What Form 100 (2021) Is For
Form 100 (2021) is a California income tax return used by corporations to report taxable income, calculate tax liability, and satisfy franchise tax requirements under California law. This California form applies to qualified corporations and certain limited liability company entities that elect corporate tax treatment. The return reports gross income, net income, and current-year income derived from California sources, and reflects the required California adjustments that differ from those on federal tax returns.
When You’d Use Form 100 (2021)
Corporations file Form 100 (2021) when specific filing conditions apply during the taxable year.
- Annual corporate filing requirement: A corporation must file this California tax return each taxable year to report business income and determine tax payments, even when no revenue is generated.
- California business activity or sourcing: Corporations with California income, property, payroll, or sales sourced to California must file because these factors establish nexus under state rules.
- Limited Liability Company corporate election: A Limited Liability Company or Single Member LLC that elects corporate treatment files this return instead of Form 568 or a Limited Liability Company Return of Income.
- Combined or consolidated reporting: Corporations that are part of a unitary business must file a combined or consolidated corporate return when filing a Combined Report is required.
- Exclusions for other entity types: Partnerships and entities with nonresident members file a Partnership Return of Income using Form 565 rather than this corporate return.
Key Rules or Details for 2021
Several vital rules affect how corporations complete Form 100 (2021) for the 2021 tax year.
- Minimum tax and tax rate: Most corporations owe a minimum tax of $800 and apply the applicable tax rate to taxable income to determine total tax liability.
- Income apportionment and sourcing: Multistate corporations must use Schedule R and identify California sources of income based on property, payroll, and sales factors.
- California-specific adjustments: Differences between federal and state law require adjustments reported on Schedule CA, Schedule D, Schedule D-1, Schedule B, and Schedule C when applicable.
- Alternative Minimum Tax Calculation: Corporations subject to the Alternative Minimum Tax (AMT) must complete Schedule P to compute the additional tax due.
- Withholding and information reporting: Corporations must include Forms 592, 592-A, 592-B, 592-F, or Form 593 when withholding applies to payments made during the year.
Step-by-Step (High Level)
Corporations should follow a structured filing process to complete Form 100 (2021) accurately and in compliance with California law.
- Gather required records and returns: Corporations must collect federal tax returns, including Form 1120, prior California income tax return filings, Schedule K-1 documents if applicable, and records supporting gross income and current year income.
- Determine the reporting method: Businesses must decide whether to use the federal reconciliation method or the California computation method to calculate taxable income and net income accurately.
- Prepare the required schedules: Corporations must complete Schedule R for apportionment, Schedule CA for California adjustments, Schedule D and Schedule D-1 for capital transactions, Schedule B and Schedule C when applicable, and Schedule P if the alternative minimum tax applies.
- Calculate taxes and payments: Corporations must apply the correct tax rate, confirm payment of the minimum tax, and accurately enter estimated payments, extension payment amounts, and other tax payments.
- Address withholding and compliance items: Businesses should review Forms 588, 589, 590, 592, 592-A, 592-B, and 592-F to ensure proper withholding and information reporting compliance.
- Submit the return properly: Corporations must follow electronic filing requirements, comply with the California electronic filing mandate, include the correct payment voucher if applicable, and complete the California e-file Return Authorization when required.
Common Mistakes and How to Avoid Them
Corporations can reduce errors and penalties by addressing common filing mistakes associated with Form 100 (2021).
- Using the incorrect return type: Corporations should confirm they are not required to file Form 568, Form 565, Form 540, Form 540NR, or a California S Corporation Franchise or Income Tax Return instead of this form.
- Incorrect apportionment of income: Errors in Schedule R or failure to identify California sources of income may result in adjustments; therefore, corporations should align their apportionment data with actual operations.
- Misreporting combined filings: Corporations involved in a unitary business must properly file when filing a Combined Report or operating as Water's-Edge Filers.
- Payment application errors: Corporations should apply estimated payments, extension payments, and payment vouchers correctly to avoid penalties and interest.
- Failure to follow electronic rules: Noncompliance with electronic filing or payment requirements may result in penalties; therefore, businesses must adhere to all California electronic filing rules.
What Happens After You File
After Form 100 (2021) is filed, the Franchise Tax Board reviews the California tax return for accuracy, completeness, and compliance with California law. If discrepancies are identified, the corporation may receive a notice requesting clarification or additional documentation. Interest accrues on unpaid tax liability from the original due date until paid in full. Approved extension payments are credited to the account, and any federal refund does not affect the processing of the California income tax return.
FAQs
Does Form 100 (2021) require corporations to file Form 100W?
No, Form 100W is only required if the corporation is electing or operating on a water's-edge basis for California tax reporting.
Can a corporation deduct net operating losses in the 2021 tax year?
No, net operating loss deductions were suspended in 2021 for corporations with $1 million or more in taxable income.
Does owning real property in California trigger a filing requirement?
Yes, owning real property in California may be considered doing business, requiring the corporation to file Form 100 (2021) with the Franchise Tax Board.
Is a relief grant taxable for California purposes?
No, most COVID-19 Relief Grant amounts are excluded from gross income, but they must still be reported using Form FTB 4197.
What schedules are used for a unitary business operating in multiple states?
A unitary business must file a combined report and typically includes Schedule R to report income apportioned across different jurisdictions.
