What California Form 100 (2021) Is For
California Form 100 (2021) is the standard corporation franchise or income tax return used by C corporations, banks, financial corporations, REITs, RICs, and LLCs taxed as corporations. It applies to businesses operating in California or earning income from California sources. The form calculates either the state franchise tax for corporations doing business in California or income tax for those with only California-source income.
For 2021, corporations generally pay 8.84% of net income or the $800 minimum franchise tax. Banks and financial corporations pay 10.84%. First-year corporations are exempt from the minimum franchise tax, and several COVID-related tax rules remained in effect. California Form 100 is separate from Form 100S for S corporations and Form 100W for water’s-edge filers. The official form and instructions are available at the California Franchise Tax Board website: https://www.ftb.ca.gov/forms/.
When You’d Use California Form 100 (2021)
Corporations file Form 100 each year they are incorporated, qualified, or doing business in California. You must also file if you earned California-source income, even without a business presence. Calendar-year filers submit the return by April 18, 2022, due to the 2022 federal holiday shift.
California grants an automatic seven-month filing extension, but taxes must still be paid by the original due date using Form FTB 3539. Suspended corporations do not qualify for this extension. If you discover errors after filing—such as income adjustments or credit miscalculations—you must submit Form 100X to amend the return.
Key Rules or Details for the 2021 Tax Year
Doing Business and Threshold Tests
A corporation is “doing business” in California if it engages in any transaction for financial gain or meets one of the 2021 economic thresholds:
- California sales exceed the lesser of $637,252 or 25% of total sales
- California property exceeds the lesser of $63,726 or 25% of total property
- California payroll exceeds the lesser of $63,726 or 25% of total payroll
Minimum Franchise Tax Requirements
Most corporations owe at least the $800 minimum franchise tax, even if inactive or operating at a loss. Exceptions include first-year corporations, credit unions, certain exempt entities, and military-owned small businesses for 2020–2030.
NOL Suspension for 2021
California suspended net operating loss deductions for corporations with taxable income of $1 million or more for 2020–2022. Businesses may still compute and carry over NOLs, with the carryover period extended by the suspension years.
Credit Limitation
For 2021, corporations cannot use more than $5 million in total credits to reduce their tax liability. The rule applies to combined reporting groups, and unused credits may be carried forward. The Low Income Housing Credit is exempt.
Electronic Filing and Payment Rules
Corporations preparing returns with software must file electronically. Any entity making a payment over $20,000 or with annual tax liability above $80,000 must use electronic payment methods to avoid a 10% penalty.
Step-by-Step (High Level)
Step 1: Gather Your Information
Collect your Federal Form 1120, California corporation number, FEIN, Secretary of State file number, and records of estimated or prior-year payments. If applicable, gather apportionment data and supporting schedules.
Step 2: Choose a Computation Method
Corporations may use the Federal Reconciliation Method—which starts with federal taxable income and adjusts for California differences—or the California Computation Method. Most choose the reconciliation method because it aligns more closely with federal reporting.
Step 3: Complete the Form
Provide accurate identification details and fiscal year dates. Round entries to the nearest dollar and ensure all foreign amounts are converted to U.S. dollars. For first-time filers, the beginning date must match the incorporation date.
Step 4: Calculate Your Tax
Apply the 8.84% (or 10.84%) rate to net income and confirm whether the $800 minimum tax applies. Apply available credits within the 2021 $5 million limitation. If required, use Form FTB 5806 to compute estimated tax underpayment penalties.
Step 5: Assemble the Return
Order documents exactly as follows:
- Form 100
- Schedule R (if apportioning income)
- Supporting schedules
- Copy of the federal return, if required
- Form FTB 5806, if applicable
Do not staple or permanently bind the return.
Step 6: Sign and File
An authorized officer must sign and date the return. File electronically when required or mail to the appropriate Franchise Tax Board address. Enclose, but do not staple, any check payment.
Common Mistakes and How to Avoid Them
- Missing identification numbers
Always include the California corporation number, FEIN, and Secretary of State file number. - Incorrect estimated payments
California requires 30/40/0/30 installment percentages, with at least $800 paid for the first installment. - Improper NOL deductions
Do not claim NOL deductions in 2021 if taxable income is $1 million or more. - Exceeding the 2021 credit limit
Track all credits to avoid exceeding the $5 million ceiling. - Federal conformity errors
Adjust for California nonconformity such as GILTI, bonus depreciation, and IRC 965 items. - Improper assembly
Submit documents in the required order and avoid staples or bindings.
What Happens After You File
The Franchise Tax Board reviews your return for completeness, math accuracy, and supporting schedules. If information is missing or inconsistent, the FTB will send a written request for clarification. Keep all supporting documents for at least four years because the FTB may assess additional tax during the four-year review period.
Interest accrues from the original due date on any unpaid balance. Late filing and late payment penalties can each reach up to 25% of unpaid tax. Corporations that fail to file or pay risk suspension or forfeiture, which triggers additional penalties and restricts business operations until reinstated. Refunds are issued after the FTB completes its review and may be direct-deposited or mailed.
FAQs
Do I owe the $800 minimum franchise tax if my corporation had no income?
Yes. Most corporations incorporated, qualified, or doing business in California must pay the $800 minimum tax, even with no income or losses. Exceptions apply to first-year corporations and certain exempt entities.
Can I claim an NOL deduction on my 2021 return?
Not if your taxable income is $1 million or more. The NOL deduction is suspended for 2021, but you may carry forward the loss with an extended carryover period.
How does the 2021 credit limitation affect my tax return?
You may use no more than $5 million in total credits to reduce your 2021 tax. Unused credits carry forward and gain additional years equal to the number of years they were limited.
What happens if I miss an estimated tax payment?
You may owe an underpayment penalty from the installment due date until paid. Form FTB 5806 helps calculate this penalty and applies even if you later receive a refund.
Does California follow federal tax rule changes for 2021?
California conforms to the Internal Revenue Code as of January 1, 2015, with many exceptions. It does not conform to federal rules on GILTI, bonus depreciation, IRC 965, opportunity zones, and certain business meal deductions.
How do COVID-19 relief grants affect my California taxes?
For 2021, California excludes PPP forgiveness, EIDL grants, and several federal and state relief grants from taxable income and allows related expenses. Some entities must file Form FTB 4197 to report these items.
