Instructions for Form 100W - FormSend

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Small Business StockFor taxable years beginning on or afterJanuary 1, 1996, corporations that issue stockintended to be qualified small business stockpursuant to R&TC Section 18152.5 arerequired to attach form FTB 3565, SmallBusiness Stock Questionnaire, to Form 100W.Classification of Certain Business Trusts andCertain Foreign Single Member LimitedLiability Companies (LLCs)Normally, the classification of a business entityshould be the same for California purposes asit is for federal purposes. However, anexception may apply for certain eligiblebusiness entities (business trusts and singlemember LLCs) existing prior to January 1,1997, that were taxed as corporations forCalifornia purposes under former R&TCSection 23038. For taxable years beginning onor after January 1, 1997, a business trust or apreviously existing foreign single member LLCmay make an irrevocable election to beclassified the same as federal for Californiapurposes. To make the election the businesstrust or the single member LLC must havebeen classified as a corporation underCalifornia law, but classified as a partnership(for a business trust) or elected to be treatedas a disregarded entity (for single memberLLC) for federal tax purposes for taxable yearsbeginning before January 1, 1997. If thiselection is not made, the existing eligiblebusiness entity will continue to be classifiedand taxed as a corporation for Californiapurposes. Get form FTB 3574, Special Electionfor Business Trusts and Certain Foreign SingleMember LLCs, for more information.General InformationA Franchise or Income TaxCorporation franchise taxEntities subject to the corporation minimumfranchise tax include all corporations (e.g.LLCs electing to be taxed as corporations) thatare:• Incorporated or organized in California;• Qualified or registered to do business inCalifornia; or• Doing business in California, whether ornot incorporated, organized, qualified, orregistered under California law.The measured franchise tax is imposed oncorporations doing business in California andis measured by the income of the currenttaxable year for the privilege of doing businessin that taxable year.The term “doing business” means activelyengaging in any transaction for the purpose offinancial gain or profit.The minimum franchise tax must be paidwhether the corporation is active, inactive, notdoing business in California, or operates at aloss.Note: A corporation incorporated in California,but not doing business in this state, is notsubject to the measured franchise tax. In thecase of a corporation incorporated in Californiaor qualified with the California Secretary ofState (SOS), but not doing business in thisstate, careful attention should be given to theterm “doing business.” It is not necessary thatthe corporation conducts business or engagesin transactions within the state on a regularbasis. Even an isolated transaction during theyear may be enough to cause the corporationto be “doing business.”Also, when a corporation is either a generalpartner of a partnership or a member of anLLC that is "doing business" in California, thecorporation is considered to be "doingbusiness" in California.Corporation income taxThe corporation income tax is imposed on allcorporations that derive income from sourceswithin California but are not doing business inCalifornia.For purposes of the corporation income tax,the term “corporation” generally includes:• Associations;• Massachusetts or business trusts;• REITs;• LLCs electing to be taxed as corporationsother than those subject to the corporatefranchise tax; and• Other business entities, including partnerships,electing to be taxed as corporations.Get FTB Pub. 1063, California Corporation TaxLaw — A Guide for Corporations, for moreinformation.B Tax RatesThe tax rates below apply to corporationssubject to either the corporation franchise taxor the corporation income tax.• Corporations other than banks and financialcorporations . . . . . . . . . . . . . . . . . . 8.84%• Banks and financial corporations . 10.84%C Minimum Franchise TaxAll corporations subject to the franchise tax,including banks, financial corporations,corporate general partners of partnerships, andcorporate members of LLCs doing business inCalifornia, must file Form 100 or Form 100Wand pay at least the minimum franchise tax asrequired by law. The minimum franchise tax,as indicated below, must be paid whether thecorporation is active, inactive, operates at aloss, or files a return for a short period of lessthan 12 months.• Domestic qualified inactive gold orquicksilver mining corporations . . . . . . $25• All other corporations subject tofranchise tax (see GeneralInformation A, Franchise orIncome Tax, for definitions) . . . . . . . . $800A combined group filing a single return mustpay at least the minimum franchise tax foreach corporation in the group that is subject tofranchise tax.Note: For corporations that incorporate orqualify through the California SOS to dobusiness in California on or after January 1,2000, the prepayment of the minimumfranchise tax to the California SOS is no longerrequired. For the first taxable year thecorporation will compute its tax liability bymultiplying its state net income by theappropriate tax rate and will not be subject tothe minimum franchise tax. The corporationwill become subject to minimum franchise taxbeginning in its second taxable year. This doesnot apply to corporations that are not qualifiedby the California SOS, or reorganize solely toavoid payment of their minimum franchise tax.There is no minimum franchise tax for:• Credit unions;• Corporations that derive income fromsources within California but are subject toincome tax only because they are not“doing business” in California, and are notincorporated or qualified under the laws ofCalifornia. For more information regarding“doing business,” get FTB Pub. 1050,Application and Interpretation of PublicLaw 86-272; FTB Pub. 1060, Guide forCorporations Starting Business in California;or FTB Pub 1063, California CorporationTax Law — A Guide for Corporations;• Corporations that are not incorporatedunder the laws of California; whose soleactivities in this state are engaging inconvention and trade show activities forseven or fewer days during the taxableyear; and that do not derive more than$10,000 of gross income reportable toCalifornia during the taxable year. Thesecorporations are not “doing business” inCalifornia. For more information, get FTBPub. 1060, Guide for Corporations StartingBusiness in California; or FTB Pub 1063,California Corporation Tax Law — A Guidefor Corporations; and• Newly formed or qualified corporationsfiling an initial return for taxable yearsbeginning on or after January 1, 2000.D Accounting Period/MethodThe taxable year of a corporation must not bedifferent from the taxable year used for federalpurposes, unless initiated or approved by theFTB (R&TC Section 24632).A change in accounting method requiresconsent from the FTB. However, a corporationthat obtains federal approval to change itsaccounting method, or that is permitted orrequired by federal law to change itsaccounting method without prior approval anddoes so, is deemed to have the FTB’s approvalif: (1) the corporation files a timely Form 100Wconsistent with the change for the first year thechange becomes effective for federal purposes;and (2) the change is consistent with Californialaw. A copy of federal Form 3115, Applicationfor Change in Accounting Method, and a copyof the federal consent to the change must beattached to Form 100W for the first year thechange becomes effective. Get FTB Notice2000-8 for more information. The FTB maymodify a requested change if the change woulddistort income for California purposes.Note: California is not following the automaticconsent procedure for a change of accountingmethod involving previously unclaimedallowable depreciation or amortization prescribedby Federal Revenue Procedure 96-31.Get FTB Notice 6-3 for more information.E When to FileFile Form 100W on or before the 15th day ofthe 3rd month after the close of the taxableyear unless the return is for a short-period asrequired under R&TC Section 24634.Generally, the due date of a short-period returnis the same as the due date of the federalshort-period return. See R&TCSection 18601(c) for the due date of ashort-period return. See GeneralInformation O, Dissolution/Withdrawal, and P,Ceasing Business, for information on finalreturns.A corporation that converts to another type ofentity, such as a limited liability company orForm 100W Booklet 2004 Page 5
limited partnership, must file two Californiareturns. The converted entity is required to filea short-period return for the taxable yearending on the date of cancellation. The newentity would then be subject to all of the filingrequirements and tax obligations for that newentity from the date of conversion.F Extension of Time to FileIf the corporation cannot file its Californiareturn by the 15th day of the 3rd month afterthe close of the taxable year, it may file on orbefore the 15th day of the 10th month withoutfiling a written request for an extension unlessthe corporation is suspended on the originaldue date. This does not extend the time forpayment of tax; the full amount of tax must bepaid by the original due date of Form 100W. Ifthere is an unpaid tax liability, complete formFTB 3539, Payment Voucher for AutomaticExtension for Corporations and ExemptOrganizations, included in this booklet, andsend it with the payment by the original duedate of the Form 100W.Note: If the corporation must pay its taxliability using electronic funds transfer (EFT),all payments must be remitted by EFT to avoidthe EFT penalty. Do not send form FTB 3539.G Electronic Funds Transfer(EFT)Corporations that meet certain requirementsmust remit all of their payments through EFTrather than by paper checks to avoid the 10%non-compliance EFT penalty. Corporations thatremit an estimated tax payment or extensionpayment in excess of $20,000 or that have atotal tax liability in excess of $80,000 mustremit all of their payments through EFT. TheFTB will notify corporations that are subject tothis requirement. Those that do not meet theserequirements and wish to participate on avoluntary basis may do so. If you are an EFTtaxpayer, complete the form FTB 3539worksheet for your records. DO NOT SENDTHE PAYMENT VOUCHER. For more information,go to our Website at www.ftb.ca.gov, call(916) 845-4025, or get FTB Pub. 3817, ElectronicFunds Transfer Program InformationGuide.H Where to FileIf a tax is due, and the corporation is notrequired to use EFT, make the check or moneyorder payable to the Franchise Tax Board.Write the California corporation numberand “2004 Form 100W” on the check ormoney order. Mail the return and payment to:FRANCHISE TAX BOARDPO BOX 942857SACRAMENTO CA 94257-0501Mail all other returns, including those withpayment by EFT, to:FRANCHISE TAX BOARDPO BOX 942857SACRAMENTO CA 94257-0500Private Delivery ServicesCalifornia law conforms to federal lawregarding the use of certain designated privatedelivery services to meet the “timely mailing astimely filing/paying” rule for tax returns andpayments. See federal Form 1120, U.S.Corporation Income Tax Return, for a list ofdesignated delivery services. If a privatedelivery service is used, address the return to:Page 6 Form 100W Booklet 2004FRANCHISE TAX BOARDSACRAMENTO CA 95827Caution: Private delivery services cannotdeliver items to PO boxes. If using one ofthese services to mail any item to the FTB,DO NOT use an FTB PO box.Private Mailbox (PMB) NumberIf the corporation leases a PMB from a privatebusiness rather than a PO box from the UnitedStates Postal Service, include the box numberin the field labeled “PMB no.’’ in the addressarea.I Net Income ComputationThe computation of net income from trade orbusiness activities generally follows thedetermination of taxable income as provided inthe IRC. However, there are differences thatmust be taken into account when completingForm 100W. There are two ways to completeForm 100W, the federal reconciliation methodor the California computation method:1. Federal reconciliation methoda. Attach a copy of federal Form 1120 orForm 1120A, Page 1, U.S. CorporationIncome Tax Return, and all pertinentsupporting schedules, or transfer theinformation from federal Form 1120 orForm 1120A, Page 1, to Schedule F andattach all pertinent schedules;b. Enter the amount of federal ordinaryincome (loss) from trade or businessactivities before any NOL onForm 100W, Side 1, line 1; andc. Enter state adjustments on line 2through line 17 to arrive at net incomeafter state adjustments, Side 1, line 18.2. Schedule F – California computationmethodIf the corporation has no federal filingrequirement or if the corporation maintainsseparate records for state purposes,complete Form 100W, Side 3, Schedule F,to determine state ordinary income. Ifordinary income is computed underCalifornia laws, generally no state adjustmentsare necessary. Transfer the amountfrom Schedule F, line 29, to Side 1, line 1.Complete Form 100W, Side 1, line 2through line 17, only if applicable.For more information, see the specific lineinstructions.Note: Regardless of the net income computationmethod used, the corporation must attachany form, schedule, or supporting documentreferred to on the return, schedules, or formsfiled with the FTB.J Alternative Minimum Tax(AMT)Corporations that claim certain types ofdeductions, exclusions, and credits may besubject to California AMT. Generally, corporationsthat complete federal Form 4626,Alternative Minimum Tax — Corporations, alsomust complete California Schedule P (100W),Alternative Minimum Tax and Credit Limitations— Water’s-Edge Filers. See Schedule P(100W), included in this booklet, for moreinformation.K Estimated TaxEvery corporation must pay estimated taxusing Form 100-ES, Corporation EstimatedTax. Estimated tax is generally due and payablein four installments:• The 1st payment is due by the 15th day ofthe 4th month of the taxable year (note thatthis payment may not be less than theminimum franchise tax, if applicable); and• The 2nd, 3rd, and 4th installments are dueand payable by the 15th day of the 6th, 9th,and 12th months respectively, of thetaxable year.Caution: If no amount is due, DO NOT mailForm 100-ES.California law has conformed to the federalexpanded annualization periods for thecomputation of estimate payments. For taxableyears beginning on or after January 1, 1998,the applicable percentage for estimate basis is100%.Get the instructions for Form 100-ES for moreinformation.Note: If the corporation must pay its taxliability using EFT, ALL estimate payments duemust be remitted by EFT to avoid the EFTpenalty.L Commencing CorporationsFor taxable years beginning on or after January1, 2000, no prepayment to the California SOSis required and no minimum tax is required forthe first taxable year if the corporationincorporated or registered through theCalifornia SOS. For more information seeGeneral Information C, Minimum FranchiseTax, or get FTB Pub. 1060, Guide for CorporationsStarting Business in California.M PenaltiesFailure to file a timely returnAny corporation that fails to file Form 100W onor before the extended due date is assessed apenalty. The penalty is 5% of the unpaid tax foreach month, or part of the month, the returnremains unfiled from the due date of the returnuntil filed. The penalty may not exceed 25% ofthe unpaid tax. If a corporation does not file itsreturn by the extended due date, the automaticextension will not apply and the late filingpenalty will be assessed from the original duedate of the return. See R&TC Sections 19131and 23772 for more information.Failure to pay total tax by the due dateAny corporation that fails to pay the total taxshown on Form 100W by the original due dateis assessed a penalty. The penalty is 5% of theunpaid tax, plus 0.5% for each month, or partof the month (not to exceed 40 months), thetax remains unpaid. This penalty may notexceed 25% of the unpaid tax. See R&TCSection 19132 for more information.Note: If a corporation is subject to both thepenalty for failure to file a timely return and thepenalty for failure to pay the total tax by thedue date, a combination of the two penaltiesmay be assessed, but the total penalty may notexceed 25% of the unpaid tax.Underpayment of estimated taxAny corporation that fails to pay, pays late, orunderpays an installment of estimated tax isassessed a penalty. The penalty is a percentageof the underpayment for the underpaymentperiod. Get form FTB 5806, Underpayment ofEstimated Tax by Corporations, to determineboth the amount of underpayment and theamount of penalty.
Page 1 and 2: Instructions for Form 100WCaliforni
Page 3 and 4: Table of ContentsForm 100W, Califor
Page 5: As a result of the new procedures:
Page 10 and 11: (R&TC Section 25113) will continue
Page 12 and 13: Also, write in the business activit
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Page 16 and 17: CREDIT NAME CODE DESCRIPTIONCurrent
Page 18 and 19: CodeMerchant Wholesalers, Nondurabl
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