What California Form 100S (2012) Is For
California Form 100S (2012) is the state franchise or income tax return for S corporations that have a filing requirement in California. While federal S corporations are generally treated as pure pass-through entities, California imposes an entity-level tax and still treats income as passing through to shareholders.
On Form 100S, the S corporation calculates the greater of 1.5% of its net income (3.5% for S corporation banks and financial institutions) or the $800 minimum franchise tax. At the same time, it reports each shareholder’s share of income, loss, deductions, and credits on Schedule K-1 (100S), which shareholders then report on their California individual income tax return if required.
When You’d Use California Form 100S (2012)
You must file California Form 100S (2012) if your corporation has a valid federal S election and is incorporated in California, qualified or registered to do business here, or meets the state’s “doing business” threshold. “Doing business” includes actively engaging in profit-seeking activities, being organized or commercially domiciled in California, or exceeding certain sales, property, or payroll thresholds in the state.
For calendar-year S corporations, the 2012 return was due March 15, 2013 (the 15th day of the 3rd month after year-end). California granted an automatic seven-month extension to file, allowing timely filing through October 15, 2013, without a separate extension request, as long as the corporation was in good standing. The extension applied only to filing—not to payment—so any tax liability still had to be paid by March 15 to avoid penalties and interest.
You’d also use the 2012 Form 100S timeline when filing a past due return or amending a previously filed return. Amended returns are filed on Form 100X, checking the box to show you are amending a Form 100S. In most cases, you have the later of four years from the original due date, four years from the date filed, or one year from the date tax was paid to file a claim for refund.
Key Rules or Details for 2012
California’s S corporation rules for 2012 differ significantly from federal treatment and drive how you calculate income tax and tax liability at both the corporate and shareholder levels.
S corporations pay the greater of 1.5% of net income (3.5% for S corporation banks and financial institutions) or the $800 minimum franchise tax. The minimum applies even if the corporation has losses, is inactive, or files a short-period return. The only exception: newly incorporated or newly qualified S corporations in their first taxable year, which pay tax solely on net income without the $800 minimum.
If you elected S corporation status federally and had a California filing requirement in 2012, California generally treated you as having made the same S election—no separate California S election form was required. However, the federal S election did not exempt you from California’s entity-level tax, and California did not conform to all federal S corporation provisions.
California’s expanded “doing business” definition, effective for years including 2012, required S corporations to consider sales, property, and payroll thresholds based on either a dollar amount (adjusted annually) or 25% of totals everywhere. You must include the corporation’s share of amounts from partnerships and other pass-through entities when applying these tests.
Estimated tax rules also applied. S corporations generally had to make quarterly estimated payments, and—except in the first taxable year—ensure that at least the $800 minimum franchise tax was paid by the first installment due date. Former C corporations that converted to S status had to watch for possible built-in gains tax on appreciated assets recognized during the S corporation period.
Step-by-Step (High Level)
Step 1: Gather Federal and California Records
Collect your federal Form 1120S, detailed financial statements, prior-year returns, records of California estimated tax and extension payments, and documentation for credits and adjustments. If you operate in multiple states, assemble apportionment data for sales, property, and payroll.
Step 2: Start from Federal Form 1120S
Use the federal return as your starting point, but do not simply copy numbers. Enter federal ordinary income on Form 100S and then identify items that require California adjustments, such as depreciation differences, passive loss limitations, and nonconforming federal deductions or credits.
Step 3: Make California Adjustments and Apportion Income
On Form 100S and Schedule R, make additions and subtractions to convert federal amounts to California amounts. If you do business inside and outside California, complete Schedule R to compute your California apportionment percentage using sales, property, and payroll factors as required for 2012.
Step 4: Compute Entity-Level Tax
Multiply California net income by 1.5% (or 3.5% for banks and financial institutions) to determine your calculated entity-level tax. Compare that figure to the $800 minimum franchise tax and use whichever is higher. This is the S corporation’s California income tax liability before credits and payments.
Step 5: Complete Schedule K and K-1s
Fill out Schedule K to show total income, deductions, and credits under California law. Prepare Schedule K-1 (100S) for each shareholder, reflecting their distributive share of these items. Ensure that the totals of all K-1s match Schedule K, because shareholders rely on these forms to file a tax return accurately in California.
Step 6: Apply Payments, Finalize, and File
Subtract estimated tax payments, extension payments, and any withholding to determine balance due or refund. Complete required schedules (M-1, M-2, and L) and attach copies of your federal Form 1120S and other required forms. File on time or under extension and pay any remaining tax by the original due date to avoid a past due return situation and penalty charges.
Common Mistakes and How to Avoid Them
- Skipping the $800 minimum franchise tax because the corporation had a loss or no activity
- Filing late and triggering the $18-per-shareholder-per-month penalty, in addition to regular delinquent filing penalties
- Copying federal amounts without California adjustments, especially for depreciation, passive losses, and credits
- Misapplying “doing business” rules, assuming no filing requirement if not incorporated in California
- Failing to notify the FTB of federal audit changes within six months of final federal determination
- Issuing incorrect Schedule K-1s that don’t tie to Schedule K or reflect California-specific rules
What Happens After You File
Once your 2012 Form 100S is filed, the Franchise Tax Board processes the return, applies payments, and determines whether you are due a refund or owe additional tax. Electronic filing typically leads to faster processing than paper filing.
If you owe more tax than you paid, you will receive a Notice of Tax Due showing the balance, penalties, and interest accruing from the original March 15, 2013 due date. Penalties may include late payment and delinquent filing penalties, plus the S-corporation-specific late filing penalty of $18 per shareholder per month (up to 12 months).
Your return may be selected for audit. During an audit, the FTB reviews the S corporation’s items and, where necessary, the shareholders’ related income. Adjustments at the entity level can ripple through to shareholders, requiring amended individual income tax returns and possibly additional tax, interest, and penalties at both levels.
Generally, California has four years from the date you filed to assess additional tax, extended to eight years for substantial understatements and indefinitely if you never file or fail to report federal changes on time. Because S corporation audits can affect many shareholders, good documentation and timely responses are crucial.
FAQs
Do we owe the $800 minimum franchise tax even if we had no profit in 2012?
Yes. Unless it is your first taxable year as an S corporation in California, you owe at least $800 if you are incorporated, qualified, or doing business in the state, regardless of losses or inactivity.
How is a California S corporation different from a federal S corporation?
Federally, S corporations generally pay no entity-level income tax and everything flows through to shareholders. In California, an S corporation still passes through income but must also pay the greater of 1.5% of net income (3.5% for S corporation banks) or the $800 minimum franchise tax at the entity level.
What penalties apply if we file Form 100S late?
You may face a delinquent filing penalty of up to 25% of unpaid tax plus an S-corporation-specific penalty of $18 per shareholder per month (or partial month), up to 12 months. Interest also accrues on unpaid tax from the original due date.
How do shareholders report their share of S corporation income?
Shareholders use the California Schedule K-1 (100S) to report their distributive share of income, deductions, and credits. Residents include these amounts on their California personal income tax return, and nonresidents report their California-source share on Form 540NR.
What happens if the IRS changes our 2012 federal S corporation return?
If the IRS adjusts your federal return, you must notify the Franchise Tax Board within six months of the final federal determination, usually by filing Form 100X or sending the required documentation. Missing this deadline allows California to assess additional tax indefinitely and may require issuing amended K-1s to shareholders.
