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Frequently Asked Questions - California Motion Picture and Television Production Credit

For questions or comments about these FAQs, contact Kristen Magers at:

General questions

  1. Who is a "qualified taxpayer" for the purposes of this credit?
  2. How does a taxpayer apply for the credit?
  3. When may a qualified taxpayer or affiliate first claim this credit?

Questions regarding sale and assignment of this credit

  1. What are the prerequisite conditions for assigning this credit?
  2. To whom may a credit be assigned?
  3. To whom may an independent film credit be sold?
  4. What are the procedural requirements for making or changing a credit assignment?
  5. When may an election to assign this credit be made?
  6. Can a qualified taxpayer that is an LLC elect to assign the credit?
  7. Can a member of a partnership or an LLC taxed as a partnership, who received a portion of a credit as a pass-through item, assign its portion of the credit?
  8. Under what circumstances may the credit be sold?
  9. If an assigned Motion Picture Credit is claimed by both the assignor and the assignee, to which party will you allow the credit?
  10. What should a taxpayer do if they discover they have made an invalid election to assign the credit?
  11. If a taxpayer has a credit carryover from the taxable year in which the credit was allowed, may the taxpayer assign all or some portion of the carryover credit in year two even if the remaining amount of credit does not exceed the assignor's year two tax liability?
  12. If a taxpayer assigns the credit to an assignee who meets all of the assignee requirements in the taxable year that the assignment was made, but the assigned credit is not fully used by the assignee in that taxable year due to it exceeding the assignee's tax liability for the year of the assignment, may the assignee take the remainder of the credit in a subsequent taxable year?
  13. If a film credit is earned by an entity that is treated as disregarded for tax purposes, will the disregarded entity limitation found in subdivision (i) of R&TC section 23036 apply to the use of the credit by the owner of the disregarded entity?
  14. If an independent film credit earned by an entity that is treated as disregarded for tax purposes is sold pursuant to subdivision (c)(3)(A) of R&TC section 23685, will the disregarded entity limitation found in subdivision (i) of R&TC section 23036 apply to the buyer's use of the credit?
  15. If a film credit earned by an entity that is treated as disregarded for tax purposes is assigned under subdivision (c)(1) of R&TC section 23685, will the disregarded entity limitation found in subdivision (i) of R&TC section 23036 apply to the assignee?
  16. If a film credit earned by an entity that is treated as disregarded for tax purposes is assigned under the unitary affiliate assignment rules of R&TC section 23663, will the disregarded entity limitation found in subdivision (i) of R&TC section 23036 apply to the assignee?
  17. How do I claim this credit if my Corporation files a short period return?
  18. Can a film credit be assigned under R&TC Section 23663 and then subsequently assigned under R&TC Section 23685 (c) or vice versa?

Back to California Motion Picture and Television Production Credit


General questions

  1. Who is a "qualified taxpayer" for the purposes of this credit?

    A qualified taxpayer is a taxpayer who has paid or incurred qualified expenditures and has been issued a credit certificate by CFC.

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  2. How does a taxpayer apply for the credit?

    The qualified taxpayer would apply directly to CFC for an allocation and credit certificate. CFC developed program guidelines and application procedures to allocate the tax credits to qualified taxpayers. Applications became available on June 1, 2009, and CFC began accepting applications on July 1, 2009, on a first come, first served basis. They will continue accepting applications as long as funds are available within each fiscal year.

    How to contact CFC:

    • Phone: 323.860.2960 extension 110
    • Website: www.film.ca.gov/Incentives.htm
    • Mail:

      California Film Commission
      7080 Hollywood Blvd., Suite 900
      Hollywood, CA 90028
      Attn: California Film & Television Tax Credit Program

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  3. When may a qualified taxpayer or affiliate first claim this credit?

    This nonrefundable credit may not be claimed until it is certain that there is a tax liability against which to claim the credit. Therefore, the first time the credit can be claimed is when the liability is assessed against the taxpayer who earned the credit. For example, the credit can be claimed when the tax return is filed or the tax liability is assessed in some other manner.

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Questions regarding sale and assignment of the credit

  1. What are the prerequisite conditions for assigning this credit?

    All of the following prerequisites must be met before a credit may be assigned:

    • The assignor must be taxed as a corporation.
    • The credit must first exceed the "tax" of the assignor for the taxable year in which the credit is to be assigned.
    • The assignee must be an affiliated corporation as defined by R&TC Section 23685(c)(1).

    This credit may also be assigned under the credit assignment rules applicable to unitary affiliates. Refer to FAQs - Credit Assignment, Revenue and Taxation Code Section 23663.

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  2. To whom may a credit be assigned?

    A qualified taxpayer may elect to assign a credit to an affiliated corporation, which includes a corporation:

    • That owns, directly or indirectly, 100 percent of the assignor's voting common stock, or
    • In which the assignor owns, directly or indirectly, 100 percent of the voting common stock, or
    • That is wholly owned by a corporation or individual owning 100 percent of the voting common stock of the assignor, or
    • That is a stapled entity as defined in R&TC Section 25105.

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  3. To whom may an independent film credit be sold?

    An independent film credit may be sold to any unrelated party. For this purpose, a related party is a party that would be treated as a related party under Internal Revenue Code sections 267, 318, or 707.

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  4. What are the procedural requirements for making or changing a credit assignment?

    The proper procedure for implementing the assignments and revocation of assignments will be contained in the instructions on the forms for the corresponding sections. Form 3551, Sale of Credit Attributable to an Independent Film, is available and can be used on or after January 1, 2011.

    The forms for claiming the California Film and Television Tax Credit and assigning/revoking the credits will be available December 15, 2011. The form for assignment of credits will be similar to the general credit assignment on FTB 3544, Election to Assign Credit Within Combined Reporting Group.

    Refer to FAQs - Credit Assignment, Revenue and Taxation Code Section 23663 for preliminary guidance.

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  5. When may an election to assign this credit be made?

    The election to assign a credit and the actual assignment of the credit are two distinct events. An election to assign the credit may be made any time after the credit certificate is issued by CFC. However a credit may not be actually assigned until it is certain there is some portion of the credit in excess of the assignor's tax liability. As such, the first time the credit can be actually assigned is when the liability is assessed against the assignor, i.e., when the tax return is filed or the tax liability is assessed in some other manner. If a credit or portion thereof is assigned to an affiliate prior to the assessment of the assignor's tax liability, and the assignor's tax liability requires the assignor to use a portion or all of the credit assigned against its own tax liability, FTB may disallow the assignee or the assignor from taking the credit under R&TC Section 23685(c)(8).

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  6. Can a qualified taxpayer that is an LLC elect to assign the credit?

    Yes, if the LLC is being taxed as a corporation rather than a partnership under California tax law.

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  7. Can a member of a partnership or an LLC taxed as a partnership, who received a portion of a credit as a pass-through item, assign its portion of the credit?

    Yes, if the member of the partnership or the LLC is a corporation, the credit may be assigned by the corporate member. However, if the member is an individual, the assignment of the credit by that member is not permitted under the statute.

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  8. Under what circumstances may the credit be sold?

    The credit may only be sold to an unrelated taxpayer if the qualifying motion picture is an Independent Film.

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  9. If an assigned Motion Picture Credit is claimed by both the assignor and the assignee, to which party will you allow the credit?

    FTB may collect any portion of a doubly-claimed credit from either the assignee or the assignor.

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  10. What should a taxpayer do if they discover they have made an invalid election to assign the credit?

    If a taxpayer has made an invalid election, they should file an amended return to notify FTB they are withdrawing or removing the election from the invalid year and file a valid election to assign the credit in the subsequent year.

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  11. If a taxpayer has a credit carryover from the taxable year in which the credit was allowed, may the taxpayer assign all or some portion of the carryover credit in year two even if the remaining amount of credit does not exceed the assignor's year two tax liability?

    To be consistent with the policy of R&TC Section 23685 governing assignments, a carryover credit must first be used against the subsequent years' tax liability of the assignor, and then only the excess may be assigned. (See FAQ #5)

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  12. If a taxpayer assigns the credit to an assignee who meets all of the assignee requirements in the taxable year that the assignment was made, but the assigned credit is not fully used by the assignee in that taxable year due to it exceeding the assignee's tax liability for the year of the assignment, may the assignee take the remainder of the credit in a subsequent taxable year?

    Yes, once the credit is assigned properly in the first taxable year, the assignee may apply the carryover against its tax liability for any subsequent taxable years in the same manner as it would have been allowed to the assignor, unless the assignment is properly revoked.

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  13. If a film credit is earned by an entity that is treated as disregarded for tax purposes, will the disregarded entity limitation found in subdivision (i) of R&TC section 23036 apply to the use of the credit by the owner of the disregarded entity?

    Yes. While certain sales and assignments of the California Film and Television Credit are specifically exempted from the limitation in subdivision (i) of R&TC section 23036, the use of the credit by the owner of a disregarded entity that earned the credit is not specifically exempted, and thus the limitation applies to the owner's use of the credit.

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  14. If an independent film credit earned by an entity that is treated as disregarded for tax purposes is sold pursuant to subdivision (c)(3)(A) of R&TC section 23685, will the disregarded entity limitation found in subdivision (i) of R&TC section 23036 apply to the buyer's use of the credit?

    No. Unlike the rules governing credit assignments under R&TC section 23663 between unitary affiliates, the rules in the California Motion Picture and Film Production Credit permitting the sale of independent film credits under R&TC section 23685(c)(3) override the limitation found in R&TC section 23036(i). As a result, the buyer who purchases an independent film credit that was earned by a disregarded entity will not be subject to that restriction.

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  15. If a film credit earned by an entity that is treated as disregarded for tax purposes is assigned under subdivision (c)(1) of R&TC section 23685, will the disregarded entity limitation found in subdivision (i) of R&TC section 23036 apply to the assignee?

    No. The assignment provisions under R&TC section 23685(c)(1) specifically override the limitations found in R&TC section 23036(i).

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  16. If a film credit earned by an entity that is treated as disregarded for tax purposes is assigned under the unitary affiliate assignment rules of R&TC section 23663, will the disregarded entity limitation found in subdivision (i) of R&TC section 23036 apply to the assignee?

    Yes. See FAQ D-10 on the FAQs - Credit Assignment, Revenue and Taxation Code Section 23663 page.

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  17. How do I claim this credit if my Corporation files a short period return?

    You can claim this credit for taxable years beginning on or after January 1, 2011. Use code number 223 and credit name California Motion Picture and Television Production Credit on either line 26a or 26b of form 100, California Corporation Franchise or Income Tax Return, or Form 100W, California Corporation Franchise or Income Tax Return – Water's Edge Filers. If you have more than two credits follow the instructions for Schedule P(100), Alternative Minimum Tax and Credit Limitations – Corporations, or Schedule P (100W) Alternative Minimum Tax and Credit Limitations – Water's-Edge Filers.

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  18. Can a film credit be assigned under R&TC Section 23663 and then subsequently assigned under R&TC Section 23685 (c) or vice versa?

    No. Only the entity generating the credit is eligible to assign the credit under either R&TC Section 23663 or 23685(c). Therefore, once the credit has been assigned, the assignee has no right to assign it again.

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