California Enhanced Oil Recovery Credit
Extracted from PDF file 2020-california-form-3546.pdf, last modified December 2020
Enhanced Oil Recovery CreditCALIFORNIA FORM TAXABLE YEAR 2020 Enhanced Oil Recovery Credit Attach to your California tax return. 3546 □ SSN or ITIN □ CA Corporation no. □ FEIN Name(s) as shown on your California tax return California Secretary of State file number Available Credit 1 Qualified enhanced oil recovery costs. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 Current year credit. Multiply line 1 by 5.00% (.0500) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 Pass-through enhanced oil recovery credit from Schedule K-1 (100S, 541, 565, or 568). See instructions . . . . . 3 4 Total current year enhanced oil recovery credit. Add line 2 and line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 Credit carryover from 2019. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6 Total available enhanced oil recovery credit. Add line 4 and line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 a Credit claimed. Enter the amount of the credit claimed on the current year tax return. See instructions. (Do not include any assigned credit claimed on form FTB 3544, Part B.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7a b Total credit assigned. Enter the total amount from form FTB 3544, Part A, column (g). If you are not a corporation, enter -0-. See instructions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7b 8 Credit carryover available for future years. Add line 7a and line 7b, subtract the result from line 6 . . . . . . . . . . . . 8 What’s New Credit Limitation – For taxable years beginning on or after January 1, 2020, and before January 1, 2023, there is a $5,000,000 limitation on the application of business credits for taxpayers. The total of all business credits including the carryover of any business credit for the taxable year may not reduce the “net tax”, for personal income tax filers, or the “tax”, for corporate filers, by more than $5,000,000. For taxpayers included in a combined report, the limitation is applied at the group level. The business credits disallowed due to the limitation may be carried over. The carryover period for disallowed credits is extended by the number of taxable years the credit was not allowed. This limitation does not apply to the Low-Income Housing Credit. General Information California allows an enhanced oil recovery credit similar to the federal enhanced oil recovery credit under Internal Revenue Code (IRC) Section 43, with exceptions. Unless specifically identified otherwise, references in these instructions are to the IRC as of January 1, 2015, and to the California Revenue and Taxation Code (R&TC). A Purpose Use form FTB 3546, Enhanced Oil Recovery Credit, to figure the current year credit and any carryover credit for qualified enhanced oil recovery costs for qualified oil recovery projects located within California. Also use this form to claim pass-through enhanced oil recovery credits you received from S corporations, estates, trusts, partnerships, or limited liability companies (LLCs) classified as partnerships. S corporations, estates, trusts, partnerships, and LLCs classified as partnerships should For Privacy Notice, get FTB 1131 ENG/SP. complete form FTB 3546 to figure the amount of credit to pass through to shareholders, beneficiaries, partners, or members. Attach this form to Form 100S, California S Corporation Franchise or Income Tax Return; Form 541, California Fiduciary Income Tax Return; Form 565, Partnership Return of Income; or Form 568, Limited Liability Company Return of Income. Show the pass-through credit for each shareholder, beneficiary, partner, or member on Schedule K-1 (100S, 541, 565, or 568), Share of Income, Deductions, Credits, etc. B Description The California enhanced oil recovery credit is available for taxable years beginning on or after January 1, 1996. The tentative enhanced oil recovery credit is equal to 5.00% (representing 1/3 of the federal enhanced oil recovery credit) of the qualified enhanced oil recovery costs for qualified oil recovery projects located within California. See General Information F, Limitations, for limitations on the enhanced oil recovery credit. C California and Federal Differences The federal enhanced oil recovery credit under IRC Section 43 and the California enhanced oil recovery credit under R&TC Sections 17052.8 and 23604 are generally the same, except that: 1. The California credit is equal to 5.00% of the qualified enhanced oil recovery costs for qualified oil recovery projects located within California. The federal credit is equal to 15.00% of the qualified enhanced oil recovery costs for qualified oil recovery projects located within the United States. It includes the seabed and subsoil adjacent to the territorial waters of the United States as defined under IRC Section 638(1). 7361203 00 00 00 00 00 00 00 00 00 2. California does not allow the enhanced oil recovery credit for the following taxpayers: • Taxpayers who are retailers of oil or natural gas (excluding bulk sales of aviation fuels) and sell directly or through a related person to the Department of Defense. See IRC Sections 613A(d)(2) and 613A(d)(3) for more information. • Taxpayers (or related persons) who are refiners of crude oil and, on any day during the taxable year, whose daily refinery output exceeded 50,000 barrels. See IRC Section 613A(d)(4) for more information. 3. Taxpayers may carry over the California credit for 15 years. The credit is subject to limitations described in General Information F, Limitations. The federal credit is part of the general business credit subject to the limitations imposed by IRC Section 38. D Definitions Qualified enhanced oil recovery costs – 1. Any amount the taxpayer pays or incurs during the taxable year for tangible property located within California: • That is an integral part of a qualified enhanced oil recovery project in California. • For which depreciation (or amortization) is allowable. 2. Any intangible drilling and development costs: • The taxpayer pays or incurs in connection with a qualified enhanced oil recovery project located within California. • For which the taxpayer elects to capitalize and amortize such costs under IRC Section 263(c) and R&TC Sections 17201 and 24423. FTB 3546 2020 Side 1 3. Any qualified tertiary injectant expenses the taxpayer pays or incurs in connection with a qualified enhanced oil recovery project located within California. For California Personal Income Tax Law and Corporation Tax Law purposes, taxpayers must capitalize and deduct tertiary injectant costs through depreciation because California has not conformed to the provisions of IRC Section 193. Qualified enhanced oil recovery project – Any project located within California involving the application of one or more tertiary recovery methods defined in IRC Section 193(b)(3), and mentioned below, that you can reasonably expect to result in more than an insignificant increase in the amount of crude oil recovery. Tertiary recovery methods – Methods qualifying for the credit include miscible fluid displacement, steam drive injection, microemulsion flooding, in situ combustion, polymer-augmented water flooding, cyclic-steam injection, alkaline (or caustic) flooding, carbonated water flooding, immiscible nonhydrocarbon gas displacement, or any other method the Secretary of the Treasury approves. E Basis You must reduce the basis of property by the amount of the credit attributable to that property. You must make the basis adjustment for the taxable year in which the credit is allowed. F Limitations Credit limitation – For taxable years beginning on or after January 1, 2020, and before January 1, 2023, there is a $5,000,000 limitation on the application of business credits, including carryover. For taxpayers included in a combined report, the limitation is applied at the group level. The limitation does not apply to the Low-Income Housing Credit. Federal election – If a taxpayer has no federal enhanced oil recovery credit due to making an election for an item of property under IRC Section 43(e), which is an election not to apply IRC Section 43 for federal tax purposes, the election is binding and irrevocable for California purposes. The California enhanced oil recovery credit with respect to that item of property is zero. Ineligible taxpayers – Certain refiners of crude oil, taxpayers that are not permitted to compute their depletion allowance under IRC Section 613 because they are retailers of oil or natural gas, and certain related parties, cannot claim the California enhanced oil recovery credit. See IRC Sections 613A(d)(2) through 613A(d)(4) for more information on ineligible taxpayers. Reduced credit – The credit is reduced when the reference price, determined under IRC Section 45K(d)(2)(C), exceeds $28 per barrel. The $28 value is adjusted for inflation for years after 1991. If the reference price exceeds the Page 2 FTB 3546 Instructions 2020 base value of $28 (as adjusted by inflation) by more than $6, the credit is zero. For 2020, the credit is zero ($0). Other limitations – If an item of property qualifies the taxpayer to take the enhanced oil recovery credit as well as any other California credit, the taxpayer must make an election on the original tax return for each year stating which credit is being claimed. Such an election cannot be revoked except with the written consent of the Franchise Tax Board (FTB). S corporations may claim only 1/3 of the credit against the 1.5% entity-level tax (3.5% for financial S corporations), the remaining 2/3 must be disregarded and may not be used as carryover. S corporations can pass through 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 or a branch owned by a corporation], the 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. If the disregarded entity reports a loss, the taxpayer may not claim the credit this year but can carry over the credit amount received from the disregarded entity. This credit cannot reduce the minimum franchise tax (corporations and S corporations), annual tax (limited partnerships, limited liability partnerships, and LLCs classified as partnerships), the alternative minimum tax (corporations, exempt organizations, individuals, and fiduciaries), the built-in gains tax (S corporations), or the excess net passive income tax (S corporations). If a C corporation had unused credit carryovers when it elected S corporation status, the carryovers were reduced to 1/3 and transferred to the S corporation. The remaining 2/3 were disregarded. The allowable carryovers may be used to offset the 1.5% tax on net income in accordance with the respective carryover rules. These C corporation carryovers may not be passed through to shareholders. For more information, get Schedule C (100S), S Corporation Tax Credits. This credit cannot reduce regular tax below the tentative minimum tax. Get Schedule P (100, 100W, 540, 540NR, or 541), Alternative Minimum Tax and Credit Limitations, for more information. If this credit is taken in lieu of any deduction otherwise allowable for the same costs, the deduction must be reduced by the amount of credit claimed for the current taxable year (the amount shown on line 7a). This credit is not refundable. G Assignment of Credits Assigned credits to affiliated corporations – Credit earned by members of a combined reporting group may be assigned to an affiliated corporation that is an eligible member of the same combined reporting group. A credit assigned may only be claimed by the affiliated corporation against its tax liability. For more information, get form FTB 3544, Assignment of Credit, or go to ftb.ca.gov and search for credit assignment. H Carryover If the available credit exceeds the current year tax liability, the unused credit may be carried over to succeeding years. The maximum carryover period is 15 years. Apply the carryover to the earliest taxable year possible. For taxable years beginning on or after January 1, 2020, and before January 1, 2023, the total of all business credits including carryover of any business credit for the taxable year may not reduce tax by more than $5,000,000. The credits disallowed due to the limitation may be carried over. The carryover period for disallowed credit is extended, without regard to carryover provisions, by the number of taxable years the credit was not allowed. In no event can you carry the credit back to apply 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 FTB may require access to these records. Specific Line Instructions Available Credit Only a credit carryover from a prior year is allowed in 2020. Begin your credit computation on line 5. Line 5 – Credit carryover from 2019. Enter the amount from your 2019 form FTB 3546, line 8. Line 7a – Credit claimed Do not include assigned credits claimed on form FTB 3544, Part B, List of Assigned Credit Received and/or Claimed by Assignee. This amount may be less than the amount on line 6 if your credit is limited by your tax liability. For more information, see General Information F, Limitations, and refer to the credit instructions in your tax booklet. Use credit code 203 when you claim this credit. Line 7b – Total credit assigned Corporations that assign credit to other corporations within the same combined reporting group must complete form FTB 3544, Part A, Election to Assign Credit Within Combined Reporting Group. Enter the total amount of credit assigned from form FTB 3544, Part A, column (g) on this line.
2020 Form 3546 Enhanced Oil Recovery Credit
More about the California Form 3546 Corporate Income Tax Tax Credit TY 2020
We last updated the Enhanced Oil Recovery Credit in March 2021, so this is the latest version of Form 3546, fully updated for tax year 2020. You can download or print current or past-year PDFs of Form 3546 directly from TaxFormFinder. You can print other California tax forms here.
Other California Corporate Income Tax Forms:
|Form Code||Form Name|
|Form 100-ES||Corporation Estimated Tax|
|3805-Z Booklet||Enterprise Zone Business Booklet|
|Form 541-B Form||Charitable Remainder and Pooled Income Trusts|
|Form 541||California Fiduciary Income Tax Return|
|Form 3522||Limited Liability Company Tax Voucher|
California usually releases forms for the current tax year between January and April. We last updated California Form 3546 from the Franchise Tax Board in March 2021.
Form 3546 is a California Corporate Income Tax form. States often have dozens of even hundreds of various tax credits, which, unlike deductions, provide a dollar-for-dollar reduction of tax liability. Some common tax credits apply to many taxpayers, while others only apply to extremely specific situations. In most cases, you will have to provide evidence to show that you are eligible for the tax credit, and calculate the amount of the credit to which you are entitled.
About the Corporate Income Tax
The IRS and most states require corporations to file an income tax return, with the exact filing requirements depending on the type of company.
Sole proprietorships or disregarded entities like LLCs are filed on Schedule C (or the state equivalent) of the owner's personal income tax return, flow-through entities like S Corporations or Partnerships are generally required to file an informational return equivilent to the IRS Form 1120S or Form 1065, and full corporations must file the equivalent of federal Form 1120 (and, unlike flow-through corporations, are often subject to a corporate tax liability).
Additional forms are available for a wide variety of specific entities and transactions including fiduciaries, nonprofits, and companies involved in other specific types of business.
Historical Past-Year Versions of California Form 3546
We have a total of ten past-year versions of Form 3546 in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:
2020 Form 3546 Enhanced Oil Recovery Credit
TAXABLE YEAR 2019 Enhanced Oil Recovery Credit CALIFORNIA FORM 3546
2018 Form 3546 - Enhanced Oil Recovery Credit
2017 Form 3546 - Enhanced Oil Recovery Credit
2016 Form 3546 - Enhanced Oil Recovery Credit
2015 Form 3546 -- Enhanced Oil Recovery Credit
2014 Form 3546 -- Enhanced Oil Recovery Credit
2013 Form 3546 -- Enhanced Oil Recovery Credit
2011 Form 3546 -- Enhanced Oil Recovery Credit
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