3801-CR: Passive Activity Credit Limitations (2024)
California · FTB · Used for tax years 2024
California Form 3801-CR calculates the passive activity credits allowed for 2024 using California amounts, including current-year credits and prior-year unallowed credits. It also includes an election to increase the basis of credit property after disposing of an entire interest
Who files this form
Form 3801-CR covers 2024 passive activity credit limitations for these categories:
- Rental real estate activities with active participation.
- Low-income housing credits.
- All other passive activity credits.
The form directs you to attach it to Form 540, Form 540NR, Form 541, or Form 100S.
What you'll need
Have these forms and amounts available:
- Your Form 540, Form 540NR, Form 541, or Form 100S, including the name and taxpayer identification number shown on the return.
- Worksheets 1 through 4 from the federal Form 8582-CR instructions, completed using California amounts.
- Current-year credits and prior-year unallowed credits for each applicable category.
- The tax attributable to net passive income for line 6.
- If completing Part II, your federal modified adjusted gross income and any amount from line 9 of Form FTB 3801.
If you have credits from more than one passive activity, or must allocate credits reported on different forms, use the applicable Worksheets 5 through 9 from the federal Form 8582-CR instructions with California amounts.
For the Part IV election, you need the activity name, a description of the credit property, and the unallowed credit amount that reduced the property's basis for California purposes.
How to file
Attach Form 3801-CR to Form 540, Form 540NR, Form 541, or Form 100S.
The provided form does not give a mailing address or e-file directions.
Common mistakes
- Using federal amounts in the worksheets. The form specifically says to use California amounts.
- Entering a negative amount on line 7. Enter 0 if line 6 is greater than or equal to line 5.
- Missing the Part II skip rule. If line 10 is greater than or equal to line 9, skip lines 11 through 15 and enter 0 on line 16.
- Exceeding the line 12 limit. Do not enter more than $25,000, or $12,500 if married/RDP filing separately and you lived apart for the entire year.
- Overlooking credit allocation worksheets. Use the applicable federal Worksheets 5 through 9 when you have credits from more than one passive activity or must allocate credits reported on different forms.
Questions people ask
Where do I enter prior-year unallowed credits?
Enter them on lines 1b, 2b, 3b, or 4b, depending on the credit category, using column (b) of the corresponding federal worksheet completed with California amounts.
When do I complete Part II?
Complete Part II, Special Allowance for Rental Real Estate Activities with Active Participation, if you have an amount on line 1c.
How do I calculate the passive activity credits allowed on line 17?
Add lines 6 and 16. If you have credits from a publicly traded partnership, the form directs you to the instructions for additional guidance.
What is the election in Part IV?
If you disposed of your entire interest in a passive activity or former passive activity in a fully taxable transaction, Part IV lets you elect to increase the basis of the credit property used in that activity by the unallowed credit that reduced its basis. Check line 18 and complete the activity, property, and credit information on lines 19 through 21.