Fillable California Form 3511 - Environmental Tax Credit

Assignment of Credits

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

incurred during the applicable period that meet both CARB and EPA

Assigned Credits to Affiliated Corporations – Credit earned by

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

members of a combined reporting group may be assigned to an affiliated

for the construction of new process operation units or the

corporation that is a member of the same combined reporting group. A

dismantling and reconstruction of existing process units to be used

credit assigned may only be claimed by the affiliated corporation against

in the production of ultra low sulfur diesel fuel, associated adjacent

its tax liability. For more information, get form FTB 3544, Election to

or offsite equipment (including tankage, catalyst, and power supply),

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

engineering, construction period interest, site work, and permitting.

List of Assigned Credit Received and/or Claimed by Assignee or go to

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

ftb.ca.gov and search for credit assignment.

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

Carryover

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

that has incurred qualified capital costs to produce ultra low sulfur

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

diesel fuel.

credit may be carried over to the following year and the ten succeeding

years until the credit is exhausted. In no event can the credit be carried

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

back and applied against a prior year’s tax. If you have a carryover, retain

Requirements of the EPA.

all records that document this credit and carryover used in prior years.

7. Applicable CARB regulations is the Vehicular Diesel Fuel Sulfur

The Franchise Tax Board may require access to these records.

Control Requirements of the CARB under Section 2281 of Article 2

of Chapter 5 of Division 3 of Title 13 of the California Code

Specific Line Instructions

of Regulations.

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

Current Year Credit

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

running at full capacity under optimal crude and product slate

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

conditions with no allowance for d

owntime.

your own trade or business.

Basis

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

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

For more information, including basis reduction, see California Revenue

partnership, or LLC classified as a partnership).

and Taxation Code (R&TC) Sections 17053.62 and 23662.

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

Limitations

partnership)

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

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

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

entity-level tax (3.5% for financial S corporations). The remaining

loss are divided.

2/3 must be disregarded and may not be used as carryover. In

addition, S corporations may pass through 100% of the credit to

Part I – Current Year Credit

their shareholders.

Line 1 – Ultra low sulfur diesel fuel produced

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

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

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

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

of 15 parts per million or less.

individual or a branch owned by a corporation] the credit amount you

Line 3 – Qualified capital costs limitation

receive from the disregarded entity that can be utilized is limited to the

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

difference between the taxpayer’s regular tax figured with the income of

Definitions) for the facility that produces ultra low sulfur diesel fuel.

the disregarded entity, and the taxpayer’s regular tax figured without the

Line 9 – Credit carryover from prior years

income of the disregarded entity.

Enter the amount from your 2015 form FTB 3511, Part I, line 12.

For more information on SMLLC, get Form 568, Limited Liability

Company Tax Booklet.

Line 11a – Credit claimed

This credit cannot reduce the minimum franchise tax (corporations and

Do not include assigned credits claimed on form FTB 3544A.

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

This amount may be less than the amount on line 10 if your credit is limited

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

by your tax liability. For more information, see General Information F,

minimum tax (corporations, exempt organizations, individuals, and

Limitations, and refer to the credit instructions in your tax booklet. Use credit

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

code 218 when you claim this credit.

passive income tax (S corporations).

Line 11b – Total credit assigned

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

Corporations that assign credit to other corporations within combined

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

reporting group must complete form FTB 3544. Enter the total amount

to the S corporation. The remaining 2/3 were disregarded. The allowable

of credit assigned from form FTB 3544, column (g) on this line.

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

Part II – Credit Recapture

accordance with the respective carryover rules. These C corporation

carryovers may not be passed through to shareholders. For more

Line 13 – Credit recapture

information, get Schedule C (100S), S Corporation Tax Credits.

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

This credit cannot reduce regular tax below the tentative minimum tax

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

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

years of the date in which you first claimed the credit.

Minimum Tax and Credit Limitations, for more information.

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

This credit is not refundable.

or schedules:

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

• Schedule K (Form 109, 565, or 568)

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

• Other Taxes (Form 541, Line 21b)

Page 2 FTB 3511 Instructions 2016

California Form 3511 - Environmental Tax Credit - 2016 Page 2

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