Form 100 (2018): California Corporation Franchise

What Form 100 (2018) Is For

Form 100 (2018) is the primary California franchise tax return used by C corporations, limited liability companies that elect corporate treatment, and other qualified business entities. This form allows the California Franchise Tax Board to collect state income taxes based on net income earned in or sourced from the state. Corporations doing business in California must use it to calculate franchise tax, while those deriving California income without direct operations may use it to pay California income tax. 

When You’d Use Form 100 (2018)

You must file Form 100 (2018) if your corporation has any tax responsibility to California. Everyday use cases include:

• Actively doing business in California: Corporations incorporated in California, registered with the California Secretary of State, or meeting activity thresholds must file and pay the state’s franchise tax even if they had no net income.
  
  
• Generating California-source income without being registered: If your corporation earns income from California sources, such as rental property or sales into the state, but is not registered to do business, you must file to report and pay California income tax.
  
  
• Newly formed or qualified corporations: A business entity that filed its Articles of Organization with the Secretary of State and is within its first taxable year may be exempt from the minimum tax.
  
  
• Corporations seeking a payment extension: You must submit Form FTB 3539 (Payment for Automatic Extension for Corporations and Exempt Organizations) and make payment by the 15th day of the 4th month to avoid late penalties.
  
  
• LLCs electing to be taxed as corporations: A limited liability company or disregarded entity that filed Form 2553 or is treated as a corporation for federal purposes must file Form 100 instead of Form 568.

Key Rules or Details for 2018

Form 100 (2018) requires careful compliance with both state and federal tax distinctions. Important rules include:

• Federal conformity cutoff date: California conforms to the Internal Revenue Code as of January 1, 2015. Therefore, federal law changes made after this date do not apply for California tax purposes.
  
  
• Tax filing deadline: The form is due by the 15th day of the 4th month following the end of the taxable year, typically April 15 for calendar-year filers, unless extended due to weekends or federal holidays.
  
  
• Electronic filing requirements: Any corporation using tax software, including professional services such as H&R Block Virtual or the Cook CPA Group, must e-file returns with the California Franchise Tax Board.
  
  
• Electronic payment rules: If a corporation makes a single payment exceeding $20,000 or has a total tax liability over $80,000, all future tax payments must be made electronically (via credit card, EFT, or Web Pay).
  
  
• NOL and credit usage: Corporations carrying forward losses from prior years may use FTB 3805Q to calculate net operating loss deductions, which affect final tax payments.

Step-by-Step (High Level)

To file Form 100 (2018) correctly, corporations should follow these general steps:

1. Determine your filing status: Identify whether you are a C corporation, S corporation (Form 100S), or limited liability company electing corporate taxation; confirm if you are filing an initial return or part of a unitary group.
   
   
2. Gather your federal return: Use your federal Form 1120 or Form 1120-S as the starting point for California income tax calculations, including relevant schedules such as Schedule C and Schedule K-1.
   
   
3. Calculate California-specific adjustments: Make all necessary adjustments to net income using state rules, including reversing GILTI, Section 965 income, and bonus depreciation, which apply only for federal purposes.
   
   
4. Determine apportionment for multi-state filers: If your corporation does business outside California, complete Schedule R using market-based sourcing to calculate the portion of taxable income subject to California state tax.
   
   
5. Apply net operating losses and credits: Use Form FTB 3805Q to calculate any net operating loss deductions and apply allowable credits directly on Form 100, listing additional ones in attached schedules.
   
   
6. Compute total tax and payments: Apply the applicable tax rate (8.84% or 10.84% for financial corporations) to your California net income, ensuring you meet the $800 minimum franchise tax if required.
   
   
7. Answer compliance questions and assemble attachments: Complete all required responses on the return, especially Schedule Q. Attach tax documents, such as your federal return, credit schedules, and international forms, if applicable.
   
   
8. Submit the return and make payment: File electronically if you used software, and pay using electronic methods if required; if mailing is allowed, use the correct California Tax Forms address based on payment status.

Common Mistakes and How to Avoid Them

Many corporations make costly errors when filing Form 100 (2018); here’s how to avoid the most frequent ones:

• Miscalculating the “doing business” threshold: Always include your pro rata share of partnership or S corporation activity to determine if you're subject to franchise tax.
  
  
• Using the wrong form: Double-check your entity type and filing status to ensure you are submitting Form 100, Form 100S, or Form 568 as required.
  
  
• Neglecting electronic filing rules: File electronically if you used any tax software; paper submissions under these conditions will trigger late penalties.
  
  
• Ignoring electronic payment thresholds: Once you exceed the $20,000 or $80,000 thresholds, ensure all tax payments are submitted electronically to avoid a 10% penalty.
  
  
• Failing to adjust for federal tax differences: Carefully review your federal-to-state income adjustments, especially for GILTI, Section 965, and bonus depreciation exclusions.
  
  
• Overlooking Schedule Q responses: Fully complete all Schedule Q questions, especially those involving ownership changes, real estate transfers, or unitary status.

What Happens After You File

Once you submit Form 100 (2018), the California Franchise Tax Board reviews the return and records it in the Business Entities Tax System. If payment was submitted by credit card or electronic transfer, it is processed automatically. Should any issues arise—such as missing tax documents, incomplete responses, or calculation errors—the Tax Board will send a notice requesting clarification. Corporations that provide precise contact details and file complete documentation usually receive faster processing. 

FAQs

Do limited partnerships need to file Form 100 (2018) in California?

A limited partnership only files Form 100 (2018) if it elects to be treated as a corporation for federal purposes and meets California’s filing requirements.

Can a disregarded entity submit Form 100 (2018)?

A disregarded entity must file Form 100 (2018) only if it is treated as a corporation for federal tax purposes; otherwise, it typically files under Form 568.

Does the 15-Day Rule apply to all corporations in the state of California?

Yes, the 15-Day Rule applies to corporations formed or qualified in the last 15 days of the taxable year that do not conduct business during that period, exempting them from filing a franchise tax return.

Are U.S. Armed Forces-related entities required to pay franchise tax in California?

Entities associated with the U.S. Armed Forces must still evaluate their California income tax obligations if conducting business or generating income in the state.

What happens if my corporation loses its tax-exempt status?

Once a corporation loses its tax-exempt status, it becomes subject to the standard California franchise tax filing and payment obligations, as outlined in Form 100 (2018).

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