Schedule D (540nr) - California Capital Gain Or Loss Adjustment - 2015 Page 2
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42015 Instructions for California Schedule D (540NR)
California Capital Gain or Loss Adjustment
References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and to the California Revenue and Taxation Code (R&TC).
General Information
At-Risk Rules and Passive Activity Limitations. If you dispose of
(1) an asset used in an activity to which the at-risk rules apply, or (2)
In general, for taxable years beginning on or after January 1, 2015,
any part of your interest in an activity to which the at-risk rules apply,
California law conforms to the IRC as of January 1, 2015 . However,
and you have amounts in the activity for which you are not at risk, get
there are continuing differences between California and federal law .
and complete federal Form 6198, At-Risk Limitations, using California
When California conforms to federal tax law changes, we do not always
amounts to figure your California deductible loss under the at-risk rules .
adopt all of the changes made at the federal level . For more information,
Once a loss becomes allowable under the at-risk rules, it becomes
go to ftb.ca.gov and search for conformity . Additional information
subject to the passive activity rules . Get form FTB 3801, Passive Activity
can be found in FTB Pub . 1001, Supplemental Guidelines to California
Loss Limitations .
Adjustments, the instructions for California Schedule CA (540 or 540NR),
and the Business Entity tax booklets .
Specific Line Instructions
The instructions provided with California tax forms are a summary of
Line 1 – List each capital asset transaction.
California tax law and are only intended to aid taxpayers in preparing
their state income tax returns . We include information that is most useful
Column (a) – Description of Property. Describe the asset you sold
to the greatest number of taxpayers in the limited space available . It is
or exchanged .
not possible to include all requirements of the California Revenue and
Column (b) – Sales Price. Enter in this column either the gross sales
Taxation Code (R&TC) in the tax booklets . Taxpayers should not consider
price or the net sales price . If you received a Form 1099-B, Proceeds
the tax booklets as authoritative law .
From Broker and Barter Exchange Transactions; Form 1099-S, Proceeds
For purposes of California income tax, references to a spouse, husband,
From Real Estate Transactions; or similar statement showing the gross
or wife also refer to a California registered domestic partner (RDP),
sales price, enter that amount in column (b) . However, if box 2a of
unless otherwise specified . When we use the initials RDP they refer to
Form 1099-B indicates that gross proceeds less commissions and
both a California registered domestic “partner” and a California registered
option premiums were reported to the IRS, enter that net amount in
domestic “partnership,” as applicable . For more information on RDPs,
column (b) . If you entered the net amount in column (b), do not include
get FTB Pub . 737, Tax Information for Registered Domestic Partners .
the commissions and option premiums in column (c) .
Column (c) – Cost or Other Basis. In general, the cost or other basis is
Purpose
the cost of the property plus purchase commissions and improvements,
minus depreciation, amortization, and depletion . Enter the cost or
Full-year nonresidents or part-year residents report gains and losses as if
adjusted basis of the asset for California purposes . Use your records and
they were full-year residents for the entire year using California amounts .
California tax returns for years before 1987 to determine the California
Therefore, all gains and losses must be reported . Full-year nonresidents
amount to enter in column (c) . If you used an amount other than cost as
or part-year residents complete Schedule D (540NR), California Capital
the original basis, your federal basis may be different from your California
Gain or Loss Adjustment, and the Schedule D (540NR) Worksheet for
basis . Other reasons for differences include:
Nonresident and Part-Year Residents, in order to complete column E
on Schedule CA (540NR), California Adjustments - Nonresidents or
• Depreciation Methods and Property Expensing – Before 1987,
Part-Year Residents .
California law disallowed the use of accelerated cost recovery system
(ACRS) and disallowed the use of an asset depreciation range 20%
For nonresidents, the computation of California taxable income, capital
above or below the standard rate . Before 1999, California had different
loss carryovers, and capital loss limitations are determined based upon
limits on the expensing of property under IRC Section 179 . California
California source income and loss items only . For purposes of calculating
law permits rapid write-off of certain property such as solar energy
California taxable income, the character of gains and losses on the sale or
systems, pollution control devices, and property used in an Enterprise
exchange of property used in the trade or business or certain involuntary
Zone, Local Agency Military Base Recovery Area, Targeted Tax Area, or
conversions (IRC Section 1231) are determined by netting California
Los Angeles Revitalization Zone .
source Section 1231 gains and losses only .
• Inherited Property – The California basis of property inherited from a
If you moved in or out of California during the year, get FTB Pub .1100,
decedent is generally the fair market value at the time of death .
Taxation of Nonresidents and Individuals Who Change Residency .
• S Corporation Stock – Prior to 1987, California law did not recognize
Get FTB Pub . 1001, for more information about the following:
S corporations and your California basis in S corporation stock may
• Disposition of property inherited before 1987 .
differ from your federal basis . In general, your California basis will
• Gain on the sale or disposition of a qualified assisted housing
be cost-adjusted for income, loss, and distributions received after
development to low-income residents or to specific entities
1986, while your stock was California S corporation stock . Your
maintaining housing for low-income residents .
federal basis will be cost-adjusted for income, loss, and distributions
• Capital loss carryback .
received during the time your stock qualified for federal S corporation
Installment Sales. If you sold property at a gain (other than publicly
treatment . Effective for taxable years beginning on or after
traded stocks or securities) and you will receive a payment in a tax year
January 1, 2002, any corporation with a valid federal S corporation
after the year of sale, report the sale on the installment method unless
election is considered an S corporation for California purposes .
you elect not to do so . Get form FTB 3805E, Installment Sale Income .
Existing law already requires federal C corporations to be treated as
Also, use that form if you received a payment in 2015, for an installment
C corporations for California purposes .
sale made in an earlier year .
• Special Credits – California law authorizes special tax credits not
You may elect to not use the installment sale method for California by
allowed under federal law or computed differently under federal law . If
reporting the entire gain on Schedule D (540NR) (or Schedule D-1, Sales
you claimed special credits related to capital assets, reduce your basis
of Business Property, for business assets) in the year of the sale and
in the assets by the amount of credit .
filing your return on or before the due date .
Schedule D (540NR) Instructions 2015 Page 1
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