Form 3805Q: California NOL Computation and Disaster Loss Limitations for Corporations

Form 3805Q is a California Franchise Tax Board form that corporations use to figure their net operating loss (NOL) deduction and to apply the rules that limit how NOLs and disaster losses can be carried forward or, in some cases, carried back. If your corporation had a loss year in California and wants to use that loss to reduce tax in another year, this is the form that walks you through the math the state requires.

What Form 3805Q actually does

Unlike a simple worksheet, Form 3805Q separates different categories of losses because California treats them differently. It has sections for general NOLs, new business NOLs, eligible small business NOLs, and disaster losses tied to a state or federally declared disaster area. Each category has its own carryover period and, depending on the tax year, its own percentage limitation on how much of the loss can actually be deducted. The form calculates the deductible amount, tracks how much of the loss remains for future years, and reconciles prior carryovers so the FTB can see exactly how the current year’s deduction was derived.

Because California’s NOL rules have shifted several times — including temporary suspensions of the NOL deduction during budget shortfalls — the form also asks corporations to confirm which years are affected by suspension rules, so the carryover period is extended correctly rather than lost.

Who needs to file it

Any corporation filing a California return (Form 100, 100W, or 100S) that is claiming a net operating loss deduction, or that incurred a loss during the year it wants to preserve for future use, generally needs to attach Form 3805Q. This includes standard C corporations, S corporations, and corporations that qualify as new businesses or eligible small businesses under California’s special NOL provisions. Corporations claiming a disaster loss deduction tied to a federally or state-declared disaster also use this form to show how the loss was calculated and applied.

If your corporation has no NOL or disaster loss to report, you don’t need this form at all — it’s strictly for entities carrying losses forward or claiming a current-year disaster loss deduction.

When it’s used

Form 3805Q is filed with the corporation’s annual California tax return for the year the NOL deduction is being claimed. It’s not a standalone filing; it supports the numbers reported on the main corporate return. Corporations often need to complete a new version of this form every year they carry forward a loss, since the balance of unused NOL changes annually as portions are absorbed against taxable income.

If your corporation is also managing payment deadlines around the same filing, it helps to look at related California business forms, like the Form 3586 e-file payment voucher for corporations paying electronically, or Form FTB 3539 if you need an automatic extension to file while you finish reconciling loss carryovers.

How to get and complete the form

Form 3805Q is a fillable PDF (AcroForm), meaning you can type your figures directly into the document using Adobe Reader or a similar PDF program before printing or attaching it to an e-filed return. Start by identifying the loss year and category — general, new business, eligible small business, or disaster — since each has separate carryover rules. Enter prior-year carryover amounts as shown on your previous year’s Form 3805Q, then apply the current year’s income to determine how much of the loss is used up and how much remains.

Double-check the applicable limitation percentage for the tax year in question, since California has adjusted these percentages in different years depending on the state budget. Keep a copy of each year’s completed form, since the FTB may request documentation showing how a current-year NOL deduction traces back to the original loss year.

Corporations dealing with multi-state filings or partnership structures sometimes need to coordinate deadlines with other jurisdictions — for reference, entities filing in New York alongside California obligations may find Form IT-370-PF useful for extension planning on that side.