New LLC's end of the year

Dec 08, 2014 2 Replies
S

Because this is the end of the year, I have been asked more than once about California franchise taxes. In California there is a minimum tax of $800 for each tax year. So LLC's and corporations formed in December of 2014 that are on a calendar year basis, will owe the minimum tax for 2014 and against for 2015.



My question is whether a newly formed LLC can elect to be taxed on a fiscal year basis, so that they can have the minimum tax apply to a



12-month fiscan year rather than a one-month calendar year.

Thanks.


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M

There is a 15-day grace period at year end:

"An LLC is not required to file a tax return and is not subject to the annual taxes and LLC fees if both the following are true: ? The LLC?s taxable year is 15 days or less. ? The LLC did not conduct business in the state during the 15 day period."

I think the issues around fiscal year depend on how the LLC is taxed at federal level, e.g. partnership rules would apply to a MMLLC not taxed as a corporation. Form 568 instructions merely state the accounting period must include 12 full months unless it is a short year.

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S

I should have specified that I was wondering about an LLC taxed as a corporation. I know that some personal service corporations are normally required to use a calendar year. I just wanted to make certain that, in some cases at least, an LLC that elects to be taxed as a corporation can select a fiscal year, and the state's minimum tax would be assessed based on that fiscal year.

Thanks.

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