California Limitation on Business Losses: Updates to FT8 3461 Will Affect Clients Claiming Business Loss Carryovers in Tax Year 2021.

• Position: FTB news

Under IRC Sec. 461(1), business losses may be limited for non-corporate taxpayers. Any remaining excess business loss is treated as a net operating loss carryover into the next tax year, For California purposes, any disallowed loss is instead treated as a carryover excess business loss for the subsequent tax year,

The FTB is aware that FTB 3461 does not specify where to report an excess business loss carryover on the Schedule CA (540), and is working to correct the form instructions. Taxpayers with an excess business loss carryover from...