California Form 3527 - New Jobs Credit - 2013 Page 3

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Qualified Wages: Wages subject to Div. 6 (commencing with
or form FTB 3544A, List of Assigned Credit Received and/or Claimed by
Section 13000) of the Unemployment Insurance Code.
Assignee or go to ftb.ca.gov and search for credit assignment.
Annual Full-time Equivalent:
H
Carryover
• In the case of a full-time employee paid hourly qualified wages, the
If the available credit exceeds the current year tax liability or is limited by
total number of hours worked for the taxpayer by the employee (not
tentative minimum tax, the unused credit may be carried over for eight
to exceed 2,000 hours per employee) divided by 2,000.
years or until the credit is exhausted, whichever occurs first. Apply the
• In the case of a salaried full-time employee, the total number of
carryover to the earliest taxable year(s) possible. In no event can the
weeks worked for the taxpayer by the employee divided by 52.
credit be carried back and applied against a prior year’s tax.
Acquire: Includes any gift, inheritance, transfer incident to divorce, or
If you have a carryover, retain all records that document this credit and
any other transfer, whether or not for consideration.
carryover used in prior years. The FTB may require access to these
E Limitations
records.
The credit is limited to $3,000 per qualified employee and is limited
Instructions
further by being prorated on an annual full-time equivalent basis for
employees employed less than a full year.
How many total employees, including both full-time and part-time, did
you have on the last day of the prior taxable year? If more than 20,
This credit does not reduce any other deduction for qualified wages.
STOP, you are not eligible for this credit.
S corporations may claim only 1/3 of the credit against the 1.5% entity
level tax (3.5% for financial S corporations). The remaining 2/3 must
Part I – Net Increase in Qualified Full-Time Employees
be disregarded and may not be used as a carryover. S corporations can
Section A
pass through 100% of the credit to their shareholders. If a taxpayer
owns an interest in a disregarded business entity [a single member
For line 4, line 7, and line 8 of Section A, enter the result as a decimal
limited liability company (SMLLC) not recognized by California, and for
out to four decimal places.
tax purposes is treated as a sole proprietorship owned by an individual
Section B
or a branch owned by a corporation], the usable credit amount received
from the disregarded entity is limited to the difference between the
For line 12, line 15, and line 16 of Section B, enter the result as a
taxpayer’s regular tax figured with the income of the disregarded
decimal out to four decimal places.
entity, and the taxpayer’s regular tax figured without the income of the
If the amounts entered on lines 1, 3, and 6 of Section A, and lines 9, 11,
disregarded entity. An SMLLC may be disregarded as an entity separate
and 14 of Section B are negative, enter as negative.
from its owner, and subject to certain statutory provisions that recognize
otherwise disregarded entities for certain purposes, for example:
Part II – Credit Computation
• The tax and fee of an LLC
Example: Company P employs two qualified full-time employees paid on
• The tax return filing requirements of an LLC
an hourly basis. One employee worked 1,575 hours during the current
• The credit limitations previously mentioned
taxable year, and the other worked 1,000 hours.
Get Form 568, Limited Liability Company Tax Booklet, for more
The total amount of credit Company P may claim for both employees is
information.
calculated as follows:
÷
This credit cannot reduce the regular tax below the minimum franchise
Step 1: 2,575 hours
2,000 hours = 1.2875
tax (corporations and S corporations), the annual tax (limited
Step 2: 1.2875 x $3,000 = $3,863
partnerships, limited liability partnerships, and LLCs classified as
Example: Company P also employs two qualified full-time employees
a partnership), the alternative minimum tax (corporations, exempt
paid on a salaried basis. One employee worked 35 weeks during the
organizations, individuals, and fiduciaries), the built-in gains tax
current taxable year, and the other worked 50 weeks. The total amount
(S corporations), or the excess net passive income tax (S corporations).
of credit Company P may claim for both employees is calculated as
This credit cannot reduce regular tax below the tentative minimum tax
follows:
(TMT). Get Schedule P (100, 100W, 540, 540NR, or 541), Alternative
÷
Step 1: 85 weeks
52 weeks = 1.6346
Minimum Tax and Credit Limitations, for more information.
Step 2: 1.6346 x $3,000 = $4,904
This credit is not refundable.
Line 18 – Enter the total new jobs credit generated amount on Form 100,
F Disallowance of the Credit
line 25a; Form 100S, line 23a; Form 100W, line 25a; Form 109, line 11a;
Form 540, line 41; Long Form 540NR, line 56; Form 565, question EE; or
Taxpayers that have been denied the credit as a result of the $400 million
Form 568, question EE.
cap being reached will not be assessed an underpayment of estimated
tax or underpayment of tax penalty to the extent the underpayment
Line 19 – If you received pass-through new jobs credit(s) from
was created or increased by the disallowance of this credit. For more
S corporations, estates, trusts, partnerships, or LLCs classified as
information, get form FTB 5805, Underpayment of Estimated Tax by
partnerships, add the amounts and enter the total.
Individuals and Fiduciaries, or form FTB 5806, Underpayment of Estimated
Line 22a – The amount of this credit you can claim on your tax return
Tax by Corporations. Additionally, any disallowance of the credit due to
may be limited further. See General Information E, Limitations. Also,
the $400 million cap being reached would be treated as a math error, and
refer to the credit instructions in your tax booklet for more information.
would not be reviewable in any administrative or judicial proceeding.
Enter the amount of credit claimed on this line and on your current tax
return; Form 100, line 25b; Form 100S, line 23b; Form 100W, line 25b;
G Assignment of Credits
Form 109; line 11b; Form 540, line 42; Long Form 540NR, line 57; or
Form 541, line 23 and use credit code number 220.
Assigned Credits to Affiliated Corporations – For taxable years beginning
on or after July 1, 2008, credit earned by members of a combined
reporting group may be assigned to an affiliated corporation that is a
member of the same combined reporting group. A credit assigned may
only be claimed by the affiliated corporation against its tax in taxable years
beginning on or after January 1, 2010. For more information, get form
FTB 3544, Election to Assign Credit Within Combined Reporting Group,
Page 2 FTB 3527 2013

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