Instructions For Schedule P (Form 541) - 2016

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2016 Instructions for Schedule P (541)
Alternative Minimum Tax and Credit Limitations – Fiduciaries
References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and to the California Revenue and Taxation Code (R&TC).
What’s New
A Purpose
New California Motion Picture and Television Production Credit – For
California tax law gives special treatment to some items of income
taxable years beginning on or after January 1, 2016, a new California
and allows special deductions and credits for some items of expense.
motion picture and television production credit will be allowed to a
Many taxpayers who benefit from these provisions must pay at least
qualified taxpayer. The credit is allocated and certified by the California
a minimum amount of tax, the alternative minimum tax (AMT), and/or
Film Commission (CFC). The qualified taxpayer can:
limit the amount of their credits.
• Offset the credit against income tax liability.
B Who Must File
• Sell the credit to an unrelated party (independent films only).
• Assign the credit to an affiliated corporation.
Fiduciaries must use Schedule P (541), Alternative Minimum Tax and
• Apply the credit against qualified sales and use taxes.
Credit Limitations – Fiduciaries, to figure the following:
For more information, get form FTB 3541, California Motion Picture and
• Income distribution deduction on an AMT basis
Television Production Credit, form FTB 3551, Sale of Credit Attributable
• Estate’s or trust’s alternative minimum taxable income (AMTI)
to an Independent Film, go to ftb.ca.gov and search for motion picture,
• Estate’s or trust’s AMT
or go to the CFC website at film.ca.gov and search for incentives.
Fiduciaries must also use Schedule P (541) if any of the following apply:
Low-Income Housing Credit
• Figure credits that must be limited by the tentative minimum tax
Allocations to Partners – For partnerships owning projects that
(TMT) (Part III, line 8)
receive a preliminary reservation of the Low-Income Housing Credit
• Figure credits that may reduce the AMT (Part III, line 10)
(LIHC) before January 1, 2020, the prior law exception that requires
• Claim more than one credit
a partnership to allocate the credit among partners based upon the
Every estate or trust that takes an income distribution deduction under
partnership agreement is re-enacted.
IRC Section 651 or Section 661 must complete Schedule P (541), Part I,
Sale of Credit – For projects that receive a preliminary reservation of
to figure its AMTI, and Part II to figure the income distribution deduction
the LIHC beginning on or after January 1, 2016, and before January 1,
on an AMT basis. Part III should be completed only if the estate or trust
2020, a taxpayer may make an irrevocable election in its application to
is liable for AMT (Part I, line 10 is more than $44,732) or is claiming
the California Tax Credit Allocation Committee to sell all or any portion
credits. In all instances, attach Schedule P (541) to Form 541, California
of the LIHC allowed to one or more unrelated parties for each taxable
Fiduciary Income Tax Return.
year in which the credit is allowed. An original purchaser is allowed
C Recordkeeping
a one-time resale of that credit to one or more unrelated parties. For
more information, get form FTB 3521, Low-Income Housing Credit,
For the AMT, certain items of income, deductions, etc., receive different
or go to the California Tax Credit Allocation Committee website at
tax treatment than for the regular tax. Therefore, you need to refigure
treasurer.ca.gov/ctcac.
items for the AMT that you figured for the regular tax. In some cases,
General Information
you may wish to do this by completing the applicable tax form a second
time. If you do complete another form, do not attach it to your tax
In general, for taxable years beginning on or after January 1, 2015,
return, but keep it for your records.
California law conforms to the Internal Revenue Code (IRC) as of
For regular tax, some deductions may result in carryovers to future
January 1, 2015. However, there are continuing differences between
taxable years. Examples are investment interest expense, NOL, and
California and federal law. When California conforms to federal tax law
capital loss. Because you may have to refigure these items to determine
changes, we do not always adopt all of the changes made at the federal
AMT for the estate or trust, the carryover amount may be different for
level. For more information, go to ftb.ca.gov and search for conformity.
AMT than for regular tax. Although the carryovers that you figure for
Additional information can be found in FTB Pub. 1001, Supplemental
AMT do not affect the carryovers for regular tax, you must keep track of
Guidelines to California Adjustments, the instructions for California
the AMT carryovers in order to complete your Schedule P (541) in future
Schedule CA (540 or 540NR), and the Business Entity tax booklets.
years.
The instructions provided with California tax forms are a summary of
D S Corporations, Partnerships, or Limited
California tax law and are only intended to aid taxpayers in preparing
their state income tax returns. We include information that is most
Liability Companies (LLCs)
useful to the greatest number of taxpayers in the limited space available.
It is not possible to include all requirements of the California Revenue
If the estate or trust is a shareholder of an S corporation, partner in a
and Taxation Code (R&TC) in the instructions. Taxpayers should not
partnership, or a member of an LLC, you must take into account the
consider the instructions as authoritative law.
estate’s or trust’s distributive share of income and deductions that
enter into the computation of the estate’s or trust’s adjustments and tax
Net Operating Loss (NOL) Carryback – NOLs incurred in taxable year
preferences.
2016 shall be carried back to each of the preceding two taxable years.
If the estate or trust is a beneficiary of another estate or trust, you
Individuals, estates, and trusts compute the NOL carryback in Part IV of
must include the adjustment for AMT shown on Schedule K-1 (541),
form FTB 3805V, Net Operating Loss (NOL) Computation and NOL and
Beneficiary’s Share of Income, Deductions, Credits, etc., line 12a.
Disaster Loss Limitations – Individuals, Estates, and Trusts. For more
information, get form FTB 3805V.
E Allocation of Deductions to Beneficiaries
Election to Waive Carryback – Any taxpayer entitled to a carryback
The distributable net AMTI of the estate or trust does not include
period pursuant to IRC Section 172(b)(3) may elect to relinquish/waive
amounts of depreciation, depletion, or amortization that are allocated
the entire carryback period with respect to an NOL incurred in the 2016
to the beneficiaries, just as the distributable net income of the estate or
taxable year. By making the election, the taxpayer is electing to carry an
trust does not include these items for regular tax.
NOL forward instead of carrying it back to the previous two years.
Report separately on Schedule K-1 (541), line 12, any adjustments or
To make the election, check the box in Part I under Section C – Election
tax preferences attributable to depreciation, depletion, or amortization
to Waive Carryback, on form FTB 3805V, and attach form FTB 3805V to
that were allocated to beneficiaries.
the tax return. For more information, get form FTB 3805V.
Schedule P (541) Instructions 2016 Page 1

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