Corporate Tax Credits

Chapter 3.5 of Part 11 of Division 2 of the Revenue and Taxation Code deals with tax credits under the California Corporation Tax Law.

Section 23608 provides that, in the case of a taxpayer who transports any agricultural product donated, there is allowed as a credit against the “tax” an amount equal to 50 percent of the transportation costs paid or incurred by the taxpayer in connection with the transportation of that donated agricultural product.

Section 23609 allows as a credit against the “tax” an amount determined in accordance with Section 41 of the Internal Revenue Code, relating to credit for increasing research activities, except as specified. The terms “qualified research” and “basic research” are defined. The provisions of Section 41(e)(7)(A) of the Internal Revenue Code, are modified as specified.

Section 23610.4 contains a statement of legislative intent regarding the amount of the state low-income housing tax credit allocated to a project cannot exceed an amount in addition to the federal tax credit that is necessary for the financial feasibility of the project and its viability throughout the extended use period.

Section 23610.5 provides there is a credit against the “tax” a state low-income housing tax credit in an amount equal to the amount determined by law, computed in accordance with Section 42 of the Internal Revenue Code except as otherwise provided in this section. The terms “taxpayer” and “housing sponsor” are defined.

Section 23621 provides there is a credit against the “tax” an amount equal to 10 percent of the amount of wages paid to each employee who is certified by the Employment Development Department to meet the requirements of Section 328 of the Unemployment Insurance Code.

Section 23624 allows as a credit against the “tax” an amount equal to 10 percent of the amount of wages paid or incurred during the taxable year to each prisoner who is employed in a joint venture program established through agreement with the Director of Corrections. The Department of Corrections is required to annually forward to the FTB a list of all employers certified by the Department of Corrections as active participants in a joint venture program.

Section 23636 allows before January 1, 2031, a qualified taxpayer a credit against the “tax,” in an amount equal to 17¹/₂ percent of qualified wages paid or incurred by the qualified taxpayer during the taxable year to qualified full-time employees, subject to the limitations specified. The following terms are defined: “qualified full-time employee,” “qualified taxpayer,” “qualified wages,” “new advanced strategic aircraft for the United States Air Force,” “new Advanced Strategic Aircraft Program,” and “total annual full-time equivalents.”

Section 23640 provides before January 1, 2036 a credit to a qualified taxpayer in an amount equal to 20 percent of the qualified expenditures paid or incurred by the qualified taxpayer during the taxable year, not to exceed $20,000,000 per qualified taxpayer per taxable year. The following terms are defined: “Bank,” “eligible transmission project,” “qualified expenditures,” “qualified taxpayer,” and “qualified wages.

Section 23642 provides a credit against the “tax” the amount paid or incurred for eligible access expenditures. The credit is allowed in accordance with Section 44 of the Internal Revenue Code, relating to expenditures to provide access to disabled individuals, except that the credit amount specified is modified. The credit amount allowed under this section is 50 percent of so much of the eligible access expenditures for the taxable year as do not exceed $250.

Section 23663 states that any credit allowed to a taxpayer under this chapter that is an eligible credit may be assigned by that taxpayer to any eligible assignee. The terms “affiliated corporation”, “eligible credit,” and “eligible assignee” are defined.

Section 23685 allows to a qualified taxpayer a credit against the “tax” in an amount equal to the applicable percentage of the qualified expenditures for the production of a qualified motion picture in California. The credit is allowed for the taxable year in which the California Film Commission issues the credit certificate for the qualified motion picture, and be for the applicable percentage of all qualified expenditures paid or incurred by the qualified taxpayer in all taxable years for that qualified motion picture.

The amount of the credit allowed to a qualified taxpayer is limited to the amount specified in the credit certificate issued to the qualified taxpayer by the California Film Commission. The following terms are defined: “ancillary product,” “budget,” “clip use,” “credit certificate,” “employee fringe benefits,” “independent film,” “licensing,” “new use,” “postproduction,” “preproduction,” “principal photography,” “production period” “qualified entity,” “qualified individual,” and “qualified motion picture.”

Section 23689 allows a credit before January 1, 2030 in an amount as determined by the committee. The credit under this section is allocated by GO-Biz. The amount of credit allocated to a taxpayer with respect to a fiscal year pursuant to this section is set forth in a written agreement between GO-Biz and the taxpayer and is based on the twelve specified factors. The written agreement must include three specified items. The terms “Committee” and “GO-Biz” are defined. GO-Biz is required to do three specified activities.

Section 23695 allows to a qualified taxpayer a credit against the “tax,” subject to a computation and ranking by the California Film Commission and the allocation amount categories, in an amount equal to 20 percent or 25 percent, whichever is the applicable credit percentage, of the qualified expenditures for the production of a qualified motion picture in California.

A credit is not allowed under this section for any qualified expenditures for the production of a motion picture in California if a credit has been claimed for those same expenditures under Section 23685. The following terms are defined: “applicable period,” “Los Angeles zone,” “original photography,” “qualified expenditures relating to original photography outside the Los Angeles zone,” “ancillary product,” “budget,” “clip use,” “credit certificate,” “employee fringe benefits,” “independent fil,” “jobs ratio,” “licensing,” “new use,” “pilot for a new television series,” “postproduction,” “preproduction,” “principal photography,” “production period,” “qualified entity,” “qualified expenditures,” “qualified individual,” “qualified motion picture,” “qualified taxpayer,” “qualified visual effects,” “qualified wages,” “residual compensation,” “reuse,” “secondary markets,” “television series that relocated to California,” and “”visual effects.”

Section 23696 states that a credit that is generated by a disregarded single member limited liability company is not ineligible for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation, based on either of two specified conditions.

Section 23698.1 provides there is a credit against “tax” for qualified taxpayers subject to a computation and ranking by the California Film Commission and the allocation amount categories in an amount equal to 35% or 40%, whichever is the applicable credit percentage, of the qualified expenditures for the production of a qualified motion picture in California. A credit is not allowed under this section for any qualified expenditures for the production of a motion picture in California if a credit has been claimed for those same expenditures.