Form 3541 - California Motion Picture And Television Production Credit

C Credit Assignment

S corporation. If a C corporation has unused credit carryovers when

it elects S corporation status, the credit carryovers may not be passed

For taxable years beginning on or after January 1, 2011, R&TC

through to the S corporation or the shareholders. For more information,

Section 23685(c)(1) allows a qualified taxpayer to assign a California

get Schedule C (100S), S Corporation Tax Credits.

motion picture and television production credit to an eligible assignee.

Disregarded business entity. If a taxpayer owns an interest in a

The credit must first exceed the tax of the qualified taxpayer (the

disregarded business entity [for example, a single member limited

assignor) for the taxable year in which the credit is to be assigned.

liability company (SMLLC), which for tax purposes is treated as a sole

The election to assign any credit is irrevocable. The assignor shall

proprietorship if owned by an individual or a division if owned by a

make the election and report the credit assignment by completing

corporation], the credit amount received from the disregarded entity

Part IV, Credit Assigned to Affiliated Corporations Pursuant to R&TC

is limited to the difference between the taxpayer’s regular tax figured

Section 23685. Once a credit is assigned to an eligible assignee, it

with the income of the disregarded entity, and the taxpayer’s regular tax

cannot be reassigned. The assignor will reduce the credit amount

figured without the income of the disregarded entity. If the credit is sold

available for assignment by the amount of the credit assigned.

under Section 17053.85(c) or assigned or sold under Section 23685(c)

this restriction does not apply.

After assignment of an eligible credit, the eligible assignee may use the

credit against income tax liability, or apply it against BOE qualified sales

E Carryover

and use taxes. Also, the restrictions and limitations that applied to the

assignor (entity that originally generated the credit) may apply to the

If the available credit exceeds the current year tax liability or is limited

eligible assignee.

by tentative minimum tax, the unused credit may be carried over for six

There is no requirement of payment or other consideration for

years or until the credit is exhausted, whichever occurs first. Apply the

assignment of the credit by an eligible assignee to an assignor.

credit carryover to the earliest taxable year(s) possible. In no event can

the credit be carried back and applied against a prior year’s tax.

The assignor and the eligible assignee shall maintain the information

necessary to substantiate any credit assigned and to verify the

Retain all records that document this credit and carryover used in prior

assignment and subsequent use of the credit assigned. Lack of

years. The FTB may require access to these records.

substantiation may result in the disallowance of the assignment. The

assignor and the eligible assignee shall each be liable for the full amount

Specific Line Instructions

of any tax, addition to tax, or penalty that results from any disallowance

of the credit assigned under R&TC Section 23685. The Franchise Tax

Part I – Available Credit

Board may collect such amount in full from either the assignor or the

eligible assignee.

Line 1a – Current year generated credit. If you received Form M from

Note: This credit may also be assigned under the credit assignment

CFC, enter the full amount of credit allocated to you by the CFC as shown

rules of R&TC Section 23663. Any portion of the credit assigned under

on Form M. If you received more than one Form M during the taxable

either Section 23663 or 23685 may not be subsequently assigned under

year, add the credit amounts from all Form Ms and enter the total on

either statute. For more information on credit assignment under R&TC

this line. If you received the credit from a pass through entity, purchased

Section 23663, get form FTB 3544, Election to Assign Credit Within

the credit from a qualified taxpayer, or received the credit through an

Combined Reporting Group, and form FTB 3544A, List of Assigned

assignment from another corporation pursuant to R&TC Section 23685,

Credit Received and/or Claimed by Assignee.

do not enter the amounts on this line. Instead, enter these amounts on

line 2, line 3, or line 4, respectively.

Assignor. An assignor is the qualified taxpayer that receives Form M

from the CFC. The following rules must be met before a credit can be

Line 1b – Enter the credit certificate number from Form M for the

assigned:

current year generated credit entered on line 1a. If you reported multiple

credits on line 1a, list all credit certificate numbers on this line.

• The assignor must be taxed as a corporation.

• The credit must first exceed the “tax” of the assignor for the taxable

Line 2 – Credit received from pass through entities. Add the

year in which the credit is to be assigned.

pass-through credit amounts received from S corporations, estates and

• The eligible assignee must be an affiliated corporation as defined by

trusts, partnerships, or LLCs taxed as a partnership, and enter the total on

R&TC Section 23685(c)(1).

this line. Attach a schedule showing the taxpayer names and identification

numbers of the entities from which the credits were passed through to

Eligible assignee. An eligible assignee is any affiliated corporation,

you, the credit certificate number from the original certificate issued by

which includes a corporation where one of the following applies:

the CFC, and the ownership percentage from the pass-through entity.

• Owns, directly or indirectly, 100 percent of the assignor’s voting

Line 3 – Credit purchased from other entities. Enter the amount

common stock.

of credit purchased from a qualified taxpayer. Do not enter the

• The assignor owns, directly or indirectly, 100 percent of the voting

consideration amount paid for the credit.

common stock.

• Is wholly owned by a corporation or individual owning 100 percent of

Line 4 – Credit assigned from affiliated corporations. If you received

the voting common stock of the assignor, or

an assigned credit from an affiliated corporation pursuant to R&TC

• Is a stapled entity as defined in R&TC Section 25105.

Section 23685, complete Part III, Assigned Credit from Affiliated

Corporations Pursuant to R&TC Section 23685, and enter the amount

D Limitations

from Part III, line 13 on this line.

Line 7 – Credit sold to other entities. Enter the amount of credit sold

The credit cannot reduce the S corporation 1.5% entity-level tax (3.5%

for financial S corporations), the minimum franchise tax (corporations

to an unrelated party from form FTB 3551, box 7 (Total amount of credit

and S corporations), the annual tax (limited partnerships, limited liability

being sold).

partnerships, and LLCs taxed as partnerships), the alternative minimum

Line 8 – Credit assigned to affiliated corporations. If you assigned

tax (corporations, exempt organizations, individuals, and fiduciaries),

a credit to an affiliated corporation pursuant to R&TC Section 23685,

the built-in gains tax (S corporations), or the excess net passive income

complete Part IV, Credit Assigned to Affiliated Corporations Pursuant to

tax (S corporations).

R&TC Section 23685. Enter the amount from Part IV, line 19, on this line.

The credit cannot reduce regular tax below the tentative minimum tax.

Line 9 – Credit applied against sales and use taxes. If you applied

For more information, get Schedule P (100, 100W, 540, 540NR, or 541),

any portion of the credit against qualified sales and use taxes, enter the

Alternative Minimum Tax and Credit Limitations.

amount on this line.

Page 2 FTB 3541 Instructions 2012

Form 3541 - California Motion Picture And Television Production Credit - 2012 Page 4

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