8721203
FTB 3866 (NEW) 2020
TAXABLE YEAR
2020
Main Street Small Business Tax Credit
CALIFORNIA FORM
3866
Attach to your California tax return.
Name(s) as shown on your California tax return
□ SSN or ITIN □ CA Corporation no. □ FEIN
California Secretary of State (SOS) file number
Name of taxpayer generating the credit. See instructions.
□ SSN or ITIN □ CA Corporation no. □ FEIN
California Secretary of State (SOS) file number
Tentative Credit Reservation Confirmation Number
Available Credit
1
Enter the allocated credit amount listed on the California Department of
Tax and Fee Administration tentative credit reservation.
......................................... 1 $ 00
00
00
00
00
2
Pass through credit from Schedule K-1 (100S, 541, 565 or 568). See instructions. ................... 2 $
3
Total available credit. Add lines 1 and 2. ..................................................... 3 $
4
Total credit claimed. See Instructions. ..................................................... 4 $
5
Credit carryover to 2021. Subract line 4 from line 3. ........................................... 5 $
What’s New
Main Street Small Business Tax Credit – For the taxable year beginning
on or after January 1, 2020, and before January 1, 2021, a Main Street
Small Business Tax Credit is available to a qualified small business
employer that received a tentative tax credit reservation from the
California Department of Tax and Fee Administration (CDTFA). The credit
is equal to $1,000 for each net increase in qualified employees. The credit
cannot exceed $100,000 for any qualified small business employer. A
qualified small business employer, among other requirements, must have
met the following requirements:
• As of December 31, 2019, employed a total of 100 or fewer
employees.
• Had a 50% decrease in gross receipts from April 1, 2020, through
June 30, 2020, compared to the gross receipts from April 1, 2019,
through June 30, 2019.
The Main Street Small Business Tax Credit must be claimed on a timely
filed original tax return. The taxpayer cannot be included, required to file
as, or authorized to be included in a combined report under California
Revenue and Taxation Code Sections 25101, 25110, or25101.15.
Taxpayers made an irrevocable election to apply the credit to either sales
and use tax, or income tax when they applied for the credit. Only use this
form if you elected to apply this credit to income tax.
For more information, go to ftb.ca.gov and search for main street small
business tax credit.
Purpose
Use form FTB 3866, Main Street Small Business Tax Credit, to claim a
tax credit for a qualified small business employer that had a net increase
in qualified full-time employees, and to determine any carryover credit
amount.
Also, use form FTB 3866 to claim a pass-through Main Street Small
Business Tax Credit received from an S corporation, estate, trust,
partnership, or limited liability company (LLC) classified as a partnership.
S corporations, estates, trusts, partnerships, and LLCs classified as
partnerships should complete form FTB 3866 to report the amount of
credit that will be passed through to shareholders, beneficiaries, partners,
or members.
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. Report the pass-through credit amount and
the tentative credit reservation confirmation number for each shareholder,
beneficiary, partner, or member on Schedule K-1 (100S, 541, 565, or
568), Share of Income, Deductions, Credits, etc.
General Information
A Tentative Credit Reservation
An employer was required to obtain a tentative credit reservation from
the CDTFA between December 1, 2020, and January 15, 2021, which
included a tentative credit reservation confirmation number. If you did not
receive a tentative credit reservation from the CDTFA you cannot claim
this credit. For more information, go to cdtfa.ca.gov.
B Limitations
The taxpayer must reduce any wage deduction claimed on their income
tax returns by the amount of the Main Street Small Business Tax Credit
allowed for the 2020 taxable year, including any credit carried forward to
future years.
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 a carryover. S corporations can pass
through 100% of the credit to their shareholders.
If a taxpayer owns an interest in a disregarded business entity [a single
member limited liability company (SMLLC) not recognized by California,
and for tax purposes is treated as a sole proprietorship owned by an
individual or a branch owned by a corporation], the usable 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.
Get Form 568, Limited Liability Company Tax Booklet, for more
information.
For Privacy Notice, get FTB 1131 ENG/SP.
