Completing Form 3885 (California Franchise Tax Board depreciation) in Lacerte

Form 3885 is a California Franchise Tax Board (FTB) form used by corporations, including partnerships and limited liability companies (LLCs) classified as corporations, to calculate their California depreciation and amortization deduction.  

Who needs to file this?

• Corporations operating in California that need to claim deductions for the depreciation or amortization of their business assets. This typically includes corporations that have purchased or improved physical or intangible assets during the tax year.  
• Nonprofit organizations that have obtained tax exemption from the California FTB and are reporting depreciation or amortization expenses on Form CA-199 (California Exempt Organization Annual Information Return).  

To enter in Lacerte:

While form 3885 does not have a direct input screen, you can you can generate it by entering California-specific depreciation and amortization information within the appropriate depreciation screen in your tax module.

• Partnership: Screen 14
• Corporate: Screen 21
• S-Corp: Screen 16
• Exempt Org: Screen 39
  • Look on Screen 1 Client Info. If the box 990-T Return Type says 501(c) corporation, then the 3885 will generate. If it says 501(c) trust or any of the trust types, then the 3885F will generate.

Lacerte automatically creates Form 3885 based on any differences between federal and California depreciation.

To resolve diagnostic ref 60267 for an Exempt

• Form 3885 or 3885F must be generating with the return to qualify for electronic filing. Please remove the override or file this return as a conventional paper return. Due to the CA Business e-file mandate, you must request and file a Business Entity e-file waiver. To complete the waiver online, copy and paste the following address in your internet browser: https://www.ftb.ca.gov/professionals/busefile/Business_eFile_Waiver_Request.asp

To resolve this diagnostic you can fix this one two ways:

1. Add the 3885 as a pdf attachment to the e-file
2. Paper file the return.

To add the 3885 as a PDF attachment:

Print the 3885 to PDF and add it as an attachment. See the article here on how to attach.

When you add the attachment the Description should be 3885L/P.

To paper file the return:

Paper file the return with the waiver following waiver. https://www.ftb.ca.gov/professionals/busefile/Business_eFile_Waiver_Request.asp