Minimum Franchise Tax, Corporations and S-Corporations (2024)

How do I get the California franchise tax to calculate for corporations and S corps? Is there a minimum franchise tax?

Initial Returns

There is no minimum franchise tax for newly formed or qualified corporations filing an initial return for taxable years beginning on or after January 1, 2000.For the first taxable year, the corporation computes its tax liability by multiplying its state net income by the appropriate tax rate and is not subject to the Minimum Franchise Tax. To indicate an initial or first year, on screen 1 of the federal return, select

• the Initial return option for a corporation
• or the First year as an S corporation option for an S corporation

Overrides are available on CA screen 100 for a corporation or100Sfor an S corp. There you can check the boxNot Subject to $800 Minimum Franchise Tax orForce $800 Minimum Franchise Tax.

All Other CA Corporations/S-corporations

California corporations and S-corps are generally subject CA franchise tax.The California Minimum Franchise Tax of $800 will be automatically calculated for applicable corporate and S corp returnson CA Form 100, page 2, line 23 or CA Form 100S, page 2, line 21.

The amount due for the current return can be paid via the PMT screen or with voucher CA 3586-V.

California estimates tax vouchers for the $800 minimum are produced by making the following entries on the federal ES screen:

• State/City: CA
• Type: blank (no entry)
• ES code: X

By default, per CA guidelines, three estimated tax vouchers are produced for quarters 1, 2, and 4 (see note 410). If the business is subject to the minimum franchise tax, amounts will be as follows:

• 1st quarter is 30% or $240 printed on CA100ES
• 2nd quarter is 40% or $320printed onCA100ES Pg 2
• 3rd quarter is 0% or $0 (no voucher produced)
• 4th quarter is 30% or $240printed onCA100ES Pg 4

If desired, use the ES screen to produce the full required payment on a single ES voucher by overriding all four voucher amounts.

If the $800 was pre-paid via estimates, use the ES screen to report the payment (choose St/City as CA and leave the Type blank). This will be carried to the CA 100, page 2, line 32 or the CA 100S, page 2, line 31.

See the CA 100S Instructionsand CA 100 Instructions for details.