Spidell Tax

The Consequences of Failing to File California's Like-Kind Exchange Form

In this episode of Spidell's California Minute, host Katherine Zidane explains the penalties for not filing California Form 3840, which is required for like-kind exchanges involving California property. Failure to file can trigger a Notice of Proposed Assessment that accelerates deferred gain into the year of non‑filing, but only if the taxpayer also fails to file a California income tax return. The discussion highlights that non‑residents and former California owners are most at risk, while residents who file a return generally avoid the accelerated gain. Practical filing guidance is provided, covering who must file, how to submit the form with an amended return, and special scenarios such as multiple owners, pass‑through entities, single‑member LLCs, and divorce.