3801-CR: Passive Activity Credit Limitations (2025)
California · FTB · Used for tax years 2025
California Form 3801-CR calculates the passive activity credits allowed for 2025 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
What you'll need
Have these forms and details ready:
- Your name as shown on your return and your SSN, ITIN, FEIN, or California corporation number.
- Worksheets 1 through 4 from the instructions for federal Form 8582-CR, completed using California amounts. These provide current credits and prior-year unallowed credits for Part I.
- Your federal modified adjusted gross income and any amount from line 9 of Form FTB 3801, if completing Part II.
- Worksheets 5 through 9 from the federal Form 8582-CR instructions, whichever apply, if you need to allocate credits among multiple passive activities or different forms. Use California amounts.
- If making the Part IV election, the name of the activity disposed of, a description of the credit property, and the unallowed credit amount that reduced the property's basis for California purposes.
How to file
Attach your 2025 Form 3801-CR to Form 540, Form 540NR, Form 541, or Form 100S.
The supplied form does not provide a mailing address or e-filing directions.
Common mistakes
- Using amounts other than California amounts on the federal worksheets. The form specifically tells you to use California amounts.
- Entering a negative amount on line 7. Enter 0 if line 6 is greater than or equal to line 5.
- Overlooking the Part II skip rule. If line 10 is equal to or greater than 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.
- Missing credit allocation worksheets. Use the applicable Worksheets 5 through 9 if you have credits from more than one passive activity or must allocate credits because they are reported on different forms.
Questions people ask
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.
Where do prior-year unallowed credits go?
Part I has separate entries on lines 1b, 2b, 3b, and 4b. Transfer the amounts from column (b) of the corresponding federal Worksheets 1 through 4, using California amounts.
What if I have credits from a publicly traded partnership?
The form directs you to the Part III instructions titled “Credits from Publicly Traded Partnerships (PTPs).” Those instructions were not included in the supplied text.
What is the Part IV election?
Part IV lets you elect to increase the basis of credit property by the unallowed credit that reduced its basis if you disposed of your entire interest in a passive activity or former passive activity in a fully taxable transaction. Check line 18 and provide the activity name, property description, and California unallowed credit amount on lines 19 through 21.