According to IRS publication 925, any prior year unallowed passive activity credits from a former passive activity can be offset the allocable part of current year tax liability. I believe Ca is also conformed to Federal’s treatment of former passive activity rule. My question is where can I indicate the allocable part of current year tax liability that’s allocable to the current year net income from the “former” passive activity on Form 3523, Seciton C? Should I override on line 45 with explanation statement to FTB? Thanks!
California generally conforms to the passive activity credit provisions (see R&TC Sec. 17561). The Passive Activity loss limitations and credits are computed on FTB Form 3801 and 3801-CR and if it relates to the Research Credit would be entered on Line 44 of the Form 3523