Fillable Form 3546 - California Enhanced Oil Recovery Credit

Instructions

polymer-augmented water flooding,

If the disregarded entity reports a loss, the

cyclic-steam injection, alkaline (or caustic)

taxpayer may not claim the credit this year but

flooding, carbonated water flooding,

can carry over the credit amount received from

Available Credit

immiscible nonhydrocarbon gas displacement,

the disregarded entity.

Only a credit carryover from a prior year

or any other method the Secretary of the

This credit cannot reduce the minimum

is allowed in 2015. Begin your credit

Treasury approves.

franchise tax (corporations and

computation on line 5.

S corporations), annual tax (limited

E Basis

Line 5 – Credit carryover from 2014.

partnerships, limited liability partnerships,

Enter the amount from your 2014 form

and LLCs classified as partnerships), the

You must reduce the basis of property by

FTB 3546, line 8.

alternative minimum tax (corporations, exempt

the amount of the credit attributable to that

organizations, individuals, and fiduciaries),

Line 7a – Credit Claimed

property. You must make the basis adjustment

the built-in gains tax (S corporations),

for the taxable year in which the credit

Do not include assigned credits claimed on

or the excess net passive income tax

is allowed.

form FTB 3544A.

(S corporations).

This amount may be less than the amount

F Limitations

on line 6 if your credit is limited by your tax

If a C corporation had unused credit carryovers

liability. For more information, see General

when it elected S corporation status, the

Federal election – If a taxpayer has no federal

Information F, Limitations and refer to the

carryovers were reduced to 1/3 and transferred

enhanced oil recovery credit due to making

credit instructions in your tax booklet. Use

to the S corporation. The remaining 2/3 were

an election for an item of property under IRC

credit code 203 when you claim this credit.

disregarded. The allowable carryovers may

Section 43(e), which is an election not to

be used to offset the 1.5% tax on net income

Line 7b – Total credit assigned

apply IRC Section 43 for federal tax purposes,

in accordance with the respective carryover

Corporations that assign credit to other

the election is binding and irrevocable for

rules. These C corporation carryovers may

corporations within combined reporting group

California purposes. The California enhanced

not be passed through to shareholders. For

must complete form FTB 3544. Enter the

oil recovery credit with respect to that item of

more information, get Schedule C (100S),

total amount of credit assigned from form

property is zero.

S Corporation Tax Credits.

FTB 3544, column (g) on this line.

Ineligible taxpayers – Certain refiners of

This credit cannot reduce regular tax below

crude oil, taxpayers that are not permitted

the tentative minimum tax. Get Schedule P

to compute their depletion allowance under

(100, 100W, 540, 540NR, or 541), Alternative

IRC Section 613 because they are retailers of

Minimum Tax and Credit Limitations, for

oil or natural gas, and certain related parties,

more information.

cannot claim the California enhanced oil

recovery credit. See IRC Sections 613A(d)(2)

If this credit is taken in lieu of any deduction

through 613A(d)(4) for more information on

otherwise allowable for the same costs, the

ineligible taxpayers.

deduction must be reduced by the amount of

credit claimed for the current taxable year (the

Reduced credit – The credit is reduced when

amount shown on Side I, line 7a).

the reference price, determined under IRC

Section 45K(d)(2)(C), exceeds $28 per barrel.

This credit is not refundable.

The $28 value is adjusted for inflation for years

G Assignment of Credits

after 1991. If the reference price exceeds the

base value of $28 (as adjusted by inflation) by

Credit earned by members of a combined

more than $6, the credit is zero. For 2015 the

reporting group may be assigned to an

credit is zero ($0).

affiliated corporation that is a member of

Other limitations

the same combined reporting group. A

If an item of property qualifies the taxpayer to

credit assigned may only be claimed by the

take the enhanced oil recovery credit as well as

affiliated corporation against its tax liability.

any other California credit, the taxpayer must

For more information, get form FTB 3544,

make an election on the original tax return for

Election to Assign Credit Within Combined

each year stating which credit is being claimed.

Reporting Group, or form FTB 3544A, List of

Such an election cannot be revoked except

Assigned Credit Received and/or Claimed by

with the written consent of the FTB.

Assignee or go to ftb.ca.gov and search for

credit assignment.

S corporations may claim only 1/3 of the credit

against the 1.5% entity-level tax (3.5% for

H Carryover

financial S corporations), the remaining 2/3

must be disregarded and may not be used as

If the available credit exceeds the current year

carryover. S corporations can pass through

tax liability, the unused credit may be carried

100% of the credit to their shareholders.

over to succeeding years. The maximum

If a taxpayer owns an interest in a disregarded

carryover period is 15 years. Apply the

business entity [a single member limited

carryover to the earliest taxable year possible.

liability company (SMLLC) not recognized by

In no event can you carry the credit back to

California, and for tax purposes treated as a

apply against a prior year’s tax.

sole proprietorship owned by an individual

If you have a carryover, retain all records that

or a branch owned by a corporation], the

document this credit and carryover used in

credit amount received from the disregarded

prior years. The FTB may require access to

entity is limited to the difference between the

these records.

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. For more information

on SMLLC, get Form 568, Limited Liability

Company Tax Booklet.

Page 2 FTB 3546 Instructions 2015

Form 3546 - California Enhanced Oil Recovery Credit - 2015 Page 2

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