California Natural Heritage Preservation Credit

Natural Heritage Preservation Credit
2024 California Form 3503 Natural Heritage Preservation Credit
TAXABLE YEAR

2024

CALIFORNIA FORM

Natural Heritage Preservation Credit

3503

Attach to your California tax return.

□ SSN or ITIN □ CA Corporation no. □ FEIN

Name(s) as shown on your California tax return

California Secretary of State file number

Part I  Wildlife Conservation Board (WCB) Qualified Contribution
Donor’s name as shown on certificate

Type of donated property

Date donation was accepted

Project name

Fair market value

WCB ID#

Part II  Available Credit

1	 Fair market value from Part I  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

00

2	 Multiply the amount on line 1 by 55% (.55) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

00

3	 Pass-through Natural Heritage Preservation Credit(s) from Schedule K-1 (100S, 541, 565, or 568).
	 See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

00

4	 Total current year Natural Heritage Preservation Credit. Add line 2 and line 3  . . . . . . . . . . . . . . . . . . . . . . . . 4

00

5	 Credit carryover from 2023. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

00

6	 Total available Natural Heritage Preservation Credit. Add line 4 and line 5. .  . . . . . . . . . . . . . . . . . . . . . . . . . 6

00

7	a	Credit claimed. Enter the amount of the credit claimed on the current year tax return.
See instructions. (Do not include any assigned credit claimed on form FTB 3544, Part B.). . . . . . . . . . . . 7a
	b	 Total credit assigned. Enter the total amount from form FTB 3544, Part A, column (g).
If you are not a corporation, enter -0-. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7b

00
00

	c	 Credit amount to be elected as refundable in future years. See instructions . . . . . . . . . . . . . . . . . . . . . . . 7c

00

8	 Credit carryover available for future years. Add lines 7a, 7b, and 7c, subtract the result from line 6 . . . . . . . 8

00

What’s New

General Information

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 business credit for the taxable year
may not reduce the “net tax”, for personal income filers, or “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 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 California Revenue and Taxation Code (R&TC) Sections 17039.4,
17039.5, 23036.4 and 23036.5 and get form FTB 3870.

The C
­ alifornia Personal Income Tax Law and Corporation Tax Law allow a
nonrefundable credit for certain approved contributions of real property.
This credit can be used by taxpayers against the net tax in an amount
equal to 55% of the fair market value of a qualified contribution that has
been approved for acceptance by the Wildlife Conservation Board (WCB).

For Privacy Notice, get FTB 1131 EN-SP.

A	Purpose
Use ­form FTB 3503, Natural Heritage Preservation Credit, to figure the
amount of the credit. Also, use this form to claim pass-through credits
received from S corporations, estates, trusts, partnerships, or limited
liability companies (LLCs) classified as partnerships.
S corporations, estates, trusts, partnerships, and LLCs classified as
partnerships should complete form FTB 3503 to figure the amount
of credit to pass 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. Show the pass-through
credit for each shareholder, beneficiary, partner, or member on
Schedule K-1 (100S, 541, 565, or 568), Share of Income, Deductions,
Credits, etc.

7241243

FTB 3503  2024  Side 1

B	Description
The WCB implemented a program for the protection of wildlife habitat,
open space, and agricultural lands. Under this program, property
can be contributed to the state, any local government, or to any
nonprofit organization designated by a local government, based on
specified criteria.
The credit is allowed against net tax, in an amount equal to 55%
of the fair market value of any qualified contribution made by the
taxpayer to the state, any local government, or any designated
nonprofit organization.

C	Qualifications
To qualify for this credit:
#	 Make a contribution of property as defined in Section 37002 of the
Public Resources Code.
#	 The WCB must approve the contribution for acceptance.
#	 Attach completed form FTB 3503 to your California tax return.
For more information regarding qualified contributions, contact the WCB
at 916.445.8448, or go to wcb.ca.gov.
The credit of any qualified contribution passes through to shareholders,
beneficiaries, partners, or members of the pass-through entity in
accordance with their pro-rata interest in the entity as of the date of
the qualified contribution. The term “pass-through entity” means any
S corporation, partnership, or LLC treated as a partnership.

D	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 Natural Heritage Preservation Credit is available for qualified
contributions made on or after January 1, 2021, and no later than
June 30, 2026. This credit may not be claimed for any contributions
made on or after July 1, 2020, and on or before December 31, 2020.
No credit will be allowed unless you received a certificate from the
WCB, which shows that your qualified contribution was approved for
acceptance. You must retain the certificate and make it available to the
Franchise Tax Board upon request.
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. In addition,
S corporations may pass through 100% of the credit to their s­ hareholders.
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.
If a taxpayer owns an interest in a disregarded business entity [a single
member limited liability company (SMLLC) not recognized by C
­ alifornia,
and for tax purposes is treated as a sole proprietorship owned by an
individual or a branch owned by a corporation], the credit amount
received from the disregarded entity that can be utilized 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.
For more information on SMLLCs, get Form 568, Limited Liability
Company Tax Booklet.
If the disregarded entity reports a loss, the taxpayer may not claim the
credit this year but can carry over the credit amount received from the
disregarded entity to the next succeeding taxable year.

Page 2  FTB 3503 Instructions  2024

This credit cannot reduce the regular tax below the minimum franchise
tax (corporations and S corporations), annual tax (limited partnerships,
limited liability partnerships, and LLCs classified as a partnership),
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).
This credit can reduce regular tax below tentative minimum tax (TMT).
Get Schedule P (100, 100W, 540, 540NR, or 541), Alternative Minimum
Tax and Credit Limitations, for more information.
This credit is in lieu of any other state tax credit or deduction that the
taxpayer would otherwise be allowed for the contributed property or
interest therein.
This credit is not refundable.

E	

Assignment of Credits

Assigned Credits to Affiliated Corporations – 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, get form
FTB 3544, Assignment of Credit, or go to ftb.ca.gov and search for
credit assignment.

F	Carryover
If the available credit exceeds the current year tax liability, the unused
credit may be carried over. For credits generated before January 1, 2015,
the credit may be carried over for eight years or until the credit is
exhausted. For credits generated on or after January 1, 2015, the credit
carryover period has been extended to 15 years or until exhausted,
whichever occurs first. Apply the carryover to the earliest taxable year
possible. In no event can this credit be carried back and applied against
a prior year’s tax.

Specific Line Instructions
Part I	 Wildlife Conservation Board (WCB)
	
Qualified Contribution
Enter the following information from the certificate you received from
the WCB:
#	 Name of donor
#	 Type of property donated
#	 Date donation was accepted
#	 Approved fair market value amount
#	 Project name
#	 WCB ID #
If you have more than one qualified contribution, figure each
contribution on a separate form FTB 3503.

Part II	 Available Credit
Line 3 – Pass-Through Natural Heritage
Preservation Credit
If you received more than one pass-through credit from S corporations,
estates, trusts, partnerships, or LLCs classified as partnerships, add the
amounts and enter the total on line 3. Attach a schedule showing the
names and identification numbers of the entities from which the credits
were passed through to you.

Line 5 – Credit carryover
Enter the carryover amount from your 2023 form FTB 3503.

Line 7a – 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 6 if your credit
is limited by your tax liability. For more information, see General
Information D, Limitations, and refer to the credit instructions in your
tax booklet. Use credit code 213 when you claim this credit.

Line 7b – Total credit assigned
Corporations that assign credit to other corporations within the same
combined reporting group 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 7c – 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 complete form FTB 3870 to
your original, timely filed tax return.

Line 8 – Credit carryover available for future years
Do not include any amount you will be electing as a refundable credit on
form FTB 3870.
Credit limited by your tax liability cannot be included in an election for
refundable credit. 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.

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.

FTB 3503 Instructions  2024  Page 3