3834: Interest Computation Under the Look-Back Method for Completed Long-Term Contracts (2024)
California · FTB · Used for tax years 2024
California Form 3834 calculates interest owed or to be refunded under the look-back method for completed long-term contracts. It reports adjustments to prior-year income and tax based on actual contract prices and costs compared with previously estimated amounts.
What you'll need
Have these records and details available, as applicable:
- Your name as shown on your California tax return, address, taxpayer identification number, and entity type.
- Prior-year tax returns or adjusted figures showing income and tax amounts.
- Actual and estimated contract prices and costs for the contracts completed or adjusted during the filing year.
- Earlier Forms FTB 3834 that affect the same prior years. Part I, line 1 requires copies of the applicable prior-year forms when using income amounts from them.
- The name and identification number of any pass-through entity you owned an interest in that holds contracts related to this computation. Attach a schedule if there is more than one entity.
If more than three prior years are involved, the form directs you to attach additional Forms FTB 3834 as needed.
How to file
The form refers to filing it with your tax return or separately. Sign Form FTB 3834 only if you file it separately, not with your tax return. If filing jointly, both spouses or registered domestic partners must sign when the signature section applies.
The supplied form does not give a mailing address or e-filing directions. It refers readers to instructions, which were not provided.
Common mistakes
- Signing when the form is attached to your return: The signature section says to sign only when filing the form separately.
- Missing a required joint signature: If filing jointly and signing this form, both spouses or registered domestic partners must sign. The form warns that forging a spouse’s or registered domestic partner’s signature is unlawful.
- Leaving out extra forms or schedules: Check the box if more than three prior years are involved and attach additional Forms FTB 3834 as needed. Attach a schedule if more than one pass-through entity is involved.
- Using the wrong prior-year figures in Part I: If an earlier Form FTB 3834 affects the same prior years, lines 1 and 5 direct you to use amounts from the most recent applicable contract completion year. Line 1 also requires copies of the applicable prior-year forms.
Questions people ask
What does Form FTB 3834 calculate?
It calculates interest under the look-back method for completed long-term contracts. The form compares income based on actual contract prices and costs with income reported using estimated prices and costs, then calculates interest on the resulting tax differences.
What calculation methods appear on the form?
Part I is the Regular Method. Part II is the Simplified Marginal Impact Method.
Can the calculation show interest refundable to me?
Yes. Part I, line 9 and Part II, line 10 show interest to be refunded when total interest refundable exceeds total interest due. Part I, line 10 and Part II, line 11 show interest you owe when the reverse is true.
What if more than three prior years are involved?
Check the box on Side 1 and attach additional Forms FTB 3834 as needed. The form also refers you to General Information I in the instructions.