California Manufacturing Enhancement Area Business Booklet

Manufacturing Enhancement Area Business Booklet
2018 Booklet 3808 - Manufacturing Enhancement Area Business Booklet
2018

Manufacturing Enhancement Area
Business Booklet

3808

California Forms & Instructions
Members of the Franchise Tax Board
Betty T. Yee, Chair
George Runner, Member
Keely Bosler, Member

This booklet contains:
Form FTB 3808, Manufacturing Enhancement Area Credit Summary

2018 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 C
­ alifornia Revenue and Taxation Code (R&TC).

Contents
General Information .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  2
How to Claim the Credit Carryover .  .  .  .  .  .  .  .  3
Part I – Hiring Credit Carryover .  .  .  .  .  .  .  .  .  .  3
Part II – Portion of Business Attributable to
	 the Manufacturing Enhancement Area  .  .  4
Worksheet I, Income or Loss
 Apportionment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  6
Instructions for Schedule Z – Computation
	 of Credit Carryover Limitations .  .  .  .  .  .  .  .  . 8
Form FTB 3808, Manufacturing
	 Enhancement Area Credit Summary .  .  .  . 11
Schedule Z, Computation of Credit Carryover
	Limitations .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 12
Standard Industrial Classification Manual,
	 1987 Edition (Partial Listing)  .  .  .  .  .  .  .  .  . 13
Principal Business Activity Codes  .  .  .  .  .  .  .  . 15
How to Get ­California Tax Information .  .  .  .  . 18

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. The credit has expired.

Page 2  FTB 3808 Booklet  2018

The taxpayer can claim the credit carryover
from prior years. 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 for employees hired on or before
December 31, 2012, 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 singlesales 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 Carryover
Limitations, on page 8, 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.
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.
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 H 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 a former MEA
may claim a hiring credit carryover. For more
information see R&TC Sections 17053.47
and 23622.8. Use this booklet to determine
the correct amount of hiring credit carryover
deduction that a business may claim for
operating or investing in a trade or business
within a former MEA. Complete the worksheets
and Schedule Z in this booklet for the MEA
hiring credit carryover. Then enter the hiring
credit carryover amount on form FTB 3808.

Former Manufacturing
Enhancement Area Designation
California’s two former MEAs were 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 offered
a special tax incentive to encourage business
and stimulate job creation in the area.
The geographic boundaries of a former
MEA were used to determine whether the
tax incentive was available to a business in
a specified location. For business eligibility
or zone related information, including
questions regarding former 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 H
­ CD. See
page 18 for the HCD contact information.

Forms List
Forms referred to in this booklet include:
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	
California Nonresident or
Form 540NR	 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	 California Adjustments —
 (540)	
Residents

Schedule CA	 California Adjustments —
  (540NR)	
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	 S Corporation Tax Credits
 (100S)
Schedule K-1	 Shareholder’s Share of Income,
  (100S)	
Deductions, Credits, etc.
Schedule K-1	 Beneficiary’s Share of Income,
  (541)	
Deductions, Credits, etc.
Schedule K-1	 Partner’s Share of Income,
  (565)	
Deductions, Credits, etc.
Schedule K-1	 Member’s Share of Income,
  (568)	
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 Former
MEA Tax Incentive?
The MEA hiring credit carryover was available
to individuals, sole proprietors, corporations,
estates, trusts, and partnerships operating
or investing in a business located within the
designated former MEA.

How to Claim the Credit
Carryover
To claim the MEA hiring credit carryover,
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 a former MEA. Also, complete
the following schedule and/or worksheets to
report credit carryovers incurred:
•	 Corporations complete Schedule Z and all
the worksheets, except for Worksheet I,
Section B.
•	 Sole proprietors complete Schedule Z and
all the worksheets.
•	 Trusts, estates and partnerships, complete
Worksheet I, Section A.
•	 Individual investors receiving pass‑through
MEA credits, complete Worksheet I,
Section B and Schedule Z. All other
investors, complete Worksheet I, 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 a former MEA by doing the following:
Form 540 filers:	 Claim the MEA tax incentive
on Form 540, lines 43
through 45, as applicable.
Long Form	
Claim the MEA tax
540NR filers:	
incentive on Long
Form 540NR, lines 58
through 60, as applicable.

Form 100 filers:	 Claim the MEA tax ­incentive
on Form 100, line 20,
lines 24 through 26, as
­applicable.
Form 100S filers:	Claim the MEA tax incentive
on Form 100S, line 18 and
lines 22 through 24, as
applicable.
Form 100W filers:	Claim the MEA tax incentive
on Form 100W, line 20 and
lines 24 through 26, as
applicable.
Form 109 filers:	 Check the “Yes” box for the
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 H
•	 For corporations, estates, trusts,
partnerships, LLCs classified as
partnerships, exempt organizations,
and sole proprietors, complete items A
through H.
•	 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 13
and 14 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 15 through 17. Enter the
PBA code of your principal activity on form
FTB 3808, Side 1.

Part I – Hiring Credit Carryover
Line 1  Hiring Credit Carryover

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. Although qualified taxpayers
can no longer 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, they can claim the hiring
credit carryover from prior years.

FTB 3808 Booklet  2018  Page 3

Credit Limitations
•	 The amount of hiring credit carryover
claimed may not exceed the amount of
tax on the MEA business income in any
year. Use Schedule Z to compute the credit
limitation.
•	 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 for employees
hired on or before December 31, 2012, may
be carried over to the succeeding 10 taxable
years.
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.

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 former MEA area. If the business
is located within and outside a former MEA,
or in more than one former MEA, you must
determine the portion of total business income
that is attributable to each former MEA.

Business Income vs.
Nonbusiness Income
Only business income is apportioned to
the former 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.

Page 4  FTB 3808 Booklet  2018

For corporations and entities doing
business in and outside of the former
Manufacturing Enhancement Area, use
Worksheet I, 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 former MEA.
2.	 The distributive (or pro-rata for
S corporations) share of the business
capital gains and losses apportioned to the
former MEA included in item 1.
3.	 The distributive (or pro-rata for
S corporation) share of the former 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 I, Section
B to determine business income attributable
to the former 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 former
MEA.

Apportionment
Business income is apportioned to a former
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 former
MEA, the MEA apportionment factor and credit
limitations are computed separately for each
former 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 former MEA
Compensation is considered to be within the
former MEA if any of the following tests are
met:
1.	 The employee’s services are performed
within the geographical boundaries of
the former MEA.
2.	 The employee’s services are performed
within and outside the former MEA, but the
services performed outside the former MEA
are incidental to the employee’s service
within the former 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 former MEA, the
employee’s compensation is attributed to
the former MEA if any of the following tests
are met:
A.	 The employee’s base of operations is
within the former MEA.
B.	 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 former MEA.
C.	 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 former 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 former MEA, the business income of
each corporation doing business in the former
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 former MEA by multiplying California
business by the MEA apportionment factor
computed in Worksheet I, 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 former
MEA compute the business income attributable
to the former 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
former MEA

Parent Corporation A has two subsidiaries,
B and C. Corporations A and B operate
within a former 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 former 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 Apport. %	
100%	  73.33%
(Property + Payroll Factors)

    2
Apportioned
Business Income	
MEA Business
Income	

$  228,000	

$  250,000

$  228,000	

$  183,325

Instructions for Worksheet I
Income or Loss
Apportionment –
Manufacturing Enhancement
Area
If the business operates solely within a single
former MEA and all its property and payroll
are solely within that single former MEA, enter
100% (1.00) on Section A, line 4, column (c).
Do not complete the rest of Worksheet I.

Section A – Income
Apportionment
Use Worksheet I, Section A, Income
Apportionment, to determine the amount
of business income apportioned to the
former 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 I, Section A.
Property Factor
When determining the income apportioned to
the former 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 former
MEA during the taxable year to produce MEA
business income, see Worksheet I, 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 I, Section
A, column (a).
Payroll Factor
When determining income apportioned to
the former MEA, the numerator of the payroll
factor is the taxpayer’s total compensation
paid to the employees for working within
the former MEA during the taxable year,
see Worksheet I, Section A, column (b).
The denominator of the payroll factor is
the taxpayer’s total compensation paid to
employees working in California. See
Worksheet I, Section A, column (a).

Section B – Income or Loss
Apportionment
Form 540 and Long Form 540NR filers, use
Worksheet I, 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 former 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 former MEA. See Part II on page 4, 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 the former MEA must
determine the MEA wage income by entering
the percentage of the time that they worked
within the former 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 I, 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
the former MEA from which you received a
MEA tax incentive, see the example below for
computing business income in the the former
MEA.
Example:
Trade or
	
business
	
income
	
from
	
Schedule K-1	 Entity’s MEA	
MEA
 Pass-through	 (100S, 541,	 apportionment	 apportioned
 
entity	
565, or 568)	
percentage	
income
	

 ABC, Inc.	
$40,000	
 A, B, & C	  30,000	
 ABC, LLC	  10,000	

80%	
$32,000
10%	  3,000
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 former 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 former MEA, enter the income or loss from
this activity in column (a) and enter 1.00 in
column (b).

FTB 3808 Booklet  2018  Page 5

 Worksheet I   Income or Loss Apportionment – Manufacturing Enhancement Area
Section A  Income Apportionment
Use Worksheet I, Section A, if your business has net	
income from sources within and outside the former MEA.	
		
PROPERTY FACTOR

(a)	
Total within	
California	

(b)	
Total within	
the former MEA	

(c)
Percentage within the former
MEA column (b) ÷ column (a)

1	 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  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 				

	Buildings .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 				
	 Machinery and equipment  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 				
	 Furniture and fixtures .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 				
	 Delivery equipment .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 				
	Land .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 				
	 Other tangible assets (attach schedule) .  .  .  .  .  .  .  .  .  .  .  .  . 	 				
	 Rented property used in the business. See instructions . 	 				
	 Total property values  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 					
PAYROLL FACTOR
2	 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)					
4	 Average apportionment percentage (1/2 of line 3).
Enter here and on form FTB 3808, Side 1, line 2  .  .  .  .  .  .
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 former 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 former MEA, the average apportionment percentage would be
computed by dividing line 3 by one instead of by two as normally instructed.
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 former 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 I, Section A.
Enter the percentage from Worksheet I, Section
A, line 4, column (c) on Worksheet I, 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 I, Section A.
Enter the percentage from Worksheet I,
Section A, line 4, column (c) on Worksheet I,
Section B, column (b).

Page 6  FTB 3808 Booklet  2018

Located Within and Outside California and
the former 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 former MEA and C
­ alifornia, 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 I, Section A.
Enter the percentage from Worksheet I, Section
A, line 4, column (c) on Worksheet I, 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 former 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.
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 former 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 I, Section A.
Enter the percentage from Worksheet I, Section
A, line 4, column (c) on Worksheet I, 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 former MEA. You cannot use
any of the MEA hiring credit carryover 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 I  Income or Loss Apportionment – Manufacturing Enhancement Area (continued)
Section B  Income or Loss Apportionment
Part I  Individual Income and Expense Items. See instructions.
		
	
(a)	(b)	(c)
			
Amount	
Percentage of time providing	
Apportioned amount
				
services in the former MEA	
(a) x (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)	(b)
		
Name of entity	
Distributive or pro-rata share of business income or loss apportioned
			
to the former 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)	
(c)
Apportionment percentage	
Apportioned income or loss
for the former MEA	
(a) x (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)	
(b)	
			
Business gain	
Apportionment percentage	
			
or loss	
for the former MEA	

(c)
Apportioned gain or loss
(a) x (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  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 		

FTB 3808 Booklet  2018  Page 7

Schedule Z – Computation of
Credit Carryover Limitations
Credit Carryover Limitations
The amount of the MEA hiring credit carryover
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 I, Section A.
For individuals, the MEA business income is
computed on Worksheet I, 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 credit carryover
you may claim on your California tax return
is limited to the tax attributable to a specific
former 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 former
Calexico MEA of the assignor, the assignee
must have a tax liability on the income
attributable to the former 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
carryover 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 carryover 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.

Page 8  FTB 3808 Booklet  2018

S Corporations and the Application of the
MEA Hiring Credit
An S corporation may use its MEA hiring credit
carryover to reduce the MEA tax at both the
corporate and shareholder levels.
Carryover
If the amount of hiring credit carryover
available this year exceeds your MEA tax, you
may carry over any excess credit to future
years. For taxable years beginning on or
after January 1, 2014, the carryover period
is 10 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.
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 carryover on your tax return. Using an
incorrect code may cause a delay in allowing
the credit.

Instructions for Schedule Z –
Computation of Credit
Carryover 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 carryover that they may claim on
their C
­ alifornia tax return. For individual
partners, report the distributive share of
all the business income apportioned to the
former 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 former
MEA; and
•	 Separately state any distributive or pro-rata
share of business capital gains and losses
apportioned to the former 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 former MEA, for the definition of business
income.
Line 2 – If your business is located entirely
within the former MEA, enter 1.
Specifically, this percentage is the
apportionment percentage computed by the
entity using Worksheet I, Section A, and
it represents the percentage of the entity’s
business income attributable to the former
MEA.
Line 4a – Compute the tax as if the former
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 carryover 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 a former MEA and one outside a
former MEA. Eighty percent (80%) of the S
corporation’s business income is attributable
to the former MEA.
This percentage was determined by ABC, Inc.
using Worksheet I, 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 former MEA.
John and Jackie Anderson have the following
items of ­California income and expense for the
2018 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 Schedule A .  .  .  .  .  .  .  .  . (2,000)
The Anderson’s MEA income (total amount to
be reported on Schedule Z, Part I, line 3) is
computed as follows:
John’s MEA salary
  ($100,000 x 50%) .  .  .  .  .  .  .  .  .  .  .  .  .  . $50,000
Jackie’s MEA salary
  ($75,000 x 100%) .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 75,000
Pass-through ordinary income from
  ABC, Inc. ($40,000 x 80%)  .  .  .  .  .  .  .  . 32,000
John’s unreimbursed employee business
  expenses ($2,000 x 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:
If the amount on line 4b is the minimum
franchise tax ($800), you cannot use your MEA
hiring credit carryover 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 (e) – Enter the amount from
line 5. This is the amount of limitation based
on the tax on MEA business income.
Line 6A, column (f) – Enter the amount of
credit carryover 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 (e) or the amount
computed on line 6B, column (d). Enter this
amount on form FTB 3808, Side 1, line 1.
Line 6B, column (b) – 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 (c) – 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 (d) instructions.

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 (c) – Enter the amount of
credit carryover 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 (d) – Subtract the amount
in column (c) from the amount in column
(b). 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 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 (c) – 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 (d) instructions.
Line 8, column (d) – Add the amount of the
total prior year carryover on line 8, column (b),
then subtract the amount of credit assigned on
line 8, column (c). This is the amount of credit
that can be carried over to future years.

Line 6B, column (d) – Add the amount of the
total prior year carryover on line 6B, column
(b), then subtract the amount of the total credit
assigned on line 6B, column (c), if any.
Line 6B, column (e) – Compare the amounts
on line 6A, column (e) and line 6A, column (f).
Enter the smaller amount.
Line 6B, column (g) – Subtract the amount
on line 6B, column (e) from the amount on
line 6B, column (d). Enter the result on line 6B,
column (g). 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.

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 the
total prior year carryover of the credit (this
is the amount of credit that was previously

Example: Part II
The ABC Business has $8,000 of tax. The business computed a credit limitation based on the MEA income of $7,000 on Schedule Z, line 5.
The business has the following credits:
Hiring credit  —  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

6  Hiring credit

(b)
Total
prior year
carryover

(c)
Total credit
assigned from
form FTB 3544,
col. (g)

(d)
Total credit
col. (b)
minus col. (c)

A
B

300

–0–

300

(e)
Limitation
based on
MEA business
income

(f)
Credit used on
Sch. P
can never be
greater than col. (d)
or col. (e)

7,000

300

300

(g)
Total credit
carryover
col. (d) minus
col. (e)

–0–
FTB 3808 Booklet  2018  Page 9

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Page 10  FTB 3805Z Booklet  2018

TAXABLE YEAR

2018

Manufacturing Enhancement Area
Credit Summary

Attach to your California tax return.
Name(s) as shown on return

CALIFORNIA FORM

3808
 SSN or ITIN   CA Corporation no.   FEIN
v

CA Secretary of State (SOS) file number

Qualified taxpayer’s SIC code. See instructions. 

 ___ ___ ___ ___

A.	 Check the appropriate box for your entity type:
 Individual   Estate   Trust   C corporation    S corporation    Partnership
 Exempt organization         Limited liability company      Limited liability partnership
B.	 Enter the name of the Manufacturing Enhancement Area (MEA) business:	
C.	 Enter the address (actual location) where the MEA business is conducted:
	

	

D.	 Enter the name of the MEA in which the business and/or investment activity is located.
	

	

E.	 Enter the six-digit Principal Business Activity Code of the MEA Business  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	

	

F.	 Total number of employees in the MEA  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 	
G.	 Gross annual receipts of the business  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 	
H.	 Total asset value of the business  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 	
Part I  Hiring Credit Carryover. (Complete Schedule Z on Side 2 before you complete this part.)
1	 Hiring credit carryover from Schedule Z, line 6A, column (f) or line 7, column (c)  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 1	 	
Part II  Portion of Business Attributable to the Manufacturing Enhancement Area. See Instructions.
2	 Enter the average apportionment percentage of your business that is in the former MEA from Worksheet I, Section A,
line 4. If your operation is entirely within one former MEA, the average apportionment percentage is 100% (1.00) .  .  .  .  .  .  .  .  .  . 	 2	 	

For Privacy Notice, get FTB 1131 ENG/SP.

7571183

FTB 3808   2018  Side 1

Schedule Z Computation of Credit Carryover Limitations — Manufacturing Enhancement Area
Part I  Computation of Credit Limitations. See instructions.
  1	 Trade or business income. Individuals: Enter the amount from Worksheet I, Section B, line 14, column (c) on
this line and on line 3 (skip line 2). See instructions. Corporations which file a combined report, enter
the taxpayer’s business income apportioned to California (see form FTB 3808, Part II instructions) .  .  .  .  .  .  .  .  .  .  .  .  		
  2	 Corporations: Enter the average apportionment percentage from Worksheet I, Section A, line 4. See instructions  .  . 		
  3	 Multiply line 1 by line 2  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 		
  4	 a	 Compute the amount of tax due using the amount on line 3.
See instructions .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 	 4a
 	 b	 Enter the amount of tax from Form 540, line 35; Long Form 540NR, line 42;
Form 541, line 21; Form 100, line 23; Form 100W, line 23; Form 100S, line 21; or
Form 109, line 10. Corporations and S corporations, see instructions .  .  .  .  .  .  .  .  .  . 	 4b
  5	 Enter the smaller of line 4a or line 4b. This is the limitation based on the MEA income. Go to Part II, Part III,
or Part IV. See instructions  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  	

1		
2		
3		

5

Part II  Limitation of Credits for Corporations, Individuals, Estates, and Trusts. See instructions.
(a)
Credit
name

6  Hiring credit

(b)
Total
prior year
carryover

(c)
Total credit
assigned from
form FTB 3544,
col. (g)

(d)
Total credit
col. (b)
minus col. (c)

(e)
Limitation
based on
MEA business
income

(f)
Credit carryover
used on Sch. P
can never be
greater than col. (d)
or col. (e)

(g)
Total credit
carryover
col. (d) minus
col. (e)

A
B

Part III  Limitation of Credits for S Corporations Only. See instructions.
(a)
Credit
name

(b)
Total prior
year carryover

(c)
Credit carryover used
this year by S corporation

(d)
Carryover
col. (b) minus col. (c)

7  Hiring credit
Part IV  Limitation of Credits for Corporations and S Corporations Subject to Paying Only the Minimum Franchise Tax. See instructions.
(a)
Credit
name

(b)
Total prior
year carryover

(c)
Total credit assigned
from form FTB 3544, col. (g)

8  Hiring credit

Refer to page 3 for information on how to claim the credit carryover.

Side 2  FTB 3808  2018

7572183

(d)
Total credit carryover
sum of col. (b) minus col. (c)

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

(continued on next page)

FTB 3808 Booklet  2018  Page 13

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 truc