Instructions For Form Ftb 3541 - California Motion Picture And Television Production Credit - 2016 Page 2

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B
Definitions
assignee, it cannot be reassigned. The assignor will reduce the credit
amount available for assignment by the amount of the credit assigned.
Credit certificate. Credit certificate means the tax credit certificate
After assignment of an eligible credit, the eligible assignee may use the
issued by the CFC for the allocation of the credit to a qualified taxpayer.
credit against income tax liability, or apply it against BOE qualified sales
Qualified taxpayer. Qualified taxpayer means a taxpayer who has paid
and use taxes. Also, the restrictions and limitations that applied to the
or incurred qualified expenditures and has been issued a tax credit
assignor (entity that originally generated the credit) may apply to the
certificate by the CFC. In the case of any pass-through entity, the
eligible assignee.
determination of whether a taxpayer is a qualified taxpayer is made
There is no requirement of payment or other consideration for
at the entity level. The credit is not allowed at the pass-through entity
assignment of the credit by an eligible assignee to an assignor.
level. Pass-through entity means any entity taxed as a partnership
The assignor and the eligible assignee shall maintain the information
or S corporation. The credit is passed through to the shareholders,
necessary to substantiate any credit assigned and to verify the
beneficiaries, partners, or members. For the new credit, a qualified
assignment and subsequent use of the credit assigned. Lack of
taxpayer must also have participated in the Career Readiness
substantiation may result in the disallowance of the assignment. The
requirement. For more information refer to R&TC Section 23685 and
assignor and the eligible assignee shall each be liable for the full amount
Section 23695.
of any tax, addition to tax, or penalty that results from any disallowance
Qualified motion picture. Qualified motion picture means a motion
of the credit assigned under R&TC Section 23685 or Section 23695.
picture that is produced for distribution to the general public, regardless
The Franchise Tax Board may collect such amount in full from either the
of medium. For more information, refer to the R&TC Section 17053.85,
assignor or the eligible assignee.
Section 17053.95, Section 23685, Section 23695, or go to film.ca.gov.
Note: This credit may also be assigned under the credit assignment
Independent film
rules of R&TC Section 23663. Any portion of the original credit
For the original credit, an independent film means a motion picture
assigned under Section 23663 or Section 23685, or any portion of the
with a minimum budget of one million dollars ($1,000,000) and a
new credit assigned under Section 23663 or Section 23695 may not
maximum budget of ten million dollars ($10,000,000) that is produced
be subsequently assigned under either statute. For more information
by a company that is not publicly traded and publicly traded companies
on credit assignment under R&TC Section 23663, get form FTB 3544,
do not own, directly or indirectly, more than 25% of the producing
Election to Assign Credit Within Combined Reporting Group, and
company.
form FTB 3544A, List of Assigned Credit Received and/or Claimed by
Assignee.
For the new credit, an independent film means a motion picture with a
minimum budget of one million dollars ($1,000,000) that is produced
Assignor. An assignor is the qualified taxpayer that receives the CFC Tax
by a company that is not publicly traded and publicly traded companies
Credit Certificate. The following rules must be met before a credit can
do not own, directly or indirectly, more than 25% of the producing
be assigned:
company.
y The assignor must be taxed as a corporation.
Television series
y The credit must first exceed the “tax” of the assignor for the taxable
year in which the credit is to be assigned.
For the original credit, television series means a television series
y The eligible assignee must be an affiliated corporation as defined by
that relocated to California, without regard to episode length or initial
R&TC Section 23685(c)(1) or Section 23695(c)(1).
media exhibition, that filmed all of its prior season or seasons outside
of California and for which the taxpayer certifies that this credit is the
Eligible assignee. An eligible assignee is any affiliated corporation,
primary reason for relocating to California.
which includes a corporation where one of the following applies:
For new credit, television series means a television series, without
y Owns, directly or indirectly, 100% of the assignor’s voting common
regard to episode length or initial media exhibition, with a minimum
stock.
production budget of one million dollars ($1,000,000) per episode,
y The assignor owns, directly or indirectly, 100% of the voting
that filmed its most recent season outside of California or has filmed all
common stock.
seasons outside of California and for which the taxpayer certifies that
y Is wholly owned by a corporation or individual owning 100% of the
this credit is the primary reason for relocating to California.
voting common stock of the assignor, or
y Is a stapled entity as defined in R&TC Section 25105.
Affiliated corporation
Affiliated corporation has the meaning provided in R&TC Section
D
Limitations
25110(b), except that “100 percent” is substituted for “more than
50 percent” wherever it appears in the section and “voting common
The credit cannot reduce the S corporation 1.5% entity-level tax (3.5%
stock” is substituted for “voting stock” wherever it appears in
for financial S corporations), the minimum franchise tax (corporations
the section. For more information, see General Information C,
and S corporations), the annual tax (limited partnerships, limited liability
Credit Assignment.
partnerships, and LLCs taxed as partnerships), the alternative minimum
tax (corporations, exempt organizations, individuals, and fiduciaries),
C
Credit Assignment
the built-in gains tax (S corporations), or the excess net passive income
tax (S corporations).
Both the original and new credit may be assigned to an eligible
For corporate taxpayers, the credit can reduce the regular tax below
assignee. The original credit is assignable for taxable years beginning on
the TMT. For individual taxpayers, the credit cannot reduce regular tax
or after January 1, 2011, under R&TC Section 23685(c)(1). The new credit
below the TMT. For more information, get Schedule P (100, 100W, 540,
is assignable for taxable years beginning on or after January 1, 2016,
540NR, or 541), Alternative Minimum Tax and Credit Limitations.
under R&TC Section 23695(c)(1). The credit must first exceed the tax
of the qualified taxpayer (the assignor) for the taxable year in which the
S corporation. If a C corporation has unused credit carryovers when
credit is to be assigned.
it elects S corporation status, the credit carryovers may not be passed
through to the S corporation or the shareholders. For more information,
The election to assign any credit is irrevocable. The assignor shall
get Schedule C (100S), S Corporation Tax Credits.
make the election and report the credit assignment by completing
Part IV, Credit Assigned to Affiliated Corporations Pursuant to R&TC
Section 23685 or Section 23695. Once a credit is assigned to an eligible
Page 2 FTB 3541 Instructions 2016

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