Contents

2017 Instructions for Form FTB 3808

Manufacturing Enhancement Area Businesses

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and to the California Revenue and Taxation Code (R&TC).

What’s New

Principal Business Activity Codes

The Principal Business Activity Codes, located within these instructions, have been updated and revised to reflect updates to the North American Industry Classification System (NAICS).

General Information

In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015. However, there are continuing differences between California and federal law. When California conforms to federal tax law changes, we do not always adopt all of the changes made at the federal level. For more information, go to ftb.ca.gov and search for conformity. Additional information can be found in FTB Pub. 1001, Supplemental Guidelines to California Adjustments, the instructions for California Schedule CA (540 or 540NR), and the Business Entity tax booklets.

The instructions provided with California tax forms are a summary of California tax law and are only intended to aid taxpayers in preparing their state income tax returns. We include information that is most useful to the greatest number of taxpayers in the limited space available. It is not possible to include all requirements of the California Revenue and Taxation Code (R&TC) in the instructions. Taxpayers should not consider the instructions as authoritative law.

Repeal of Geographically Targeted Economic Development Area Tax Incentives

The California legislature repealed and made changes to all of the Geographically Targeted. Economic Development Area Tax Incentives. Enterprise Zones (EZ) and Local Agency Military Base Recovery Areas (LAMBRA) were repealed on January 1, 2014. The Targeted Tax Areas (TTA) and Manufacturing Enhancement Areas both expired on December 31, 2012. For more information, go to ftb.ca.gov and search for repeal tax incentives.

Expired Manufacturing Enhancement Area (MEA)

The MEA has expired as of December 31, 2012. Taxpayers can no longer generate/incur MEA hiring credits for employees hired on or after January 1, 2013. However, qualified taxpayers can generate/incur MEA hiring credits for qualified employees hired prior to the MEA expiration date for wages paid or incurred within the 60-month period of the MEA hiring credit. For more information, see R&TC Sections 17053.47(b)(1)(D) and 23622.8(b)(1)(D).

Expired Manufacturing Enhancement Area Credits Carryover Period

The portion of any MEA hiring credit remaining for carryover to taxable years beginning on or after January 1, 2014, shall be carried over only to the succeeding 10 taxable years if necessary, or until the credit is exhausted, whichever occurs first. Any hiring credits generated in the current taxable year for employees hired on or before December 31, 2012, and unusable in the current taxable year, may be carried over to the succeeding 10 taxable years.

Single-Sales Factor Formula

R&TC Section 25128.7 requires all business income of an apportioning trade or business, other than an apportioning trade or business under R&TC Section 25128(b), to apportion its business income to California using the single-sales factor formula. For more information, get Schedule R, Apportionment and Allocation of Income, or go to ftb.ca.gov and search for single sales factor. However, business income apportioned to the MEA continues to be apportioned based on the property and payroll factors.

Assignment of Credits

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, see instructions for Schedule Z, Computation of Credit Limitations, on page 10, Assignment of Credit, or get form FTB 3544, Election to Assign Credit Within Combined Reporting Group, or form FTB 3544A, List of Assigned Credit Received and/or Claimed by Assignee, or go to ftb.ca.gov and search for credit assignment.

Minimum Wage

For an employer who employs 25 or fewer employees, the California minimum wage is:

  • $10.00 per hour from January 1, 2017 through December 31, 2017.
  • $10.50 per hour from January 1, 2018 through December 31, 2018.

For any employer who employs 26 or more employees, the California minimum wage is:

  • $10.50 per hour from January 1, 2017 through December 31, 2017.
  • $11.00 per hour from January 1, 2018 through December 31, 2018.
Pass-Through Entities

For purposes of this booklet, the term “pass-through entity” refers to an S corporation, estate, trust, partnership, and limited liability company (LLC). References to “partnerships” include LLCs classified as partnerships.

Introduction

Economic Development Area (EDA) Tax Incentives

California established four types of EDAs that have related tax incentives. These incentives were established to stimulate growth and development in selected areas that are economically depressed. EDA tax incentives applied only to certain business transactions that were undertaken after an EDA had received final designation from the California Department of Housing & Community Development (HCD). Final designation was when the HCD designated an area to be an EDA. Tax incentives were available to individuals and businesses operating or investing within the geographic boundaries of the following EDAs:

  • Enterprise Zones (repealed on January 1, 2014)
  • Local Agency Military Base Recovery Areas (repealed on January 1, 2014)
  • Manufacturing Enhancement Areas (designation expired on December 31, 2012)
  • Targeted Tax Areas (designation expired on December 31, 2012)

Additional information on the EDAs can be found in the following FTB tax booklets:

  • EZ tax incentives, FTB 3805Z, Enterprise Zone Business Booklet
  • LAMBRA tax incentives, FTB 3807, Local Agency Military Base Recovery Area Business Booklet
  • TTA tax incentives, FTB 3809, Targeted Tax Area Business Booklet

References in this booklet to the “MEA” are interpreted as “the boundaries of the former MEA as it existed on December 31, 2012.”

Reporting Requirement

California statutes require the Franchise Tax Board (FTB) to provide information to the California Legislature regarding the number of businesses using the EDA tax incentives, types of EDA tax incentives being used, and the EDAs in which the businesses are claiming the tax incentives.

Complete items A through I on Side 1 of form FTB 3808, Manufacturing Enhancement Area Credit Summary, as applicable. This information will be used to meet the FTB’s statutory reporting requirement.

Purpose

This booklet provides specific information on the available MEA tax incentive. Taxpayers investing or operating within an MEA may be eligible for a hiring credit if, both the taxpayer and the hired employee meet the requirements of R&TC Sections 17053.47 and 23622.8. Use this booklet to determine the correct amount of hiring credit that a business may claim for operating or investing in a trade or business within an MEA. Complete the worksheets and Schedule Z in this booklet for the MEA hiring credit. Then enter the hiring credit amount on form FTB 3808.

Manufacturing Enhancement Area Designation

California’s two MEAs are the cities of Brawley and Calexico, located in Imperial County. These cities received their final designation as MEAs effective January 1, 1998. The MEA designation expired on December 31, 2012. The program offers a special tax incentive to encourage business and stimulate job creation in the area.

The geographic boundaries of an MEA are used to determine whether the tax incentive is available to a business in a specified location. For business eligibility or zone related information, including questions regarding MEA geographic boundaries, contact the local zone program manager in which the business is located. Go to hcd.ca.gov and search for directory of zone contacts for Directory of Economic Development Areas.

For information that is zone-specific, but not tax-specific, you may contact the HCD. See page 20 for the HCD contact information.

Forms List
Form 100
California Corporation Franchise or Income Tax Return
Form 100S
California S Corporation Franchise or Income Tax Return
Form 100W
California Corporation Franchise or Income Tax Return – Water’s-Edge Filers
Form 109
California Exempt Organization Business Income Tax Return
Form 540
California Resident Income Tax Return
Long Form 540NR
California Nonresident or Part-Year Resident Income Tax Return
Form 541
California Fiduciary Income Tax Return
Form 565
Partnership Return of Income
Form 568
Limited Liability Company Return of Income
Schedule CA (540)
California Adjustments – Residents
Schedule CA (540NR)
California Adjustments – Nonresidents or Part-Year Residents
Schedule P
Alternative Minimum Tax and Credit Limitations
FTB Pub. 1061
Guidelines for Corporations Filing a Combined Report
Schedule C (100S)
S Corporation Tax Credits
Schedule K-1 (100S)
Shareholder’s Share of Income, Deductions, Credits, etc.
Schedule K-1 (541)
Beneficiary’s Share of Income, Deductions, Credits, etc.
Schedule K-1 (565)
Partner’s Share of Income, Deductions, Credits, etc.
Schedule K-1 (568)
Member’s Share of Income, Deductions, Credits, etc.
Schedule R
Apportionment and Allocation of Income
FTB 3544
Election to Assign Credit Within Combined Reporting Group
FTB 3544A
List of Assigned Credit Received and/or Claimed by Assignee
Who Can Claim the MEA Tax Incentive?

The MEA hiring credit is available to individuals, sole proprietors, corporations, estates, trusts, and partnerships operating or investing in a business located within the designated MEA.

How to Claim the Credit

To claim the MEA hiring credit, complete form FTB 3808 and attach it to your California tax return.

Attach a separate form FTB 3808 for each business you operate or invest in that is located within an MEA. Also, complete the following schedule and/or worksheets to report credits incurred:

  • Corporations complete Schedule Z and all the worksheets, except for Worksheet II, Section B.
  • Sole proprietors complete Schedule Z and all the worksheets.
  • Trusts, estates and partnerships, complete Worksheet I and Worksheet II, Section A.
  • Individual investors receiving pass-through MEA credits, complete Worksheet II, Section B and Schedule Z. All other investors, complete Worksheet II, Section A and Schedule Z.

Schedule Z is on Side 2 of form FTB 3808.

To assist with the processing of the tax return, indicate that the business operates or invests within an MEA by doing the following:

Form 540 filers:
Claim MEA tax incentives on Form 540, lines 43 through 45, as applicable.
Long Form 540NR filers:
Claim MEA tax incentives on Long Form 540NR, lines 58 through 60, as applicable.
Form 100 filers:
Claim MEA tax incentives on Form 100, line 20, lines 24 through 26, as applicable.
Form 100S filers:
Claim MEA tax incentives on Form 100S, line 18, lines 22 through 24 as applicable.
Form 100W filers:
Claim MEA tax incentives on Form 100W, line 20, lines 24 through 26, as applicable.
Form 109 filers:
Check the “Yes” box for MEA Question I at the top of Form 109, Side 1.

Be sure to keep all completed worksheets and supporting documents for your records.

Form FTB 3808 – Instructions for items A through I

  • For corporations, estates, trusts, partnerships, LLCs classified as partnerships, exempt organizations, and sole proprietors, complete items A through I.
  • Investors of pass-through entities, complete items A through D. See form FTB 3808, Side 1 for more information.
Standard Industrial Classification (SIC) and Principal Business Activity (PBA) Codes

To qualify for the MEA hiring credit, you must be engaged in a trade or business within the selected SIC listed on pages 15 and 16 of this booklet. Enter the SIC code of the establishment that qualifies you to take this credit on form FTB 3808, Side 1. If your business has more than one establishment, and if more than one of them qualifies you to take this credit, enter the SIC code that best represents your primary qualifying establishment.

The PBA codes are based on the North American Industry Classification System published by the United States Office of Management and Budget. The PBA codes are listed on pages 17 through 19. Enter the PBA code of your principal activity on form FTB 3808, Side 1.

Part I – Hiring Credit and Recapture

Line 1 Hiring Credit

The MEA has expired as of December 31, 2012. Taxpayers can no longer generate/incur MEA hiring credits for employees hired on or after January 1, 2013. However, qualified taxpayers can generate/incur MEA hiring credits for qualified employees hired prior to the MEA expiration date for wages paid or incurred within the 60-month period of the MEA hiring credit.

The portion of any MEA hiring credit remaining for carryover to taxable years beginning on or after January 1, 2014, shall be carried over only to the succeeding 10 taxable years if necessary, or until the credit is exhausted, whichever occurs first. Any hiring credits generated in the current taxable year for employees hired on or before December 31, 2012, and unusable in the current taxable year, may be carried over to the succeeding 10 taxable years.

Employers hiring qualified employees, were required to obtain VoucherCert 10-07 from the local agency responsible for verifying employee eligibility on or before December 31, 2014. Do not file VoucherCert 10-07 with your tax return. Keep the voucher for your records. For vouchering deadline questions, go to hcd.ca.gov and search for vouchering.

A qualified taxpayer conducting a trade or business within an MEA may claim a hiring credit for wages paid or incurred to hire certain disadvantaged individuals. Qualified taxpayers must meet all of the following:

  • Be engaged in a line of business described in Standard Industrial Classification (SIC) Codes 0211 through 0291, Code 0723, or Codes 2011 through 3999 of the Standard Industrial Classification Manual, 1987 Edition.
  • Conduct a trade or business within the MEA.
  • Have at least 50% of its workforce that was hired after the MEA designation, be residents of the county in which the MEA is located at the time of hire.
  • Have at least 30% of the qualified county resident workforce described above be qualified disadvantaged individuals.

A “qualified disadvantaged individual” is an individual who at the time hired was any of the following:

  1. A person receiving or determined to be eligible to receive services funded by the federal Job Training Partnership Act (JTPA), or its successor.
  2. Any voluntary or mandatory registrant under the Greater Avenues for Independence Act of 1985 (GAIN), or its successor.
  3. A person who has been certified eligible by the Employment Development Department under the federal Targeted Jobs Tax Credit Program, or its successor, whether or not this program is in effect.

An employer may claim a credit for the qualified wages paid or incurred to a qualified disadvantaged individual who meets all of the following:

  • Was hired after the MEA received its final designation.
  • Spends at least 90% of his or her work time for the qualified employer on activities directly related to the conduct of a qualified trade or business activity within the boundaries of the MEA.
  • Performs at least 50% of the work for the qualified employer within the boundaries of the MEA.

The percentage of wages used to compute the credit depends on the number of years the employee works for the employer in the MEA. The applicable percentage begins at 50% and declines 10% for each year of employment. After the fifth year of employment, no credit can be generated.

Wages that qualify for the hiring credit are those wages paid or incurred to hire a qualified disadvantaged individual for the consecutive 60-month period beginning on the first day the individual commenced employment with the employer. For this purpose, commencement of employment or the hire date is the first day of employment for which the individual receives wages/compensation. For an employer that operates a business that has regularly occurring seasonal or intermittent employment decreases and increases, reemployment of an individual is not a new hire; rather, it is a continuation of the prior employment and does not constitute commencement of employment for the qualified wages test.

The credit is based on the smaller of the following:

  • The actual hourly rate paid or incurred by the employer for work performed by the employee during the taxable year.
  • 150% of the minimum hourly wage established by the Industrial Welfare Commission.

Where the California minimum wage is higher than the federal minimum wage, the California minimum wage is used for purposes of computing the MEA hiring credit. The minimum wage prior to July 1, 2014, was $8.00 per hour. For purposes of computing the MEA hiring credit, 150% of the minimum wage was $12.00 per hour. Beginning on or after July 1, 2014, the minimum wage is $9.00 per hour. For purposes of computing the MEA hiring credit, 150% of the minimum wage is $13.50 per hour.

Example:

John Anderson was hired on January 1, 2012. John’s hourly rate for the first month was the minimum wage $8.00. At the beginning of the second month, his hourly rate increased to $8.50. In the third month, John’s hourly rate increased to $12.50. The hourly rate that qualifies for the credit is limited to 150% of the minimum wage, or $12.00 per hour. The amount of qualified wages is computed as follows:

Month(s) Hours per month × Hourly rate allowed = Qualified wages per month
1 175 $8.00 $1,400.00
2 170 $8.50 $1,445.00
3 170 $12.00 $2,040.00
Record Keeping

Retain a copy of the VoucherCert 10-7 and the documentation given to the vouchering agency. In addition, for each qualified employee, keep records and a schedule of the first 60 months of employment showing (at least) the following:

  • Employee’s name.
  • Date the employee was hired.
  • The employee’s address at the time of hire.
  • Number of hours the employee worked for each month of employment.
  • Smaller of the hourly rate of pay for each month of employment or 150% of the minimum wage.
  • Location of the employee’s job site and duties performed.
  • Total qualified wages per month for each month of employment.
Line 2 Credit Recapture

Employers recapture (add back to the tax liability) the amount of credit attributable to an employee’s wages if the employer terminates the employee at anytime during the longer of the following:

  • The first 270 days of employment (whether or not consecutive).
  • 90 days of employment plus 270 calendar days.

Employers of seasonal employees recapture the amount of hiring credit attributable to the employee’s wages if both of the following apply:

  • The employer terminates the employee before the completion of 270 days of employment.
  • The 270 days is during the 60-month period beginning the day the employee commences employment with the employer.

A “day of employment” means any day the employee receives wage compensation (including a paid sick day, holiday, or vacation day).

Employers add to the current year’s tax the amount of credit claimed in the year of termination and all prior years in which the credit was claimed for the terminated employee.

The credit recapture does not apply if the termination of employment was any of the following:

  • Voluntary on the part of the employee.
  • In response to misconduct of the employee. See Cal Code Regs., tit. 22 sections 1256-30 to 1256-43, for further information on misconduct.
  • Caused by the employee becoming disabled, (unless the employee was able to return to work and the employer did not offer to reemploy the individual).
  • Carried out so that other qualified individuals could be hired, creating a net increase in both the number of qualified employees and the number of hours worked.
  • Due to a substantial reduction in the employer’s trade or business operations.

Instructions for Worksheet I – Hiring Credit & Recapture

Section A – Credit Computation
Line 1, column (a)

Enter the name of each qualified employee. Attach additional schedule(s) if necessary.

Line 1, column (b) through column (f)

Enter in the appropriate columns the qualified wages paid or incurred during the taxable year for each qualified employee listed in column (a).

Line 2, column (b) through column (f)

Add the amounts in each column. The cumulative qualified wages used to compute the MEA hiring credit cannot exceed $2,000,000. This limit applies for each taxable year.

Line 3, column (b) through column (f)

Multiply the total in each column of line 2 by the percentage in each column.

Line 5

If you can claim the federal jobs tax credit from the Work Opportunity Tax Credit (WOTC) on your 2017 federal tax return then reduce the MEA hiring credit by that amount. The reduction applies for those employees who are hired on or after January 1, 2010, and before August 31, 2011 (excluding unemployed veterans and disconnected youth as described in IRC Section 51(d)(14)).

No other California jobs tax credit may be claimed for the same wage expense paid to employees shown in line 1, column (a).

Line 6

For partnerships, enter the amount from line 6, on form FTB 3808, Side 1, Part I, line 1. Also, include the current year hiring credit amount on Forms 565 and 568, Schedule K, line 15f and the distributive share of the credit to partners and members on Schedule K-1, line 15f. In addition, add the entire amount of the credit on Schedule K, line 1, column (c).

For corporations, individuals, estates, and trusts, enter the amount from line 6 on Schedule Z, as follows:

  • Part II, line 6B, column (b) for corporations, individuals, and estates and trusts.
  • Part III, line 7, column (b) for S corporations.
  • Part IV, line 8, column (b) for corporations and S corporations subject to paying only the minimum franchise tax.

Important: Affiliated corporations that received credits assigned under R&TC Section 23663, do not include the assigned credits received on this worksheet. Those credits are entered and tracked on form FTB 3544A.

Credit Limitations

  • The cumulative qualified wages used to compute the MEA hiring credit cannot exceed $2,000,000. This limit applies for each taxable year, regardless of the number of qualified disadvantaged individuals employed.
  • Businesses must reduce any deduction for wages by the amount of the MEA hiring credit on Worksheet I, Section A, line 6.
  • S corporations may claim only 1/3 of the credit against the 1.5% entity-level tax (3.5% for financial S corporations). S corporations can pass through 100% of the credit to their shareholders. S corporations must reduce their wage deduction by 1/3 of the amount on Worksheet I, Section A, line 6 and on Form 100S, line 7. In addition, the S corporation must make an adjustment for the entire amount of the credit on Schedule K (100S), line 1, column (c).

    Example: In 2017, an S corporation qualified for a $3,000 MEA hiring credit. The S corporation can claim a credit for $1,000 ($3,000 x 1/3). On Form 100S, Schedule K, line 1, column (c), the S corporation would add $3,000 to the S corporation’s ordinary income or loss to reflect the credit passed through to the shareholder(s).

  • The amount of hiring credit claimed may not exceed the amount of tax on the MEA business income in any year. Use Schedule Z to compute the credit limitation.
  • Where a wage expense qualifies for the MEA hiring credit as well as another credit, the business may claim only one credit for that wage expense.
  • The portion of any credit remaining for carryover to taxable years beginning on or after January 1, 2014, shall be carried over only to the succeeding 10 taxable years if necessary, or until the credit is exhausted, whichever occurs first. In the case of an S corporation, 1/3 of the credit can be carried over if it cannot be used in the current year. The remaining 2/3 must be disregarded and may not be carried over.

For more information about the treatment of credits for S corporations, see instructions for Schedule Z.

Section B – Credit Recapture
Line 1, column (a)

Enter the name of the terminated employee. Attach additional schedule(s) if necessary.

Line 1, column (b)

Enter the amount of credit recapture for each employee listed in column (a).

Line 2

Enter the amount from line 2, column (b) on form FTB 3808, Side 1, line 2.

Also, include the amount of hiring credit recapture on your California tax return or schedule as follows:

  • Form 100, Schedule J, line 5.
  • Form 100S, Schedule J, line 5 and Schedule K-1 (100S), line 17d.
  • Form 100W, Schedule J, line 5.
  • Form 109, Schedule K, line 4.
  • Form 540, line 63.
  • Long Form 540NR, line 73.
  • Form 541, line 37 and Schedule K-1 (541), line 14d.
  • Form 565, Schedule K, line 20c and Schedule K-1 (565), line 20c.
  • Form 568, Schedule K, line 20c and Schedule K-1 (568), line 20c.

Indicate that you included the hiring credit recapture on your tax return by writing “FTB 3808”, in the space provided on the schedule or form.

Partnerships must identify the recapture amounts for their partners and members on Schedule K-1 (565 or 568).

S corporation shareholders must recapture the portion of credit that was previously claimed, based on the terminated employee’s wages. S corporations must also identify the recapture amount for shareholders on Schedule K-1 (100S). This amount will differ from the amount recaptured by the S corporation on Form 100S, Schedule J.

Worksheet I: Hiring Credit and Recapture – Manufacturing Enhancement Area

Section A: Credit Computation

You cannot take the MEA hiring credit and another credit for the same wage expense.

  1.   Qualified wages paid or incurred for year of employment
    (a)
    Employee’s name
    (b)
    1st year
    (c)
    2nd year
    (d)
    3rd year
    (e)
    4th year
    (f)
    5th year
               
               
               
               
  2. Total. See instructions: (b) 1st year, (c) 2nd year, (d) 3rd year, (e) 4th year, (f) 5th year
  3. Multiply line 2 by the percentage for each column. See instructions: (b) 1st year: .50, (c) 2nd year: .40, (d) 3rd year: .30, (e) 4th year: .20, (f) 5th year: .10
  4. Add the amounts on line 3, column (b) through column (f)
  5. Enter the total amount of 2017 California and federal jobs tax credits allowed. See instructions.
  6. Subtract line 5 from line 4. See instructions.
Section B: Credit Recapture
  1. (a)
    Terminated employee’s name
    (b)
    Recapture amount
       
       
       
       
       
  2. Total amount of credit recapture. Add the amount in column (b). See line 2 instructions for where to report the amount on your California tax return.

Part II – Portion of Business Attributable to the Manufacturing Enhancement Area

The MEA tax incentive is limited to the tax on business income attributable to operations within the area. If the business is located within and outside an MEA, or in more than one MEA, you must determine the portion of total business income that is attributable to each MEA.

Business Income vs. Nonbusiness Income

Only business income is apportioned to the MEA to determine the incentive limitation.

Business income is defined as income arising from transactions and activities in the regular course of the trade or business. Business income includes income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the regular trade or business operations. Nonbusiness income is all income other than business income. See Cal. Code Regs., tit. 18 section 25120 for further references and examples of nonbusiness income.

For corporations and entities doing business in and outside of the Manufacturing Enhancement Area, use Worksheet II, Section A, to determine the MEA apportionment factor to determine the amount of business income attributable to the former MEA.

Pass-through entities must report to their shareholders, beneficiaries, partners, and members the following items:

  1. The distributive (or pro-rata for S corporations) share of the business income apportioned to the MEA.
  2. The distributive (or pro-rata for S corporations) share of the business capital gains and losses apportioned to the MEA included in item 1.
  3. The distributive (or pro-rata for S corporation) share of the MEA property and payroll to corporate partners, members, shareholders, beneficiaries.

Report these items as other income on Schedule K-1 (100S, 541, 565, or 568).

For an individual, use Worksheet II, Section B to determine business income attributable to the MEA. Business income includes but is not limited to, California business income or loss from federal Form 1040, Schedules C,D,E,F, and California Schedule D-1, Sales of Business Property, (or federal Form 4797, Sales of Business Property, if California Schedule D-1 is not needed), as well as wages. Be sure to include casualty losses, disaster losses, and any business deductions reported on federal Form 1040, Schedule A as itemized deductions.

Generally, all income which arises from the conduct of trade or business operations of a taxpayer is business income.

If you elected to claim part or all of your current year disaster loss under IRC Section 165(i)(1) on prior year’s tax return, do not include the amount of the loss that was claimed on prior year’s tax return in your current year business income from the MEA.

Apportionment

Business income is apportioned to an MEA by multiplying the total California business income of the taxpayer by a fraction. The fraction consists of the numerator which is the property factor plus the payroll factor, and the denominator, which is two. If a taxpayer conducts business in more than one MEA, the MEA apportionment factor and credit limitations are computed separately for each MEA.

Property Factor

Property is defined as the average value of all real and tangible personal property owned or rented by the business and used during the taxable year to produce business income.

Property owned by the business is valued at its original cost. Original cost is the basis of the property for federal income tax purposes (prior to any federal adjustment) at the time of acquisition by the business, adjusted for subsequent capital additions or improvements and partial dispositions because of sale or exchange. Allowance for depreciation is not considered.

Rented property is valued at eight times the net annual rental rate. The net annual rental rate for any item of rented property is the total rent paid for the property, less aggregate annual subrental rates paid by subtenants.

Payroll Factor

Payroll is defined as the total amount paid to the business’s employees for compensation for the production of business income during the taxable year.

Compensation means wages, salaries, commissions, and any other form of payment paid directly to employees for personal services.

Payments made to independent contractors or any other person not properly classified as an employee are excluded.

Compensation Within the MEA

Compensation is considered to be within the MEA if any of the following tests are met:

  1. The employee’s services are performed within the geographical boundaries of the MEA.
  2. The employee’s services are performed within and outside the MEA, but the services performed outside the MEA are incidental to the employee’s service within the MEA.

    Incidental means any temporary or transitory service rendered in connection with an isolated transaction.

  3. If the employee’s services are performed within and outside the MEA, the employee’s compensation is attributed to the MEA if any of the following tests are met:
    1. The employee’s base of operations is within the MEA.
    2. There is no base of operations in any other part of the state in which some part of the service is performed, and the place from which the service is directed or controlled is within the MEA.
    3. The base of operations or the place from which the service is directed or controlled is not in any other part of the state in which some part of the service is performed and the employee’s residence is within the MEA.

      Base of operations is the permanent place from which the employees start work and customarily return in order to receive instruction from the taxpayer or communications from their customers or persons; to replenish stock or other material; to repair equipment; or to perform any other functions necessary in the exercise of their trade or profession at some other point or points.

Corporations Filing a Combined Report

When determining the income attributable to the MEA, the business income of each corporation doing business in the MEA is the business income apportioned to California as determined under combined report mechanics. For more information on combined reports, get FTB Pub. 1061. Each corporation computes the income attributable to the MEA by multiplying California business by the MEA apportionment factor computed in Worksheet II, Section A. The MEA property and payroll factors used in the determination of MEA business income includes only the taxpayer’s California amounts in the denominator.

Each corporation doing business in the MEA compute the business income attributable to the MEA according to their own apportioned California business income and interstate apportionment factors.

Example: Computation of MEA business income apportioned to each entity operating within the MEA

Parent Corporation A has two subsidiaries, B and C. Corporations A and B operate within an MEA. The combined group operates within and outside California and apportions its income to California using Schedule R. Assume the combined group’s business income apportioned to California was $1,000,000 and Corporation A and B’s share of California business income is $228,000 and $250,000 respectively. Corporation A and B’s separate MEA and separate California property and payroll factor amounts are shown in the example below.

Business income apportioned to the MEA was determined as follows:

  A. B.
Property Factor
MEA property $1,000,000 $800,000
California property $1,000,000 $1,200,000
Apportionment % 100% 66.66%
Payroll Factor
MEA payroll $800,000 $800,000
California payroll $800,000 $1,000,000
Apportionment % 100% 80%
Average Apportionment %

(Property + Payroll Factors) ÷ 2

100% 73.33%
Apportioned Business Income $228,000 $250,000
MEA business income $228,000 $183,325

Instructions for Worksheet II
Income or Loss Apportionment – Manufacturing Enhancement Area

If the business operates solely within a single MEA and all its property and payroll are solely within that single MEA, enter 100% (1.00) on Section A, line 4, column (c). Do not complete the rest of Worksheet II.

Section A – Income Apportionment

Use Worksheet II, Section A, Income Apportionment, to determine the amount of business income apportioned to the MEA. The apportioned MEA business income determines the amount of the tax incentive that can be used. A taxpayer’s MEA business income is its California business income multiplied by the specific MEA apportionment percentage computed in Worksheet II, Section A.

Property Factor

When determining the income apportioned to the MEA, the numerator of the property factor is the average value of the real and tangible personal property owned or rented by the business and used within the MEA during the taxable year to produce MEA business income, see Worksheet II, Section A, column (b). The denominator of the property factor is the total average value of all the taxpayer’s real and tangible personal property owned or rented and used during the taxable year within California, see Worksheet II, Section A, column (a).

Payroll Factor

When determining income apportioned to the MEA, the numerator of the payroll factor is the taxpayer’s total compensation paid to the employees for working within the MEA during the taxable year, see Worksheet II, Section A, column (b). The denominator of the payroll factor is the taxpayer’s total compensation paid to employees working in California. See Worksheet II, Section A, column (a).

Section B – Income or Loss Apportionment

Form 540 and Long Form 540NR filers, use Worksheet II, Section B to determine the amount to enter on Schedule Z, Part I, line 1 and line 3.

Do not include disaster losses in any amounts used in the table.

Only California source business income is apportioned to the MEA.

The first step is to determine which portion of the taxpayer’s net income is “business income” and which portion is “nonbusiness income,” since only business income is apportioned to the MEA. See Part II on page 5, Portion of Business Attributable to the Manufacturing Enhancement Area, for a complete discussion of business and nonbusiness income.

Business income or loss reported on federal Form 1040 Schedules C, C-EZ, E, F, and other schedules are reported on lines 6 through line 9. Line 11 and line 12 report business gains or losses reported on Schedule D, California Capital Gain or Loss Adjustment, and California Schedule D-1 (or federal Form 4797, if California Schedule D-1 is not needed). All business income and losses should be adjusted for any differences between California and federal amounts as shown on the Schedule CA (540 or 540NR).

Part I – Individual Income and Expense Items

Wages

Taxpayers with wages from a company located within and outside an MEA must determine the MEA wage income by entering the percentage of the time that they worked within the MEA in column (b). The percentage of time should be for the same period the wages entered on line 1 were earned. This percentage must be determined based on their record of time and events such as a travel log or entries in a daily planner.

Part II – Pass-Through Income or Loss

Individuals with a K-1

The individual partner, member, or shareholder completes Worksheet II, Section B, Part II, Pass-Through Income or Loss, and Schedule Z, Computation of Credit Limitation.

Multiple Pass-Through Entities

If you are a shareholder, beneficiary, partner, or member in multiple pass-through entities with businesses located within and outside an MEA from which you received a MEA tax incentive, see the example below for computing business income in the MEA.

Example:

Pass-through entity Trade or business income from Schedule K-1 (100S, 541, 565, or 568) Entity’s MEA apportionment percentage MEA apportioned income
ABC, Inc. $40,000 80% $32,000
A, B, & C 30,000 10% 3,000
ABC, LLC 10,000 50% 5,000
Total     $40,000
Part III – Taxpayer’s Trade or Business

Business Income or Loss

Use business income or loss from federal Form 1040 Schedules C, C-EZ, E, and F, plus California adjustments from Schedule CA (540 or 540NR) for each trade or business. Also, include business capital gains and losses from Schedule D and business gains and losses from Schedule D-1 as adjusted on Schedule CA (540 or 540NR).

Income Computation

Located Entirely Within the MEA

Line 6 – Line 9: If your business operation reported on federal Form 1040 Schedule C, C-EZ, E, F, or other schedule is entirely within the MEA, enter the income or loss from this activity in column (a) and enter 1.00 in column (b).

Line 11 and Line 12: If the gain or loss reported on Schedule D or Schedule D-1 as adjusted on Schedule CA (540 or 540NR) was attributed to an asset used in an activity conducted entirely within the MEA, enter the gain or loss reported in column (a) and enter 1.00 in column (b).

Located Entirely Within California

Line 6 – Line 9: If your business operation reported on federal Form 1040 Schedule C, C-EZ, E, F, or other schedule is entirely within California, enter the income or loss from this activity in column (a). To determine the apportionment percentage in column (b), complete Worksheet II, Section A.

Enter the percentage from Worksheet II, Section A, line 4, column (c) on Worksheet II, Section B, column (b).

Line 11 and Line 12: If the gain or loss reported on Schedule D or Schedule D-1 as adjusted on Schedule CA (540 or 540NR) was attributed to an asset used in an activity conducted entirely within California, enter the gain or loss reported in column (a). To determine the apportionment percentage in column (b), complete Worksheet II, Section A. Enter the percentage from Worksheet II, Section A, line 4, column (c) on Worksheet II, Section B, column (b).

Located Within and Outside California and the MEA

Line 6 – Line 9: If your business operation reported on federal Form 1040 Schedule C, C-EZ, E, F, or other schedule is within and outside the MEA and California, get California Schedule R and complete line 1 through line 18b and line 28 through line 31. Enter the amount from Schedule R, line 18b and line 31 on column (a) of this worksheet. To determine the apportionment percentage in column (b), complete Worksheet II, Section A. Enter the percentage from Worksheet II, Section A, line 4, column (c) on Worksheet II, Section B, column (b).

When computing Schedule R, disregard any reference to Form 100, Form 100W, Form 565, or Form 568. Also, disregard any reference to Schedules R-3, R-4, or R-5.

Nonresidents that have an apportioning business that operates within the MEA should have already computed Schedule R, and can use those amounts when that schedule is referenced. Residents must complete a Schedule R in order to determine their California source business income for purposes of the MEA credit computation.

Line 11 and Line 12: If the gain or loss reported on Schedule D or Schedule D-1 as adjusted on Schedule CA (540 or 540NR) was attributed to an asset used in an activity conducted within and outside the MEA and California, get Schedule R and complete Schedule R-1. Multiply the gain or loss reported by the apportionment percentage on Schedule R-1, Part A, line 2 or Part B, line 5 and enter the result in column (a). To determine the apportionment percentage in column (b), complete Worksheet II, Section A. Enter the percentage from Worksheet II, Section A, line 4, column (c) on Worksheet II, Section B, column (b).

Line 14 – If, in computing your income or loss, the result on line 14, column (c), is a negative amount, you do not have any business income attributable to the MEA. You cannot use any of the MEA hiring credit in the current taxable year.

If the amount on line 14, column (c), is a positive amount, enter the amount on Schedule Z, Part I, line 1 and line 3 (skip line 2).

Worksheet II: Income or Loss Apportionment – Manufacturing Enhancement Area

Section A: Income Apportionment

Use Worksheet II, Section A, if your business has net income from sources within and outside an MEA.

  (a)
Total within California
(b)
Total within an MEA
(c)
Percentage within an MEA
column (b) ÷ column (a)
1. PROPERTY FACTOR

Average yearly value of owned real and tangible personal property used in the business (at original cost). See instructions for more information. Exclude property not connected with the business and the value of construction in progress.

Inventory     Not Applicable
Buildings     Not Applicable
Machinery and equipment     Not Applicable
Furniture and fixtures     Not Applicable
Delivery equipment     Not Applicable
Land     Not Applicable
Other tangible assets (attach schedule)     Not Applicable
Rented property used in the business. See instructions.     Not Applicable
Total property values      
2. PAYROLL FACTOR

Employees’ wages, salaries, commissions, and other compensation related to business income included in the tax return.

Total payroll      
3. Total percentage – sum of the percentages in column (c). Not Applicable Not Applicable  
4. Average apportionment percentage (1/2 of line 3).
Enter here and on form FTB 3808, Side 1, line 3.
Not Applicable Not Applicable  

The average apportionment percentage shown on line 4 represents the portion of the taxpayer’s total business that is attributable to activities conducted within the MEA. Factors with zero balances in the totals of column (a) will not be included in the computation of the average apportionment percentage. For example, if the taxpayer does not have any payroll within or outside the MEA, the average apportionment percentage would be computed by dividing line 3 by one instead of by two as normally instructed.

Section B: Income or Loss Apportionment
Part I: Individual Income and Expense Items

See instructions.

  (a)
Amount
(b)
Percentage of time providing services in the MEA
(c)
Apportioned amount
(a) × (b)
1. Wages      
2. Employee business expenses      
3. Total. Combine line 1, column (c) and line 2, column (c).  
Part II: Pass-Through Income or Loss

See instructions.

  (a)
Name of entity
(b)
Distributive or pro-rata share of business income or loss apportioned to the MEA from Schedule K-1 (100S, 541, 565, or 568) including capital gains and losses
4.    
   
5. Total. Add line 4, column (b).  
Part III: Taxpayer’s Trade or Business

See instructions.

(a)
Business income or loss
(b)
Apportionment percentage for the MEA
(c)
Apportioned income or loss
(a) × (b)
6. Schedule C or C-EZ      
7. Schedule E (Rentals)      
8. Schedule F    
9. Other business income or loss      
10. Total. Add line 6 through line 9, column (c).  
  (a)
Business gain or loss
(b)
Apportionment percentage for the MEA
(c)
Apportioned gain or loss
(a) × (b)
11. Schedule D      
12. Schedule D-1      
13. Total. Add line 11, column (c) and line 12, column (c).  
14. Total. Add line 3, line 10, and line 13, column (c), and line 5, column (b). See instructions.  

Schedule Z – Computation of Credit Limitations

Credit Limitations

The amount of the MEA hiring credit you can claim on your California tax return is limited by the amount of tax attributable to the MEA business income. The amount of tax attributable to the MEA business income is computed in this schedule. For corporations and other entities doing business in the MEA, the MEA business income is computed in this schedule using the MEA apportionment factor formula computed on Worksheet II, Section A. For individuals, the MEA business income is computed on Worksheet II, Section B.

Assignment of Credit

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.

The eligible assignee shall be treated as if it originally generated the assigned credit. Any credit limitations or restrictions that applied to the assignor will also apply to the eligible assignee. The amount of MEA credits you may claim on your California tax return is limited to the tax attributable to a specific MEA. For zone credits assigned, the assignee must have a tax liability as a result of income generated in the same zone that the original credit was generated. For example, if the original credit was generated in the Calexico MEA of the assignor, the assignee must have a tax liability on the income attributable to the Calexico MEA in order to use the assigned credit. For more information, get form FTB 3544, or form FTB 3544A, or go to ftb.ca.gov and search for credit assignment.

Other Limitations

If a taxpayer owns an interest in a disregarded business entity, the amount of the credit that can be utilized is limited to the difference between the taxpayer’s regular tax computed with the income of the disregarded entity, and the taxpayer’s regular tax computed without the income of the disregarded entity. Partnerships allocate the credit among the partners according to the partner’s distributive share as determined in a written partnership agreement. See R&TC Section 17039(e)(2).

The MEA hiring credit you are otherwise eligible to claim may be limited. Do not apply the credit against the minimum franchise tax (corporations and S corporations), the annual tax (partnerships and QSub) 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).

Refer to the credit instructions in your tax booklet for more information.

S Corporations and the Application of the MEA Hiring Credit

An S corporation may use its MEA hiring credit to reduce the MEA tax at both the corporate and shareholder levels.

An S corporation may use 1/3 of the MEA hiring credit to reduce the tax on the S corporation’s MEA business income. In addition, S corporation shareholders may claim their pro-rata share of the entire amount of the MEA hiring credits computed under the Personal Income Tax Law.

Example: In 2017, an S corporation qualified for a $3,000 MEA hiring credit. The S corporation will be able to use 1/3 of the credit ($3,000 x 1/3 = $1,000) to offset the tax on the corporation’s MEA business income.

The S corporation will also pass through a $3,000 MEA hiring credit to its shareholders to offset their individual tax (computed under the Personal Income Tax Law) on the MEA business income.

S corporations should attach form FTB 3808 to Form 100S to claim the MEA tax credit. If form FTB 3808 is not attached to the tax return, the credit may be disallowed.

Shareholders should attach Schedule(s) K-1 (100S) to their individual tax returns.

Carryover

If the amount of hiring credit available this year exceeds your MEA tax, you may carry over any excess credit to future years. The portion of any MEA hiring credit remaining for carryover to taxable years beginning on or after January 1, 2014, shall be carried over only to the succeeding 10 taxable years if necessary, or until the credit is exhausted, whichever occurs first. Apply the carryover to the earliest taxable year possible. In no event can the credit be carried back and applied against a prior year’s tax. Generally, the credit cannot be transferred to another taxpayer, unless:

  • There was a qualifying merger.
  • The credit qualifies under R&TC Section 23663 for assignment to an affiliated corporation. For additional information, get form FTB 3544, or form FTB 3544A.

For S corporations, the amount of 1/3 of the hiring credit that is in excess of the 1.5% entity-level MEA tax (3.5% for financial S corporations) in the current year may also be carried forward and used in future years to offset the S corporation entity-level tax. See the instructions for Schedule Z, Part III for more information.

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.

Credit Code

Use credit code 211 to claim the MEA hiring credit on your tax return. Using an incorrect code may cause a delay in allowing the credit.

Instructions for Schedule Z – Computation of Credit Limitations

Reporting Requirements of S Corporations, Estates, Trusts, and Partnerships
  • Partnerships and LLC’s treated as partnerships do not complete Schedule Z. However, the partners and members of these types of entities should compute their MEA income from all sources by completing the Schedule Z in order to determine the amount of the MEA hiring credit that they may claim on their California tax return. For individual partners, report the distributive share of all the business income apportioned to the MEA. For corporate partners, report the distributive share of the MEA property and payroll. Report these items as other information on Schedule K-1 (565).
  • S corporations and their shareholders must complete Schedule Z.
  • Report to shareholders, beneficiaries, partners, and members, the distributive or pro-rata share of business income, loss, and deductions apportioned to the MEA; and
  • Separately state any distributive or pro-rata share of business capital gains and losses apportioned to the MEA included in the amount above.
S Corporations

Complete only Part I and Part III of Schedule Z if your entity-level tax before credits is more than the minimum franchise tax.

Corporations and S Corporations subject to the minimum franchise tax only

Complete only Part IV of Schedule Z.

All others

Complete Part I and Part II of Schedule Z.

Part I – Computation of Credit Limitations
Line 1

Enter all trade or business income. See Part II, Portion of Business Attributable to the Manufacturing Enhancement Area, for the definition of business income.

Line 2

If your business is located entirely within the MEA, enter 1.

Specifically, this percentage is the apportionment percentage computed by the entity using Worksheet II, Section A, and it represents the percentage of the entity’s business income attributable to the MEA.

Line 4a

Compute the tax as if the MEA taxable income represented all of your taxable income.

Individuals

Use the tax table or tax rate schedule in your tax booklet for your filing status.

Exempt Organizations

Use the applicable tax rate in your tax booklet.

Corporations and S Corporations

Use the applicable tax rate.

If the amount on line 4a is the minimum franchise tax ($800), you cannot use your MEA hiring credit this year. You should complete Part IV of Schedule Z to compute the amount of credit carryover.

Example: Determination of MEA Income for Shareholders, Partners, or Members of Pass-Through Entities

John Anderson is vice president of ABC, Inc., an S corporation that has two locations: one within an MEA and one outside an MEA. Eighty percent (80%) of the S corporation’s business income is attributable to the MEA.

This percentage was determined by ABC, Inc. using Worksheet II, Section A, when ABC’s S corporation tax return (Form 100S) was prepared.

John divides his time equally (50/50) between the two offices of ABC, Inc. Jackie Anderson (John’s spouse/RDP) works for ABC, Inc. at its office located in the MEA.

John and Jackie Anderson have the following items of California income and expense for the 2017 taxable year:

  • John’s salary from ABC, Inc: $100,000
  • Jackie’s salary from ABC, Inc: 75,000
  • Interest on savings account: 1,000
  • Dividends: 3,000
  • Schedule K-1 (100S) from ABC, Inc.: Ordinary income: 40,000
  • John’s unreimbursed employee expenses from federal Schedule A: (2,000)

The Anderson’s MEA business income (total amount to be reported on line 3) is computed as follows:

  • John’s MEA salary ($100,000 × 50%): $50,000
  • Jackie’s MEA salary ($75,000 × 100%): 75,000
  • Pass-through ordinary income from ABC, Inc. ($40,000 × 80%): 32,000
  • John’s unreimbursed employee business expenses (2,000 × 50%): (1,000)
  • Total MEA income (Schedule Z, Part I, line 3): $156,000

The standard deduction and personal or dependency exemptions are not included in the computation of MEA business income since they are not related to trade or business activities.

John and Jackie must compute the tax (to be entered on Schedule Z, Part I, line 4a) on the total MEA income of $156,000 (as if it represents all of their income).

Line 4b

Corporations and S Corporations: the amount on line 4b is the minimum franchise tax ($800), you cannot use your MEA hiring credit this year. You should complete Part IV of Schedule Z to compute the amount of credit carryover.

Part II – Limitation of Credits for Corporations, Individuals, Estates, and Trusts

Individuals that received a Schedule K-1, complete Schedule Z, Part II, using the information from the Schedule K-1.

Corporations, individuals, estates, or trusts, use Schedule Z, Part II. Corporations and S corporations that are subject to paying only the minimum franchise tax, use Schedule Z, Part IV.

Line 6A, column (f)

Enter the amount from line 5. This is the amount of limitation based on the tax on MEA business income.

Line 6A, column (g)

Enter the amount of credit that is used on Schedule P (100, 100W, 540, 540NR, or 541), column (b). The amount cannot be greater than the amount on line 6A, column (f) or the amount computed on line 6B, column (e). Enter this amount on form FTB 3808, Side 1, line 1.

Line 6B, column (b)

Enter the amount of the current year credit that was computed on Worksheet I. Individuals enter the current year hiring credit from the Schedule K-1.

Line 6B, column (c)

Enter the amount of the total prior year carryover credit. This is the amount of credit that was previously figured on Worksheet I in the prior year, minus the amount that was allowed to be taken on the prior year tax return.

Line 6B, column (d)

Enter the amount of credit assigned to affiliated corporations that are members of the same combined reporting group from form FTB 3544, column (g). Only C corporations who completed the form will enter an amount in this column. Individuals, and Estates and Trusts, leave blank and go to column (e) instructions.

Line 6B, column (e)

Add the amount of the current year credit on line 6B, column (b) and the amount of the total prior year carryover on line 6B, column (c), then subtract the amount of the total credit assigned on line 6B, column (d), if any.

Line 6B, column (f)

Compare the amounts on line 6A, column (f) and line 6A, column (g). Enter the smaller amount.

Line 6B, column (h)

Subtract the amount on line 6B, column (f) from the amount on line 6B, column (e). Enter the result on line 6B, column (h). This is the amount of credit that can be carried over to future years. This carryover includes both the Schedule P (100, 100W, 540, 540NR, or 541) limitation and the limitation based on MEA business income.

Example: Part II

The ABC Business has $8,000 of tax. The business computed a credit limitation based on MEA income of $7,000 on Schedule Z, line 5.

The business has the following credits:

  • Hiring credit — $500 and a $300 carryover from a prior year

Schedule Z, Part II would be computed as follows:

Part II: Limitation of Credits for Corporations, Individuals, Estates, and Trusts. See instructions.

(a)
Credit name
(b)
Credit amount
(c)
Total prior year carryover
(d)
Total credit assigned from form FTB 3544, col. (g)
(e)
Total credit sum of col. (b) plus col. (c), minus col. (d)
(f)
Limitation based on MEA business income
(g)
Credit used on Sch. P
Can never be greater than col. (e) or col. (f)
(h)
Total credit carryover col. (e) minus col. (f)
6 Hiring credit A Not Applicable Not Applicable Not Applicable Not Applicable 7,000 800 Not Applicable
B 500 300 –0– 800 800 Not Applicable –0–
Part III – Limitation of Credits for S Corporations Only

Use Part III of Schedule Z only if you are an S corporation.

Line 7, column (b)

Enter the amount of credit computed this year from Worksheet I. Also, enter this amount on Form 100S as follows:

  • Schedule C, line 4
  • Schedule K, line 13d

You may need to adjust your Schedule C (100S) to reflect the MEA tax limitation (Part I, line 5) on your credit after completing this worksheet.

Line 7, column (c)

Multiply the amount on line 7, column (b) by 1/3. Enter this amount in column (c). The amount in column (c) is the maximum amount of the current year credit that may be used by the S corporation to offset its 1.5% entity-level tax (3.5% for financial S corporations).

Line 7, column (d)

Enter the amount of the total prior year carryover of the credit (this is the amount of credit that was previously figured on Worksheet I in the prior year, minus the amount that was allowed to be taken on the prior year tax return).

Line 7, column (e)

Add the amount of the current year credit on line 7, column (c) and the amount of the total prior year carryover on line 7, column (d).

Line 7, column (f)

Enter the amount of credit that was used by the S corporation in the current year to offset its 1.5% entity-level tax (3.5% for financial S corporations). Enter this amount on form FTB 3808, Side 1, line 1.

Line 7, column (g)

Subtract the amount in column (f) from the amount in column (e). This is the amount of credit that can be carried over to future years and used by the S corporation.

Part IV – Limitation of Credits for Corporations and S Corporations Subject to Paying Only the Minimum Franchise Tax

Use Part IV of Schedule Z if you are a corporation or S corporation subject to paying only the minimum franchise tax.

Line 8, column (b)

Enter the amount of current year credit that was computed on Worksheet I. S corporations may enter only 1/3 of the amount from Worksheet I.

Line 8, column (c)

Enter the amount of the total prior year carryover of the credit. This is the amount of credit that was previously figured on Worksheet I in the prior year, minus the amount that was allowed to be taken on the prior year tax return.

Line 8, column (d)

Enter the amounts of credits assigned to affiliated corporations that are members of the same combined reporting group from form FTB 3544, column (g). Only C corporations who completed the form will enter an amount in this column. S corporations, leave blank and go to column (e) instructions.

Line 8, column (e)

Add the amount of the current year credit on line 8, column (b) and the amount of the total prior year carryover on line 8, column (c), then subtract the amount of credit assigned on line 8, column (d). This is the amount of credit that can be carried over to future years.

Standard Industrial Classification Manual, 1987 Edition (Partial Listing)

The Standard Industrial Classification (SIC) Manual classifies business activities based upon establishments, which are defined in the SIC Manual as an economic unit, generally at a single physical location, where business is conducted, or where services or industrial operations are performed. A taxpayer’s enterprise may consist of more than one establishment. The SIC Manual provides the following examples of establishments: A factory, mill, store, hotel, movie theater, mine, farm, ranch, bank, railroad depot, airline terminal, sales office, warehouse, or central administrative office. Where distinct and separate economic activities are performed at a single physical location (such as construction activities operated out of the same physical location as a lumber yard), each activity should be treated as a separate establishment where: (1) No one industry description in the SIC Manual includes such combined activities; (2) The employment in each economic activity is significant; and (3) Separate reports are prepared on the number of employees, their wages and salaries, sales or receipts, property and equipment, and other types of financial data, such as financial statements, job costing, and profit center accounting.

The SIC Manual is organized using a hierarchical structure. First by division, next by two-digit major groups within each division, then by three-digit industry groups within each major group, and finally by four-digit industry codes within each industry group.

For purposes of this publication, SIC Codes 0211 through 0291, Code 0723, or Codes 2011 through 3999 are listed since only taxpayers with establishments in these industry codes qualify for the MEA hiring credit.

The complete Standard Industrial Classification Manual, 1987 Edition, is available for purchase from:

NATIONAL TECHNICAL INFORMATION SERVICE
5301 Shawnee Road
Alexandria, Virginia 22312
Order No. PB 87-100012

Or to view this manual, go to osha.gov and search for SIC code.

The four-digit industry codes within Division D of the SIC Manual are:

(nec means “not elsewhere classified”)

3291
Abrasive products
2891
Adhesives & sealants
2879
Agricultural chemicals, nec
3563
Air & gas compressors
3728
Aircraft parts & equipment, nec
3724
Aircraft engines & engine parts
3721
Aircraft
2812
Alkalies & chlorine
3354
Aluminum extruded products
3355
Aluminum rolling & drawing, nec
3365
Aluminum foundries
3353
Aluminum sheet, plate, & foil
3363
Aluminum die-casting
3483
Ammunition, except for small arms, nec
3826
Analytical instruments
0273
Animal aquaculture
0279
Animal specialties, nec
2077
Animal & marine fats & oils
2387
Apparel belts
2389
Apparel & accessories, nec
3446
Architectural metal work
3292
Asbestos products
2952
Asphalt felts & coatings
2951
Asphalt paving mixtures & blocks
3581
Automatic vending machines
2396
Automotive & apparel trimmings
3465
Automotive stampings
2673
Bags: plastic, laminated, & coated
2674
Bags: uncoated paper & multiwall
3562
Ball & roller bearings
0211
Beef cattle feedlots
0212
Beef cattle, except feedlots
2063
Beet sugar
2836
Biological products except diagnostic substances
2782
Blankbooks & looseleaf binders
3312
Blast furnace & steel mills
3564
Blowers & fans
3732
Boat building & repairing
3452
Bolts, nuts, rivets, & washers
2731
Book publishing
2732
Book printing
2789
Bookbinding & related work
2086
Bottled & canned soft drinks
2342
Bras, girdles, & allied garments
2051
Bread, cake, & related products
3251
Brick & structural clay tile
2211
Broadwoven fabric mills, cotton
2221
Broadwoven fabric mills, manmade
0251
Broiler, fryer, and roaster chickens
2231
Broadwoven fabric mills, wool
3991
Brooms & brushes
3995
Burial caskets
3578
Calculating & accounting equipment
2064
Candy & other confectionery products
2062
Cane sugar refining
2033
Canned fruits & vegetables
2091
Canned & cured fish & seafood
2032
Canned specialties
2394
Canvas & related products
3955
Carbon paper & inked ribbons
2895
Carbon black
3624
Carbon & graphite products
3592
Carburetors, pistons, rings, & valves
2273
Carpets & rugs
2823
Cellulosic manmade fiber
3241
Cement, hydraulic
3253
Ceramic wall & floor tile
2043
Cereal breakfast foods
2022
Cheese, natural & processed
2899
Chemical preparations, nec
2067
Chewing gum
2131
Chewing & smoking tobacco
0252
Chicken eggs
2066
Chocolate & cocoa products
2111
Cigarettes
2121
Cigars
3255
Clay refractories
2295
Coated fabrics, not rubberized
3316
Cold finishing of steel shapes
2754
Commercial printing, gravure
2752
Commercial printing, lithographic
2759
Commercial printing, nec
3582
Commercial laundry equipment
3646
Commercial lighting fixtures
3669
Communication equipment
3577
Computer peripheral equipment, nec
3575
Computer terminals
3572
Computer storage devices
3271
Concrete block & brick
3272
Concrete products, nec
3531
Construction machinery
2679
Converted paper products, nec
3535
Conveyors & conveying equipment
2052
Cookies & crackers
3351
Copper rolling & drawing
3366
Copper foundries
2298
Cordage & twine
2653
Corrugated & solid fiber boxes
3961
Costume jewelry
2074
Cottonseed oil
2021
Creamery butter
0723
Crop preparation services for market
3466
Crowns & closures
3643
Current-carrying wiring devices
2391
Curtains & draperies
3087
Custom compound purchased resins
3281
Cut stone & stone products
3421
Cutlery
2865
Cyclic crudes & intermediates
0241
Dairy farms
2034
Dehydrated fruits, vegetables, & soups
3843
Dental equipment & supplies
2675
Die-cut paper products
2085
Distilled & blended liquors
2047
Dog & cat food
3942
Dolls & stuffed toys
2591
Drapery hardware & blinds & shades
2023
Dry, condensed, & evaporated dairy products
2079
Edible fats & oils, nec
3641
Electric lamps
3634
Electric housewares & fans
3699
Electrical equipment & supplies, nec
3629
Electrical industrial apparatus, nec
3845
Electromedical equipment
3313
Electrometallurgical products
3679
Electronic components, nec
3678
Electronic connectors
3671
Electron tubes
3675
Electronic capacitors
3676
Electronic resistors
3677
Electronic coils & transformers
3571
Electronic computers
3534
Elevators & moving stairways
3694
Engine electrical equipment
2677
Envelopes
3822
Environmental controls
2892
Explosives
2381
Fabric dress & work gloves
3499
Fabricated metal products, nec
3443
Fabricated plate work (boiler shops)
3498
Fabricated pipe & fittings
3069
Fabricated rubber products, nec
3441
Fabricated structural metal
2399
Fabricated textile products, nec
3523
Farm machinery & equipment
3965
Fasteners, buttons, needles, & pins
2875
Fertilizers, mixing only
2655
Fiber cans, drums, & similar products
2262
Finishing plants, manmade
2261
Finishing plants, cotton
2269
Finishing plants, nec
3211
Flat glass
2087
Flavoring extracts & syrups, nec
2041
Flour & other grain mill products
3824
Fluid meters & counting devices
3492
Fluid power valves & hose fittings
2026
Fluid milk
3594
Fluid power pumps & motors
3593
Fluid power cylinders & actuators
2657
Folding paperboard boxes
2099
Food preparations, nec
3556
Food products machinery
3131
Footwear cut stock
3149
Footwear, except rubber, nec
2092
Fresh/frozen prepared fish/seafood
2053
Frozen bakery products, except bread
2038
Frozen specialties, nec
2037
Frozen fruits & vegetables
0271
Fur-bearing animals and rabbits
2371
Fur goods
2599
Furniture & fixtures, nec
3944
Games, toys, & children’s vehicles
3053
Gaskets, packing, & sealing devices
0291
General farms, primarily animal
3569
General industrial machinery, nec
0219
General livestock, nec
2369
Girls’ & children’s outerwear, nec
2361
Girls’ & children’s dresses, blouses
3221
Glass containers
3321
Gray & ductile iron foundries
2771
Greeting cards
3764
Guided missile & space vehicle parts
3769
Guided missile & space vehicle parts, nec
3761
Guided missiles & space vehicles
2861
Gum & wood chemicals
3275
Gypsum products
3423
Hand & edge tools, nec
3996
Hardsurface floor coverings, nec
2429
Hardware, nec
2426
Hardwood dimensions & flooring mills
2435
Hardwood veneer & plywood
2353
Hats, caps, & millinery
3433
Heating equip, except electric
0213
Hogs
3536
Hoists, cranes, & monorails
0272
Horses and other equines
2252
Hosiery, nec
2392
House furnishings, nec
3142
House slippers
3651
Household audio & video equipment
3635
Household vacuum cleaners
3631
Household cooking appliances
3633
Household laundry equipment
3639
Household appliances, nec
2519
Household furniture, nec
3632
Household refrigerators & freezers
2024
Ice cream & frozen desserts
3491
Industrial valves
2819
Industrial inorganic chem, nec
3599
Industrial machinery, nec
2869
Industrial organic chem, nec
3537
Industrial trucks & tractors
2813
Industrial gases
3543
Industrial patterns
3567
Industrial furnaces & ovens
2816
Inorganic pigments
3825
Instruments to measure electricity
3519
Internal combustion engines, nec
2835
In vitro & in vivo diagnostic substances
3462
Iron & steel forging
3915
Jewelers’ materials & lapidary work
3911
Jewelry, precious metal
2253
Knit outerwear mills
2254
Knit underwear mills
2259
Knitting mills, nec
3821
Laboratory apparatus & furniture
2258
Lace & warp knit fabric mills
3083
Laminated plastic plate & sheet
3524
Lawn & garden equipment
3952
Lead pencils & art goods
3199
Leather goods, nec
2386
Leather & sheep-lined clothing
3111
Leather tanning & finishing
3151
Leather gloves & mittens
3648
Lighting equipment
3274
Lime
2411
Logging
2992
Lubricating oils & greases
3161
Luggage
2098
Macaroni, spaghetti, & noodles
3541
Machine tools, metal cutting types
3545
Machine tool accessories
3542
Machine tools, metal forming type
3695
Magnetic & optical recording media
3322
Malleable iron foundries
2083
Malt
2082
Malt beverages
2761
Manifold business forms
2097
Manufactured ice
3999
Manufacturing industries, nec
3953
Marking devices
2515
Mattresses & bedsprings
3586
Measuring & dispensing pumps
3829
Measuring & controlling devices, nec
2011
Meat packing plants
3061
Mechanical rubber goods
2833
Medicinal & botanicals
2325
Men’s & boys’ trousers & slacks
3143
Men’s footwear, except athletic
2323
Men’s & boys’ neckwear
2329
Men’s & boys’ clothing, nec
2321
Men’s & boys’ shirts
2322
Men’s & boys’ underwear & nightwear
2326
Men’s & boys’ work clothing
2311
Men’s & boys’ suits & coats
2514
Metal household furniture
3549
Metalworking machinery, nec
3398
Metal heat treating
3411
Metal cans
3412
Metal barrels, drums, & pails
3431
Metal sanitary ware
3497
Metal foil & leaf
3479
Metal coating & allied services
3469
Metal stampings, nec
3442
Metal door, sash, & trim
2431
Millwork
3296
Mineral wool
3295
Minerals, ground or treated
3532
Mining machinery
2741
Misc publishing
3449
Misc metal work
3496
Misc fabricated wire products
2451
Mobile homes
3716
Motor homes
3711
Motor vehicles & car bodies
3621
Motor & generators
3714
Motor vehicle parts & accessories
3751
Motorcycles, bicycles, & parts
3931
Musical instruments
2441
Nailed wood boxes & shook
2241
Narrow fabric mills
2711
Newspapers
2873
Nitrogenous fertilizers
3297
Nonclay refractories
3644
Noncurrent-carrying wiring devices
3369
Nonferrous foundries, nec
3364
Nonferrous die-casting, except aluminum
3357
Nonferrous wiredrawing & insulating
3356
Nonferrous rolling & drawing, nec
3341
Nonferrous metals
3463
Nonferrous forging
3299
Nonmetallic mineral products, nec
2297
Nonwoven fabrics
3579
Office machines, nec
2522
Office furniture, except wood
3533
Oil & gas field machinery
3851
Ophthalmic goods
3827
Optical instruments & lenses
3489
Ordnance & accessories, nec
2824
Organic fibers, noncellulosic
3565
Packaging machinery
2851
Paints & allied products
3554
Paper industries machinery
2621
Paper mills
2671
Paper coated & laminated, packaging
2672
Paper coated & laminated, nec
2631
Paperboard mills
2542
Partitions & fixtures, except wood
3951
Pens & mechanical pencils
2721
Periodicals
3172
Personal leather goods, nec
2911
Petroleum refining
2999
Petroleum & coal products, nec
2834
Pharmaceutical preparations
2874
Phosphatic fertilizers
3861
Photographic equipment & supplies
2035
Pickles, sauces, & salad dressing
3085
Plastic bottles
3086
Plastic foam products
2821
Plastic materials & resins
3084
Plastic pipe
3088
Plastic plumbing fixtures
3089
Plastic products, nec
2796
Platemaking service
3471
Plating & polishing
2395
Pleating & stitching
3432
Plumbing fixture fittings & trim
2842
Polishes & sanitation goods
3264
Porcelain electrical supplies
2096
Potato chips & similar snacks
3269
Pottery products, nec
0254
Poultry hatcheries
0259
Poultry and eggs, nec
2015
Poultry slaughtering & processing
3568
Power transmission equipment, nec
3546
Power-driven handtools
3448
Prefabricated metal buildings
2452
Prefabricated wood buildings
2045
Prepared flour mixes & doughs
2048
Prepared feeds, nec
3652
Prerecorded records & tapes
3229
Pressed & blown glass, nec
3399
Primary metal products, nec
3339
Primary nonferrous metals, nec
3334
Primary aluminum
3331
Primary copper
3692
Primary batteries, dry & wet
3672
Printed circuit boards
2893
Printing ink
3555
Printing trades machinery
3823
Process control instruments
3231
Products of purchased glass
2531
Public building & related furniture
2611
Pulp mills
3561
Pumps & pumping equipment
3663
Radio, TV, & communications equipment
3743
Railroad equipment
2061
Raw sugar cane
3273
Ready-mixed concrete
2493
Reconstituted wood products
3585
Refrigeration & heating equipment
3625
Relays & industrial controls
3645
Residential lighting fixtures
2044
Rice milling
2095
Roasted coffee
2384
Robes & dressing gowns
3547
Rolling mill machinery
3052
Rubber & plastic hose & belting
3021
Rubber & plastic footwear
2068
Salted & roasted nuts & seeds
2656
Sanitary food containers
2676
Sanitary paper products
2013
Sausages & other prepared meats
3425
Saw blades & handsaws
2421
Sawmills & planing mills, general
3596
Scales & balances, except laboratory
2397
Schiffli machine embroideries
3451
Screw machine products
3812
Search & navigation equipment
3674
Semiconductors & related devices
3263
Semivitreous table & kitchenware
3589
Service industry machinery, nec
2652
Setup paperboard boxes
0214
Sheep and goats
3444
Sheet metal work
3731
Ship building & repairing
3993
Signs & advertising specialties
3914
Silverware and plate ware
3484
Small arms
3482
Small arms ammunition
2841
Soap & other detergents
2436
Softwood veneer & plywood
2075
Soybean oil mills
3769
Space vehicle equipment & parts
3764
Space propulsion units & parts
2429
Special product sawmills, nec
3544
Special dies, tools, jigs, & fixtures
3559
Special industry machinery, nec
3566
Speed changers, drives, & gears
3949
Sporting & athletic goods, nec
2678
Stationery products
3493
Steel springs, except wire
3315
Steel wire & related products
3317
Steel pipe & tubes
3325
Steel foundries, nec
3324
Steel investment foundries
3691
Storage batteries
3259
Structural clay products, nec
2439
Structural wood members, nec
2843
Surface active agents
3841
Surgical & medical instruments
3842
Surgical appliances & supplies
3613
Switchgear & switchboard apparatus
2822
Synthetic rubber
3795
Tanks & tank components
3661
Telephone & telegraph apparatus
3552
Textile machinery
2393
Textile bags
2299
Textile goods, nec
2284
Thread mills
2282
Throwing & winding mills
2296
Tire cord & fabrics
3011
Tires & inner tubes
2141
Tobacco stemming & redrying
2844
Toilet preparations
3612
Transformers, except electronic
3799
Transportation equipment, nec
3792
Travel trailers & campers
3713
Truck & bus bodies
3715
Truck trailers
3511
Turbines & turbines generator sets
0253
Turkey and turkey eggs
2791
Typesetting
3082
Unsupported plastic profile shapes
3081
Unsupported plastic film & sheet
2512
Upholstered household furniture
3494
Valves & pipe fittings, nec
2076
Vegetable oil mills, nec
3647
Vehicular lighting equipment
3261
Vitreous plumbing fixtures
3262
Vitreous china table & kitchenware
3873
Watches, clocks, & parts
2385
Waterproof outerwear
2257
Weft knit fabric mills
3548
Welding apparatus
2046
Wet corn milling
2084
Wines, brandy, & brandy spirits
3495
Wire springs
2337
Women’s & misses’ suits & coats
2335
Women’s, juniors’, & misses’ dresses
2341
Women’s & children’s underwear
2251
Women’s hosiery, except socks
2339
Women’s & misses’ outerwear, nec
2331
Women’s & misses’ blouses & shirts
3171
Women’s handbags and purses
3144
Women’s footwear, except athletic
2491
Wood preserving
2499
Wood products, nec
2434
Wood kitchen cabinets
2541
Wood partitions & fixtures
2521
Wood office furniture
2517
Wood TV & radio cabinets
2449
Wood containers, nec
2511
Wood household furniture
2448
Wood pallets & skids
3553
Woodworking machinery
3844
X-ray apparatus & tubes
2281
Yarn spinning mills

FTB 3808
Principal Business Activity Codes

This list of principal business activities and their associated codes is designed to classify a business by the type of activity in which it is engaged to facilitate the administration of the California Revenue and Taxation Code. These principal business activity codes are based on the North American Industry Classification System published by the United States Office of Management and Budget, 1997 Edition.

For purposes of qualifying for the MEA tax incentive, refer to the Standard Industrial Classification Manual, 1987 Edition and the partial listing on pages 15 and 16 of this booklet.

Agriculture, Forestry, Fishing, and Hunting

Crop Production

Code
 
111100
Oilseed & Grain Farming
111210
Vegetable & Melon Farming (including potatoes & yams)
111300
Fruit & Tree Nut Farming
111400
Greenhouse, Nursery, & Floriculture Production
111900
Other Crop Farming (including tobacco, cotton, sugarcane, hay, peanut, sugar beet, & all other crop farming)

Animal Production

112111
Beef Cattle Ranching & Farming
112112
Cattle Feedlots
112120
Dairy Cattle & Milk Production
112210
Hog & Pig Farming
112300
Poultry & Egg Production
112400
Sheep & Goat Farming
112510
Aquaculture (including shellfish & finfish farms & hatcheries)
112900
Other Animal Production

Forestry and Logging

113110
Timber Tract Operations
113210
Forest Nurseries & Gathering of Forest Products
113310
Logging

Fishing, Hunting and Trapping

114110
Fishing
114210
Hunting & Trapping

Support Activities for Agriculture and Forestry

115110
Support Activities for Crop Production (including cotton ginning, soil preparation, planting, & cultivating)
115210
Support Activities for Animal Production
115310
Support Activities for Forestry

Mining

211120
Crude Petroleum Extraction
211130
Natural Gas Extraction
212110
Coal Mining
212200
Metal Ore Mining
212310
Stone Mining & Quarrying
212320
Sand, Gravel, Clay, & Ceramic & Refractory Mineral Mining & Quarrying
212390
Other Nonmetallic Mineral Mining & Quarrying
213110
Support Activities for Mining

Utilities

221100
Electric Power Generation, Transmission & Distribution
221210
Natural Gas Distribution
221300
Water, Sewage, & Other Systems
221500
Combination Gas and Electric

Construction

Construction of Buildings

236110
Residential Building Construction
236200
Nonresidential Building Construction

Heavy and Civil Engineering Construction

237100
Utility System Construction
237210
Land Subdivision
237310
Highway, Street, & Bridge Construction
237990
Other Heavy & Civil Engineering Construction

Specialty Trade Contractors

238100
Foundation, Structure, & Building Exterior Contractors (including framing carpentry, masonry, glass, roofing, & siding)
238210
Electrical Contractors
238220
Plumbing, Heating, & Air-Conditioning Contractors
238290
Other Building Equipment Contractors
238300
Building Finishing Contractors (including drywall, insulation, painting, wallcovering, flooring, tile, & finish carpentry)
238900
Other Specialty Trade Contractors (including site preparation)

Manufacturing

Food Manufacturing

311110
Animal Food Mfg
311200
Grain & Oilseed Milling
311300
Sugar & Confectionery Product Mfg
311400
Fruit & Vegetable Preserving & Specialty Food Mfg
311500
Dairy Product Mfg
311610
Animal Slaughtering and Processing
311710
Seafood Product Preparation & Packaging
311800
Bakeries, Tortilla & Dry Pasta Mfg
311900
Other Food Mfg (including coffee, tea, flavorings, & seasonings)

Beverage and Tobacco Product Manufacturing

312110
Soft Drink & Ice Mfg
312120
Breweries
312130
Wineries
312140
Distilleries
312200
Tobacco Manufacturing

Textile Mills and Textile Product Mills

313000
Textile Mills
314000
Textile Product Mills

Apparel Manufacturing

315100
Apparel Knitting Mills
315210
Cut & Sew Apparel Contractors
315220
Men’s & Boys’ Cut & Sew Apparel Mfg
315240
Women’s, Girls’ and Infants’ Cut and Sew Apparel Mfg
315280
Other Cut & Sew Apparel Mfg
315990
Apparel Accessories & Other Apparel Mfg

Leather and Allied Product Manufacturing

316110
Leather & Hide Tanning & Finishing
316210
Footwear Mfg (including rubber & plastics)
316990
Other Leather & Allied Product Mfg

Wood Product Manufacturing

321110
Sawmills & Wood Preservation
321210
Veneer, Plywood, & Engineered Wood Product Mfg
321900
Other Wood Product Mfg

Paper Manufacturing

322100
Pulp, Paper, & Paperboard Mills
322200
Converted Paper Product Mfg

Printing and Related Support Activities

323100
Printing & Related Support Activities

Petroleum and Coal Products Manufacturing

324110
Petroleum Refineries (including integrated)
324120
Asphalt Paving, Roofing, & Saturated Materials Mfg
324190
Other Petroleum & Coal Products Mfg

Chemical Manufacturing

325100
Basic Chemical Mfg
325200
Resin, Synthetic Rubber, & Artificial & Synthetic Fibers & Filaments Mfg
325300
Pesticide, Fertilizer, & Other Agricultural Chemical Mfg
325410
Pharmaceutical & Medicine Mfg
325500
Paint, Coating, & Adhesive Mfg
325600
Soap, Cleaning Compound, & Toilet Preparation Mfg
325900
Other Chemical Product & Preparation Mfg

Plastics and Rubber Products Manufacturing

326100
Plastics Product Mfg
326200
Rubber Product Mfg

Nonmetallic Mineral Product Manufacturing

327100
Clay Product & Refractory Mfg
327210
Glass & Glass Product Mfg
327300
Cement & Concrete Product Mfg
327400
Lime & Gypsum Product Mfg
327900
Other Nonmetallic Mineral Product Mfg

Primary Metal Manufacturing

331110
Iron & Steel Mills & Ferroalloy Mfg
331200
Steel Product Mfg from Purchased Steel
331310
Alumina & Aluminum Production & Processing
331400
Nonferrous Metal (except Aluminum) Production & Processing
331500
Foundries

Fabricated Metal Product Manufacturing

332110
Forging & Stamping
332210
Cutlery & Handtool Mfg
332300
Architectural & Structural Metals Mfg
332400
Boiler, Tank, & Shipping Container Mfg
332510
Hardware Mfg
332610
Spring & Wire Product Mfg
332700
Machine Shops; Turned Product; & Screw, Nut, & Bolt Mfg
332810
Coating, Engraving, Heat Treating, & Allied Activities
332900
Other Fabricated Metal Product Mfg

Machinery Manufacturing

333100
Agriculture, Construction, & Mining Machinery Mfg
333200
Industrial Machinery Mfg
333310
Commercial & Service Industry Machinery Mfg
333410
Ventilation, Heating, Air-Conditioning, & Commercial Refrigeration Equipment Mfg
333510
Metalworking Machinery Mfg
333610
Engine, Turbine, & Power Transmission Equipment Mfg
333900
Other General Purpose Machinery Mfg

Computer and Electronic Product Manufacturing

334110
Computer & Peripheral Equipment Mfg
334200
Communications Equipment Mfg
334310
Audio & Video Equipment Mfg
334410
Semiconductor & Other Electronic Component Mfg
334500
Navigational, Measuring, Electromedical, & Control Instruments Mfg
334610
Manufacturing & Reproducing Magnetic & Optical Media

Electrical Equipment, Appliance, and Component Manufacturing

335100
Electric Lighting Equipment Mfg
335200
Major Household Appliance Mfg
335310
Electrical Equipment Mfg
335900
Other Electrical Equipment & Component Mfg

Transportation Equipment Manufacturing

336100
Motor Vehicle Mfg
336210
Motor Vehicle Body & Trailer Mfg
336300
Motor Vehicle Parts Mfg
336410
Aerospace Product & Parts Mfg
336510
Railroad Rolling Stock Mfg
336610
Ship & Boat Building
336990
Other Transportation Equipment Mfg

Furniture and Related Product Manufacturing

337000
Furniture & Related Product Manufacturing

Miscellaneous Manufacturing

339110
Medical Equipment & Supplies Mfg
339900
Other Miscellaneous Manufacturing

Wholesale Trade

Merchant Wholesalers, Durable Goods

423100
Motor Vehicle & Motor Vehicle Parts & Supplies
423200
Furniture & Home Furnishings
423300
Lumber & Other Construction Materials
423400
Professional & Commercial Equipment & Supplies
423500
Metal & Mineral (except Petroleum)
423600
Household Appliances and Electrical and Electronic Goods
423700
Hardware, & Plumbing & Heating Equipment & Supplies
423800
Machinery, Equipment, & Supplies
423910
Sporting & Recreational Goods & Supplies
423920
Toy & Hobby Goods & Supplies
423930
Recyclable Materials
423940
Jewelry, Watch, Precious Stone, & Precious Metals
423990
Other Miscellaneous Durable Goods

Merchant Wholesalers, Nondurable Goods

424100
Paper & Paper Products
424210
Drugs & Druggists’ Sundries
424300
Apparel, Piece Goods, & Notions
424400
Grocery & Related Products
424500
Farm Product Raw Materials
424600
Chemical & Allied Products
424700
Petroleum & Petroleum Products
424800
Beer, Wine, & Distilled Alcoholic Beverages
424910
Farm Supplies
424920
Book, Periodical, & Newspapers
424930
Flower, Nursery Stock, & Florists’ Supplies
424940
Tobacco & Tobacco Products
424950
Paint, Varnish, & Supplies
424990
Other Miscellaneous Nondurable Goods

Wholesale Electronic Markets and Agents and Brokers

425110
Business to Business Electronic Markets
425120
Wholesale Trade Agents & Brokers

Retail Trade

Motor Vehicle and Parts Dealers

441110
New Car Dealers
441120
Used Car Dealers
441210
Recreational Vehicle Dealers
441222
Boat Dealers
441228
Motorcycle, ATV, and All Other Motor Vehicle Dealers
441300
Automotive Parts, Accessories, & Tire Stores

Furniture and Home Furnishings Stores

442110
Furniture Stores
442210
Floor Covering Stores
442291
Window Treatment Stores
442299
All Other Home Furnishings Stores

Electronics and Appliance Stores

443141
Household Appliance Stores
443142
Electronics Stores (including Audio, Video, Computer, and Camera Stores)

Building Material and Garden Equipment and Supplies Dealers

444110
Home Centers
444120
Paint & Wallpaper Stores
444130
Hardware Stores
444190
Other Building Material Dealers
444200
Lawn & Garden Equipment & Supplies Stores

Food and Beverage Stores

445110
Supermarkets and Other Grocery (except Convenience) Stores
445120
Convenience Stores
445210
Meat Markets
445220
Fish & Seafood Markets
445230
Fruit & Vegetable Markets
445291
Baked Goods Stores
445292
Confectionery & Nut Stores
445299
All Other Specialty Food Stores
445310
Beer, Wine, & Liquor Stores

Health and Personal Care Stores

446110
Pharmacies & Drug Stores
446120
Cosmetics, Beauty Supplies, & Perfume Stores
446130
Optical Goods Stores
446190
Other Health & Personal Care Stores

Gasoline Stations

447100
Gasoline Stations (including convenience stores with gas)

Clothing and Clothing Accessories Stores

448110
Men’s Clothing Stores
448120
Women’s Clothing Stores
448130
Children’s & Infants’ Clothing Stores
448140
Family Clothing Stores
448150
Clothing Accessories Stores
448190
Other Clothing Stores
448210
Shoe Stores
448310
Jewelry Stores
448320
Luggage & Leather Goods Stores

Sporting Goods, Hobby, Book, and Music Stores

451110
Sporting Goods Stores
451120
Hobby, Toy, & Game Stores
451130
Sewing, Needlework, & Piece Goods Stores
451140
Musical Instrument & Supplies Stores
451211
Book Stores
451212
News Dealers & Newsstands

General Merchandise Stores

452200
Department Stores
452300
General Merchandise Stores, incl. Warehouse Clubs and Supercenters

Miscellaneous Store Retailers

453110
Florists
453210
Office Supplies & Stationery Stores
453220
Gift, Novelty, & Souvenir Stores
453310
Used Merchandise Stores
453910
Pet & Pet Supplies Stores
453920
Art Dealers
453930
Manufactured (Mobile) Home Dealers
453990
All Other Miscellaneous Store Retailers (including tobacco, candle, & trophy shops)

Nonstore Retailers

454110
Electronic Shopping & Mail-Order Houses
454210
Vending Machine Operators
454310
Fuel Dealers (including Heating Oil and Liquefied Petroleum)
454390
Other Direct Selling Establishments (including door-to-door retailing, frozen food plan providers, party plan merchandisers, & coffee-break service providers)

Transportation and Warehousing

Air, Rail, and Water Transportation

481000
Air Transportation
482110
Rail Transportation
483000
Water Transportation

Truck Transportation

484110
General Freight Trucking, Local
484120
General Freight Trucking, Long-distance
484200
Specialized Freight Trucking

Transit and Ground Passenger Transportation

485110
Urban Transit Systems
485210
Interurban & Rural Bus Transportation
485310
Taxi Service
485320
Limousine Service
485410
School & Employee Bus Transportation
485510
Charter Bus Industry
485990
Other Transit & Ground Passenger Transportation

Pipeline Transportation

486000
Pipeline Transportation

Scenic & Sightseeing Transportation

487000
Scenic & Sightseeing Transportation

Support Activities for Transportation

488100
Support Activities for Air Transportation
488210
Support Activities for Rail Transportation
488300
Support Activities for Water Transportation
488410
Motor Vehicle Towing
488490
Other Support Activities for Road Transportation
488510
Freight Transportation Arrangement
488990
Other Support Activities for Transportation

Couriers and Messengers

492110
Couriers
492210
Local Messengers & Local Delivery

Warehousing and Storage

493100
Warehousing & Storage (except lessors of miniwarehouses & self- storage units)

Information

Publishing Industries (except Internet)

511110
Newspaper Publishers
511120
Periodical Publishers
511130
Book Publishers
511140
Directory & Mailing List Publishers
511190
Other Publishers
511210
Software Publishers

Motion Picture and Sound Recording Industries

512100
Motion Picture & Video Industries (except video rental)
512200
Sound Recording Industries

Broadcasting (except Internet)

515100
Radio & Television Broadcasting
515210
Cable & Other Subscription Programming

Telecommunications

517000
Telecommunications (including paging, cellular, satellite, cable & other program distribution, resellers, & other telecommunications & internet service providers)

Data Processing Services

518210
Data Processing, Hosting, & Related Services

Other Information Services

519100
Other Information Services (including news syndicates, libraries, internet publishing & broadcasting)

Finance and Insurance

Depository Credit Intermediation

522110
Commercial Banking
522120
Savings Institutions
522130
Credit Unions
522190
Other Depository Credit Intermediation

Nondepository Credit Intermediation

522210
Credit Card Issuing
522220
Sales Financing
522291
Consumer Lending
522292
Real Estate Credit (including mortgage bankers & originators)
522293
International Trade Financing
522294
Secondary Market Financing
522298
All Other Nondepository Credit Intermediation

Activities Related to Credit Intermediation

522300
Activities Related to Credit Intermediation (including loan brokers, check clearing, & money transmitting)

Securities, Commodity Contracts, and Other Financial Investments and Related Activities

523110
Investment Banking & Securities Dealing
523120
Securities Brokerage
523130
Commodity Contracts Dealing
523140
Commodity Contracts Brokerage
523210
Securities & Commodity Exchanges
523900
Other Financial Investment Activities (including portfolio management & investment advice)

Insurance Carriers and Related Activities

524140
Direct Life, Health, & Medical Insurance Carriers
524150
Direct Insurance (except Life, Health, & Medical) Carriers
524210
Insurance Agencies & Brokerages
524290
Other Insurance Related Activities (including third-party administration of insurance and pension funds)

Funds, Trusts, and Other Financial Vehicles

525100
Insurance & Employee Benefit Funds
525910
Open-End Investment Funds (Form 1120-RIC)
525920
Trusts, Estates, & Agency Accounts
525990
Other Financial Vehicles (including mortgage REITS & closed-end investment funds)

“Offices of Bank Holding Companies” and “Offices of Other Holding Companies” are located under Management of Companies (Holding Companies) on next page.

Real Estate and Rental and Leasing

Real Estate

531110
Lessors of Residential Buildings & Dwellings (including equity REITs)
531120
Lessors of Nonresidential Buildings (except Miniwarehouses) (including equity REITs)
531130
Lessors of Miniwarehouses & Self-Storage Units (including equity REITs)
531190
Lessors of Other Real Estate Property (including equity REITs)
531210
Offices of Real Estate Agents & Brokers
531310
Real Estate Property Managers
531320
Offices of Real Estate Appraisers
531390
Other Activities Related to Real Estate

Rental and Leasing Services

532100
Automotive Equipment Rental & Leasing
532210
Consumer Electronics & Appliances Rental
532281
Formal Wear & Costume Rental
532282
Video Tape & Disc Rental
532283
Home Health Equipment Rental
532284
Recreational Goods Rental
532289
All Other Consumer Goods Rental
532310
General Rental Centers
532400
Commercial & Industrial Machinery & Equipment Rental & Leasing

Lessors of Nonfinancial Intangible Assets (except copyrighted works)

533110
Lessors of Nonfinancial Intangible Assets (except copyrighted works)

Professional, Scientific, and Technical Services

Legal Services

541110
Offices of Lawyers
541190
Other Legal Services

Accounting, Tax Preparation, Bookkeeping, and Payroll Services

541211
Offices of Certified Public Accountants
541213
Tax Preparation Services
541214
Payroll Services
541219
Other Accounting Services

Architectural, Engineering, and Related Services

541310
Architectural Services
541320
Landscape Architecture Services
541330
Engineering Services
541340
Drafting Services
541350
Building Inspection Services
541360
Geophysical Surveying & Mapping Services
541370
Surveying & Mapping (except Geophysical) Services
541380
Testing Laboratories

Specialized Design Services

541400
Specialized Design Services (including interior, industrial, graphic, & fashion design)

Computer Systems Design and Related Services

541511
Custom Computer Programming Services
541512
Computer Systems Design Services
541513
Computer Facilities Management Services
541519
Other Computer Related Services

Other Professional, Scientific, and Technical Services

541600
Management, Scientific, & Technical Consulting Services
541700
Scientific Research & Development Services
541800
Advertising & Related Services
541910
Marketing Research & Public Opinion Polling
541920
Photographic Services
541930
Translation & Interpretation Services
541940
Veterinary Services
541990
All Other Professional, Scientific, & Technical Services

Management of Companies (Holding Companies)

551111
Offices of Bank Holding Companies
551112
Offices of Other Holding Companies

Administrative and Support and Waste Management and Remediation Services

Administrative and Support Services

561110
Office Administrative Services
561210
Facilities Support Services
561300
Employment Services
561410
Document Preparation Services
561420
Telephone Call Centers
561430
Business Service Centers (including private mail centers & copy shops)
561440
Collection Agencies
561450
Credit Bureaus
561490
Other Business Support Services (including repossession services, court reporting, & stenotype services)
561500
Travel Arrangement & Reservation Services
561600
Investigation & Security Services
561710
Exterminating & Pest Control Services
561720
Janitorial Services
561730
Landscaping Services
561740
Carpet & Upholstery Cleaning Services
561790
Other Services to Buildings & Dwellings
561900
Other Support Services (including packaging & labeling services, & convention & trade show organizers)

Waste Management and Remediation Services

562000
Waste Management & Remediation Services

Educational Services

611000
Educational Services (including schools, colleges, & universities)

Health Care and Social Assistance

Offices of Physicians and Dentists

621111
Offices of Physicians (except mental health specialists)
621112
Offices of Physicians, Mental Health Specialists
621210
Offices of Dentists

Offices of Other Health Practitioners

621310
Offices of Chiropractors
621320
Offices of Optometrists
621330
Offices of Mental Health Practitioners (except Physicians)
621340
Offices of Physical, Occupational & Speech Therapists, & Audiologists
621391
Offices of Podiatrists
621399
Offices of All Other Miscellaneous Health Practitioners

Outpatient Care Centers

621410
Family Planning Centers
621420
Outpatient Mental Health & Substance Abuse Centers
621491
HMO Medical Centers
621492
Kidney Dialysis Centers
621493
Freestanding Ambulatory Surgical & Emergency Centers
621498
All Other Outpatient Care Centers

Medical and Diagnostic Laboratories

621510
Medical & Diagnostic Laboratories

Home Health Care Services

621610
Home Health Care Services

Other Ambulatory Health Care Services

621900
Other Ambulatory Health Care Services (including ambulance services & blood & organ banks)

Hospitals

622000
Hospitals

Nursing and Residential Care Facilities

623000
Nursing & Residential Care Facilities

Social Assistance

624100
Individual & Family Services
624200
Community Food & Housing, & Emergency & Other Relief Services
624310
Vocational Rehabilitation Services
624410
Child Day Care Services

Arts, Entertainment, and Recreation

Performing Arts, Spectator Sports, and Related Industries

711100
Performing Arts Companies
711210
Spectator Sports (including sports clubs & racetracks)
711300
Promoters of Performing Arts, Sports, & Similar Events
711410
Agents & Managers for Artists, Athletes, Entertainers, & Other Public Figures
711510
Independent Artists, Writers, & Performers

Museums, Historical Sites, and Similar Institutions

712100
Museums, Historical Sites, & Similar Institutions

Amusement, Gambling, and Recreation Industries

713100
Amusement Parks & Arcades
713200
Gambling Industries
713900
Other Amusement & Recreation Industries (including golf courses, skiing facilities, marinas, fitness centers, & bowling centers)

Accommodation and Food Services

Accommodation

721110
Hotels (except Casino Hotels) & Motels
721120
Casino Hotels
721191
Bed & Breakfast Inns
721199
All Other Traveler Accommodation
721210
RV (Recreational Vehicle) Parks & Recreational Camps
721310
Rooming & Boarding Houses Dormitories, & Workers’ Camps

Food Services and Drinking Places

722300
Special Food Services (including food service contractors & caterers)
722410
Drinking Places (Alcoholic Beverages)
722511
Full Service Restaurants
722513
Limited Service Restaurants
722514
Cafeterias and Buffets
722515
Snack and Non-alcoholic Beverage Bars

Other Services

Repair and Maintenance

811110
Automotive Mechanical & Electrical Repair & Maintenance
811120
Automotive Body, Paint, Interior, & Glass Repair
811190
Other Automotive Repair & Maintenance (including oil change & lubrication shops & car washes)
811210
Electronic & Precision Equipment Repair & Maintenance
811310
Commercial & Industrial Machinery & Equipment (except Automotive & Electronic) Repair & Maintenance
811410
Home & Garden Equipment & Appliance Repair & Maintenance
811420
Reupholstery & Furniture Repair
811430
Footwear & Leather Goods Repair
811490
Other Personal & Household Goods Repair & Maintenance

Personal and Laundry Services

812111
Barber Shops
812112
Beauty Salons
812113
Nail Salons
812190
Other Personal Care Services (including diet & weight reducing centers)
812210
Funeral Homes & Funeral Services
812220
Cemeteries & Crematories
812310
Coin-Operated Laundries & Drycleaners
812320
Drycleaning & Laundry Services (except Coin-Operated)
812330
Linen & Uniform Supply
812910
Pet Care (except Veterinary) Services
812920
Photofinishing
812930
Parking Lots & Garages
812990
All Other Personal Services

Religious, Grantmaking, Civic, Professional, and Similar Organizations

813000
Religious, Grantmaking, Civic, Professional, & Similar Organizations (including condominium and homeowners associations)

How to Get California Tax Information

(Keep This Page For Future Use)

Your Rights as a Taxpayer

Our goal at the FTB is to make certain that your rights are protected so that you will have the highest confidence in the integrity, efficiency, and fairness of our state tax system. FTB 4058, California Taxpayers’ Bill of Rights, includes information on your rights as a California taxpayer, the Taxpayers’ Rights Advocate Program, and how you can request written advice from the FTB on whether a particular transaction is taxable. See “Where to Get Tax Forms and Publications” below.

Where to Get Tax Forms and Publications

By Internet

You can download, view, and print California tax forms and publications at ftb.ca.gov/forms.

Access other state agencies’ websites at ca.gov.

By phone

To order current year California tax forms and publications, call our automated phone service. Refer to the list in your tax booklet and find the code for the form you want to order. Call 800.338.0505 and follow the recorded instructions.

Allow two weeks to receive your order. If you live outside California, allow three weeks to receive your order.

In person

Many post offices and libraries provide free California personal income tax booklets during the filing season.

Employees at libraries, post offices, and quick print businesses cannot provide tax information or assistance.

By mail

Write to:

TAX FORMS REQUEST UNIT
FRANCHISE TAX BOARD
PO BOX 307
RANCHO CORDOVA CA 95741-0307

Letters

If you write to us, be sure your letter includes your federal employer identification number (FEIN), California Secretary of State (SOS) file number, California corporation number, social security number (SSN) or individual taxpayer identification number (ITIN), your daytime and evening telephone numbers, and a copy of the notice (if applicable). Send your letter to:

CORRESPONDENCE, ANALYSIS, SUPPORT
AND EDUCATION SECTION MS F-283
FRANCHISE TAX BOARD
PO BOX 1468
SACRAMENTO CA 95812-1468

We will respond to your letter within ten weeks. In some cases, we may need to call you for additional information.

Do not attach correspondence to your tax return unless the correspondence relates to an item on your tax return.

Internet and Telephone Assistance

Telephone assistance is available year-round from 7 a.m. until 5 p.m. Monday through Friday, except holidays. Hours subject to change.

Website:
ftb.ca.gov
Telephone:
800.852.5711 from within the United States
916.845.6500 from outside the United States
TTY/TDD:
800.822.6268 for persons with hearing or speech disability
711 or 800.735.2929 California relay service

Asistencia Por Internet y Teléfono

Asistencia telefónica está disponible durante todo el año desde las 7 a.m. hasta las 5 p.m. de lunes a viernes, excepto días feriados. Las horas están sujetas a cambios.

Sitio web:
ftb.ca.gov
Teléfono:
800.852.5711 dentro de los Estados Unidos
916.845.6500 fuera de los Estados Unidos
TTY/TDD:
800.822.6268 para personas con discapacidades auditivas o del habla
711 ó 800.735.2929 servicio de relevo de California

MEA Contact Information

For business eligibility or zone related information, including questions regarding MEA geographic boundaries and vouchering, contact the the HCD or the local zone program manager in which the business is located. Go to hcd.ca.gov and search for directory of zone contacts to find Directory of Economic Development Areas.

For information that is zone-specific but not tax-specific, contact the HCD at:

DEPARTMENT OF HOUSING &
COMMUNITY DEVELOPMENT
DIVISION OF FINANCIAL ASSISTANCE
ENTERPRISE ZONE PROGRAMS
2020 WEST EL CAMINO AVENUE,
SUITE 650
SACRAMENTO, CA 95833

Mailing address

PO BOX 952054
SACRAMENTO CA 94252-2054

Website: hcd.ca.gov
Telephone: 916.274.0575
Fax: 916.263.2764

or for tax-specific information contact:

FRANCHISE TAX BOARD
Website: ftb.ca.gov
Telephone: 916.845.3464