Form 3885 - Corporation Depreciation and
Amortization

Introduction

California businesses use Form FTB 3885, Corporation Depreciation and Amortization, to report the costs of depreciation and amortization on their business assets.

Depreciation lets a business slowly write off the cost of physical assets like buildings, machinery, or equipment over the course of the asset's useful life. Amortization works the same way, but it is for intangible assets like patents, copyrights, and trademarks.

If your business files California Form 199, you might also need to file FTB Form 3885 when you report depreciation or amortization on assets that the business uses. This helps the California Franchise Tax Board check that the amounts you report on your return are correct and that the costs of your assets are being deducted correctly.

What is Form FTB 3885?

Form 3885 is used to calculate California depreciation and amortization deduction for corporations, including partnerships and limited liability companies (LLCs) classified as corporations. This form must be filed by corporations seeking to claim depreciation or amortization deductions on their California state tax return.

Filing this form ensures corporations can accurately account for the wear and tear on their assets, reducing their taxable income.

Who must file Form FTB 3885?

Corporations operating in California that wish to report deductions for the depreciation or amortization of their business assets must file Form FTB 3885.

This form is typically required if the corporation has purchased or improved physical or intangible assets during the year, such as:

• Office equipment, machinery, or vehicles.
• Buildings or real estate improvements.
• Patents, copyrights, or other intellectual property.

How to file Form 3885 with Taxzerone

Enter your corporation’s legal name and California corporation number exactly as registered to ensure accurate and timely processing of Form FTB 3885.

Part I Election to expense certain property under IRC Section 179

Line 1

Enter the maximum Section 179 deduction allowed in California. (For 2025: $25,000)

Line 2

Add up the cost of all qualified Section 179 property placed in service this year, including listed property. Only include business-use cost.

Line 3

Enter the cost threshold before reduction. (For 2025: $200,000)

Line 4

Subtract line 3 from line 2. If the result is zero or less, enter 0.

Line 5

Subtract line 4 from line 1. If zero or less, enter 0. If zero, skip lines 6–11 and enter 0 on line 12.

Line 6

List the property you’re electing to expense (not listed property).

• Column (a): Brief property description.
• Column (b): Cost (business use only, excluding trade-in value).
• Column (c): Amount you choose to expense. You don’t have to expense the full cost.

Line 7

Include listed property (vehicles under 6,000 lbs, motorcycles, SUVs, or entertainment/photographic equipment) here.

• Exceptions: Equipment used 100% for business, computers, ambulances, or vehicles for hire.
• Property used ≤50% for business doesn’t qualify.

Line 8

Add lines 6(c) and 7.

Line 9

Enter the smaller line 5 or line 8.

Line 10

Enter any disallowed Section 179 deduction from previous years.

Line 11

Enter the smaller business income or line 5. Business income = net income from active trade/business (Form 100/100W, Side 2, line 17), before this deduction.

Line 12

Add lines 9 and 10, but do not exceed line 11.

Line 13

Subtract line 12 from the total of lines 9 + 10. This is the amount you can carry forward to 2026.

Part II Depreciation and election of additional first-year depreciation deduction under R&TC Section 24356

Line 14

Column (a) Description of property

Name or type of asset (e.g., machinery, equipment, furniture).

Column (b) Date acquired

When the asset was purchased (format: mm/dd/yyyy).

Column (c) Cost or other basis

The amount you paid for the asset or its adjusted value for tax purposes.

Column (d) Depreciation allowed or allowable in earlier years

How much depreciation has already been claimed on this asset in previous years.

Column (e) Depreciation method

The method you use to calculate depreciation (e.g., straight-line, declining balance).

Column (f) Life or rate

Useful life of the asset in years, or the depreciation rate.

Column (g) Depreciation for this year

The amount of regular depreciation claimed for the current year.

Column (h) Additional first-year depreciation

Optional extra deduction for certain “qualifying property,” up to a maximum of $2,000.M

Line 15

Add the amounts in column (g) and column (h) for each asset or group. Make sure the additional first-year depreciation in column (h) does not exceed $2,000. Enter the total on Line 15.

Part III Summary

Line 16

Complete this line based on the election made:

• If electing IRC Section 179 expense:
  Add line 12 + line 15, column (g).
• If claiming Additional First-Year Depreciation (R&TC Section 24356):
  Add line 15, column (g) + column (h).
• If no election is made:
  Enter line 15, column (g) only.

Line 17

Enter the total depreciation claimed for federal purposes from Federal Form 4562, line 22.

Line 18

Compare line 17 and line 16:

• If line 17 is greater than line 16,
  Enter the difference here and on Form 100 or Form 100W, Side 1, line 6.
• If line 17 is less than line 16,
  Enter the difference here and on Form 100 or Form 100W, Side 2, line 12.

Part IV Amortization

Line 19

Column (a) – Description of property

Enter the name or type of intangible property being amortized (e.g., goodwill, start-up costs).

Column (b) – Date acquired (mm/dd/yyyy )

Enter the date the property was acquired.

Column (c) – Cost or other basis

Enter the total cost or adjusted basis of the property.

Column (d) – Amortization allowed or allowable in earlier years

Enter the total amortization claimed in prior years.

Column (e) – R&TC Section

Enter the applicable California Revenue & Taxation Code section under which the amortization is claimed.

Column (f) – Period or percentage

Enter the amortization period (number of years) or the applicable amortization rate.

Column (g) – Amortization for this year

Enter the amortization deduction for the current taxable year.

Line 20

Add the amounts in column (g) and enter the total.

Line 21

Enter the total amortization claimed for federal purposes from Federal Form 4562, line 44.

Line 22

• If line 21 is greater than line 20, enter the difference here and on Form 100 or Form 100W, Side 1, line 6.
• If line 21 is less than line 20, enter the difference here and on Form 100 or Form 100W, Side 2, line 12.