Prepare the 3804 Pass-Through Entity Elective Tax Calculation

FTB 3804, Part I, line 3 will calculate the elective according to all shareholder income(s) in Part II  Schedule of Qualified Taxpayers below the line. FTB 3804, Part I, Line 3, will carry into Form 100S, page 2, line 29 as Pass-through entity elective tax due and line 35 as Amount paid with Form FTB 3893.

1. Go to California > Other Information worksheet.
2. Expand Section 11 - 3804 - Pass-Through Entity Elective Tax Calculation.
3. In Line 2 - Product Form 3804 and include all shareholders (Y/N), select Y.
4. Calculate the return.

1. Go to California > Other Information worksheet.
2. Expand Section 11 - 3804 - Pass-Through Entity Elective Tax Calculation.
3. In Row S/H #, input applicable shareholder number(s) to be included in the 3804 calculation and automatically populate steps 4 through 7 below after return recalculation.
4. (Optional) First name, Last name, input applicable information the shareholder to be included in the 3804 calculation.
5. (Optional) In Row ID Code, select from the following:
   1. SSN / ITIN
   2. FEIN
6. (Optional) In Row ID Number, input shareholder identification number in a format (xxx-xx-xxxx / xx-xxxxxxxx) according to the ID Code selected in step 4 for the shareholder.
7. (Optional) In Row Pro rata share, input applicable Pro-rata or distributive share of qualified net income amount as it should appear on Form 3804, Part II, line a.
8. Select  in ProSystem fx® Tax, or  in Axcess™ Tax.
9. Repeat steps 3-8 as applicable.
10. Calculate the return.

Prepare the 3893 Pass-Through Entity Elective Tax Payment Voucher

• Form 3893 (2021) automatically activates when Form 3804 is present.
• The amount on FTB 3893 Amount of payment carries to Form 100S, page 2, line 35 as paid against taxes due.

Override Form 100S, page 2, line 35

1. Go to California > Other Information worksheet
2. Expand Section 10 - 3804 -PTET Tax Calculation.
3. In Line 15 - Amount Paid with Form 3893 - override.
4. Calculate the return.

• FTB 3586 is the payment voucher for the remaining tax due on 100S return, line 40, after applying taxes paid on line 36, which includes 3893 payments. Thus, the state may assume the 3893 is filed and paid prior to filing the 100S return.

Prepare Only Form 3893 Pass-Through Entity Elective Tax Payment Voucher(s)

1. Go to California > Other Information worksheet.
2.  Expand Section 10 - 592-PTE, 3893 (PTE).
3. In Line 12 - Force print Form 3893, select the checkbox.
4. In Line 13 - Payment amount - override, input applicable amount to appear on 3893 (2021) as due.
   • Note: By default, this input will carry to Form 100S, page 2, line 35.
5. (Optional) In Line 15 - Amount Paid with Form 3893 - override.
   • If 100S pg 2, line 35 should be different than what appears on 3893 (2021).
6. Calculate the return.

Tax Year 2022 FTB Form 3893

• This voucher is automatically prepared when 2021 FTB Form 3893.
• The due date of this voucher is June 15th, 2022.
• Printing the 2022 FTB Form 3893 is included with the Accountant, Government, and Client copies, or by going to the form and selecting Print > This Form. 

1. Go to California > Other Information worksheet
2. Expand Section 11 - 3804 - PTET Tax Calculation.
3. In Line 14 - June 15 estimate voucher payment amount - override, input applicable amount.
4. Calculate the return.

Suppress Print of 2022 FTB 3893 Voucher

1. Go to California > Other Information worksheet
2. Expand Section 11 - 3804 - PTET Tax Calculation.
3. In Line 17 - Suppress 3893 estimate vouchers, select as applicable.
4. Calculate the return.

Form 100S, Schedule K-1, line 13d Other credits for 3804-CR

• This credit is calculated automatically when either Method 1 or 2 are used above, but can be overridden using the input steps below. However, the following input will suppress the statement required by California FTB.

1. Go to California > Credits worksheet.
2. Expand Section 3 - Distributive Share of Credits / Overrides.
3. In Line 4 - Other Credits - All Sources, input an applicable credit amount.
   • Special allocation code 55103.
4. In Line 4 - Other Credits - California Source, input an applicable credit amount for California K-1s, column e.
   • Special allocation code 55104.
5. Calculate the return.

Schedule K-1 Statement for Line 13d - 3804-CR Credit

A statement is automatically prepared for each partner receiving a portion of the PTET credit if using the above Methods. However, if an additional K-1 Footnote is needed:

1. Go to Federal Shareholders > Schedule K-1 Footnotes worksheet.
2. In Line 1 - FS, select S.
3. In Line 1 - State, select CA.
4. In Line 3 - Ratio ID number, if specially allocating the footnote different than Federal ownership percentage, then input a unique ratio ID number and allocate using Special Allocations > Special Allocations worksheet > Section 3 - Ratio Allocation.
5. In Grid 7 - Columns Description and Amount, populate as applicable.
6. Calculate the return.

Filing Instructions and Transmittal letter

• Letters are now available for 2022 FTB Form 3893 voucher with release 2021.03040 and forward.

Electronic Filing

• If Form 3804 is prepared, then it will be included with the electronic file.
• Form 3893 2022 is a separate electronic file from the 100S return and is automatically enabled for efile with Federal > General > Electronic Filing worksheet > Section 1 - General > Line 1 and Line 6 - File Other returns electronically, if selected Yes. 
  • Or Go to Federal > General > Electronic Filing worksheet > Section 4 - State Electronic Filing Options > Line 56 - California 3893 PTE Payment, select Y.
  • Or Go to California > Other Information worksheet > Expand Section 11 - 3804 -PTET Tax Calculation > In Line 16 - Electronic Filing (Y), (N) - override, select Y.

Notes

• Form 3804 and 3893 can be found in the list of California Government forms, under 588,592 Series - Withholding payments this company sends FTB, Waiver, along with the Form 592 vouchers and statements.
• Only shareholder types Individual, Estate, Trust, and Grantor Trust are included on the Form 3804.
  • FTB 3804 Instructions document Qualified Taxpayer:
    • "Qualified taxpayer – is defined as an individual, fiduciary, estate, or trust that is a partner, shareholder, or member of an electing qualified PTE that consents to have their pro-rata share or distributive share of income included in the qualified net income subject to the elective tax of the electing qualified PTE. The qualified taxpayer may be a resident, nonresident, or part-year resident. The qualified taxpayer does not include disregarded entities and their partners or members."
• FTB Instructions for passthroughs will refer to FTB 3804-CR, but this form is only relevant at the individual tax return
  • The 3804-CR is used by a member on their individual return to list the partnership and S Corporation K-1s received reporting the amount of tax paid on their behalf by the Pass-through entity and calculate an amount allowed as a credit on their personal return or carried over into a following year.
• S-Corporation and Partnership FTB instructions differ on whether or not the credit is to be reported on Sch K. Since there is a discrepancy between the two systems we have submitted a clarification request to the FTB.  As of yet we have not received an answer from the FTB.  Until the FTB provided further guidance the P and S systems will follow the instructions for each system .
  • S-Corporation instructions explicitly state that the credit is to be reported on the shareholder(s) K-1(s) and NOT on Sch K.  The S-Corp program follows the instructions provided by the FTB. 
  • Partnership instructions explicitly state that the credit is to be reported on BOTH the Sch K and Sch K-1(s). 
• If the Federal S Corporation enables a State / City Tax Accrual option (General > Return Options > Section 2 > Line 3) then the tax due on California 100S, page 2, line 30 (including line 29 - 3804, line 3 elective tax), will carry into the Federal 1120S, page 1, line 12 - Taxes and licenses.
• CA 100S Form 5806, line 4 includes the PTE tax in the calculation of the underpayment of estimated tax penalty. with release 2021.03010 / 2021-3.1.
• G-W; Government to Worksheet links were added with release 2021.03010 / 2021-3.1.
• Cross-Reference F1 help is a work in process for a future future release.