Fillable California Form 3527 - New Jobs Credit

Instructions for Form FTB 3527

New Jobs Credit

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2009, and to the California Revenue and Taxation Code (R&TC).

What’s New

(B) Any acquired assets that constituted property described in

IRC Section 1221(1) in the hands of the transferor shall not be

For taxable years beginning on or after January 1, 2014, taxpayers

treated as assets acquired from an existing trade or business,

cannot generate a New Jobs Credit.

unless those assets also constitute property described in IRC

General Information

Section 1221(1) in the hands of the acquiring taxpayer or

partnership (or related person).

A Purpose

2. Where a taxpayer or partnership (or any related person) is engaged

in one or more trade or business activities in this state, or has been

Use form FTB 3527, New Jobs Credit, to figure a credit for qualified

engaged in one or more trade or business activities in this state

employers in the amount of $3,000 for each increase in qualified

within the preceding 36 months (“prior trade or business activity”),

full-time employees hired in the current taxable year. The $3,000 credit

and thereafter commenced an additional trade or business activity

is prorated based on an annual full-time equivalent basis for full-time

in this state, the additional trade or business activity shall only be

employees employed less than a full year. See General Information

treated as a new business if the additional trade or business activity

Section D, Definitions, for more information. The total amount of credit

is classified under a different division of the Standard Industrial

that the Franchise Tax Board (FTB) can allocate may not exceed four

Classification (SIC) Manual (1987 edition), than are any of the

hundred million dollars ($400,000,000).

taxpayer’s or partnership’s (or any related persons) current or prior

The credit must be claimed on a timely filed original tax return by a

trade or business activities.

cut-off date that the FTB will establish based on allocations. The FTB

3. Where a taxpayer or partnership, including all related persons, is

will post the cut-off date at the FTB website when the credit has been

engaged in trade or business activities wholly outside of this state

fully allocated. Only tax returns filed by the cut-off date will qualify to

and the taxpayer or partnership first commences doing business

claim the credit. To ensure that you receive the credit if you qualify, you

in this state (within the meaning of R&TC Section 23101) after

must file your original tax return by the cut-off date. Go to ftb.ca.gov

December 31, 1993 (other than by purchase or other acquisition

and search for new jobs to find out if the credit has been fully allocated,

described in paragraph 1), the trade or business activity shall be

when the cut-off date will be, and to get any other updates for this credit.

treated as a new business for purposes of this credit.

The credit was not subject to the 50% limitation for business credits

4. Where the legal form under which a trade or business activity is

under California Revenue and Taxation Code (R&TC) Sections 17039.2

being conducted is changed, the change in form shall be disregarded

and 23036.2.

and the determination of whether the trade or business activity is a

new business shall be made by treating the taxpayer or partnership

B Qualifications

as having purchased or otherwise acquired all or any portion of the

assets of an existing trade or business under the rules of paragraph 1.

Net increases in qualified full-time employees are determined by

comparing the number of full-time employees employed by the taxpayer

Employees of related persons shall be treated as employed by a single

in the current taxable year with the number of qualified full-time

taxpayer.

employees that were employed by the taxpayer in the preceding taxable

For more information on these rules, see Legal Rulings 96-5 and 99-2,

year.

and R&TC Sections 17276(f) and 24416(g).

Qualified employers must have employed 20 or less employees on the

C Exceptions

last day of the preceding taxable year and must have a net increase in

qualified full-time employees in the current taxable year compared to the

An employer may not claim the credit for those employees who are any

number in the preceding taxable year. If an employer first commenced

of the following:

doing business in California during the current taxable year, the number

of qualified full-time employees for the immediately preceding taxable

• Certified as a qualified employee in an enterprise zone or targeted

year would be zero.

tax area.

• Certified as a qualified disadvantaged individual in a manufacturing

In determining whether the taxpayer has first commenced doing

enhancement area.

business in this state during the current taxable year, the following rules

• Certified as a qualified disadvantaged individual or qualified displaced

apply:

employee in a local agency military base recovery area.

1. Where a taxpayer or partnership purchases or otherwise acquires

• An employee whose wages are included in calculating any other

all or any portion of the assets of an existing trade or business

credit allowed.

(irrespective of the form of entity) that is doing business in this state

(within the meaning of R&TC Section 23101), the trade or business

D Definitions

thereafter conducted by the taxpayer or partnership (or any related

Qualified Employer: A taxpayer that, as of the last day of the preceding

person) shall not be treated as a new business if the aggregate fair

taxable year, employed a total of 20 or fewer employees.

market value (FMV) of the acquired assets (including real, personal,

tangible, and intangible property) used by the taxpayer or partnership

Qualified Full-time Employee:

(or any related person) in the conduct of its trade or business

• A qualified employee who was paid qualified wages by the qualified

exceeds 20% of the aggregate FMV of the total assets of the trade

employer for services of not less than an average of 35 hours

or business being conducted by the taxpayer or partnership (or any

per week. The average hours are determined based on the number

related person).

of hours worked divided by the number of weeks in the period of

For purposes of this paragraph:

employment. Qualified employees include only those employees who

work an average of 35 hours per week.

(A) The determination of the relative FMVs of the acquired assets

• A qualified employee who was a salaried employee and was

and the total assets shall be made as of the last day of the first

paid compensation during the current taxable year for full-time

taxable year in which the taxpayer or partnership (or any related

employment, within the meaning of Section 515 of the Labor Code,

person) first uses any of the acquired trade or business assets in

by the qualified employer.

its business activity.

FTB 3527 2013 Page 1

California Form 3527 - New Jobs Credit - 2013 Page 2

Related Articles

Related forms

Related Categories