FTB sending Form 3840 follow-up letters - Spidell

FTB sending Form 3840 follow-up letters

Beginning in June 2019, the FTB will be sending follow-up letters to taxpayers who have already received communication from the FTB regarding their failure to file or incomplete filing of Form FTB 3840, California Like-Kind Exchanges. (FTB Tax News (May 2019)) Taxpayers must respond to this letter within 30 days or they may be contacted by the audit division.

Common Form FTB 3840 errors include:

  • Side 2 is transmitted blank and contains no data;
  • A box on Question B has not been checked indicating whether the Form FTB 3840 is an initial, amended, annual, or final form;
  • Vague, incomplete, or omitted property descriptions. Form FTB 3840 instructions require that the full address (or assessor’s parcel number, county, and state) must be reported;
  • Missing ownership percentages; and
  • Omitted California source deferred gain (Schedule A, Part I, Line 8).