What California Form 100S Is For
California Form 100S is the annual return S corporations file to report business income, deductions, and credits to the FTB. The form calculates the corporation-level franchise tax and supports shareholder reporting through Schedule K and Schedule K-1. Corporations use it to report California-source income, apportionment data, and required adjustments that differ from those for federal purposes. The form also confirms whether a company owes the $800 minimum franchise tax or qualifies for the first-year exemption, as determined by state laws and filing rules.
When You’d Use California Form 100S
You must file California Form 100S each year if your S corporation conducts business in the state, generates California source income, or meets the doing-business thresholds outlined in the Revenue and Taxation Code. The return is due on the 15th day of the 3rd month after the close of the taxable year for both calendar-year and fiscal-year corporations.
An automatic six-month extension applies to filing, but not to tax payments. You also file this form for a short-period return, an amended return, or when the SOS shows a change in corporate status. Suspended corporations must file to resolve past returns, penalties, and reporting issues. Visit the IRS Form Help Center for guidance on federal forms that influence your California 100S filing, including schedules used for state-specific adjustments.
Key Rules or Details for 2024
Tax Rates
For 2024, most S corporations pay a 1.5% tax on California business income, while financial corporations and banks pay a 3.5% tax on their business income. Some entities may also be subject to tax on built-in gains or excess net passive income. These rates apply even when a corporation files a combined report or has multiple taxpayer members with different activities.
Minimum Franchise Tax
Most qualified corporations are required to pay a minimum franchise tax of $800. The first-year exemption applies when a company is newly formed through the SOS and meets state requirements. After the initial period, the minimum tax applies each year, even when the corporation has a loss or a short-period return.
2024 Changes
For the years 2024 through 2026, NOL deductions are suspended for entities with annual income exceeding $1 million. The $5 million credit limitation applies to several credits, including those reported on FTB 3805Z and FTB 4197. New rules also eliminate certain oil and gas deductions and allow an exclusion for payments made for wildfire mitigation.
Additional Requirements
California does not follow several federal tax provisions; therefore, corporations must review the differences in depreciation, credits, and basis rules for federal purposes. Doing-business thresholds rely on sales, real property, and payroll. Corporations with activity inside and outside the state must complete Schedule R for apportionment data. The FTB requires e-file service when the return is prepared using approved software, and all forms must follow state instructions for records, reporting, and identification numbers.
Review how the IRS Collection Process may affect corporations that fall behind on California franchise tax payments or fail to resolve Form 100S-related balances.
Step-by-Step (High Level)
Step 1—Gather Records
Collect your company’s accounting records, federal return (Form 1120-S), prior-year forms, and details about income, expenses, property, payroll, and tax payments. Ensure you have the identification numbers from the IRS, FTB, and SOS.
Step 2—Complete Corporate Information
Fill in the name, address, corporation number, FEIN, and SOS file number. Verify that this matches your legal records to avoid a penalty for incorrect filing.
Step 3—Answer Schedule Q Questions
Provide information about ownership, business activity, trade or investment income, and whether this is a short-period return or part of a combined report.
Step 4—Calculate Income and Adjustments
Start with federal income, then follow California instructions to adjust for nonconforming laws, apportionment data, and California source income using Schedule R or Schedule F.
Step 5—Apply Deductions and Credits
Apply allowed deductions, NOL rules, and any credits, including those that affect franchise tax and corporation income tax.
Step 6—Compute Tax and Payments
Compute total taxes, compare them with prior tax payments and withholding, and determine any balance due or refund.
Step 7—Prepare Schedules K and K-1
Complete Schedule K and each shareholder’s pro rata share on Schedule K-1 for reporting their income tax obligations.
Step 8—File by Mail or e-File
Submit the return and tax payment on time by mail or through the FTB e-file service, keeping a copy for your records.
Common Mistakes and How to Avoid Them
- Many corporations enter incorrect identification numbers in required sections or place details in the wrong box, slowing FTB processing. You can avoid this by checking each number against your federal return and state records.
- Some domestic companies use a DBA (Doing Business As) instead of their legal name, which can cause issues for establishments tied to the same California taxpayer. Use the legal name on state filings and place the DBA only where permitted.
- Filers often miss required schedules such as Schedule M-1, worksheets for combined report calculations, or forms like FTB 3805Q. Review the FTB Pub checklist to confirm which schedules apply to your activity, capital changes, or credits.
- Certain corporations skip adjustments involving transfers, LIFO recapture, AMT items, or percent allocations in apportionment columns. Review each worksheet to ensure that entries comply with California rules, rather than relying solely on federal tax purposes.
Learn how unresolved S corporation tax debts may lead to enforcement actions involving corporate officers, including potential wage garnishments.
What Happens After You File
After you file Form 100S, the Tax Board reviews the single return and verifies the computation, receipts, and any copies of schedules provided. The FTB may issue a Request if a transaction, termination, or combined reporting relationship needs more explanation.
Some corporations may need to clarify weighted average property values, interim closing methods, or Section 25106.5 entries for Corporations A, B, C, or D. If the return indicates an underpayment, a penalty for failure may be applicable; however, an installment plan may be available to resolve the issue. Payments through EFT or EFW reduce delays, and entities with EZ, LAMBRA, LCUP, TTA, or Relief Grant activity may receive questions.
FAQs
What’s the difference between the California franchise tax and the income tax for S corporations?
The California franchise tax applies to corporations doing business in the state. In contrast, the income tax applies when a corporation has California-source income but does not meet the “doing business” standard in California.
Do new S corporations owe the $800 minimum franchise tax in their first year of operation?
New S corporations formed through the SOS are exempt from the $800 minimum franchise tax in their first taxable year, provided they meet the state's requirements.
How does the 2024 NOL suspension affect my S corporation?
The 2024 NOL suspension prevents corporations with taxable income of $1 million or more from using NOL deductions during the suspension period.
How does the $5 million credit limitation work for 2024–2026?
The $5 million credit limitation caps the total credits a corporation may use in a year, with any unused amounts carried forward.
How are nonresident shareholders taxed on California-source income?
Nonresident shareholders are taxed only on their pro rata share of income sourced to California.
