Form 3507 - California Prison Inmate Labor Credit - 2015

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Prison Inmate Labor Credit
Attach to your California tax return. The employer must keep the approved joint venture agreement for audit purposes.
Name(s) as shown on your California tax return
CA Corporation no.
California Secretary of State file number
1 Total qualifying wages. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Multiply line 1 by 10% (.10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Pass-through prison inmate labor credit(s) from Schedule K-1 (100S, 541, 565, or 568). See instructions. . . 3
4 Total available prison inmate labor credit. Add line 2 and line 3. See instructions . . . . . . . . . . . . . . . . . . . . . . . 4
General Information
This credit cannot reduce the regular tax below the minimum franchise
tax (corporations and S corporations), the annual tax (limited
A Purpose
partnerships, limited liability partnerships, and LLCs classified as
a partnership), the alternative minimum tax (corporations, exempt
Use form FTB 3507, Prison Inmate Labor Credit, to figure a credit for
organizations, individuals, and fiduciaries), the built-in gains tax
wages paid to prison inmates under an approved joint venture with the
(S corporations), or the excess net passive income tax (S corporations).
California Department of Corrections. Also use this form to claim pass-
This credit cannot reduce regular tax below the tentative minimum tax
through prison inmate labor credits you received from S corporations,
estates, trusts, partnerships, or limited liability companies (LLCs)
(TMT). Get Schedule P (100, 100W, 540, 540NR, or 541), Alternative
classified as partnerships.
Minimum Tax and Credit Limitations, for more information.
There is no provision for carryover of any unused credit to succeeding
S corporations, estates, trusts, partnerships, and LLCs classified as
tax years and in no event can you carry this credit back and apply it
partnerships should complete form FTB 3507 to figure the amount
of credit to pass through to shareholders, beneficiaries, partners, or
against a prior year’s tax.
members. Attach this form to Form 100S, California S Corporation
This credit is not refundable.
Franchise or Income Tax Return; Form 541, California Fiduciary Income
D Assignment of Credits
Tax Return; Form 565, Partnership Return of Income; or Form 568,
Limited Liability Company Return of Income. Show the pass-through
Assigned Credits to Affiliated Corporations – Credit earned by
credit for each shareholder, beneficiary, partner, or member on
members of a combined reporting group may be assigned to an affiliated
Schedule K-1 (100S, 541, 565, or 568) Share of Income, Deductions,
corporation that is a member of the same combined reporting group. A
Credit, etc.
credit assigned may only be claimed by the affiliated corporation against
B Qualifications
its tax liability.For more information, get form FTB 3544, Election to
Assign Credit Within Combined Reporting Group, or form FTB 3544A,
California allows a credit equal to 10% of the wages paid to each
List of Assigned Credit Received and/or Claimed by Assignee or go to
prisoner who is employed under an approved joint venture with the and search for credit assignment.
California Department of Corrections.
The credit amount is based on wages paid to each qualifying employee
during the taxable year for the duration of the contract agreement.
Line 1 – Enter the total amount of qualifying wages paid or incurred
The credit applies only to wages paid pursuant to a contract agreement,
under the provisions of the approved joint venture.
between the director of corrections and the joint venture employer,
Line 3 – If you received more than one pass-through credit from
executed on or before the day the individual begins work for the employer.
S corporations, estates, trusts, partnerships, or LLCs classified as
C Limitations
partnerships, add the amounts and enter the total on line 3. Attach a
schedule showing the names and identification numbers of the entities
S corporations may claim only 1/3 of the credit against the 1.5%
from which the credits were passed through to you.
entity-level tax (3.5% for financial S corporations). The remaining 2/3
Line 4 – The amount of this credit that you can claim on your tax return
must be disregarded and may not be used as a carryover. S corporations
may be limited. See General Information C, Limitations. Also refer to the
can pass through 100% of the credit to their shareholders.
credit instructions in your tax booklet for more information. Use credit
If a taxpayer owns an interest in a disregarded business entity
code 162 when you claim this credit.
[a single member limited liability company (SMLLC) not recognized
by California, and for tax purposes is treated as a sole proprietorship
owned by an individual or a branch owned by a corporation], the
usable credit amount received from the disregarded entity is limited
to the difference between the 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.
FTB 3507 2015
For Privacy Notice, get FTB 1131 ENG/SP.


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