California Minimum Franchise Tax

Dec 03, 2020 Last reply: 5 years ago 2 Replies
S

This should be an easy question, but I seem to see conflicting information on the California Franchise Tax Board website.



In CA all corporations, LLCs and limited partnerships pay either a minimum tax or fee (whichever is appropriate) of $800 per year. But corporations are allowed to pay the actual tax owed the first year if it is less than $800.



Can a California LLC that is taxed as a corporation get that same benefit and just pay the tax that is actually owed for its first year without paying the minimum tax?



Thanks. I'd appreciate any information you may have on this.


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A

CA recognizes the federal election to be treated as a corporation. As such, that LLC is a corporation. If you look at Form 100, the CA franchise tax form, it tells you that LLCs electing to be treated as a corporation are subject to the corporation minimum franchise tax. Therefore, FTB 3522, the LLC Tax Voucher is not filed. Form 100 is filed. So, the LLC is subject to the first year rule for corporations.

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S

Thanks. That's what I hoped, but I couldn't find that specific statement in that form.

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