California Form 3546 - Enhanced Oil Recovery Credit - 2016 Page 2
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2H
Carryover
Tertiary recovery methods – Methods
or a branch owned by a corporation], the
qualifying for the credit include miscible
credit amount received from the disregarded
If the available credit exceeds the current year
fluid displacement, steam drive injection,
entity is limited to the difference between the
tax liability, the unused credit may be carried
microemulsion flooding, in situ combustion,
taxpayer’s regular tax figured with the income
over to succeeding years. The maximum
polymer-augmented water flooding,
of the disregarded entity, and the taxpayer’s
carryover period is 15 years. Apply the
cyclic-steam injection, alkaline (or caustic)
regular tax figured without the income of the
carryover to the earliest taxable year possible.
flooding, carbonated water flooding,
disregarded entity.
In no event can you carry the credit back to
immiscible nonhydrocarbon gas displacement,
For more information on SMLLC, get Form 568,
apply against a prior year’s tax.
or any other method the Secretary of the
Limited Liability Company Tax Booklet.
Treasury approves.
If you have a carryover, retain all records that
If the disregarded entity reports a loss, the
document this credit and carryover used in
E
Basis
taxpayer may not claim the credit this year but
prior years. The FTB may require access to
can carry over the credit amount received from
these records.
You must reduce the basis of property by
the disregarded entity.
the amount of the credit attributable to that
This credit cannot reduce the minimum
property. You must make the basis adjustment
Instructions
franchise tax (corporations and
for the taxable year in which the credit
S corporations), annual tax (limited
is allowed.
Available Credit
partnerships, limited liability partnerships,
F
Limitations
and LLCs classified as partnerships), the
Line 1
alternative minimum tax (corporations, exempt
Federal election – If a taxpayer has no federal
Enter the total qualified enhanced oil recovery
organizations, individuals, and fiduciaries),
enhanced oil recovery credit due to making
costs paid or incurred during the taxable year
the built-in gains tax (S corporations),
an election for an item of property under IRC
beginning on or after January 1, 2016, for
or the excess net passive income tax
Section 43(e), which is an election not to
qualified enhanced oil recovery projects
(S corporations).
apply IRC Section 43 for federal tax purposes,
located within California.
If a C corporation had unused credit carryovers
the election is binding and irrevocable for
Line 3
when it elected S corporation status, the
California purposes. The California enhanced
If you received more than one pass-through
carryovers were reduced to 1/3 and transferred
oil recovery credit with respect to that item of
credit from S corporations, estates, trusts,
to the S corporation. The remaining 2/3 were
property is zero.
partnerships, or LLCs classified as
disregarded. The allowable carryovers may
Ineligible taxpayers – Certain refiners of
partnerships, add the amounts and enter the
be used to offset the 1.5% tax on net income
crude oil, taxpayers that are not permitted
total on line 3. Attach a schedule showing the
in accordance with the respective carryover
to compute their depletion allowance under
name and tax identification numbers of the
rules. These C corporation carryovers may
IRC Section 613 because they are retailers of
entities from which you received the credit.
not be passed through to shareholders. For
oil or natural gas, and certain related parties,
more information, get Schedule C (100S),
Line 5 – Credit carryover from 2015.
cannot claim the California enhanced oil
S Corporation Tax Credits.
Enter the amount from your 2015 form
recovery credit. See IRC Sections 613A(d)(2)
FTB 3546, line 8.
This credit cannot reduce regular tax below
through 613A(d)(4) for more information on
the tentative minimum tax. Get Schedule P
Line 7a – Credit claimed
ineligible taxpayers.
(100, 100W, 540, 540NR, or 541), Alternative
Do not include assigned credits claimed on
Reduced credit – The credit is reduced when
Minimum Tax and Credit Limitations, for
form FTB 3544A.
the reference price, determined under IRC
more information.
This amount may be less than the amount
Section 45K(d)(2)(C), exceeds $28 per barrel.
If this credit is taken in lieu of any deduction
on line 6 if your credit is limited by your tax
The $28 value is adjusted for inflation for years
otherwise allowable for the same costs, the
liability. For more information, see General
after 1991. If the reference price exceeds the
deduction must be reduced by the amount of
Information F, Limitations, and refer to the
base value of $28 (as adjusted by inflation)
credit claimed for the current taxable year (the
credit instructions in your tax booklet. Use
by more than $6, the credit is zero. For 2016,
amount shown on Side I, line 7a).
credit code 203 when you claim this credit.
there is no reduction of the credit.
This credit is not refundable.
Line 7b – Total credit assigned
Other limitations
Corporations that assign credit to other
If an item of property qualifies the taxpayer to
G
Assignment of Credits
corporations within combined reporting group
take the enhanced oil recovery credit as well
must complete form FTB 3544. Enter the total
as any other California credit, the taxpayer
Credit earned by members of a combined
amount of credit assigned from form FTB 3544,
must make an election on the original tax
reporting group may be assigned to an
column (g) on this line.
return for each year stating which credit is
affiliated corporation that is a member of
being claimed. Such an election cannot be
the same combined reporting group. A
revoked except with the written consent of the
credit assigned may only be claimed by the
Franchise Tax Board (FTB).
affiliated corporation against its tax liability.
For more information, get form FTB 3544,
S corporations may claim only 1/3 of the credit
Election to Assign Credit Within Combined
against the 1.5% entity-level tax (3.5% for
Reporting Group, or form FTB 3544A, List of
financial S corporations), the remaining 2/3
Assigned Credit Received and/or Claimed by
must be disregarded and may not be used as
Assignee or go to ftb.ca.gov and search for
carryover. S corporations can pass through
credit assignment.
100% of the credit to their shareholders.
If a taxpayer owns an interest in a disregarded
business entity [a single member limited
liability company (SMLLC) not recognized by
California, and for tax purposes treated as a
sole proprietorship owned by an individual
Page 2 FTB 3546 Instructions 2016 (REV 02-17)
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