Fillable California Form 3511 - Environmental Tax Credit

• Has not been at any time since September 1, 1988, owned

minimum tax (corporations, exempt organizations, individuals, and

or controlled by any refiner that at the same time owned or

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

controlled refineries in California with a total combined crude oil

passive income tax (S corporations).

capacity of more than 55,000 barrels per stream day.

This credit cannot reduce regular tax below the tentative minimum tax

• Has not been at any time since September 1, 1988, owned

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

or controlled by any refiner that at the same time owned or

information.

controlled refineries in the United States with a total combined

This credit is not refundable.

crude oil capacity of more than 137,500 barrels per stream day.

G Carryover

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

incurred during the applicable period that meet both CARB and EPA

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

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

be carried over to the following year and the 10 succeeding years until

for the construction of new process operation units or the disman-

the credit is exhausted.

tling and reconstruction of existing process units to be used in the

In no event can the credit be carried back and applied against a prior

production of ultra low sulfur diesel fuel, associated adjacent or

year’s tax.

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

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

If you have a carryover, retain all records that document this credit and

carryover used in prior years. The Franchise Tax Board may require

4. “Applicable period,” with respect to the facility, is the period

access to these records.

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

Specific Line Instructions

5. “Facility” is a small refiner’s petroleum refinery located in California

that has incurred qualified capital costs to produce ultra low sulfur

diesel fuel.

Current Year Credit

6. “Applicable EPA regulations” is the Highway Diesel Fuel Sulfur

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

Control Requirements of the Environmental Protection Agency.

your own trade or business.

7. “Applicable CARB regulations” is the Vehicular Diesel Fuel Sulfur

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

Control Requirements of the California Air Resources Board under

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

Section 2281 of Article 2 of Chapter 5 of Division 3 of Title 13 of the

or LLC classified as a partnership).

California Code of Regulations.

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

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

partnership)

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

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

when running at full capacity under optimal crude and product slate

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

conditions with no allowance for downtime.

loss are divided.

E Basis

Part I

For more information, including basis reduction, see R&TC

Line 1

Sections 17053.62 and 23662.

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

of 15 parts per million or less.

F Limitations

Line 3

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

Enter 25% (.25) of the qualified capital costs (defined above) for the

level tax (3.5% for financial S corporations). The remaining 2/3 must be

facility that produces ultra low sulfur diesel fuel.

disregarded and may not be used as carryover. In addition,

Line 9

S corporations may pass through 100% of the credit to their

Enter the amount from your 2006 form FTB 3511, Part I, line 12.

shareholders.

Line 11

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

The amount of this credit that can be claimed on your tax return may

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

be further limited. Refer to the credit instructions in your tax booklet

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

for more information. These instructions also explain how to claim this

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

credit on your tax return. Use credit number 218 when you claim this

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

credit. Also, see General Information F, Limitations.

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

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

Part II

income of the disregarded entity.

Line 1

An SMLLC may be disregarded as an entity from its owner, and is

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

subject to statutory provisions that recognize otherwise disregarded

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

entities for certain purposes, for example:

years of the date which you first claimed the credit.

• The tax and fee of an LLC

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

• The return filing requirements of an LLC

schedules:

• The credit limitations previously mentioned

• Form 100, 100S, or 100W, Schedule J.

Get Form 568, Limited Liability Company Tax Booklet, for more

• Form 109, 565, or 568, Schedule K.

information.

• Form 540, Long Form 540NR, or 541, Other Taxes.

This credit cannot reduce the minimum franchise tax (corporations and

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

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

Page 2 FTB 3511 2007

California Form 3511 - Environmental Tax Credit - 2007 Page 2

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