2024 Instructions for Form FTB 3510 Credit for Prior Year Alternative Minimum Tax – Individuals or Fiduciaries

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and to the California Revenue and Taxation Code (R&TC).

What's New

Net Operating Loss Suspension – For taxable years beginning on or after January 1, 2024, and before January 1, 2027, California has suspended the net operating loss (NOL) carryover deduction. Taxpayers may continue to compute and carryover an NOL during the suspension period. However, taxpayers with net business income or modified adjusted gross income of less than $1,000,000 or with disaster loss carryovers are not affected by the NOL suspension rules. For more information, see California Revenue and Taxation Code (R&TC) Section 17276.24, and get form FTB 3805V, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations – Individuals, Estates, and Trusts.

Intangible Drilling and Development Costs – California law does not allow the Internal Revenue Code (IRC) Section 263(c) deduction for intangible drilling and development costs in the case of oil and gas wells paid or incurred on or after January 1, 2024. For more information, see R&TC Section 17260, and get Schedule P (540), Alternative Minimum Tax and Credit Limitations – Residents, Schedule P (540NR), Alternative Minimum Tax and Credit Limitations – Nonresidents or Part-Year Residents, or Schedule P (541), Alternative Minimum Tax and Credit Limitations – Fiduciaries.

Percentage Depletion – For taxable years beginning on or after January 1, 2024, California law does not allow the calculation of depletion as a percentage of gross income from the property for specified natural resources, including coal, oil shale, oil and gas wells. R&TC Sections 17681.3 and 17681.6 allowing state nonconformity to federal rules for percentage depletion of certain refiner exclusions as well as the temporary suspension of taxable income limit for marginal production have also been repealed. For more information, see R&TC Section 17681, and get Schedule P (540), Schedule P (540NR) or Schedule P (541).

General Information

Tax Computation for Certain Children with Investment Income – California conforms to the provision of the federal Small Business and Work Opportunity Tax Act of 2007, which increased the age of children to 18 and under or a full-time student under age 24, for elections made by parents reporting their child’s interest and dividends.

Registered Domestic Partner (RDP) – For purposes of California income tax, references to a spouse, husband, or wife also refer to a California RDP, unless otherwise specified.

A. Purpose

Use form FTB 3510, Credit for Prior Year Alternative Minimum Tax – Individuals or Fiduciaries, to figure your 2024 California credit for prior year alternative minimum tax (AMT) incurred in a taxable year beginning after 1986.

B. Who Must File

To claim the credit for prior year AMT, individuals and fiduciaries must complete form FTB 3510. Individuals and fiduciaries qualify for the credit if one of following applies:

  • Had an AMT credit carryover from 2023.
  • Paid AMT for 2023, and had 2023 adjustments and tax preference items other than exclusions.

Corporations must use Schedule P (100 or 100W), Alternative Minimum Tax and Credit Limitations – Corporations, Part III to claim the credit for prior year AMT.

C. Exclusions and Deferral Preferences

The 2023 AMT you paid is attributable to two types of adjustments and tax preferences: exclusions and deferral preferences. The amount of AMT attributable to the deferral preferences is available as a credit in 2024.

Exclusions are those adjustments and preference items that cause a permanent difference in the amount of tax you pay. The adjustments and preference items include all of the following:

  • The standard deduction or itemized deductions.
  • Depletion.

Deferral preferences are adjustments and tax preference items that cause only a temporary difference in the amount of tax you pay. The deferral preferences are all the other items listed on your 2023 Schedule P (540, 540NR, or 541), Alternative Minimum Tax and Credit Limitations, that are not exclusions.

Use form FTB 3510, Part I, to figure the amount of 2023 AMT that was attributable to only the exclusions.

Use form FTB 3510, Part II, to figure the amount of 2023 AMT that was attributable to the deferral preferences and the amount available as a credit in 2024.

California conformed to the federal repeal of the AMT depletion adjustment for independent oil and gas producers and royalty owners. As a result, for AMT purposes follow the methods prescribed by the federal rules to adjust the depletion amounts deducted from income for purposes of computing the regular tax, for taxable years beginning before January 1, 2024. Your California depletion costs may continue to differ from the federal amounts because of prior differences in the law and differences in basis.

Specific Line Instructions

Complete your 2024 Schedule P (540) through Part II, line 24; Schedule P (540NR) through Part II, line 43; or Schedule P (541) through Part III, line 8, before figuring this credit.

Line 1 – Estates and trusts: Skip line 1 through line 3. Complete a second 2023 Schedule P (541), Part I and Part II. Enter only exclusion items from Schedule P (541), line 4a through line 4d and any other exclusion items on Schedule P (541), line 4p. If the amount on Schedule P (541), Part I, line 10 is zero or less, enter -0- on line 4 of form FTB 3510.

Otherwise, enter on line 4 of form FTB 3510, the amount from line 10 of Schedule P (541) adjusted for the beneficiary’s exclusion items.

Line 2 – Enter the adjustments and tax preference items treated as exclusions.

Schedule P (540 and 540NR) filers, combine your 2023 Schedule P (540 and 540NR), Part I, line 1 through line 7, line 13b, and line 13i. Do not include any amount from line 12 of your 2023 Schedule P (540 and 540NR). Instead, include the exclusion items from line 12e, column (d) of your Schedule K‑1 (541), Beneficiary’s Share of Income, Deductions, Credits, etc. for 2023.

If you included any exclusions on a line other than those listed above, add these exclusions to the total.

Line 3 – Determine your 2023 Alternative Minimum Tax Credit Net Operating Loss Deduction (AMTCNOLD) and the AMTCNOLD that may be carried over to other years by following the provisions set forth under R&TC Section 17276.2, 17276, 17276.21, 17276.22, and 17276.24 with appropriate modifications taken into account for exclusion items.

Line 4 – If line 4 is zero and you paid 2023 AMT, all of the 2023 AMT is attributable to the deferral preferences. Enter -0- on line 13, then complete Part I, Section B, if applicable, and Part II to figure the credit available for 2024.

Married/RDP taxpayers filing separate California tax returns: Complete the following computation if line 4 is more than $450,368:

  1. Enter the amount from line 4.
  2. Maximum exemption amount $450,368.
  3. Subtract line 2 from line 1.
  4. Multiply line 3 by 25% (.25).
  5. Enter the smaller of line 4 or $58,111.
  6. Add line 1 and line 5. Enter the result here and replace the amount on form FTB 3510, line 4 with this amount.

Line 9 – Enter the smaller of (1) the amount by which line 5 exceeds line 8 or (2) the child’s 2023 earned income plus $8,950, if the child did not file a joint return for 2023, at least one parent was alive at the end of 2023, and one of the following statements is true.

  1. The child was under age 18 at the end of 2023.
  2. The child was age 18 at the end of 2023 and did not have earned income that was more than half of their support.
  3. The child was a full-time student over age 18 and under age 24 at the end of 2023 and did not have earned income that was more than half of their support.

Certain January 1 Birthdays. If the child was born on January 1, 2006, the child is considered to be age 18 at the end of 2023. If the child was born on January 1, 2005, the child is considered to be age 19 at the end of 2023. If the child was born on January 1, 2000, the child is considered to be age 24 at the end of 2023.

Line 10 – If line 10 is -0- and you paid 2023 AMT, all of the 2023 AMT is attributable to the deferral preferences. Enter -0- on line 13, then complete Part I, Section B, if applicable, and Part II to figure the available credit for 2024.

Line 18 – Enter the adjustments and tax preference items treated as exclusions. Combine your 2023 Schedule P (540NR), Part II, lines 29a and 29h. Do not include any amount from line 29f. Instead, include the exclusion items from your 2023 Schedule K‑1 (541), line 12e, column (e).

Line 28 – Reduce the amount on line 28 by the same amount shown on one of the forms below if you reduced your 2023 AMT by any solar energy credit carryover or commercial solar energy credit carryover:

  • Schedule P (540), Part III, line 23 and line 24, column (b).
  • Schedule P (540NR), Part III, line 23 and line 24, column (b).
  • Schedule P (541), Part IV, line 18 and line 19, column (b).

Write the amount of the reduction in the space to the left of line 28.

Line 31 – Enter the amount of any unused AMT credit carryover from one of the following 2023 forms:

  • Schedule P (540), Part III, line 10, column (d).
  • Schedule P (540NR), Part III, line 10, column (d).
  • Schedule P (541), Part IV, line 9, column (d).

Line 32 – If line 32 is zero or less, you do not have an AMT credit or an AMT credit to carry over. Do not complete the rest of this form. If line 32 is more than zero, enter the amount here and in column (a) of one of the following 2024 forms:

  • Schedule P (540), Part III, line 10.
  • Schedule P (540NR), Part III, line 10.
  • Schedule P (541), Part IV, line 9.

Line 34 – Exemption and other allowable credits that cannot reduce regular tax below the tentative minimum tax.

Residents enter on line 34 the total of the following:

  • The exemption credits from Form 540, line 32 (or Form 541, line 22).
  • The amount of other allowable credits that are listed on your 2024 Schedule P (540 or 541), Section A1 and Section A2, column (b).

Nonresidents or Part-Year Residents enter on line 34 the total of the following:

  • The exemption and other allowable credits from Form 540NR, line 39.
  • The amount of other allowable credits that are listed on your 2024 Schedule P (540NR), Section A1 and Section A2, column (b).

See Schedule P (540, 540NR, or 541) for more information.

Line 36 – Enter the tentative minimum tax from one of the following 2024 forms:

  • Schedule P (540), Part II, line 24.
  • Schedule P (540NR), Part II, line 43.
  • Schedule P (541), Part III, line 8.

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.