3802: Corporate Passive Activity Loss and Credit Limitations (2024)
California · FTB · Used for tax years 2024
California Form 3802 calculates allowed and unallowed passive activity losses and credits for personal service corporations and closely held C corporations. It attaches to Form 100 or Form 100W and also includes an election to increase the basis of credit property after disposing
Who files this form
Form 3802 is for personal service corporations and closely held C corporations only. It covers passive activity loss and credit limitations and is attached to Form 100 or Form 100W.
What you'll need
Have the following ready:
- The corporation’s name and California corporation number.
- Federal Worksheets 1 and 2 from the instructions for federal Form 8810, completed using California amounts, for Part I.
- Federal Worksheet 5 from the instructions for federal Form 8810, completed using California amounts, for Part II.
- Current-year passive activity income, deductions, losses, and credits, plus prior-year unallowed losses and credits.
- If making the Part III 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 Form 3802 to Form 100 or Form 100W. The supplied form does not give a mailing address or e-file directions.
Common mistakes
- Not preparing the worksheets first: Before completing Part I, complete federal Worksheets 1 and 2. Before completing Part II, complete federal Worksheet 5. Use California amounts for all of these worksheets.
- Entering net active income for a personal service corporation: Line 2 tells personal service corporations to enter 0. Closely held C corporations enter net active income.
- Entering a negative amount on line 8: If line 6 minus line 7 is zero or less, enter 0.
- Skipping the instruction references: If line 1d or line 3 is net income or zero, the form directs you to the instructions.
Questions people ask
Where do prior-year unallowed losses and credits go?
Enter prior-year unallowed losses from federal Worksheet 2, column (c), on line 1c. Enter prior-year unallowed credits from federal Worksheet 5, column (b), on line 5b. Use worksheets completed with California amounts.
How is the allowed passive activity credit calculated?
Line 9 is line 6 minus line 8. Line 6 combines current-year passive activity credits and prior-year unallowed credits. Line 8 is line 6 minus line 7, with 0 entered if the result is zero or less. The form also directs you to the instructions.
What is the election in Part III?
If the corporation disposed of its entire interest in a passive activity or former passive activity in a fully taxable transaction, it can elect to increase the basis of credit property used in that activity by the unallowed credit that reduced the property’s basis. Check line 10 and provide the activity name, property description, and California unallowed credit amount on lines 11 through 13.