California Form 3507 - Prison Inmate Labor Credit - 2012

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Prison Inmate Labor Credit
Attach to your California tax return. The employer must keep the approved joint venture agreement for audit purposes.
Name(s) as shown on your California tax return
Corporation no.
California Secretary of State file number
1 Total qualifying wages. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Multiply line 1 by 10% (.10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Pass-through prison inmate labor credit(s) from Schedule K-1 (100S, 541, 565, or 568). See instructions. . . 3
4 Total available prison inmate labor credit. Add line 2 and line 3. See instructions . . . . . . . . . . . . . . . . . . . . . . . 4
General Information
An SMLLC may be disregarded as an entity separate from its owner,
and subject to certain statutory provisions that recognize otherwise
A Purpose
disregarded entities for certain purposes, for example:
Use form FTB 3507, Prison Inmate Labor Credit, to figure a credit for
• The tax and fee of an LLC
wages paid to prison inmates under an approved joint venture with the
• The tax return filing requirements of an LLC
• The credit limitations
California Department of Corrections. Also use this form to claim pass-
through prison inmate labor credits you received from S corporations,
Get Form 568, Limited Liability Company Tax Booklet, for
estates or trusts, partnerships, or limited liability companies (LLCs)
more information.
classified as partnerships.
This credit cannot reduce the regular tax below the minimum franchise
S corporations, estates or trusts, partnerships, and LLCs classified
tax (corporations and S corporations), the annual tax (limited
as partnerships should complete form FTB 3507 to figure the amount
partnerships, limited liability partnerships, and LLCs classified as
of credit to pass through to shareholders, beneficiaries, partners, or
a partnership), the alternative minimum tax (corporations, exempt
members. Attach this form to Form 100S, California S Corporation
organizations, individuals, and fiduciaries), the built-in gains tax
Franchise or Income Tax Return; Form 541, California Fiduciary Income
(S corporations), or the excess net passive income tax (S corporations).
Tax Return; Form 565, Partnership Return of Income; or Form 568,
This credit cannot reduce regular tax below the tentative minimum tax
Limited Liability Company Return of Income. Show the pass-through
(TMT). Get Schedule P (100, 100W, 540, 540NR, or 541), Alternative
credit for each shareholder, beneficiary, partner, or member on
Minimum Tax and Credit Limitations, for more information.
Schedule K-1 (100S, 541, 565, or 568) Share of Income, Deductions,
There is no provision for carryover of any unused credit to succeeding
Credit, etc.
tax years and in no event can you carry this credit back and apply it
B Qualifications
against a prior year’s tax.
California allows a credit equal to 10% of the wages paid to each
This credit is not refundable.
prisoner who is employed under an approved joint venture with the
Corporate Members of a Unitary or Combined Group
California Department of Corrections.
This credit cannot be allocated or otherwise transferred to another
The credit amount is based on wages paid to each qualifying employee
taxpayer, even if the other taxpayer is a member of a unitary or combined
during the taxable year for the duration of the contract agreement.
group or otherwise affiliated with the taxpayer who earned the credit.
The credit applies only to wages paid pursuant to a contract agreement,
Specific Line Instructions
between the director of corrections and the joint venture employer,
executed on or before the day the individual begins work for the employer.
Line 1 – Enter the total amount of qualifying wages paid or incurred
under the provisions of the approved joint venture.
C Limitations
Line 3 – If you received more than one pass-through credit from
S corporations may claim only 1/3 of the credit against the 1.5%
S corporations, estates or trusts, partnerships, or LLCs classified as
entity-level tax (3.5% for financial S corporations). The remaining 2/3
partnerships, add the amounts and enter the total on line 3. Attach a
must be disregarded and may not be used as a carryover. S corporations
schedule showing the names and identification numbers of the entities
can pass through 100% of the credit to their shareholders.
from which the credits were passed through to you.
If a taxpayer owns an interest in a disregarded business entity
Line 4 – The amount of this credit that you can claim on your tax return
[a single member limited liability company (SMLLC) not recognized
may be limited. Refer to the credit instructions in your tax booklet for
by California, and for tax purposes is treated as a sole proprietorship
more information. The instructions also explain how to claim this credit
owned by an individual or a branch owned by a corporation], the
on your tax return. Use credit code number 162 when you claim this
usable credit amount received from the disregarded entity is limited
credit. Also see General Information C, Limitations.
to the difference between the taxpayer’s regular tax figured with the
income of the disregarded entity, and the taxpayer’s regular tax figured
without the income of the disregarded entity.
FTB 3507 2012
For Privacy Notice, get form FTB 1131.


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