California Depreciation and Amortization

Depreciation and Amortization
2023 Form 3885P Depreciation and Amortization
TAXABLE YEAR

2023

CALIFORNIA FORM

Depreciation and Amortization

3885P

Name as shown on return

FEIN
California Secretary of State (SOS) file number

Tangible and intangible assets placed in service during the 2023 taxable year:
(a)
Description of property

(b)
Date placed in
service
(mm/dd/yyyy)

(c)
Cost or
other basis

Depreciation of assets
(e)
(d)
Method of Life or
rate
figuring
depreciation

(f)
Depreciation
for this year

Amortization of property
(h)
(g)
Code Period or
section percentage

(i)
Amortization
for this year

1

1 Enter line 1, column (f) and column (i) totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Depreciation
Be sure to make adjustments for any basis differences when calculating depreciation.
2 California depreciation for assets placed in service beginning before the 2023 taxable year . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Total California depreciation. Add line 1(f) totals and line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Amortization
Be sure to make adjustments for any basis differences when calculating amortization.
4 California amortization for intangibles placed in service beginning before the 2023 taxable year . . . . . . . . . . . . . . . . . . . . . 4
5 Total California amortization. Add line 1(i) totals and line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Total depreciation and amortization. Add line 3 and line 5. Enter the total here and on Form 565, Side 1, line 17a,
if from a trade or business, or on federal Form 8825, line 14, if from rental real estate activities . . . . . . . . . . . . . . . . . . . . . 6
7 IRC Section 179 expense deduction from line 12 of the worksheet in the instructions . . . . . . . 7
8 Carryover of disallowed deduction to 2024 from line 13 of the worksheet in the instructions. . 8

General Information

B

In general, for taxable years beginning on or after January 1, 2015, California
law conforms to the Internal Revenue Code (IRC) as of January 1, 2015.
However, there are continuing differences between California and federal
law. When California conforms to federal tax law changes, we do not always
adopt all of the changes made at the federal level. For more information, go
to ftb.ca.gov and search for conformity. Additional information can be found
in FTB Pub. 1001, Supplemental Guidelines to California Adjustments, the
instructions for Schedule CA (540), California Adjustments – Residents, or
Schedule CA (540NR), California Adjustments – Nonresidents or Part‑Year
Residents, and the Business Entity tax booklets.
The instructions provided with California tax forms are a summary of
California tax law and are only intended to aid taxpayers in preparing their
state income tax returns. We include information that is most useful to the
greatest number of taxpayers in the limited space available. It is not possible
to include all requirements of the California Revenue and Taxation Code
(R&TC) in the instructions. Taxpayers should not consider the instructions
as authoritative law.

A

Purpose

Use form FTB 3885P, Depreciation and Amortization, to compute
depreciation and amortization allowed as a deduction on Form 565,
Partnership Return of Income. Attach form FTB 3885P to Form 565.
Depreciation is the annual deduction allowed to recover the cost or other
basis of business or income producing property with a determinable useful
life of more than one year. Land is not depreciable.
Amortization is an amount deducted to recover the cost of certain capital
expenses over a fixed period.

Federal/State Calculation Differences

California law has not always conformed to federal law with regard
to depreciation methods, special credits, or accelerated write‑offs.
Consequently, the recovery periods and the basis on which the depreciation
is calculated may be different from the amounts used for federal purposes.
Reportable differences may occur if all or part of your assets were placed in
service:
• Before January 1, 1987: California disallowed depreciation under the
federal Accelerated Cost Recovery System (ACRS). Continue to calculate
California depreciation in the same manner as in prior years for those
assets.
• On or after January 1, 1987: California provides special credits and
accelerated write‑offs that affect the California basis for qualifying assets.
California does not conform to all the changes to federal law enacted in
1993. Therefore, the California basis or recovery periods may be different
for some assets.
California law does not conform to the federal law for:
• IRC Section 168(k) relating to the depreciation deduction for
certain assets.
• The enhanced IRC Section 179 expensing election.
• The expanded definition of IRC Section 179 property for certain
depreciable tangible personal property related to furnishing lodging
and for qualified real property for improvements to nonresidential real
property.
• Federal modifications to amortization of research and experimental
expenditures (IRC Section 174).

7661233

FTB 3885P 2023

Side 1

Additional differences may occur for the following:
• Luxury Automobile Depreciation: Sport utility vehicles and minivans
built on a truck chassis are included in the definition of trucks and vans
when applying the 6,000 pound gross weight limit. However, California
does not conform to the federal modifications to depreciation limitations
on luxury automobiles (IRC Section 280F).

Specific Line Instructions
Line 1 – California depreciation for assets and amortization for
intangibles placed in service during the 2023 taxable year.
Complete column (a) through column (i) for each asset or group of assets or
property placed in service during the 2023 taxable year. Enter the column (f)
totals on line 1(f). Enter the column (i) totals on line 1(i).

Depreciation limitations placed in service in the calendar year 2023:
For passenger automobiles (that are not trucks or vans)
Tax year

1st Tax Year
2nd Tax Year
3rd Tax Year
Each Succeeding Year
For trucks and vans

Tax year

1st Tax Year
2nd Tax Year
3rd Tax Year
Each Succeeding Year

Line 2 – California depreciation for assets placed in service beginning
before the 2023 taxable year.

Amount

Enter total California depreciation for assets placed in service beginning
before the 2023 taxable year, taking into account any differences in asset
basis or differences in California and federal tax law.

$3,860
$6,100
$3,650
$2,175

Line 4 – California amortization for intangibles placed in service
beginning before the 2023 taxable year.

Enter total California amortization for intangibles placed in service beginning
before the 2023 taxable year, taking into account any differences in asset
basis or differences in California and federal tax law.

Amount
$4,260
$6,800
$4,050
$2,475

Assets with a Federal Basis Different from California Basis

Some assets placed in service on or after January 1, 1987, will have a
different adjusted basis for California purposes due to the credits claimed
or accelerated write‑offs of the assets. Review the list of depreciation
and amortization items in the instructions for Schedule CA (540) and
Schedule CA (540NR). If the partnership has any other adjustments to make,
get FTB Pub. 1001, for more information.

For lease inclusion indexing amounts, go to ftb.ca.gov/forms/search and
enter lease inclusion.
• Amortization of Certain Intangibles (IRC Section 197): Property
classified as Section 197 property under federal law is also Section 197
property for California purposes. There is no separate California election
required or allowed. However, for Section 197 property acquired before
January 1, 1994, the California adjusted basis as of January 1, 1994,
must be amortized over the remaining federal amortization period.
• Grapevines Subject to Phylloxera or Pierce’s Disease: For California
purposes, replacement grapevines may be depreciated using a recovery
period of five years instead of ten years.
This list is not intended to be all‑inclusive of the federal and state differences.
For additional information, refer to California’s R&TC.

Line 6 – Total Depreciation and Amortization

Add line 3 and line 5. Enter the total on line 6 and on Form 565,
Side 1, line 17a.
If depreciation or amortization is from more than one trade or business
activity, or from more than one rental real estate activity, the partnership
should separately compute depreciation for each activity. Use the
depreciation computed on this form to identify the net income for each
activity. Report the net income from each activity on an attachment to
Schedule K‑1 (565), Partner’s Share of Income, Deductions, Credits, etc.,
for purposes of passive activity reporting requirements. Use California
amounts to determine the depreciation amount to enter on line 14 of federal
Form 8825, Rental Real Estate Income and Expenses of a Partnership or an
S Corporation.

Line 7

Enter the IRC Section 179 expense deduction amount from line 12 of the
following worksheet.

These limitations apply to the partnership and each partner.
Election to Expense Certain Tangible Property (IRC Section 179) Worksheet

Follow the instructions on federal Form 4562, Depreciation and Amortization, for listed property.
1 Maximum dollar limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Total cost of IRC Section 179 property placed in service during the taxable year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Threshold cost of IRC Section 179 property placed in service during the taxable year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter ‑0‑ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Dollar limitation for taxable year. Subtract line 4 from line 1. If zero or less, enter ‑0‑ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a)
Description of property

(b)
Cost

(c)
Elected cost

6

7
8
9
10
11

Listed property. Use federal Form 4562, Part V, line 29. Make adjustments for California law and basis differences . . . . . . 7
Total elected cost of IRC Section 179 property. Add amounts in column (c), line 6 and line 7 . . . . . . . . . . . . . . . . . . . . . . . 8
Tentative deduction. Enter the smaller of line 5 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Carryover of disallowed deduction from 2022. See instructions for line 10 through line 12 on federal Form 4562 . . . . . . 10
Income limitation. Enter the smaller of line 5 or the aggregate of the partnership’s items of income and expense
described in IRC Section 702(a) from any business actively conducted by the partnership, other than credits,
tax‑exempt IRC Section 179 expense deduction, and guaranteed payments under IRC Section 707(c) . . . . . . . . . . . . . . . 11
12 IRC Section 179 expense deduction. Add line 9 and line 10, but do not enter more than line 11. Enter on
Schedule K (565), line 12 and on form FTB 3885P, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Carryover of disallowed deduction to 2024. Add line 9 and line 10 and subtract line 12. Enter here and on
form FTB 3885P, line 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Page 2 FTB 3885P Instructions 2023

$ 25,000
$200,000