Questions people ask
How is the deferred gain calculated in Part I?
Subtract the transferred property’s adjusted basis on the transfer date from its fair market value on that date. Enter the result in line 3, column (g).
What if the insurer issued or canceled shares during the taxable year?
Answer “Yes” on line 6 and enter the number of shares outstanding before and after the issuance or cancellation on lines 6a and 6b.
How does Part IV separate short-term and long-term gains and losses?
Section A covers assets held one year or less. Section B covers assets held more than one year.
Can I use extra sheets for property details?
Yes. Part I, Section B, and both sections of Part IV say to use additional sheets if necessary.