Form 3541 - California Motion Picture And Television Production Credit

2014 Instructions for Form FTB 3541

California Motion Picture and Television Production Credit

Important Information

General Information

California Motion Picture and Television Production Credit. For

A Purpose

taxable years beginning on or after January 1, 2011, California Revenue

& Taxation Code (R&TC) Section 17053.85 and Section 23685 allow a

Use form FTB 3541 to report the credit for the production of a qualified

qualified taxpayer a California motion picture and television production

motion picture in California that was:

credit against the net tax (individuals) or tax (corporations) and/or

• Allocated on the CFC Tax Credit Certificate.

qualified sales and use tax. The credit, which is allocated and certified

• Passed–through from S corporations, estates, trusts, partnerships,

by the California Film Commission (CFC), is 20% of expenditures

or LLCs taxed as partnerships.

attributable to a qualified motion picture or 25% of production

• Purchased from a qualified taxpayer.

expenditures attributable to an independent film or a television series that

• Assigned to or from an affiliated corporation under R&TC

relocates to California.

Section 23685(c)(1). For more information, see General

For taxable years beginning on or after January 1, 2011, the California

Information C, Credit Assignment.

Motion Picture and Television Production Credit can reduce tax

• Applied or will be applied against BOE qualified sales and use taxes.

below the tentative minimum tax (TMT) for corporations. For more

For more information, go to boe.ca.gov and search for ca film.

information, see R&TC Section 23036 or get Schedule P (100),

Note: Each entity that received or assigned a motion picture and

Alternative Minimum Tax and Credit Limitations – Corporations.

television production credit from or to another entity within a combined

Write “CFC Credit”– Taxpayers attaching form FTB 3541, California

reporting group must complete a separate form FTB 3541.

Motion Picture and Television Production Credit, to the tax return should

S corporations, estates, trusts, partnerships, or LLCs taxed as

write “CFC Credit” in red ink at the top margin of their tax return.

partnerships should complete form FTB 3541 to figure the amount

Use of Credit – The credit can be used by the qualified taxpayer to:

of credit to pass-through to shareholders, beneficiaries, partners, or

members. The credit is not allowed at the pass-through entity level.

• Offset franchise or income tax liability. Use credit code 223 when

Attach this form to Form 100S, California S Corporation Franchise or

claiming this credit.

Income Tax Return; Form 541, California Fiduciary Income Tax Return;

• Sell to an unrelated party (independent films only).

Form 565, Partnership Return of Income; or Form 568, Limited Liability

• Assign to an affiliated corporation.

Company Return of Income. Show the pass-through credit for each

• Apply against qualified sales and use taxes.

shareholder, beneficiary, partner, or member on Schedules K-1 (100S,

This credit is not refundable.

541, 565, or 568), Share of Income, Deductions, Credits, etc.

Sale of Credit Attributable to an Independent Film – A qualified

Corporate taxpayers attach this form to Form 100, California Corporation

taxpayer may sell a credit, attributable to an independent film, to an

Franchise or Income Tax Return, or Form 100W, California Corporation

unrelated party once the taxpayer receives the California Film and

Franchise or Income Tax Return - Water’s Edge Filers.

Television Tax Credit Program Tax Credit Certificate (hereafter, CFC Tax

Individual taxpayers attach this form to Form 540, California Resident

Credit Certificate or credit certificate). The credit can only be sold by

Income Tax Return, or Form 540NR, California Nonresident or Part-Year

the qualified taxpayer that generated the credit (that is a corporation, a

Resident Income Tax Return.

limited liability company (LLC) or partnership taxed as a corporation,

or an individual) or by a shareholder, beneficiary, partner, or member

B Definitions

who received the credit as their distributive or pro-rata share. For

more information, get form FTB 3551, Sale of Credit Attributable to an

Credit certificate. Credit certificate means the tax credit certificate

Independent Film, or go to ftb.ca.gov and search for motion picture.

issued by the CFC for the allocation of the credit to a qualified taxpayer.

Seller – A qualified taxpayer that sells an independent film credit is

Qualified taxpayer. Qualified taxpayer means a taxpayer who has paid

required to report the gain on the sale of the credit in the amount of

or incurred qualified expenditures and has been issued a tax credit

the sale price.

certificate by the CFC. In the case of any pass-through entity, the

Buyer – If the credit was purchased for less than the credit amount

determination of whether a taxpayer is a qualified taxpayer is made at

stated on the CFC Tax Credit Certificate, the buyer is required to

the entity level. The credit is not allowed at the pass-through entity level.

report income in the amount of the difference between the credit

The credit is passed through to the shareholders, beneficiaries, partners,

amount claimed on its return and the purchase price.

or members.

Credit Assignment – A qualified taxpayer that is a corporation or is taxed

Qualified motion picture. Qualified motion picture means a motion

as a corporation and whose credit exceeds the tax may elect to assign

picture that is produced for distribution to the general public, regardless

the credit to an affiliated corporation(s). The election to assign the credit

of medium. For more information, refer to the R&TC Section 17053.85,

is irrevocable. For more information, see General Information C, Credit

Section 23685, or go to film.ca.gov.

Assignment.

Independent film. Independent film means a motion picture with a

Sales and Use Taxes – A qualified taxpayer who has been issued a

minimum budget of one million dollars ($1,000,000) and a maximum

certified CFC Tax Credit Certificate may make an irrevocable election with

budget of ten million dollars ($10,000,000) that is produced by a company

the Board of Equalization (BOE) to apply the credit against qualified sales

that is not publicly traded and publicly traded companies do not own,

and use taxes. For more information, go to boe.ca.gov and search for

directly or indirectly, more than 25 percent of the producing company.

ca film.

Television series. Television series means a television series that

relocated to California, without regard to episode length or initial

media exhibition, that filmed all of its prior season or seasons outside

of California and for which the taxpayer certifies that this credit is the

primary reason for relocating to California.

FTB 3541 Instructions 2014 Page 1

Form 3541 - California Motion Picture And Television Production Credit - 2014 Page 3

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