2025 Instructions for Form FTB 3541 California Motion Picture and Television Production Credit

What’s New

Program 4.0 California Motion Picture and Television Production Credit – For taxable years beginning on or after January 1, 2025, California Revenue and Taxation Code (R&TC) Sections 17053.98.1 and 23698.1 allow a new motion picture credit, program 4.0, against tax. This credit is certified and allocated by the California Film Commission (CFC).

This credit can reduce tax below tentative minimum tax (TMT) for individuals and corporations.

In addition, R&TC Sections 17053.98.1 and 23698.1 allow a qualified taxpayer to make a one-time irrevocable election to receive a limited refundable tax credit for program 4.0 credit that exceeds the qualified taxpayer’s tax liability for the taxable year.

The election must be made on FTB 3541, California Motion Picture and Television Production Credit, in the first taxable year the certificate is issued and attached on a timely filed, original income tax return. Taxpayers who purchase a credit attributable to an independent film are not permitted to elect a refund.

For more information, go to the CFC website at film.ca.gov.

Important Information

California law allows the following film credits, as certified and allocated by the CFC to qualified taxpayers who have been issued a tax credit certificate by the CFC.

Original California Motion Picture and Television Production Credit – For taxable years beginning on or after January 1, 2011, R&TC Sections 17053.85 and 23685 allow a qualified taxpayer a California Motion Picture and Television Production Credit against tax.

New California Motion Picture and Television Production Credit – For taxable years beginning on or after January 1, 2016, R&TC Sections 17053.95 and 23695 allow a second film credit, the New California Motion Picture and Television Production Credit against tax.

Program 3.0 California Motion Picture and Television Production Credit – For taxable years beginning on or after January 1, 2020, R&TC Sections 17053.98 and 23698 allow a third film credit, the Program 3.0 California Motion Picture and Television Production Credit, against tax.

Soundstage Filming Tax Credit – For taxable years beginning on or after January 1, 2022, R&TC Sections 17053.98(k) and 23698(k), allow the Soundstage Filming Tax Credit, against tax.

In most cases, a qualified motion picture shall not be eligible to receive a credit allocation for the Soundstage Filming Tax Credit if it receives a credit allocation for the Program 3.0 California Motion Picture and Television Production Credit in the same fiscal year. For more information, go to ftb.ca.gov and search for motion picture, or go to the CFC website at film.ca.gov and search for tax credit.

Credit Limitation – For taxable years beginning on or after January 1, 2024, and before January 1, 2027, there is a $5,000,000 limitation on the application of business credits. The total of all business credits including the carryover of any credit for the taxable year may not reduce the "net tax", for personal income tax filers, or the “tax”, for corporate filers, by more than $5,000,000. Business credits should be applied against "net tax" before other credits. For taxpayers included in a combined report, the limitation is applied at the group level.

For each taxable year of the limitation, taxpayers may make an irrevocable election to receive an annual refundable credit amount for the credits disallowed due to the limitation. Taxpayers may claim 20% of this refundable credit in each year of a five-year refundable period. The refundable period for this election begins the third taxable year after the taxable year in which the election is made. To make this irrevocable election, complete form FTB 3870, Election for Refundable Credit, and submit it with an original, timely filed return.

S corporations may not elect to make credits taken at the entity level refundable.

If a taxpayer does not choose to make the election outlined above, business credits disallowed due to the limitation may be carried over. The carryover period for disallowed credit is extended by the number of taxable years the credit was not allowed. For more information, refer to R&TC Sections 17039.4, 17039.5, 23036.4 and 23036.5 and get form FTB 3870.

Sales and Use Taxes – A qualified taxpayer who has been issued a CFC Tax Credit Certificate may make an irrevocable election with the California Department of Tax and Fee Administration (CDTFA) to apply the credit against qualified sales and use taxes.

For taxable years beginning on or after January 1, 2024, and before January 1, 2027, a taxpayer who has made an irrevocable election with the CDTFA to apply a qualified motion picture tax credit against qualified sales and use taxes shall not receive refunds or credit offsets in excess of $5,000,000, for any taxable year. A taxpayer may use the credit amount, or assigned portion, that exceeds the $5,000,000 limitation against the qualified sales and use tax imposed during the reporting periods in the five years following, including the reporting period beginning on and after January 1, 2027. This limitation does not apply to irrevocable elections made prior to January 1, 2024. For more information, go to cdtfa.ca.gov and search for ca film.

Write “CFC Credit” – Taxpayers attaching form FTB 3541 to the tax return should write "CFC Credit" in black or blue ink at the top margin of their tax return.

Claiming More Than One Credit – If you claim more than one motion picture and television production credit in the same year, you must complete a separate form FTB 3541 for each credit. If you have multiple certificates for the same credit, complete a separate form FTB 3541 for each certificate number.

Use of Credit – The credit can be used by the qualified taxpayer to:

Offset franchise or income tax liability. When you claim the credit, use:
- Original, credit code 223
- New, credit code 237
- Program 3.0, credit code 239
- Soundstage Filming, credit code 245
- Program 4.0, credit code 248
Sell to an unrelated party (independent films only).
Assign to an affiliated corporation.
Apply against qualified sales and use taxes.

These credits are not refundable.

Program 4.0 credit that exceeds tax can be elected to be refundable. This refundable credit does not have a credit code. Go to Part IV for more information.

Sale of Credit Attributable to an Independent Film – A qualified taxpayer may sell a credit, attributable to an independent film, to an unrelated party once the taxpayer receives the California Film and Television Tax Credit Program Tax Credit Certificate (hereafter, CFC Tax Credit Certificate or credit certificate). The credit can only be sold by the qualified taxpayer that generated the credit (that is a corporation, a limited liability company (LLC) classified as a corporation, or an individual) or by a shareholder, beneficiary, partner, or member who received the credit as their distributive or pro-rata share.

Seller – A qualified taxpayer that sells an independent film credit is required to report the gain on the sale of the credit in the amount of the sale price.

Buyer – If the credit was purchased for less than the credit amount stated on the CFC Tax Credit Certificate, the buyer is required to report income in the amount of the difference between the credit amount claimed on its return and the purchase price.

For more information, get form FTB 3551, Sale of Credit Attributable to an Independent Film, or go to ftb.ca.gov and search for motion picture.

General Information

A. Purpose

Use form FTB 3541 to report the credit for the production of a qualified motion picture in California that was:

Allocated on the CFC Tax Credit Certificate.
Passed through from S corporations, estates, trusts, partnerships, or LLCs taxed as partnerships.
Purchased from a qualified taxpayer.
Assigned to or from an affiliated corporation under R&TC Section 23685(c)(1), Section 23695(c)(1), Section 23698(c)(1), or Section 23698.1(c)(1). For more information, see General Information B, Assignment of Credits.
Applied or will be applied against CDTFA qualified sales and use taxes. For more information, go to cdtfa.ca.gov and search for ca film.

Note: Each entity that received or assigned a motion picture and television production credit from or to another affiliated corporation pursuant to the film credit assignment provisions, must complete a separate form FTB 3541. See Section B, Assignment of Credits, for more information.

S corporations, estates, trusts, partnerships, or LLCs taxed as partnerships should complete form FTB 3541 to figure the amount of credit to pass through to shareholders, beneficiaries, partners, or members. The credit is not allowed at the pass-through entity level for the original, new, program 3.0 and program 4.0 credit. The credit is allowed at the pass-through entity level for the soundstage filming credit.

Attach this form to Form 100S, California S Corporation Franchise or Income Tax Return; Form 541, California Fiduciary Income Tax Return; Form 565, Partnership Return of Income; or Form 568, Limited Liability Company Return of Income. Show the pass-through credit for each shareholder, beneficiary, partner, or member on Schedules K-1 (100S, 541, 565, or 568), Share of Income, Deductions, Credits, etc.

Corporate taxpayers attach this form to Form 100, California Corporation Franchise or Income Tax Return, or Form 100W, California Corporation Franchise or Income Tax Return – Water’s Edge Filers.

Individual taxpayers attach this form to Form 540, California Resident Income Tax Return, or Form 540NR, California Nonresident or Part-Year Resident Income Tax Return.

B. Assignment of Credits

The original, new, program 3.0, soundstage filming and program 4.0 credit may be assigned to an eligible assignee.

For the original and new credit, the credit must first exceed the tax liability before the qualified taxpayer (the assignor) may assign any portion of the credit under R&TC Section 23685(c)(1) or R&TC Section 23695(c)(1), unless certain conditions under R&TC Section 23696 are met.

For the program 3.0, soundstage filming, and program 4.0 credit, any portion of the credit may be assigned to one or more affiliated corporations for each taxable year in which the credit is allowed. Refer to R&TC Sections 23698(c)(1) and 23698.1(c)(1).

Program 4.0 credit that exceeds tax and is elected to be refundable cannot be assigned.

The election to assign any credit is irrevocable. The assignor shall make the election and report the credit assignment by completing Part III, Credit Assigned to Affiliated Corporations Pursuant to the Film Credit Assignment Provisions. Once a credit is assigned to an eligible assignee, it cannot be reassigned. The assignor will reduce the credit amount available for assignment by the amount of the credit assigned.

After assignment of an eligible credit, the eligible assignee may use the credit against income tax liability, or apply it against CDTFA qualified sales and use taxes. Also, the restrictions and limitations that apply to the assignor (entity that originally generated the credit) may apply to the eligible assignee.

There is no requirement of payment or other consideration for assignment of the credit by an eligible assignee to an assignor.

The assignor and the eligible assignee shall maintain the information necessary to substantiate any credit assigned and to verify the assignment and subsequent use of the credit assigned. Lack of substantiation may result in the disallowance of the assignment. The assignor and the eligible assignee shall each be liable for the full amount of any tax, addition to tax, or penalty that results from any disallowance of the credit assigned under R&TC Section 23685, Section 23695, Section 23698, or Section 23698.1. The Franchise Tax Board (FTB) may collect such amount in full from either the assignor or the eligible assignee.

An assignor is the qualified taxpayer that receives the CFC Tax Credit Certificate. The following rules must be met before credit can be assigned:

The assignor must be taxed as a corporation or a single member limited liability company (SMLLC) that is disregarded for tax purposes.
The eligible assignee must be an affiliated corporation. An eligible assignee is any affiliated corporation as defined by R&TC Section 23685(c)(1), Section 23695(c)(1), Section 23698(c)(1) or Section 23698.1(c)(1).

Credit Assigned under R&TC Section 23663. The original, new, program 3.0, soundstage filming and program 4.0 credit may also be assigned under the credit assignment rules of R&TC Section 23663. Any portion that is assigned under R&TC Section 23663 may not subsequently be assigned under the original, new, program 3.0, soundstage filming, or program 4.0 credit assignment provision.

Conversely, any portion of the credit assigned under the original, new, program 3.0, soundstage filming, or program 4.0 credit assignment provisions may not be subsequently assigned under R&TC 23663.

For more information on credit assignment under R&TC Section 23663, get form FTB 3544, Assignment of Credit.

C. Limitations

For taxable years beginning on or after January 1, 2024, and before January 1, 2027, there is a $5,000,000 limitation on the application of business credits, including carryover. For taxpayers included in a combined report, the limitation is applied at the group level.

The credit cannot reduce the minimum franchise tax (corporations and S corporations), the annual tax (limited partnerships, limited liability partnerships, and LLCs taxed as partnerships), the alternative minimum tax (corporations, exempt organizations, individuals, and fiduciaries), the built-in gains tax (S corporations), or the excess net passive income tax (S corporations).

The original, new, program 3.0, soundstage filming, and program 4.0 credits can reduce the tax below the TMT for corporations.

For individual taxpayers, the original and new credit cannot reduce regular tax below TMT. The program 3.0, soundstage filming, and program 4.0 credit can reduce the tax below the TMT. For more information, get Schedule P (100, 100W, 540, 540NR, or 541), Alternative Minimum Tax and Credit Limitations.

S corporation. The original, new, program 3.0, and program 4.0 credit cannot reduce the S corporation 1.5% entity level tax (3.5% for financial S corporations). If a C corporation has unused credit carryovers when it elects S corporation status, the credit carryovers may not be passed through to the S corporation or the shareholders.

For the soundstage filming credit, S corporations may claim only 1/3 of the credit against the 1.5% entity-level tax (3.5% for financial S corporations). The remaining 2/3 must be disregarded and may not be used as carryover. S corporations may pass through 100% of the credit to their shareholders.

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.

Disregarded business entity. If a taxpayer directly or indirectly owns an interest in a disregarded business entity, the credit amount received from the disregarded entity is limited to the difference between the taxpayer's regular tax figured with the income of the disregarded entity, and the taxpayer's regular tax figured without the income of the disregarded entity. See R&TC Section 17039(g) and Section 23036(i).

However, if the credit is sold or assigned under the program 3.0, soundstage filming, or program 4.0, this restriction does not apply.

D. Carryover

If the available credit exceeds the current year tax liability or is limited by TMT, the unused credit may be carried over for six years for the original credit, and nine years for the new, program 3.0, soundstage filming, and program 4.0 credit, or until the credit is exhausted, whichever occurs first. Apply the credit carryover to the earliest taxable year. In no event can the credit be carried back and applied against a prior year’s tax.

Retain all records that document the credit and carryover used in prior years. The FTB may require access to these records.

Specific Line Instructions

Report each certificate on a separate form FTB 3541.

Name(s) as shown on your California tax return. Enter the name of the individual or business and the social security number (SSN), California corporation number, federal employer identification number (FEIN), or the California Secretary of State (SOS) file number as shown on your tax return. If you are a business filing a combined report enter the name of the key corporation. Get FTB Pub. 1061, Guidelines for Corporations Filing a Combined Report, for information regarding key corporations.

Owner of credit. Complete the owner of credit section with the information provided on the credit certificate issued by the CFC. If the name shown on the California return is the same as the owner of the credit, enter “Same.”

Part I – Available Credit

Item B – Credit certificate number. Provide the tax credit certificate number for the current year generated credit allocated to you from the CFC, passed through to you from a pass-through entity, purchased from a qualified taxpayer, assigned to you from an affiliated corporation, or applied against CDTFA sales and use taxes.

Item C – Copyright registration number. Provide the copyright registration number issued under the authority of Section 410 of Title 17 of the United States Code. Failure to provide the copyright registration number may result in the disallowance, assessment, and collection of the credit.

Line 1 – Current year generated credit. Enter the full amount of credit allocated to you as shown on the CFC Tax Credit Certificate. If you received the credit from a pass–through entity, purchased the credit from a qualified taxpayer, or received the credit through an assignment from another corporation pursuant to R&TC Section 23685, Section 23695, Section 23698, or Section 23698.1 do not enter the amounts on this line. Instead, enter these amounts on line 2, line 3, or line 4a, respectively.

Line 2 – Credit received from pass–through entities. Enter the pass-through credit amount received from S corporations, estates, trusts, partnerships, or LLCs taxed as a partnership.

Line 3 – Credit purchased from other entities. Enter the amount of credit purchased from a qualified taxpayer. Do not enter the consideration amount paid for the credit.

Line 4a – Credit received from affiliated corporations. If you received an assigned credit from an affiliated corporation pursuant to R&TC Section 23685, Section 23695, Section 23698 or Section 23698.1, enter the amount that was assigned to you.

Line 4b – Assignor name. Enter the name of the corporation that assigned the credit.

Line 4c – Assignor CA corporation no., FEIN, or CA SOS no. Enter the California corporation number, FEIN, or California SOS number of the corporation that assigned the credit.

Line 5b – Assignable credit carryover from prior year. Complete this line only if you are an entity with affiliates that qualify to receive assignments per the specifications under R&TC Sections 23685, 23695, 23698, and 23698.1. This is the assignable portion of line 5a, Credit carryover from prior year. Enter the prior year credit allocated to you by the CFC plus the credit you received from pass-through entities, less any credit amounts in prior years that were:

Used to reduce your franchise or income tax liability
Assigned to affiliated corporations
Sold to unrelated parties (if the credit was attributable to an independent film)
Applied against sales and use tax

Do not include any prior year credit amounts that you purchased or were assigned to you by an affiliated corporation.

Line 6 – Credit sold to other entities. Enter the amount of credit sold to an unrelated party from form FTB 3551, Part III, box 7, Total amount of credit being sold.

Line 7 – Credit assigned to affiliated corporations. If you assigned a credit to an affiliated corporation pursuant to R&TC Section 23685, Section 23695, Section 23698, or Section 23698.1, complete Part III. Enter the amount from Part III, line 19(c), on this line. See R&TC Section 23696 if a disregarded SMLLC is assigning the credit.

Line 8 – Credit passed through on Schedule K-1. Enter the amount of credit passed through to shareholders, partners, or members on Schedule K-1, on this line. See Section C, Limitations, for more information.

Line 9 – Credit applied against sales and use taxes. If you applied any portion of the credit against qualified sales and use taxes, enter the amount on this line.

Part II – Carryover Computation

Line 12a – Credit claimed. Do not include assigned credits claimed on form FTB 3544, Part B, List of Assigned Credit Received and/or Claimed by Assignee.

This amount may be less than the amount on line 11 if your credit is limited by your tax liability or the $5,000,000 credit limitation. For more information, see General Information C, Limitations, and refer to the credit instructions in your tax booklet. When you claim the credit, use:

Original, credit code 223
New, credit code 237
Program 3.0, credit code 239
Soundstage Filming, credit code 245
Program 4.0, credit code 248

Note: If you have multiple credit certificates, and therefore more than one form FTB 3541 for the same type of film credit, in a taxable year, enter the sum of this line for all forms FTB 3541 on your current year tax return using the appropriate credit code.

Do not include any refundable program 4.0 credit on this line.

Line 12b – Total credit assigned. Corporations that assign credit to other corporations within the same combined reporting group under R&TC Section 23663 must complete form FTB 3544, Part A, Election to Assign Credit Within Combined Reporting Group. Enter the total amount of credit assigned from form FTB 3544, Part A, column (g) on this line.

Line 12c – Credit amount to be elected as refundable in future years. You may elect to make credits that are disallowed due to the $5,000,000 credit limitation refundable in future years. If you make this election on form FTB 3870, enter the amount of credit that would have otherwise been available to reduce tax in this tax year but for the $5,000,000 credit limitation. Do not include credit limited by your tax.

You may not elect to have a partial amount of your disallowed credit be refundable. If you elect to make the amount of this credit that is disallowed due to the $5,000,000 credit limitation refundable, you must make the same election for all other credits you claimed this year that were also disallowed due to the $5,000,000 credit limitation. If you enter a value on this line, you must also enter the same amount on form FTB 3870 line 1, column (c). Attach your completed form FTB 3870 to your original, timely filed tax return.

Line 12d – Total refundable program 4.0 credit. If you are making the irrevocable election to make your program 4.0 credit that exceeds tax refundable, enter the total amount available to be elected on this line. Enter amount from Part IV, line 22.

Line 13 – Credit carryover available for future years. Do not include any amount you will be electing as a refundable credit on form FTB 3870 or amounts included in Part IV.

Credit limited by your tax liability cannot be included in an election for refundable credit, on form FTB 3870. These amounts would not have otherwise been able to be claimed, regardless of the $5,000,000 credit limitation and therefore are not eligible for an election to be made refundable. They can, however, be carried over for future years. Include any such amounts here.

Part III – Credit Assigned to Affiliated Corporations Pursuant to the Film Credit Assignment Provisions.

Complete Part III, if you will assign credits to affiliated corporations pursuant to R&TC Section 23685, Section 23695, Section 23698 or Section 23698.1. See Section B for more information. If you are not a corporation, skip Part III.

Line 15 – Tax. Enter the amount from Form 100, or Form 100W, line 23. If you are claiming program 3.0, soundstage filming, or program 4.0 credit, enter -0-.

Line 16 – Credit available for assigning to affiliated corporations. Subtract line 15 from line 14. If the result is:

'0' or less, enter '0'. Stop. You do not have enough credit to assign.
More than zero, this is the maximum amount of credit that may be assigned to affiliated corporations.

Complete lines 17, 18 and 19, if you have a balance on line 16 and elect to assign credits to affiliated corporations.

Line 17, column (d) – Credit available for assignment. Enter the amount of credit, from line 16.

Line 18, column (a) – Assignee name. Enter the name of the corporation that is receiving a credit assignment from the assignor.

Line 18, column (b) – Assignee CA corp. no., FEIN, or CA SOS no. Enter the California corporation number, FEIN, or California SOS number of the corporation that is receiving the credit assignment. If the corporation has applied for but not yet received the California corporation number or FEIN, enter "Applied For" in column (b). If the corporation is a non-U.S. foreign corporation, enter "Foreign" in column (b).

Line 18, column (c) – Amount of credit assigned. Enter the amount of credit that is being assigned to an assignee.

Line 18, column (d) – Credit available for assignment. Subtract the amount in column (c) from the amount in previous line column (d).

Part IV – Program 4.0 Refundable Credit Election

Refundable Credit Election Definitions

Credit amount. Credit amount means the amount specified in the credit certificate issue to the qualified taxpayer by the CFC.

In the case of a pass-through entity, "credit amount" is the pro-rata share, or distributive share of the credit passed through to the partner or shareholder of the qualified taxpayer.

In the case of an assigned credit, the "credit amount" is the amount that was assigned to the taxpayer.

Total refundable amount. Total refundable amount is 90% of the credit amount that exceeds the "tax" in the first taxable year of the refundable period.

Annual refundable amount. Annual refundable amount is 20% of the total of the refundable amount.

Refundable period. Refundable period is the first taxable year that the credit certificate is issued to the qualified taxpayer by the CFC and the succeeding four taxable years.

Complete Part IV to make the one-time irrevocable election for the program 4.0 refundable credit.

Line 21 – California income tax liability for the purpose of the program 4.0 refundable credit calculation. Subtract any non-refundable credits (except program 4.0) from your current year tax liability. Refer to R&TC Sections 17039 and 23036 for order of credits. Add the result to any amounts entered in Part I, line 10 and Part II, line 12b and enter the sum here.

Line 24 – Annual refundable amount. This is your annual refundable amount available. It is available in each year of your five-year refundable period which includes taxable years 2025 through 2029.

Line 25 – Refundable program 4.0 credits claimed in 2025. Enter the refundable program 4.0 credit you are claiming this tax year, here and on your applicable tax return. The amount on this line may be less than the amount on line 24, if your total business credit exceeds $5,000,000. The refundable program 4.0 annual refundable amount is subject to the current $5,000,000 credit limitation for taxable years beginning on or after January 1, 2024, and before January 1, 2027.

Note: If you have multiple program 4.0 credits, and made the election for refund on more than one FTB 3541, add the amounts of line 25 for all forms and report the sum on the applicable line of your tax return.

Line 26 – Refundable credit carryover. Refundable program 4.0 credit that was limited by the $5,000,000 credit limitation in taxable year 2025 can be carried over. This refundable credit carryover amount can be claimed in taxable year 2027.

Franchise Tax Board Privacy Notice on Collection

Our privacy notice can be found in annual tax booklets or online. Go to ftb.ca.gov/privacy to learn about our privacy policy statement, or go to ftb.ca.gov/forms and search for 1131 to locate FTB 1131 EN-SP, Franchise Tax Board Privacy Notice on Collection – Aviso de Privacidad del Franchise Tax Board sobre la Recaudación. To request this notice by mail, call 800-338-0505 and enter form code 948 when instructed.