Instructions For Form Ftb 3801-Cr - Passive Activity Credit Limitations

D Passive Activities

Part I

Part II — Special Allowance for Rental Real

Estate Activities with Active Participation

See the instructions for federal Form 8582-CR

Computation of 2015 Passive Activity Credits

Use Part II to figure the credit allowed if

for information about passive activities and

you have any credits from rental real estate

Line 1a through Line 1c – Individuals and

passive activity credits.

activities in which you actively participated

qualifying estates that actively participated in

Dispositions

(other than low- income housing credit). Get

rental real estate activities (other than rental

instructions for federal Form 8582-CR, see

Unallowed passive activity credits, unlike

real estate activities with low-income housing

“Rental Activities.”

unallowed passive activity losses, are not

credits) should include the credits from these

allowable when you dispose of your interest in

activities on line 1a and line 1b.

Part III — Special Allowance for Low-Income

an activity in a taxable transaction. However,

Use Worksheet 1 to figure the amounts to

Housing Credits for Property Placed in

you may elect to increase the basis of the

enter on line 1a and line 1b.

Service Before 1990 (or from Pass-Through

credit property by the amount of the original

Interests Acquired Before 1990)

A qualifying estate is one that is treated as

basis reduction of the property to the extent

Use Part III to figure the credit allowed if you

actively participating for the two taxable years

that the credit has not been allowed under the

have any low-income housing credits for

following the death of the taxpayer. The decedent

passive activity rules. No basis adjustment may

property placed in service before 1990. Also,

must have actively participated in the rental real

be elected on a partial disposition of an interest

use this part if your low-income housing credit

estate activity in the taxable year of death.

in a passive activity.

is from a partnership, S corporation, or other

If you were married/RDP filing a separate

In computing the special allowance for rental

pass-through entity in which you acquired your

return and lived with your spouse/RDP at

real estate activities with active participation,

interest before 1990, regardless of the date the

any time during the year, even if you actively

the dollar limitation for the low-income housing

property was placed in service.

participated in rental real estate activities,

credit is more than the amount allowed under

Part IV — Special Allowance for Low-Income

include the credits on Worksheet 4 but not on

federal law. The California limitation is $75,000

Housing Credits for Property Placed in

Worksheet 1.

($37,500 if married/RDP filing a separate return

Service After 1989

You may take credits that arose in a prior tax

and you lived apart the entire year).

Use Part IV to figure the credit allowed if

year (other than low-income housing credits)

you have any low-income housing credits

E Passive Activity Credit

under the special allowance only if you actively

for property placed in service after 1989. If

Carryovers

participated in the rental real estate activity

you held an indirect interest in the property

for both that prior year and this year. If you

through a partnership, S corporation, or other

Passive activity credits are suspended and

did not actively participate for both years,

pass-through entity, use this part only if your

carried forward indefinitely. Unlike losses,

include the credits on Worksheet 4 but not on

interest in the pass-through entity was also

suspended credits are not allowed when you

Worksheet 1.

acquired after 1989.

dispose of the activity. However, you may elect

Line 2a through Line 2c – Individuals,

to increase your basis (by the amount of the

Part V — Passive Activity Credits Allowed

including limited partners, and qualifying

original basis reduction) to the extent the credit

Use Part V to figure the amount of the passive

estates who had low-income housing credits

has not been used.

activity credit (as determined in Part I) that is

for property placed in service before 1990,

allowed for 2015 for all passive activities.

The credit becomes allowable under the

should include the credits from those activities

passive loss rules when there is sufficient

on line 2a and line 2b.

Part VI — Election to Increase Basis of Credit

passive income to allow its use or it is within

Property

However, if you have low-income housing

the scope of the rental real estate rule. Once

Use Part VI if you disposed of your entire

credits for property placed in service after

the credit becomes allowable under the passive

interest in a passive activity in 2015 and elect

1989, include those credits on Worksheet 3

loss rule, it is subject to the other limitations

to increase the basis of credit property used in

instead of Worksheet 2. If you held an indirect

applicable to the use of credits, such as the

a passive activity.

interest in the property through a partnership,

limitation that credits may not reduce regular

S corporation, or other pass-through entity,

tax below tentative minimum tax.

use Worksheet 3 only if you acquired your

Specific Line Instructions

In addition, the treatment of passive activity

interest in the pass-through entity after 1989.

credits is determined in all respects by the

For purposes of these instructions,

If you were married/RDP filing a separate

general rules applicable to those credits,

“worksheet” refers to Worksheet 1 through

return and lived with your spouse/RDP at

including carryover periods.

Worksheet 9 in the instructions for federal

any time during the year, include the credits

Form 8582-CR. Use California amounts

on Worksheet 4 but not on Worksheet 2 or

F Overview of Form

when completing these worksheets. Use only

Worksheet 3.

The form consists of six parts.

the credits subject to the California passive

Line 3a through Line 3c – Individuals,

credit limitation rules (described in General

Part I — 2015 Passive Activity Credits

including limited partners, and qualifying

Information C, Who Must File). Keep these

Use Part I to combine your credits from

estates who had low-income housing credits

worksheets for your records.

passive activities to determine if you have

for property placed in service after 1989,

passive activity credits for 2015.

should include those credits on line 3a and

line 3b instead of Worksheet 2. If you held

If your credits from all passive activities exceed

an indirect interest in the property through

the tax attributable to net passive income, you

a partnership, S corporation, or other

may have a suspended passive activity credit

pass-through entity, use line 3a and line 3b

for 2015. Generally, you have net passive

only if you also acquired your interest in the

income if form FTB 3801, line 3 shows income.

pass-through entity after 1989.

See the instructions for line 6 for details.

Page 2 FTB 3801-CR Instructions 2015

Instructions For Form Ftb 3801-Cr - Passive Activity Credit Limitations - 2015 Page 2

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