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In addition to the California version of federal Form 8824, Like-Kind Exchanges, California requires taxpayers to submit Form 3840, California Like-Kind Exchanges, under certain circumstances for transactions that occurred in tax year 2014 or later.
- Per Form 3840 instructions, "All taxpayers, regardless of residence status or commercial domicile, who exchange real property located in California for like-kind property located outside of California, must file form FTB 3840 with their California tax return.”
- Form 3840 is informational only and has no effect on the calculations of the Form 540 or Form 540NR.
For a like-kind transaction in which property was transferred, identified, or received in the current year, use Screen CA3840 in the applicable Business, Rent & Royalty, Farm, Farm Rental, K1 1065 1120S, K1 1041, Personal Sale, or Income & Adjustments folder.
To enter or report information for a like-kind exchange that occurred in a prior year, use Screen CA3840PY.
To print Form 3840 with the return, on Screen CA 3840 or Screen 3840PY, mark the field Print Form 3840 in order to include that particular like-kind exchange with the return.
The California Franchise Tax Board requests that preparers be mindful of the following when preparing Form 3840:
- Complete the appropriate information for Side 2.
- For Question B, indicate whether Form 3840 is an initial, amended, annual, or final form.
- Include complete property descriptions. Form 3840 instructions require that the full address (or assessor's parcel number, county, and state) must be reported.
- Include appropriate ownership percentages.
- Include the California source deferred gain (Schedule A, Part I, Line 8).
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