California Form 3541 - California Motion Picture And Television Production Credit - 2013 Page 4
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5D Limitations
Affiliated corporation. Affiliated corporation has the meaning provided
in R&TC Section 25110(b), except that “100 percent” is substituted for
The credit cannot reduce the S corporation 1.5% entity-level tax (3.5%
“more than 50 percent” wherever it appears in the section and “voting
for financial S corporations), the minimum franchise tax (corporations
common stock” is substituted for “voting stock” wherever it appears
and S corporations), the annual tax (limited partnerships, limited liability
in the section. For more information, see General Information C, Credit
partnerships, and LLCs taxed as partnerships), the alternative minimum
Assignment.
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).
For taxable years beginning on or after January 1, 2011, R&TC
For corporate taxpayers, the credit can reduce the regular tax below the
Section 23685(c)(1) allows a qualified taxpayer to assign a California
tentative minimum tax. For individual taxpayers, the credit cannot reduce
motion picture and television production credit to an eligible assignee.
regular tax below the tentative minimum tax. For more information, get
The credit must first exceed the tax of the qualified taxpayer (the
Schedule P (100, 100W, 540, 540NR, or 541), Alternative Minimum Tax
assignor) for the taxable year in which the credit is to be assigned.
and Credit Limitations.
The election to assign any credit is irrevocable. The assignor shall
S corporation. If a C corporation has unused credit carryovers when
make the election and report the credit assignment by completing
it elects S corporation status, the credit carryovers may not be passed
Part IV, Credit Assigned to Affiliated Corporations Pursuant to R&TC
through to the S corporation or the shareholders. For more information,
Section 23685. Once a credit is assigned to an eligible assignee, it
get Schedule C (100S), S Corporation Tax Credits.
cannot be reassigned. The assignor will reduce the credit amount
Disregarded business entity. If a taxpayer owns an interest in a
available for assignment by the amount of the credit assigned.
disregarded business entity [for example, a single member limited
After assignment of an eligible credit, the eligible assignee may use the
liability company (SMLLC), which for tax purposes is treated as a sole
credit against income tax liability, or apply it against BOE qualified sales
proprietorship if owned by an individual or a division if owned by a
and use taxes. Also, the restrictions and limitations that applied to the
corporation], the credit amount received from the disregarded entity
assignor (entity that originally generated the credit) may apply to the
is limited to the difference between the taxpayer’s regular tax figured
eligible assignee.
with the income of the disregarded entity, and the taxpayer’s regular tax
There is no requirement of payment or other consideration for
figured without the income of the disregarded entity. If the credit is sold
assignment of the credit by an eligible assignee to an assignor.
under Section 17053.85(c) or assigned or sold under Section 23685(c)
The assignor and the eligible assignee shall maintain the information
this restriction does not apply.
necessary to substantiate any credit assigned and to verify the
E Carryover
assignment and subsequent use of the credit assigned. Lack of
substantiation may result in the disallowance of the assignment. The
If the available credit exceeds the current year tax liability or is limited
assignor and the eligible assignee shall each be liable for the full amount
by tentative minimum tax (individual taxpayers only) , the unused
of any tax, addition to tax, or penalty that results from any disallowance
credit may be carried over for six years or until the credit is exhausted,
of the credit assigned under R&TC Section 23685. The Franchise Tax
whichever occurs first. Apply the credit carryover to the earliest taxable
Board may collect such amount in full from either the assignor or the
year(s) possible. In no event can the credit be carried back and applied
eligible assignee.
against a prior year’s tax.
Note: This credit may also be assigned under the credit assignment
Retain all records that document this credit and carryover used in prior
rules of R&TC Section 23663. Any portion of the credit assigned under
years. The FTB may require access to these records.
either Section 23663 or 23685 may not be subsequently assigned under
either statute. For more information on credit assignment under R&TC
Specific Line Instructions
Section 23663, get form FTB 3544, Election to Assign Credit Within
Combined Reporting Group, and form FTB 3544A, List of Assigned
Credit Received and/or Claimed by Assignee.
Part I – Available Credit
Assignor. An assignor is the qualified taxpayer that receives Form M
Line 1a – Current year generated credit. If you received Form M from
from the CFC. The following rules must be met before a credit can be
CFC, enter the full amount of credit allocated to you by the CFC as shown
assigned:
on Form M. If you received more than one Form M during the taxable
• The assignor must be taxed as a corporation.
year, add the credit amounts from all Form Ms and enter the total on
• The credit must first exceed the “tax” of the assignor for the taxable
this line. If you received the credit from a pass through entity, purchased
year in which the credit is to be assigned.
the credit from a qualified taxpayer, or received the credit through an
• The eligible assignee must be an affiliated corporation as defined by
assignment from another corporation pursuant to R&TC Section 23685,
R&TC Section 23685(c)(1).
do not enter the amounts on this line. Instead, enter these amounts on
Eligible assignee. An eligible assignee is any affiliated corporation,
line 2, line 3, or line 4, respectively.
which includes a corporation where one of the following applies:
Line 1b – Enter the credit certificate number from Form M for the
• Owns, directly or indirectly, 100 percent of the assignor’s voting
current year generated credit entered on line 1a. If you reported multiple
common stock.
credits on line 1a, list all credit certificate numbers on this line.
• The assignor owns, directly or indirectly, 100 percent of the voting
Line 2 – Credit received from pass through entities. Add the
common stock.
pass-through credit amounts received from S corporations, estates,
• Is wholly owned by a corporation or individual owning 100 percent of
trusts, partnerships, or LLCs taxed as a partnership, and enter the total on
the voting common stock of the assignor, or
this line. Attach a schedule showing the taxpayer names and identification
• Is a stapled entity as defined in R&TC Section 25105.
numbers of the entities from which the credits were passed through to
you, the credit certificate number from the original certificate issued by
the CFC, and the ownership percentage from the pass-through entity.
Line 3 – Credit purchased from other entities. Enter the amount
of credit purchased from a qualified taxpayer. Do not enter the
consideration amount paid for the credit.
Page 2 FTB 3541 Instructions 2013
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