Fillable Form 3507 - Prison Inmate Labor Credit (Page 2 of 2) in pdf

YEAR

CALIFORNIA FORM

Prison Inmate Labor Credit

3507

Attach to your California tax return.

Social security or California corporation number

Name(s) as shown on return

FEIN

Business address (number and street)

State

ZIP Code

City or town

Total qualifying wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Multiply line 1 by 10% (.10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pass-through prison inmate labor credit(s) from Schedule(s) K-1 (100S, 541, 565 or 568). See instructions . . . . . . . . . . . . .

Total available prison inmate labor credit. Add line 2 and line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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.

General Information

this year but can carry over the credit amount

received from the disregarded entity.

This credit cannot reduce the minimum franchise tax

A Purpose

(corporations, limited partnerships, limited liability

Use form FTB 3507 to figure and claim a credit for

partnerships, LLCs and S corporations), the alterna-

wages paid to prison inmates under an approved

tive minimum tax (corporations, exempt organiza-

joint venture agreement. Also use this form to claim

tions, individuals and fiduciaries), the built-in gains

pass-through prison inmate labor credits received

tax (S corporations) or the excess net passive

from S corporations, estates or trusts, partnerships

income tax (S corporations). This credit cannot

or limited liability companies (LLCs) taxed as

reduce regular tax below the tentative minimum tax

partnerships.

(TMT). See Schedule P (100, 540, 540NR or 541)

S corporations, estates or trusts, partnerships and

for more information.

LLCs taxed as partnerships should complete form

There is no provision for carryover of any unused

FTB 3507 to figure the amount of credit to pass

credit to succeeding tax years and in no event can

through to shareholders, beneficiaries, partners or

this credit be carried back and applied against a

members. Attach this form to Form 100S, Form 541,

prior year’s tax.

Form 565 or Form 568. Show the pass-through

This credit is not refundable.

credit for each shareholder, beneficiary, partner

or member on Schedule K-1 (100S, 541, 565

Corporate Members of a Unitary or Combined

or 568).

Group

This credit cannot be allocated or otherwise trans-

B Qualifications

ferred to another taxpayer, even if the other taxpayer

is a member of a unitary or combined group or

California allows a credit equal to 10% of the wages

otherwise affiliated with the taxpayer that earned

paid to each prisoner who is employed under an

the credit.

approved joint venture agreement.

The credit amount is based on wages paid to each

qualifying employee during the taxable or income

Specific Line Instructions

year for the duration of the contract agreement.

The credit applies only to wages paid pursuant to a

Line 1 – Enter the total amount of qualifying wages paid or

contract agreement, executed on or before the day

incurred under the provisions of the approved joint

the individual begins work for the employer, between

venture agreement.

the Director of Corrections and the joint venture

employer.

Line 3 – If you received more than one pass-through credit

from S corporations, estates or trusts, partnerships

C Limitations

or LLCs taxed as partnerships, add the amounts and

S corporations may claim only 1/3 of the credit

enter the total on line 3. Attach a schedule showing

against the 1.5% entity-level tax (3.5% for financial

the names and identification numbers of the entities

S corporations). In addition, S corporations can pass

from which the credits were passed through to you.

through 100% of the credit to their shareholders.

Line 4 – The amount of this credit that you can claim on your

If a taxpayer owns an interest in a disregarded busi-

tax return may be limited further. Refer to the credit

ness entity, the credit amount received from the dis-

instructions in your tax booklet for more information.

regarded entity that can be utilized is limited to the

These instructions also explain how to claim this

difference between the taxpayer’s regular tax figured

credit on your tax return. You must use credit code

with the income of the disregarded entity, and the

number 162 when you claim this credit. Also see

taxpayer’s regular tax figured without the income of

General Information C, Limitations.

the disregarded entity. Note: If the disregarded entity

reports a loss, the taxpayer may not claim the credit

350798109

FTB 3507

(REV. 1998)

Form 3507 - Prison Inmate Labor Credit Page 2

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