Form 3885P: California Depreciation and Amortization for Partnerships (2023)

Form 3885P is the California Franchise Tax Board’s schedule for reporting depreciation and amortization deductions on a partnership or limited liability company return. If your business operates as a partnership in California and owns depreciable property or intangible assets subject to amortization, this is the form that carries those calculations onto your state return.

California doesn’t always follow federal depreciation rules exactly. The state has its own conformity dates and, in some years, its own limits on Section 179 expensing or bonus depreciation. Because of these differences, partnerships can’t simply attach a copy of federal Form 4562 and call it done. Form 3885P exists specifically to reconcile those federal-state differences and produce the correct depreciation and amortization figures for California tax purposes.

Who Needs to File Form 3885P

This form applies to partnerships, including general partnerships, limited partnerships, and limited liability companies that are classified as partnerships for tax purposes and do business in California or have income from California sources. If the entity claimed depreciation on tangible property (equipment, vehicles, buildings, machinery) or amortization on intangible assets (like startup costs, organizational expenses, or certain leasehold improvements) during the 2023 tax year, Form 3885P needs to be completed and attached to Form 565, Partnership Return of Income.

Single-member LLCs that are disregarded for tax purposes generally don’t file this form separately since their activity flows through to the owner’s return. But any entity filing its own partnership return with depreciable assets on the books should expect to complete this schedule.

When and How the Form Is Used

Form 3885P is filed alongside the annual partnership return for the tax year in which depreciation or amortization is claimed. For the 2023 tax year, that means it accompanies the 2023 Form 565 filing, typically due by the 15th day of the third month after the close of the partnership’s tax year (March 15 for calendar-year filers, with the usual extension provisions available).

The form walks through each depreciable or amortizable asset, requiring details like the date placed in service, cost or basis, the depreciation method used, and the recovery period. It separates current-year depreciation from prior-year amounts and calculates any adjustment needed because California’s rules diverge from federal law. Partnerships that claimed federal bonus depreciation, for instance, often need to add back a portion of that deduction on this form since California hasn’t always conformed to bonus depreciation provisions.

Completing the form correctly means having clean fixed-asset records. You’ll want your depreciation schedule from the federal return handy, along with any state-specific adjustments carried over from prior years. Mistakes here tend to compound – if depreciation is miscalculated in one year, it throws off basis calculations in every subsequent year until it’s corrected.

Getting and Completing the Form

Form 3885P for the 2023 tax year is available directly from the Franchise Tax Board and comes as a fillable PDF, so you can enter figures directly into the document using a computer before printing or submitting it electronically with your return. This beats printing a blank copy and filling it out by hand, especially since the form involves several columns of numeric data that need to line up correctly across rows.

Many partnerships handle this form through tax preparation software, which automatically pulls depreciation data and applies California’s adjustment rules. If you’re filing manually, double-check the instructions that accompany the form each year, since conformity dates and bonus depreciation treatment can shift from one tax year to the next.

State tax credits and adjustment forms vary quite a bit depending on which state you’re filing in – for comparison, New York has its own set of business credit forms like the START-UP NY Telecommunication Services Excise Tax Credit or the Manufacturer’s Real Property Tax Credit, both of which follow entirely different rules than anything California requires. If your partnership operates across multiple states, it’s worth keeping separate depreciation records for each jurisdiction since the underlying calculations rarely match up.

Once Form 3885P is complete, the totals flow onto Form 565 in the appropriate income or deduction lines. Keep a copy with your permanent tax records, since the basis and accumulated depreciation figures will be needed again next year and in the years following, particularly if the partnership sells or disposes of any of the assets listed.