Delaware franchise tax question

[Tushi_Florida]

C corp was incorporated in 2021. Had authorized 10m shares at that time. Paid Delaware franchise tax for 2021 using Assumed Par Value Method. $400.

That 10 million shares are the only shares that have been authorized since incorporation.

my Q is: Do I need to pay Delaware franchise tax for the original 10m shares in 2022 too? In other words, does franchise tax applies to any authorized shares available since the beginning or only to new shares authorized in any given tax year? 

Thanks.

[MinhT1 · Accepted solution]

Yes.

The franchise tax is an annual tax. Each year you can choose the method which gives the lesser tax.

It seems that in your case the Assumed par value method will give you the lesser tax at $400.

Please read this Delaware tax document for more information.

[Tushi_Florida]

Hi

Thanks for your response.

Just to clarify (as there were sub-questions within my prior question).

"The franchise tax is an annual tax" on authorized shares irrespective of when they were originally authorized, correct?

meaning, even if the c corp did not authorize any new shares in subsequent years (beyond the year of incorporation) it still has to pay franchise tax each year on already authorized shares, correct? 

if the answer to both of these questions is "yes", could you direct me to any link that specifically addresses this topic if such a link is available?

Thanks

[Tushi_Florida]

Hi

Thanks for your response.

Just to clarify (as there were sub-questions within my prior question).

"The franchise tax is an annual tax" on authorized shares irrespective of when they were originally authorized, correct?

meaning, even if the c corp did not authorize any new shares in subsequent years (beyond the year of incorporation) it still has to pay franchise tax each year on already authorized shares, correct? 

if the answer to both of these questions is "yes", could you direct me to any link that specifically addresses this topic if such a link is available?

Thanks

[MaryK4]

Effective January 1, 2018, a domestic stock or non-stock for profit corporation incorporated in the State of Delaware is required to pay annual franchise tax.   See How to Calculate Franchise Taxes.

@Tushi_Florida