Form 3511 - California Environmental Tax Credit

G Assignment of Credits

• Has not been at any time since September 1, 1988, owned or

controlled by any refiner that at the same time owned or controlled

Assigned Credits to Affiliated Corporations – For taxable years beginning

refineries in the United States with a total combined crude oil capacity

on or after July 1, 2008, credit earned by members of a combined reporting

of more than 137,500 barrels per stream day.

group may be assigned to an affiliated corporation that is a member of the

3. Qualified capital costs with respect to the facility, are costs paid or

same combined reporting group. A credit assigned may only be claimed

incurred during the applicable period that meet both CARB and EPA

by the affiliated corporation against its tax in taxable years beginning on or

regulations. The costs include, but are not limited to, expenditures for

after January 1, 2011. For more information, get form FTB 3544, Election to

the construction of new process operation units or the dismantling and

Assign Credit Within Combined Reporting Group, or form FTB 3544A, List

reconstruction of existing process units to be used in the production

of Assigned Credit Received and/or Claimed by Assignee or go to ftb.ca.gov

of ultra low sulfur diesel fuel, associated adjacent or offsite equipment

and search for credit assignment.

(including tankage, catalyst, and power supply), engineering,

construction period interest, site work, and permitting.

H Carryover

4. Applicable period with respect to the facility, is the period beginning

If the available credit exceeds the current year tax liability, the unused credit

January 1, 2004, and ending May 31, 2007.

may be carried over to the following year and the ten succeeding years until

5. Facility is a small refiner’s petroleum refinery located in California that

the credit is exhausted. In no event can the credit be carried back and applied

has incurred qualified capital costs to produce ultra low sulfur diesel fuel.

against a prior year’s tax. If you have a carryover, retain all records that

document this credit and carryover used in prior years. The Franchise Tax

6. Applicable EPA regulations is the Highway Diesel Fuel Sulfur Control

Board may require access to these records.

Requirements of the EPA.

7. Applicable CARB regulations is the Vehicular Diesel Fuel Sulfur Control

Specific Line Instructions

Requirements of the CARB under Section 2281 of Article 2 of Chapter 5

of Division 3 of Title 13 of the California Code of Regulations.

Current Year Credit

8. Barrels per stream day is the maximum number of barrels of input that

a distillation facility can process within a 24-hour period when running

Use line 1 through line 6 to figure any environmental tax credit from your

at full capacity under optimal crude and product slate conditions with no

own trade or business.

allowance for downtime.

Skip line 1 through line 6 if you are only claiming a credit that was

E Basis

allocated to you from a pass-through entity (S corporation, estate or trust,

partnership, or LLC classified as a partnership).

For more information, including basis reduction, see R&TC

S corporation, Estate or Trust, Partnership, or LLC (classified as a

Sections 17053.62 and 23662.

partnership)

F Limitations

Figure the total credit on line 1 through line 6. Then, allocate the line 6 credit

to each shareholder or partner in the same way that income and loss are

S corporations may claim only 1/3 of the credit against the 1.5% entity-

divided.

level tax (3.5% for financial S corporations). The remaining 2/3 must be

Part I – Current Year Credit

disregarded and may not be used as carryover. In addition, S corporations

may pass through 100% of the credit to their shareholders.

Line 1 – Ultra Low Sulfur Diesel Fuel Produced

If a taxpayer owns an interest in a disregarded business entity [a single

Enter the number of gallons of diesel fuel produced with a sulfur content of

member limited liability company (SMLLC) not recognized by California, and

15 parts per million or less.

for tax purposes is treated as a sole proprietorship owned by an individual

Line 3 – Qualified Capital Costs Limitation

or a branch owned by a corporation] the credit amount you receive from the

Enter 25% (.25) of the qualified capital costs (defined in Part D, Definitions)

disregarded entity that can be utilized is limited to the difference between the

for the facility that produces ultra low sulfur diesel fuel.

taxpayer’s regular tax figured with the income of the disregarded entity, and

Line 9 – Credit Carryover from Prior Years

the taxpayer’s regular tax figured without the income of the disregarded entity.

Enter the amount from your 2013 form FTB 3511, Part I, line 12.

An SMLLC may be disregarded as an entity from its owner, and is subject to

Line 11a – Credit Claimed (excluding assigned credits claimed on

statutory provisions that recognize otherwise disregarded entities for certain

purposes, for example:

form FTB 3544A)

The amount of this credit that can be claimed on your tax return may be fur-

• The tax and fee of an LLC

ther limited. See General Information F, Limitations. Also refer to the credit

• The tax return filing requirements of an LLC

instructions in your tax booklet for more information. Use credit code 218

• The credit limitations previously mentioned

when you claim this credit.

Get Form 568, Limited Liability Company Tax Booklet, for more information.

11b – Credit Assigned to Other Corporations

This credit cannot reduce the minimum franchise tax (corporations and

Corporations that complete form FTB 3544A for this credit, enter the amount

S corporations), the annual tax (limited partnerships, limited liability

from column (g) on this line.

partnerships, and LLCs classified as a partnership), the alternative minimum

tax (corporations, exempt organizations, individuals, and fiduciaries), the

Part II – Credit Recapture

built-in gains tax (S corporations), or the excess net passive income tax

Line 13 – Credit Recapture

(S corporations).

Any credit amount previously claimed must be added back to your tax

If a C corporation had unused credit carryovers when it elected S corporation

liability if the facility was sold or removed from California within five years of

status, the carryovers were reduced to 1/3 and transferred to the S

the date in which you first claimed the credit.

corporation. The remaining 2/3 were disregarded. The allowable carryovers

Enter the total here and on one of the following California tax returns

may be used to offset the 1.5% tax on net income in accordance with the

or schedules:

respective carryover rules. These C corporation carryovers may not be

• Schedule J (Form 100, 100S, or 100W)

passed through to shareholders. For more information, get Schedule C

• Schedule K (Form 109, 565, or 568)

(100S), S Corporation Tax Credits.

• Other Taxes (Form 540, or Long Form 540NR)

This credit cannot reduce regular tax below the tentative minimum tax

• Other Taxes (Form 541, Line 21b)

(TMT). Get Schedule P (100, 100W, 540, 540NR, or 541), Alternative

Minimum Tax and Credit Limitations, for more information.

This credit is not refundable.

Page 2 FTB 3511 Instructions 2014

Form 3511 - California Environmental Tax Credit - 2014 Page 2

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