How to Complete FTB Form 3885L: Section 179 and Form 568

FTB Form 3885L is the depreciation and amortization schedule a California LLC attaches to Form 568 to report cost recovery under California rules, which do not match federal rules on several important points. If your LLC placed assets in service this year, is still writing down assets from prior years, or amortizes intangibles, you complete this form so the deduction on Form 568 reflects California law rather than what appeared on your federal return.

Who Attaches Form 3885L

Every LLC that files Form 568 and claims depreciation or amortization on any asset completes and attaches Form 3885L. That covers multi-member LLCs taxed as partnerships and single-member LLCs required to file Form 568.¹ Corporations do not use this form; they use FTB 3885 with Form 100 or Form 100S instead.²

Why the California Numbers Will Not Match Federal

California conforms to federal MACRS depreciation only in part, and the gaps are the reason this form exists.³ Three differences affect nearly every LLC:

No bonus depreciation. California does not conform to IRC Section 168(k). Whatever bonus depreciation you claimed federally, you cannot claim on the California return.⁴
Section 179 is capped at $25,000, with a phase-out starting when total Section 179 property placed in service exceeds $200,000. The federal cap is well over $1 million, so an adjustment is nearly always required.⁵
Passenger automobile caps differ. California does not conform to the federal IRC Section 280F limits, so its annual vehicle depreciation ceilings are their own numbers.⁴

The practical result: California generally lets you recover asset costs more slowly. Where the federal deduction is larger, the difference is added back to the LLC’s income on Form 568.

What to Have in Front of You

Before you start the form, pull together:

The completed federal Form 4562. It’s your starting point for the amounts that need adjusting.
Purchase records for each asset: description, date placed in service, and cost or other basis.
The California depreciation method and recovery period for each asset (straight-line, 200% declining balance, and so on).
Prior-year California depreciation schedules. For assets placed in service before this year, you need the cumulative California depreciation already claimed, not the federal figure.
Section 179 election details for each qualifying asset, adjusted for the $25,000 California cap.

Download the current-year form from the Franchise Tax Board so the line references and vehicle caps match.²

Completing the Main Schedule

Form 3885L is a single schedule with columns for depreciation and amortization, summary lines, and a Section 179 worksheet. It doesn’t have the multi-part structure of the corporate Form 3885.

Line 1: Assets Placed in Service This Year

Each asset or asset group placed in service during the current year goes on Line 1. The depreciation columns are:

Column (a): description of the property.
Column (b): date placed in service, mm/dd/yyyy.
Column (c): cost or other basis.
Column (d): California depreciation method (for example, “200DB” or “SL”).
Column (e): life in years or the rate percentage.
Column (f): current-year California depreciation.

For intangibles, the same row continues:²

Column (g): the IRC section authorizing amortization (for example, “197” for goodwill and certain intangibles).
Column (h): amortization period or percentage.
Column (i): current-year amortization.

Total column (f) on Line 1(f) and column (i) on Line 1(i).

Lines 2 Through 6: Prior-Year Assets and Totals

Line 2 is the total California depreciation for the year on assets placed in service before the current year. If prior federal returns claimed bonus depreciation California didn’t allow, the California basis and remaining depreciation schedule differ from federal, and Line 2 has to reflect the California schedule.²

Line 3 adds Line 1(f) and Line 2 for total California depreciation. Line 4 is amortization on intangibles placed in service before the current year. Line 5 totals amortization (Line 1(i) plus Line 4). Line 6 combines depreciation and amortization (Line 3 plus Line 5). Enter the Line 6 total on Form 568, Schedule B, Line 17a for a trade or business, or on federal Form 8825, Line 14 if the depreciation relates to rental real estate.²

Lines 7 and 8: Section 179

Line 7 carries the Section 179 expense deduction from the worksheet. Line 8 shows any disallowed Section 179 amount that carries over to next year when current-year income can’t absorb the full deduction.

The Section 179 Worksheet

The worksheet applies California’s numbers, not federal ones, and runs twelve lines:

Line 1: $25,000 maximum dollar limitation.
Line 2: total cost of all Section 179 property placed in service during the year.
Line 3: $200,000 phase-out threshold.
Line 4: Line 2 minus Line 3; enter zero if the result is zero or less.
Line 5: Line 1 minus Line 4. If Section 179 property placed in service exceeds $225,000, the deduction is completely phased out.

Lines 6 through 8 identify each property elected, its cost, and the elected cost. Line 7 handles listed property specifically: start with federal Form 4562, Part V, Line 29, then adjust for California law and basis.²

Line 9 is the tentative deduction, the lesser of Line 5 or Line 8. Line 10 picks up any prior-year disallowed Section 179 carryover. Line 11 applies the income limitation: the deduction can’t exceed the LLC’s aggregate income from the actively conducted business, excluding credits, the Section 179 deduction itself, and IRC Section 707(c) guaranteed payments. Line 12 adds Lines 9 and 10, capped at Line 11. Enter Line 12 on Schedule K (568), Line 12, and on Form 3885L, Line 7.²

Vehicles and Other Listed Property

Passenger automobiles get their own annual caps that override whatever depreciation method you chose. For vehicles placed in service in 2023, California’s caps were:⁶

Passenger automobiles (not trucks or vans): $3,860 first year, $6,100 second year, $3,650 third year, $2,175 each succeeding year.
Trucks and vans: $4,260 first year, $6,800 second year, $4,050 third year, $2,475 each succeeding year.

These caps apply regardless of the depreciation method, and they don’t include the additional first-year bonus depreciation federal law allows, because California doesn’t allow it. Use the caps from the form for the year your vehicle was placed in service.

For other listed property used partly personally, business use has to exceed 50% to use accelerated methods or Section 179. At 50% or below, you’re limited to straight-line. Keep mileage logs and equipment-use records; the FTB can disallow the deduction if business use can’t be substantiated.

Filing It With Form 568

Form 3885L is not filed on its own. Attach it to Form 568 and submit both together. California requires business entities that prepare returns using tax preparation software to e-file, and commercial software usually includes 3885L in the electronic submission automatically.⁷

If you paper-file, mail Form 568 with Form 3885L attached to the Franchise Tax Board:

With payment: PO Box 942857, Sacramento, CA 94257-0501.
Without payment or paid electronically: PO Box 942857, Sacramento, CA 94257-0500.
Requesting a refund: PO Box 942857, Sacramento, CA 94257-0500.¹

Form 568 for LLCs classified as partnerships is due the 15th day of the third month after the close of the tax year (March 15 for calendar-year filers). SMLLCs owned by pass-through entities use the same date. SMLLCs owned by individuals or other non-pass-through entities have until the 15th day of the fourth month (April 15 for calendar-year filers).¹ Depreciation deductions also affect whether the LLC’s total California-source income crosses into a higher LLC fee tier, so the numbers on this form matter beyond the income tax calculation.⁸

Omitting Form 3885L when Form 568 claims depreciation or amortization can trigger processing delays or an adjustment notice.

Penalties for Using the Federal Numbers

Carrying a federal bonus depreciation amount straight onto the California return, or claiming Section 179 above the $25,000 cap, can produce an accuracy-related penalty of 20% of the underpayment attributable to negligence or a substantial understatement of tax. The rate reaches 40% in certain circumstances involving more serious misstatements.⁹ Interest also accrues from the original due date until the balance is paid. Calculate California depreciation separately rather than assuming the federal figures will match.

How Long to Keep the Records

The FTB’s standard examination window is four years from the return’s due date or filing date, whichever is later. For property records specifically, the FTB advises keeping them as long as needed to figure the basis: purchase records, prior-year depreciation schedules, and Form 3885L worksheets should be held for the entire holding period of the asset, plus four years after the return reflecting its sale or retirement.¹⁰ If you’re under audit, keep the audit-period records until it closes.

1
Franchise Tax Board. 2025 Instructions for Form 568 Limited Liability Company Tax Booklet
2
Franchise Tax Board. FTB 3885L Depreciation and Amortization
3
Franchise Tax Board. Summary of Federal Income Tax Changes
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Franchise Tax Board. 2025 Instructions for Form FTB 3885 Corporation Depreciation and Amortization
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Franchise Tax Board. 2025 Instructions for Form FTB 3885A
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Franchise Tax Board. FTB 3885L Depreciation and Amortization
7
Franchise Tax Board. e-file for Business
8
Franchise Tax Board. FTB Pub. 3556 Limited Liability Company Filing Information
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Franchise Tax Board. Penalties Abusive Tax Shelters
10
Franchise Tax Board. Keeping Your Tax Records