If you exchange real property after January 1, 2014 in California, you are now required to file Form 3840 each year to track your deferred gains and provide other information concerning any non-California replacement property. The new form will be available on the FTB’s website in a few weeks to allow for public comment. The new form must be filed not only in the year the exchange is compete, but each year the gain or loss is deferred. A failure to file the form may result in a Notice of Proposed Assessment adjusting the taxpayer’s income for the previously deferred gains.