Form 3507 - Prison Inmate Labor Credit

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YEAR
CALIFORNIA FORM
Prison Inmate Labor Credit
3507
Attach to your California tax return.
Name(s) as shown on return
Social security or California corporation number
Business address (number and street)
PMB no.
FEIN
-
City or town
State
ZIP Code
-
1 Total qualifying wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
_________________
2 Multiply line 1 by 10% (.10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
_________________
3 Pass-through prison inmate labor credit(s) from Schedule(s) K-1 (100S, 541, 565, or 568). See instructions . . . . . . . . . . . .
3
_________________
4 Total available prison inmate labor credit. Add line 2 and line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
_________________
Caution:
Your credit may be limited. See the instructions for line 4.
Note: The employer must keep the approved joint venture agreement for audit purposes.
An SMLLC may be disregarded as an entity separate from its
General Information
owner, subject to certain statutory provisions that recognize
otherwise disregarded entities for certain purposes including the
Private Mailbox (PMB) Numbers
tax and fee of an LLC, the return filing requirements of an LLC,
If you lease a mailbox from a private business rather than from
and the credit limitations previously mentioned. Get Form 568,
the United States Postal Service, enter your PMB number in the
Limited Liability Company Income Tax Return, for more details.
special field labeled ‘’PMB no.’’
This credit cannot reduce the minimum franchise tax (corpora-
A Purpose
tions, limited partnerships, limited liability partnerships, LLCs,
and S corporations), the alternative minimum tax (corporations,
Use form FTB 3507 to figure and claim a credit for wages paid to
exempt organizations, individuals, and fiduciaries), the built-in
prison inmates under an approved joint venture agreement. Also
gains tax (S corporations), or the excess net passive income tax
use this form to claim pass-through prison inmate labor credits
(S corporations). This credit cannot reduce regular tax below the
received from S corporations, estates or trusts, partnerships, or
tentative minimum tax (TMT). See Schedule P (100, 540, 540NR,
limited liability companies (LLCs) taxed as partnerships.
or 541) for more information.
S corporations, estates or trusts, partnerships, and LLCs taxed as
There is no provision for carryover of any unused credit to
partnerships should complete form FTB 3507 to figure the
succeeding tax years and in no event can this credit be carried
amount of credit to pass through to shareholders, beneficiaries,
back and applied against a prior year’s tax.
partners, or members. Attach this form to Form 100S, Form 541,
Form 565, or Form 568. Show the pass-through credit for each
This credit is not refundable.
shareholder, beneficiary, partner, or member on Schedule K-1
Corporate Members of a Unitary or Combined Group
(100S, 541, 565, or 568).
This credit cannot be allocated or otherwise transferred to
another taxpayer, even if the other taxpayer is a member of a
B Qualifications
unitary or combined group or otherwise affiliated with the
California allows a credit equal to 10% of the wages paid to each
taxpayer that earned the credit.
prisoner who is employed under an approved joint venture
agreement.
Specific Line Instructions
The credit amount is based on wages paid to each qualifying
employee during the taxable or income year for the duration of
Line 1
the contract agreement.
Enter the total amount of qualifying wages paid or incurred under
The credit applies only to wages paid pursuant to a contract
the provisions of the approved joint venture agreement.
agreement, executed on or before the day the individual begins
Line 3
work for the employer, between the Director of Corrections and
the joint venture employer.
If you received more than one pass-through credit from
S corporations, estates or trusts, partnerships, or LLCs taxed as
C Limitations
partnerships, add the amounts and enter the total on line 3.
Attach a schedule showing the names and identification numbers
S corporations may claim only 1/3 of the credit against the 1.5%
of the entities from which the credits were passed through to
entity-level tax (3.5% for financial S corporations). In addition,
you.
S corporations can pass through 100% of the credit to their
shareholders.
Line 4
If a taxpayer owns an interest in a disregarded business entity (a
The amount of this credit that you can claim on your tax return
single member LLC [SMLLC] not recognized [disregarded] by
may be limited further. Refer to the credit instructions in your tax
California for tax purposes treated as a sole proprietorship owned
booklet for more information. These instructions also explain how
by an individual or a branch owned by a corporation), the credit
to claim this credit on your tax return. You must use credit code
amount received from the disregarded entity that can be utilized
number 162 when you claim this credit. Also see General
is limited to the difference between the taxpayer’s regular tax
Information C, Limitations.
figured with the income of the disregarded entity, and the
taxpayer’s regular tax figured without the income of the
disregarded entity.
350799109
FTB 3507 (REV. 1999)

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