CA Form 3531 - California Competes Tax Credit
Form FTB 3531, known as the California Competes Tax Credit (CCTC), is used by businesses and pass-through entities to report the amount of tax credit earned, carried over, or recaptured for the current tax year. This credit is available to businesses that enter into a CCTC Allocation Agreement with the Governor’s Office of Business and Economic Development (GO-Biz), which is approved by the California Competes Tax Credit Committee.
Purpose of Form 3531
- Report the current year’s California Competes Tax Credit amount.
- Claim carryover credits from prior years.
- Report any recaptured credit amounts.
- Claim pass-through credits received from S corporations, estates, trusts, partnerships, or limited liability companies (LLCs).
Who Must File Form 3531?
Entities that qualify include:
- S corporations
- Estates and trusts
- Partnerships
- LLCs (treated as partnerships)
These entities must complete Form FTB 3531 to determine the amount of credit to pass through to shareholders, beneficiaries, partners, or members. The form is attached to various California tax returns including:
- Form 1008 (California S Corporation Franchise or Income Tax Return)
- Form 541 (California Fiduciary Income Tax Return)
- Form 565 (Partnership Return of Income)
- Form 568 (Limited Liability Company Return of Income)
Key Sections of Form 3531
- Part I – Credit Earned: Enter the agreement number approved by the California Competes Tax Credit Committee and the credit earned for the current year.
- Part II – Available Credit: Allocate the credit to shareholders, beneficiaries, partners, or members in the same manner as income and loss are divided.
- Line 4a – Pass-through Credit: Total pass-through credits received from S corporations, estates, trusts, partnerships, or LLCs. Attach a schedule listing entities, identification numbers, agreement numbers, and credit amounts.
- Line 5a – Current Year Credit: For S corporations, estates, trusts, partnerships, and LLCs, this is the amount to pass through. S corporations must also report this amount on Schedule C (100S), column (a).
- Line 6 – Credit Carryover: Enter carryover amount from prior years. Do not include assigned credits from Form FTB 3544.
- Line 7 – Total Available Credit: Sum of line 5b and line 6 for S corporations.
- Line 8c – Refundable Election: Elect to make disallowed credits refundable in future years due to the $5,000,000 credit limitation. This election must be made on Form FTB 3870.
Important Restrictions
- The credit cannot reduce the minimum franchise tax (for corporations and S corporations), annual tax (for limited partnerships, LLPs, and LLCs treated as partnerships), alternative minimum tax (AMT), built-in gains tax (S corporations), or excess net passive income tax (S corporations).
- The credit is not refundable.
- S corporations may not elect to make entity-level credits refundable.
- Credits disallowed due to the $5,000,000 limitation may be carried forward. The carryover period is extended by the number of years the credit was not allowed.
Filing Instructions
To add Form FTB 3531 in Online Taxes software:
- Navigate to your tax return and click on “State.”
- Select “Start or Revisit California State.”
- Under “Other Credits,” click “Start or Edit” next to Form FTB 3531.
- Follow on-screen instructions.
Note: If claiming a credit allocated via a Schedule K-1 (from Forms 100S, 541, 565, or 568), skip Part I and Part II, line 3 and proceed to Part II, line 4.
Source:
Form FTB 3531 Instructions
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.