What Is Form 3885A for California Depreciation?

Form 3885A, Depreciation and Amortization Adjustments, is a California tax form used by individuals and business entities to calculate deductions for depreciation and amortization for state income tax purposes. The form is necessary because California’s regulations for these deductions differ from federal tax laws. It provides the mechanism to report these calculations to the California Franchise Tax Board (FTB).

Key California and Federal Depreciation Differences

A reason for a separate California depreciation calculation is the state’s non-conformity with federal “bonus depreciation” rules. Federal law permits businesses to immediately deduct a percentage of the cost of new and used assets in the year they are placed in service. California law does not allow for this accelerated first-year deduction, creating a difference in the depreciable basis of an asset for federal versus state purposes.

Another divergence is the Section 179 expense deduction. Both federal and California laws allow businesses to expense qualifying property, but the annual limits differ. For the 2025 tax year, the federal government allows a maximum deduction of $1,250,000, phasing out once investments exceed $3,130,000. California’s limit is $25,000, with a phase-out threshold at $200,000, meaning a business may fully expense an asset federally but must depreciate it over several years for California.

These distinctions require taxpayers to maintain two separate depreciation schedules: one for their federal return and another for their California return using Form 3885A. The state form reconciles these differences, ensuring the correct deduction is claimed for California income tax. This separate tracking is necessary to accurately report business income.

Information Required to Complete Form 3885A

To complete Form 3885A, taxpayers must gather specific details about their business assets. Having complete and accurate records is necessary before beginning the form, as the calculations directly impact the state tax liability.

The form is structured into several parts. Part I is for the Section 179 expense deduction, where you must describe each property, list its total cost, and specify the portion being expensed for California, which cannot exceed the state’s limit. This section calculates the allowable California Section 179 deduction and any carryover of disallowed amounts.

Part II, “Special Depreciation Allowance and Other Depreciation,” is where adjustments for bonus depreciation are made. Because California does not conform to federal bonus depreciation, this section accounts for the difference. For assets where bonus depreciation was claimed federally, that deduction is entered here as a negative adjustment, ensuring the asset’s basis is correct for state depreciation.

Part III, “MACRS Depreciation,” is for most assets placed in service after 1986. It requires a detailed listing of assets being depreciated. For each asset, you must provide a description, the date it was placed in service, and its cost or other basis for California purposes. You must also identify the correct depreciation method and convention allowed under California law and calculate the depreciation deduction for the current tax year.

Filing Form 3885A with Your Tax Return

Form 3885A is not submitted to the Franchise Tax Board as a standalone document. It functions as a supporting schedule that must be attached to your primary California income tax return. The specific primary return depends on your business structure. For example, sole proprietors attach it to their Schedule CA (540), which makes adjustments to federal income for residents.

Corporations attach the form to their Form 100 or 100S tax return, while partnerships file it with Form 565, and Limited Liability Companies (LLCs) attach it to Form 568. The total depreciation deduction calculated on Form 3885A is transferred to a specific line on the main tax form. This figure is used in the calculation of your net business income or loss for California tax purposes.