As a follow-up to the last response, the following information was obtained from the CA Franchise Tax Board website and provides additional information regarding who is, and who is not, subject to the $800 franchise fee.
"Because of the operative date specified in AB 85, the 15-day rule may impact whether an LLC, LP, or LLP is eligible for the exemption from the annual tax during its first taxable year. The 15-day rule is a set of provisions within the California law (R&TC Sections 17936, 17946, 17948.2, and 23114) that provide some relief to business entities (LPs, LLPs, LLCs, and corporations) from the general requirement to pay the annual/minimum tax.
A business entity is not subject to the $800 annual/minimum tax if the entity both:
- Did not conduct business in the state during the taxable year
- The taxable year was 15 days or less
For example, if an entity filing on a calendar year basis is formed on December 17 or after and does no business for the remainder of the year, then it may not have to file a tax return and pay the $800 annual/minimum tax for that short tax year. Since an entity that meets the 15-day rule is not required to file a tax return, this time period is not considered the first tax year. The following tax year will be considered the first taxable year."
Here is a link to the webpage from which the above quoted material was obtained.
All About CA Business
@shog92
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