How to Fill Out California Form FTB 3885A: Depreciation, Section 179, and Amortization

To fill out California Form FTB 3885A, you complete a four-part schedule that recalculates depreciation and amortization under California rules, compares the result to what you claimed federally, and sends the difference to your Schedule CA (or Form FTB 3801 for passive activities). You attach it to Form 540 or 540NR, and you file a separate copy for each business, rental, or farm activity that produces a difference.¹

When You Actually Need to File It

If your California depreciation and amortization amounts match your federal amounts exactly, you don’t file the form.² In practice, most people who depreciate anything federally will have a difference, because California does not conform to several of the federal provisions that produce the largest first-year deductions. The form covers individuals, estates, and trusts filing Form 540, 540NR, or 541 who report depreciable property on federal Schedule C, E, or F. Prepare a separate Form 3885A for each activity.

Why California and Federal Numbers Diverge

Four areas of nonconformity drive nearly every entry on the form, and knowing which applies to your assets tells you what to recalculate.

Bonus depreciation. California has never adopted federal bonus depreciation under IRC Section 168(k).³ Any first-year bonus write-off you took federally gets added back, and the asset is depreciated over its full recovery period on the California side.⁴

Section 179 expensing. The federal Section 179 deduction for 2026 runs up to $2,560,000.⁵ California caps the same election at $25,000, with a dollar-for-dollar phase-out once total Section 179 property placed in service exceeds $200,000.¹ Anything above $25,000 that you expensed federally becomes depreciable property for California.

Luxury automobile caps. California doesn’t follow the federal modifications to IRC Section 280F, so the annual depreciation ceilings on passenger vehicles are much lower on the state side.⁶ If you depreciate a listed-property vehicle, you use Form FTB 3885L in addition to 3885A.

Qualified improvement property. Federal law assigns a 15-year recovery period to interior improvements to nonresidential buildings. California, which doesn’t conform to federal MACRS generally, doesn’t adopt that 15-year treatment.⁷ The California recovery period may be longer.

What to Have in Front of You

Your federal Form 4562. Line 22 gives you total federal depreciation for the activity; Line 44 gives you total federal amortization. Both feed directly into Form 3885A.²
Purchase records showing date placed in service, original cost or other basis, and the federal method and recovery period for each asset.
Last year’s Form 3885A, if you carried forward any disallowed California Section 179 amount.
Form FTB 3885L, if any of the property is a passenger vehicle or other listed property.

Part I: Passive or Nonpassive

Line 1 asks whether the activity is passive or nonpassive. Passive means a trade or business in which you did not materially participate. Rental real estate is almost always passive for California, because the state does not follow the federal rule allowing real estate professionals to treat rentals as nonpassive.¹ The box you check determines where your final adjustment number lands, so get it right before you move on.

Part II: The California Section 179 Worksheet

Skip Part II unless you elected Section 179 on your federal return. If you did, work down the worksheet:

Line 1: California’s maximum dollar limitation, $25,000.
Line 3: the phase-out threshold, $200,000.
Lines 2 and 4: if total Section 179 property placed in service exceeded $200,000, reduce the $25,000 limit dollar-for-dollar by the excess.
Lines 6 through 8: list each property, its cost, and the amount you elect to expense for California.
Line 11: the business income limitation. You cannot expense more than net business income for the year; a loss year pushes the whole amount into a carryforward.¹
Line 12: your final California Section 179 deduction, which carries to Line 2 of the main form.
Line 13: any disallowed amount that carries forward to next year.

Part III: The Depreciation Table

Part III is where most of the arithmetic happens. Line 3 is a table with one row per asset (or group of assets) placed in service during the year:

Column (a): description of the property.
Column (b): date placed in service.
Column (c): California basis for depreciation.
Column (d): depreciation method.
Column (e): recovery life or rate.
Column (f): California depreciation deduction for the year.

Column (c) is where taxpayers slip up. For any asset you also expensed under Section 179, the California basis is the asset’s cost minus the California Section 179 amount from Part II, not the federal Section 179 amount.¹ If you expensed $100,000 federally but only $25,000 for California, the California depreciable basis is $75,000 higher than the federal basis, and you’ll be depreciating that $75,000 for years to come.

Line 7 is your total federal depreciation for the activity, pulled from federal Form 4562, Line 22. Lines 8a and 8b then compare that federal total against your California total from the table above:

Line 8a: the amount to add to California income, used when federal depreciation exceeded California’s. This is the common case in an asset’s early years, especially where bonus depreciation or a large Section 179 was involved.
Line 8b: the amount to subtract, used when California depreciation exceeds federal. That happens in the later years of an asset’s life, once the federal deductions have run out but California is still depreciating the remaining basis.

Part IV: Amortization

Part IV mirrors Part III for intangibles: goodwill, patents, startup costs, and other property you amortize rather than depreciate. Line 13 takes your total federal amortization from Form 4562, Line 44. Lines 14a and 14b produce the California adjustment the same way Part III does: 14a is the addition, 14b is the subtraction.

Where the Final Numbers Go

The destination depends on the box you checked in Part I.

For a nonpassive activity, carry the amounts from Line 8a (and 14a) to Schedule CA (540), Part I, Section B, or Schedule CA (540NR), Part II, Section B, on the line matching your income type: Line 3 for business income, Line 5 for supplemental income, Line 6 for farm income. Additions from Line 8a go in column B; subtractions from Line 8b go in column C.¹

For a passive activity, Form 3885A functions as a worksheet. The adjustment carries to Form FTB 3801, Side 2, California Passive Activity Worksheet, column (e), where the passive activity loss rules may further limit how much of the difference you can use this year.¹

Attaching and Filing

Form 3885A is an attachment to your Form 540 or 540NR, never a standalone filing. E-file software places it automatically. If you paper file, put Form 3885A behind your main return and mail the package to the Franchise Tax Board:⁸

Refund or no balance due: Franchise Tax Board, PO Box 942840, Sacramento, CA 94240-0001.
Amount owed: Franchise Tax Board, PO Box 942867, Sacramento, CA 94267-0001.

Fixing a Form 3885A You Already Filed

If you find an error after filing, whether a wrong recovery period, an incorrect basis, or a missed Section 179 election, correct it by amending the return. Individuals file Schedule X with a corrected Form 540 or 540NR and an updated Form 3885A. Estates and trusts file an amended Form 541 with the corrected schedule attached.⁹ Amended returns can be e-filed or mailed.

If the IRS changes your federal depreciation after an audit, you have to report the change to the FTB. Report it within six months and the FTB has two years from the date of notification to assess additional tax. Fail to report it, and the statute of limitations never expires.¹⁰

Records to Keep

Keep each filed Form 3885A, the underlying federal Form 4562, purchase invoices, and your depreciation schedules for at least four years after the later of the return’s due date or the date you filed. That matches the FTB’s standard four-year audit window.¹¹ As a practical matter, hold depreciation records for the entire life of the asset plus four years after the year of disposition, because you’ll need the California basis history to calculate gain or loss when you sell, and that basis will not match the federal one.

1
Franchise Tax Board. 2025 Instructions for Form FTB 3885A Depreciation and Amortization Adjustments
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Franchise Tax Board. California Form 3885A – Depreciation and Amortization Adjustments
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California Legislative Information. California Code Revenue and Taxation Code RTC 17250
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EY Tax News. California Updates General Date Conformity to Internal Revenue Code While Continuing to Decouple From Significant Federal Provisions
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IRS. Publication 946 (2025), How To Depreciate Property
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Franchise Tax Board. Depreciation and Amortization (FTB 3885L)
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Wolters Kluwer. States Respond to Qualified Improvement Property Depreciation Change
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Franchise Tax Board. 2025 Form 540 California Resident Income Tax Return
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Franchise Tax Board. Amend an Income Tax Return
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Franchise Tax Board. Manual of Audit Procedures Chapter 4 – SOL and Waivers
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California Legislative Information. California Code Revenue and Taxation Code RTC 19057